Archive for Zero Down
Why You Absolutely Need to Buy A Home Now
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History Shows That Now is The Best Time To Buy
In 1971 Housing Affordability was at its highest prior to this year. Meaning that this is the best time possible to buy.
Let’s Talk Affordability
The chart below plots two things: National Association of Realtors Affordability Index (green line) and 30 Year Fixed Rates (blue line). As you can see on the far right side you have the highest Housing Affordability and the lowest Rates. So, you have the lowest prices, lowest rates, and highest affordability.
What About the ’80′s?
In the period of 1979 to 1984 you have some of the highest interest rates on record. Yet, still a lot of people purchased homes during that period. The people that bought homes during that time did well 15 – 30 years later. My Mother purchased her first home during that time period even though rates where in the 12′s to 18′s. In 1982 Housing affordability was at its lowest ever. Inflation kicked in 1975, and rates continued an upward trend through 1979. So, the Gap between housing affordability and Interest Rates was very wide, the widest of record.
The Best of All Scenario’s
Today we have a very wide gap as well, but in a good way. Presently because interest rates are so low, home prices are low, and housing affordability is up, the overall risk is greatly reduced. If the risk was so great in 1982 and homebuyers did okay, how can someone look at the chart today and say that it is riskier than in 1982.
What About the Negative News?
That’s the best part if you are a homebuyer. Trulia recently release a report Showing Sellers Continuing to Slash Home Prices. This means you are getting an even better price on an already reduced house. The Department of Housing and Urban Development (HUD) just released there July report card, “The Obama Administration’s Efforts To Stabilize the Housing Market and Help American Homeowners.” This report card shows continued affordability in the U.S. Market.
Historic low rates continue to promote affordability: Families continue to benefit from the lowest rates in history on 30-year fixed mortgages. Since April of 2009, record low rates have helped more than 7.2 million homeowners to refinance, resulting in more stable home prices and $12.9 billion in total borrower savings.
Simple supply and Demand suggest that since there is not as great of demand now, compared to during the tax credit, housing prices will decrease thus further increasing the affordability (Read Better Deal!) There are still large amount of houses on the market and many more still in foreclosure. Both Federal Housing Finance Agency and Standard and Poor’s believe that House Prices are showing signs of stabilizing.
What do you think housing prices and interest rates will do in the next 12 months?
If you are looking to purchase or refinance please give me a call or email Jeremiah so we can get the process started. I’d be happy to get you started.
I really appreciate you coming back to look around. If you know of anyone else you think might enjoy my blog, please don't keep me a secret.
Yes, You Can Get a USDA Loan
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What’s Up with USDA Funds
With all the back and forth lately from USDA it would be easy to understand if people were just a little confused over whether or not a USDA Loan is available.
Round and Round
The past couple of months have definitely felt like a ride on a Ferris Wheel, first your at the bottom, they’re running out of money, you get to the top – they’ll issue revised commitments, half way back down no commitments and they’re out of money. We are back at the bottom and on firm ground USDA will issue modified conditional commitments. They will issue these modified commitments to the first 2.5 billion that gets submitted, that is through either the end of the Fiscal Year End, or until Congress pass Bill H.R. 4899 authorizing additional funds and an increased guarantee fee.
Why Your Are Receiving Mixed Answers from Others
The main reason that some loan officers are stating that USDA Loans are not available because their company is not set up with the right investors. A lot of mortgage bankers warehouse lines have covenants that require them to have at least two sources to sell any product offered, with the recent shake up that is very difficult. There is risk for those that make USDA Home Loans since they will have to hold the loans potentially a lot longer than ever before.
The Take Away
If you aren’t getting an answer on your USDA Loan or thought USDA was out of money; you can get a USDA Loan. Give me a call let’s get started on your USDA Home Loan today
USDA Funding Update
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What’s up with Funding for USDA Loans
While USDA Guaranteed Rural Housing hasn’t received any additional funding for the remainder of 2010 yet, you can still close with a USDA Loan. USDA has begun issuing Modified Conditional Commitments. So cue up the music, AC/DC “Back in Black” or Aerosmith “Back in the Saddle“.
It’s time to get those USDA Home Loans closed. If you thought you missed out on buying a new home with USDA Home loan, think again, it’s time to start shopping for your new home. We are still accepting and Closing USDA Home loans.
These Modified Conditional Commitments come with two caveats:
1. Availability of Funds and the authority to obligate the funds
2. The Authority to charge a sufficient guarantee fee, if any is needed
What does a Modified Commitment Mean to Me the Customer
From a customers standpoint the entire transaction will be the same as before. The conditional commitment issued by USDA are the conditions for them to insure/guarantee the loan, not to approve your loan. So, you can close your loan as normal. However, one Big problem is that when USDA first announced they were running out of funds is that a lot of the investors stopped making USDA loans, and a lot of those left stopped when funds did run out. So far those that have stopped USDA loans have stated they do not plan on re-entering the USDA market until either:
- The New Fiscal Year and more funds are appropriated, or;
- The Passage of H.R. 4899, and USDA changing their commitments back to normal
The good news is that we are Still Doing USDA Home Loans. I have to admit there are not a lot of people doing USDA loans with the modified conditional commitments, but we are one of them.
So Why are Some Lenders So Hesitant
So, why are some lenders so reluctant to lend based on these modified conditional commitments? The Guarantee from USDA is one of the best available to a lender. They basically cover 90% of the loan amount. Meaning if you default the most they could lose is 10%, obviously the numbers are simplified. With the modified Conditional Commitments the lenders have to meet the new conditions more funds, and ability to charge higher guarantee fee before USDA will offer them full protection. Also, USDA will not issue the guarantee if you default on the loan prior to those two additional conditions being satisfied. So, lenders that close USDA Home Loans under these modified commitments are taking on extra risk, and as we all know all lenders have been very risk averse for the past few years.
Give me a call so we can get started on your USDA Home Loan Today.
Income Limits Updated for USDA
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USDA has announced the income limits for Section 502 Guaranteed Rural Housing Program have changed, effective June 2, 2010. The new income limits can be found at the USDA Rural Development Eligibility Home page by following either of the links provided below.
http://eligibility.sc.egov.usda.gov
(click on “Guaranteed Housing” under the “Income limits” tab on the left side of the page)
or
http://www.rurdev.usda.gov/rhs/sfh/sfh%20guaranteed%20loan%20income%20limits.htm
(Direct link to the 2010 Income Limits)
The number of people used for income eligibility is the number of people living in the home, including foster adults and foster children, not the number of applicants on the file.
The basic income limit for non-high cost counties are:
| 1-4 Person |
5-8 Person |
$74,050 |
$97,750 |
So, regardless of whether you are purchasing a home in a high-cost area or a non-high cost area the benefit is that if you only have 1 – 2 people in your household you get the benefit of a 4 person household, and if you have 5 people in your household you get the benefit of an 8 person household.
Don’t assume just because you income is over the income limit that you don’t qualify. USDA allows for deductions to income, these are only for income limit qualifying not debt ratio qualifications; so, you still get the benefit of your full income. Each household member under 18 Years old, Disabled, or Full Time Student receives a $480 deduction to your annual income. There is also an allowance for documented child care expenses.
Property Taxes: Get Your Deduction
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Property Taxes are a large portion of your total mortgage payment
You must ensure that you have all the eligible deductions filed, and have done so in a timely manner.
Property Tax Deductions Changes Beginning 2009 Payable 2010.
Property tax for 2009 payable 2010 brings the best of both worlds. Beginning in 2009, if a deduction is in place on March, that deduction will be applied to the property taxes first due and payable in the following year regardless of changes in ownership or eligibility. In addition, if an individual (Buyer) completed and dated a deduction application on or before December 31, 2009, and it was filed with the county auditor on or before January 5, 2010, that deduction will be applied to the 2009 payable 2010 property taxes. If the Seller has the deduction as of March 1, he keeps it for that year. If the Seller does not have deductions in place, the Buyer can put them in place by December 31. This rules applies to the Seller’s deductions for VA, Over 65 deductions, homestead and supplemental homestead, and mortgage deductions, even if the Seller is the owner of another property, deceased or moved to a nursing home or assisted care without the intent to return. It does not apply to exempt status such as “not-for-profit” and “government” ownership. If those entities are not in title as of December 31 of a given year, the exempt status will not apply.
Mortgage Deduction
The mortgage deduction has different criteria for qualification than that of the homestead deduction. In addition to being the Owner and filing before December 31, you must also have a mortgage balance of not less than $3,000.00 as of March 01 of the filing year. Therefore, if you are closing after March 01, you can still file for the deduction but it won’t apply to the taxes until the following year; however, you may benefit from the prior mortgage deduction held by the Seller (or in the event of a refinance, your prior mortgage). Buyers/Borrowers will still be required to file for the deduction with the county auditor or county recorder and cannot file at the closing table.
Eligibility for Trusts
A Trust is entitled to the homestead standard deduction for property owned by the Trust and occupied by an individual that has a beneficial interest in the Trust.
Marrying Couples Multiple Benefit
An individual or married couple cannot receive more than one homestead deduction on multiple properties even if titled in individual names. However, this limitation does not apply in the first year for which a homestead deduction is claimed if the sole reason that deduction is claimed on other property is that the individual or married couple maintained a principal residence at the other property on the assessment date (March 01) and the individual or married couple is moving the individual or married couple’s principal residence to the newly purchase property.
Example:
John Smith owns his home on March 01 and Jane Dow owns her home on March 01. Only July 01 they become Mr. and Mrs. John Smith and buy another home and reside in that property before December 31 and file for the homestead deduction. They are entitled to three homesteads for only that year. The following year they will only be allowed the deduction on the new home regardless of whether the prior properties are still in their individual names.
Verification of Homestead for Existing Homeowners
With the 2010, 2011, and 2012 property tax bills, a homestead verification form will be sent to all taxpayers currently claiming the homestead on a property. The taxpayer will be required to complete this rose-colored form to verify that the property is, in face, their homestead and provide the last five digits of their social security number and driver’s license number (as is required of all new filers) so that the homestead database can be populated. As long as the taxpayer completes this form in one of those three years, there is no requirement to re-file for the deduction as long as no other changes occur on the property. If there is a change, an individual who fails to file a statement with the county auditor regarding the change is liable for any additional taxes that would have been due on the property if the individual had filed the statement PLUS a civil penalty equal to 10% of the additional taxes due. The civil penalty is in addition to any interest and penalties for delinquent payment that might be otherwise due.
