Stimulus for Mortgages. Housing Rescue Plan: (effective Wednesday, March 4th)
Housing Rescue Plan: (effective Wednesday, March 4th)
Refinance affects approximately 8 million homeowners with loans owned by Fannie Mae or Freddie Mac and those who have little or no equity to refinance into a new fixed rate loan at a reduced interest rate. To be eligible, homeowners’ must be current on their payments and cannot have any late payments on their mortgage.
Here are links to see if your loan is owned by Freddie or Fannie:
http://www.fanniemae.com/homepath/homeaffordable.jhtml
http://www.freddiemac.com/corporate/buyown/english/avoiding_foreclosure/avoiding_foreclosure_form.html
Mortgage payments may be reduced to 31 percent of gross monthly income under the Obama plan. Applicants will have to produce pay stubs and tax returns to document income and need to sign an affidavit confirming financial hardship.
Loans must have been made before Jan. 1, 2009 with a balance of less than $729,750, and the property must be a primary residence to qualify. The program doesn’t apply to second homes or vacation homes. Loans can be modified only once under the program.
Perfect candidates for this program? People who can’t currently refinance to a lower rate and those who may be on the verge of foreclosure because of economic distress.
Homeowners generally aren’t able to get a new mortgage greater than 80 percent of their home’s value. With this voluntary program, that requirement will be waived. Loans up to 105 percent of the value of the home will be eligible.
Send these clients to me. I will help them identify if they can make it to the 105% mark for value. Lenders are gearing up for this and although pricing and terms are currently not available, they will be. I will certainly deliver more information as it’s available.
Modified Mortgages
Affects an estimated 3 million to 4 million homeowners’ by modifying their mortgages to possibly avoid foreclosure.
The costs of obtaining this loan are distributed amongst the borrower, the lender and the government.
Lenders will be responsible for bringing down the monthly payment to no more than 38 percent of a borrower’s gross monthly income. Further reductions in interest payments, down to 31 percent, will be matched dollar-for-dollar by the government and paid directly to the loan servicer.
The servicing company will be able to reduce the interest rate to as little as 2 percent to achieve the debt-to-income ratio and can also extend the loan term to as long as 40 years.
Homeowners would be credited an extra $1,000 in reduced principal each year for five years as an incentive to stay current on payments. Lenders would be given $1,000 for each loan successfully modified and up to $1,000 each year for three years if the new loans stay current, according to the Treasury Department.
Borrowers who haven’t missed payments are now eligible for assistance.
Direct these clients to their lender to ‘modify’ the loan. After working with the lender, should they not qualify for credit issues, then direct them a company that can help them improve credit. Make sure it is a credible company. Should you like a referral source I can provide that.
First-time buyer tax credit of $8,000
Congress recently changed the rules and is now offering an $8,000 tax credit.
Buyers won’t have to repay it unless they sell their homes within three years.
This is different than the previously passed $7500 “deduction”.
California Home Buyer Tax Credit
$10,000 tax credit for any homeowner buying a newly constructed home between March 1, 2009 and March 1, 2010 regardless of whether they’re a first-time buyer or not. The credit is paid in 3 annual installments of $3,333.
Home buyers get the $3,333 off their taxes for the first three years after purchasing the new home.
This comes on top of the federal first-time home buyer tax credit of $8,000 announced by the Obama administration as part of the federal stimulus package.
There are no restrictions on income qualifications.
Pending escrows or recent home sales have not been determined to be eligible at this point, although it will be determined shortly.
The total credit is $100 million which works out to 10,000 home sales that would qualify under the California Home Buyer Tax Credit program.
Mortgage Insurance Premiums
M.I. premiums can be deducted in most cases by home buyers for mortgages issued after 2006 and before 2010 (although Congress may extend this provision). This one has income limits, so ask your tax professional for help.
FNMA owned properties
Buyer’s can purchase homes currently owned by Fannie Mae under the “HOMEPATH” program (www.homepath.com). We are one of 10 select lenders to provide financing for these properties. This is HUGE to
you. Without MI, it may push your buyers to qualify for more buying power. It limits you to the Fannie Mae owned properties, however that may be a non-issue if that is what is needed to qualify them for the price point they like.
This program offers the following benefits:
Owner occupied loans require a 5% down payment
Non-owner occupied loans require a 10% down payment
There is NO appraisal or mortgage insurance required for this program
If purchasing a FNMA owned home, buyer can own up to 10 other properties (current amount for non-FNMA owned homes is 4)
Buyers still need to qualify
Loan Limits
Conforming loan limits in many California counties have been raised from $625,000 to $729,750 for loans originated after March 1st and close by December 31, 2009. Loan limits do vary by state and counties.
Everyone is very anxious to see the pricing for the new 729k loan limit. As soon as that is available, I will send it out. Nothing thus far.
New Standard Deduction
Prior to 2008, only taxpayers who itemized their deductions could deduct state and local property taxes. New legislation changes this for 2008 and 2009. Qualifying tax payers who don’t itemize but pay property tax, get up to a $500 extra deduction; married filing jointly get up to $1,000. Please ask your tax professional for help.
Tom Balk – tom@afirealestate.com