Dane H. Ginsberg (Your Trusted Mortgage Advisor)

Housing Stats: New Home Sales Financed by the FHA

The Census Bureau and the Department of Housing and Urban Development Friday released New Residential Home Sales survey data for March 2010.

Below is a graph which illustrates how borrowers are financing their new home purchases. "FHA IS THE WAY" has been the motto of many a mortgage banker and broker since the collapse of the secondary mortgage market in 2007. Notice how FHA marketshare has grown since then...one might argue many of the first time home buyers who took advantage of the tax credit were able to do so primarily because of the FHA's programs.

FHA was created in 1934 to serve as an innovator in the mortgage market, to meet the needs of citizens otherwise underserved by the private sector, to stabilize local and regional housing markets, and to support the national economy. This mission is still very relevant, perhaps now more so than ever, and most of us would agree that FHA can and should continue to play its important role.

Dane H. Ginsberg

Your Trusted Mortgage Advisor

443-451-3438

Don't Leave Tax Credits On The Table (And How To Get Them Back If You Already Filed)

Taxes are due April 15 and if you're among the millions of Americans who wait until the last week to file, here's a video interview that could help you reduce your federal tax liability (click the picture above).

Originally broadcast by NBC's The Today Show, the 4-minute piece reviews various tax credits and deductions, plus some recent tax law changes. A few of the topics covered include:

• Tax filers receiving larger "personal exemptions" in 2009 versus 2008
• Unemployment income recipients being required pay taxes beyond the first $2,400 received
• The "first time" home buyer credit being extended to non-first time home buyers for up to $6,500

The interview also talks about how taking a parent, child or other family member into your home may change your tax filing status and reduce your tax liability.

Even if you've filed your taxes already, watch the video above. You may find that you missed a potential deduction. If that's the case, consider filing an amended return with the IRS to recapture the credits you left on the table. Most times, the benefits of re-filing will outweigh the costs of doing it.

Be sure to talk with your tax professional for personal tax advice.

Dane H. Ginsberg

Your Trusted Mortgage Advisor

443-451-3438

As The Supply Of New Homes Grows, So Does The Opportunity For A "Good Deal"

The housing recovery showed particular weakness in the New Homes Sales category last month -- good news for homebuyers around the country.

A "new home" is a home for which there's no previous owner.

New Home Sales fell 11 percent from the month prior and posted the fewest units sold in a month since 1963 -- the year the government first started tracking New Home Sales data.

Right now, there are roughly 234,000 new homes for sale nationwide and, at the current sales pace, it would take 9.1 months to sell them all. This is nearly 2 months longer than at October 2009's pace.

The reasons for the spike in supply are varied:

• The original home buyer tax credit expired in November
• Weather conditions were awful in most of the country in January
• Weak employment and consumer confidence continue to hinder big ticket sales

Now, these might be less-than-optimal developments for the economy as a whole, but for buyers of new homes, it's a welcome turn of events. Home prices are based on supply and demand, after all.

As a result, this season's home buyers may be treated to "free" upgrades from home builders, plus seller concessions and lower sales prices overall.

It's all a matter of timing, of course. New Home Sales reports on a 1-month lag so it's not necessarily reflective of the current, post-Super Bowl home buying season. And from market to market, sales activity varies.

That said, mortgage rates remain low, home prices are steady, and the federal tax credit gives two more months to go under contract. It's a favorable time to buy a new home.

Please give me your thoughts/feedback down below.

Dane H. Ginsberg

Your Trusted Mortgage Advisor

443-451-3438

They know they'll stay alive.....

FHA announced January 20, 2010 some additional policies:

WASHINGTON - Federal Housing Administration (FHA) Commissioner David Stevens today announced a set of policy changes to strengthen the FHA's capital reserves, while enabling the agency to continue to fulfill its mission to provide access to homeownership for underserved communities. The changes announced today are the latest in a series of changes Stevens has enacted in order to better position the FHA to manage its risk while continuing to support the nation's housing market recovery.

I applaud them for doing what they have to do to survive. A VERY large portion of all transactions in 2009 were FHA loans. I expect that to be duplicated if not surpassed in 2010. So, do what you got to do Mr. Stevens to make it work.

Here are the highlights to the policy changes:

• Increase the Mortgage Insurance Premium from 1.75% to 2.25%
• Update the combination of credit scores and down payments for new borrowers
• Reduce seller credits to 3% from 6%
• Implement a series of measures to increase lender enforcement

I have placed a rating score for the severity of these new policies by the use of a common street light. Red=Not so great for the consumer; Yellow=neutral; Green=good for all humanity.

1. Increasing the MIP to 2.25% will not hurt the bottom line to a borrower, this will not increase out of pocket expense at closing, however FHA will most likely adjust monthly premiums come late Spring/Summer - I will keep you updated.
2. Scores below 580 will be required to put 10% down - only 2 lenders that I know of are currently accepting scores under 580. I call them Cheese Grater loans. You'll feel like you've been through a cheese grater by the time you get to docs. No big surprise here. More money for less than stellar credit borrowers, okay, it levels the playing field I guess.
3. Reducing seller concessions from 6% to 3% - okay, the last time I saw 6% credit given to a buyer was due to the buyer overbidding for the home to use the additional credit to pay for closing costs, thus inflating the value of the home artificially. Normally, a 3% credit is the maximum in Riverside County. This reduction is in line with other loan programs outside of FHA, so again, no surprise.
4. The only people cringing at stricter enforcement are those that produce bad loans.

Aside from the possibility of monthly mortgage premiums going up later this year, it's going to be fine. So take a deep breath and know that FHA's got your back. We want FHA to stick around. Don't you?

Please give me your thoughts/feedback down below.

Dane H. Ginsberg

Your Trusted Mortgage Advisor

443-451-3438

100 Days left to claim the Homebuyer tax credit!

November 6, 2009, Congress voted to extend and expand the First-Time Home Buyer Tax Credit program. There's 100 days left to claim it.

The expiration date of the up-to-$8,000 tax credit has been pushed forward to spring, requiring homebuyers to be under contract for a home no later than April 30, 2010, and to be closed no later than June 30, 2010.

In addition, "move-up" buyers were also added to the program's eligibility list meaning you don't have to be a first-time home buyer to be eligible for the tax credit. If you've lived in your home for 5 of the last 8 years, you meet the IRS requirements.

Move-up buyers are capped at a total tax credit of $6,500.

The tax credit's basic eligibility requirements remain the same:

• You can't purchase the home from a parent, spouse, or child
• You can't purchase the home from an entity in which they're a majority owner
• You can't acquire the home by gift or inheritance
• All parties to the purchase must meet eligibility requirements

The new law includes some notable updates, however.

First, the subject property's sales price may not exceed $800,000. Homes sold for more than $800,000 are ineligible. And, also, household income thresholds have been raised to $125,000 for single-filers and $225,500 for joint-filers.

And lastly, don't forget that the program is a true tax credit -- not a deduction. This means that a tax filer who's eligible for the full $8,000 credit and whose "normal" tax liability totals $5,000 would receive a $3,000 refund from the U.S. Treasury at tax time.

The complete list of qualifying criteria is posted on the IRS website. Review it with a tax professional to determine your eligibility. Then mark your calendar for April 30, 2010.

There's just 100 days to go.

Are you a first-time homebuyer looking to take advantage of the tax credit and low interest rates? Please call me today for a free analysis!!

Dane H. Ginsberg

Your Trusted Mortgage Advisor

443-451-3438