James Wirth

USDA Home Loans -- it's getting closer but we can all pitch in!

It seems that additional funding for USDA has passed the House and is now in the Senate's hands, and from what I have heard, it's been referred to committee. Typically that's NOT a good thing in a case like this...

Please reach out to your local Senators and let them know how important USDA funding is to your community.

Here is a link to the Senate bill: http://www.scribd.com/doc/30885554/U-S-Senate-S-3266-via-MyGov365-com

If you want to see this passed with or without changes, here is a link that will help you determine who your senators are for your particular state: ttp://www.senate.gov/general/contact_information/senators_cfm.cfm

Thanks for reading! -- James Wirth

Just when we were waiting any day for the announcement that the USDA Rural program was out of funds... the Legistlature goes to work to get them back in there!

We still need an official vote but the Financial Services Committee approved it unanimously.

If you are not familiar with the USDA Rural loan, it is a zero-down loan program with no mortgage insurance primary for first time, low-to-moderate-income home buyers buying homes in rural/outlying areas. It's a great program for those who qualify and the income caps have been raised recently to make it available to more home buyers (which is one of the reasons why they were running out of money).

Here's a link to theligibility information on the Washington USDA Web site: http://www.rurdev.usda.gov/wa/Housing.htm. The links on the left take you to the property eligibility tool and the income eligibility guidelines.

Sometimes the site is a little challenging to navigate, feel free to give me a call for assistance.

Now we can always hope they're also working on extending the tax credit, but I for one am not going to hold my breath and I'm advising my buyers follow suit...

7 days left on the tax credit and more to come on USDA Rural!

Thanks for reading -- James Wirth

We have 8 days left for home buyers to reach mutual acceptance on a contract to purchase a home.

This is the final stretch folks! There was A LOT of buzz at the end of last year when they extended the previous tax credit; so far it seems very clear this one will expire at the end of this month.

We then have until June 30th 2010 to close on the home.

The National Associaton of Home Builders has maintained a site with additional details: http://www.federalhousingtaxcredit.com

Some of the general terms are also available on this previous post of mine.

FHA loans really won't cost that much more!

Lots of buzz this week about the Federal Housing Administration raising the costs of FHA loans, how they're raising the "up front" mortgage insurance premium; the annual premium, the down payment requirement for the scores and scores AND SCORES of people who are financing through FHA with <580 credit score, and reducing the max seller concession from 6% to 3%, and apparently these changes are apparently going to catapult us back in to recession.

Wow. Will you allow me to clarify a few things?

On a $250,000 purchase price, here's how these changes translate:

1) The "up front" mortgage insurance premium is financed in to the loan 99.99999% of the time (in all fairness, the actual percentage probably has less decimal places). The fee is going up 1/2%, so if they choose to finance in this fee as most do, it will raise their payment by about $6.50/month. Probably not a reason to decide NOT to buy a home;

2) Let's say the annual (paid monthly) premium goes up 10% for SOME borrowers (haven't release which borrowers this will affect or how much, so I'm guessing), that is equivalent to about $20/month. Again, probably not a reason to decide not to buy a home.

In all fairness, these two changes mean that in terms of monthly payment, the buyers are paying about $5,000 more for the home than they were before. In other words, if the home sold for $245K instead of $250K, it would effectively be a wash. I know a lot of sellers who would be willing to take a 2% price reduction if it meant selling their home...

3) For borrowers with less than 580 credit scores, a 10% down payment will be required. This impact is actually minimal, because most lenders have their own requirement for a minimum credit score of 620! One of the reasons they have this is because FHA doesn't have a minimum score, so the lender sets their own. My employer is one of the few lenders that follow the FHA guidelines and don't have a minimum score.

If anything, a minimum credit score of 620 for the lowest down payment option of 3.5% may help more people qualify for an FHA loan!

4) changing the max financing concession from 6% to 3%. Also very low negative impact, because most transactions don't carry more than 3% in closing costs.

Bottom line is this -- don't panic! These are needed changes in order to keep the FHA program self-sustaining, which it has maintained since 1934. So let them shore up a bit, we'll be fine!

Thanks for reading -- James Wirth

Good news! The home buyer tax credit has been extended! The new expiration date is June 30th, 2010.

Notice anything missing from that opening line? I have omitted the words "first" and "time" because 'move-up' buyers are now potentially eligible as well (conditions apply see IRS for details etc. etc. etc.). I suppose you could be a move-down buyer as well though... AND it's not well-publicized but almost any home that is your primary residence qualifies. Always wanted to live in a house-boat? Here's your credit. Thought about touring the country in an RV? Yep! You could qualify.

Just remember -- if you don't want to have to pay the credit back, you must live in the home as your primary residence for 3 years. That might be pushing it for the RV trip... Here's a run-down on important considerations;

The new guidelines are effective for transactions that close after today. If your home is closing on November 7th or after (up to June 30th of next year), these new guidelines apply to you.

New Guidelines

Income caps have been increased substantially. The new cap to receive the full credit is now $125K for a single filer or $225K for a joint filer. There is a $20K 'phase-out' on the income, if you make more than the $125K/$225k you would be eligible for a partial credit until your income is over $145K/$245K.

If you're a "long-time homeowner" who has lived in your home for at least 5 out of the last 8 years, you may also qualify for a tax credit if you buy a replacement primary residence before the June 30th, 2010 deadline. The amount is slightly different: $6,500 if you're single or you are filing jointly. If you're married but are filing separately, the amount is cut in half to $3,250.

No more last-minute rush! The new guidelines require home buyers to be under contract on or before April 30th, 2010 to qualify for the credit. But then you have 60 days to close.

If you'd like to read the news release from the IRS's Web site, here it is.