Jennifer Fidler

Looking back on 2009, a majority of the house sales we were involved in, the buyers used FHA financing. With all the changes in our industry, look for even more in 2010. Below is information regarding these important changes from a local leder, Bryan Milligan from Pacific Residential Mortgage. Buyers, please read. This affects you. Take note especially to the last paragraph, this is a huge change. Again, I cannot stress how good of a time it is to buy NOW!

A couple items of interest with FHA loans have changed or being changed in the future. (some in place now)

FHA has increased its upfront mortgage insurance premium. This premium is normally rolled into the loan and financed as part of the total loan amount. It is being raised from 1.75% to 2.25% (This is also the 2^nd raise in the UFMIP in the past 4yrs.)

FHA has increased the Min down needed for borrowers with a credit score under 580 fico. This amount will be 10% down. This one here is a catch-22. As of now, there are not any lenders funding FHA loans with a credit score under 620 anyways, so..... This change doesn't affect us anyways. (Even though FHA says 580 min..Lenders with their Layer of risk and overlays, have required 620 min scores anyways. Some now require 640 and some will not fund with a FICO less than 660.)

There are talks of increasing the monthly insurance premium (currently @ .50% of the loan amount monthly) Nothing is set in stone as of yet. I will bring you current when that change is official.

FHA flipping rule: Currently FHA will not allow the sell of a home, unless the seller has been on title for 91 days prior to the accepted EMA. This change has already been approved. (it seems HUD is sitting on to many homes, and they need to find a way to get rid of them faster....no kidding)

Here is the biggest change, that affects all of us. FHA will be lowering the sellers ability to participate with closing costs. Currently the seller can contribute 6% of the purchase price, towards the borrowers closing costs and pre-paids. This number will change to 3%. This change is expected by early summer of this year. (May/June)

Ok, I cannot stress this enough. If you are thinking of buying a home this year, be ware that if you want to take advantage of the $8000 first time buyer tax credit or the $6500 seller's tax credit, you MUST have a deal in escrow by April 30th and it must close by July 1st! That gives you 109 days from today. Now normally that may seem like a lot of time, but its really not. If you are not pre-approved that takes some time now a days and with the amount of inventory on that market, there are more homes to look at and that takes more time as well. Just keep in mind that if you do want to take advantage of this, be ware of your time frames. I've also included the link to the IRS website if you have more questions or need clarification, but also feel free to contact us if you need more information!

http://www.irs.gov/newsroom/article/0,,id=206291,00.html

The MLS put out the most recent statistics for December sales and here they are.

Albany:

Average Sales Price:180, 037

Average Days on Market: 136

Units Sold to Date : 472

Corvallis:

Average Sales Price:281,707

Average Days on Market: 133

Units Sold to Date : 464

North Albany:

Average Sales Price:267,337

Average Days on Market: 131

Units Sold to Date : 106

This is a good FYI from the National Assoication of Realtors on the home buyer tax credits that are now law. I liked the chart and visual representation, as well as the FAQ's just thought I would share the link:

http://www.realtoractioncenter.com/realtor-party/documents/2009-NAR-Issue-Brief-Homebuyer-Tax-Credit-Changes-1104-1107.pdf

Senators Agree To Extend Homebuyer Tax Credit
Proposed Plan Would Give Repeat Buyers Reduced Tax Credit
STEPHEN OHLEMACHER, Associated Press Writer
POSTED: 2:32 pm PDT October 28, 2009
UPDATED: 4:11 pm PDT October 28, 2009

WASHINGTON -- Senators agreed Wednesday to extend a popular tax credit for first-time homebuyers and to offer a reduced credit to some repeat buyers.
The tax credit provides up to $8,000 to first-time homebuyers but is set to expire at the end of November. The Commerce Department said Wednesday that new homes sales fell 3.6 percent in September, and some industry representatives blamed uncertainty about the tax credit.
Senators agreed to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid, D-Nev.
The tax credits would be available to homebuyers who sign sales agreements by the end of April. They would have until the end of June to close on their new homes, according to a summary of the legislation being circulated among lawmakers.
Senators were still negotiating the expansion of a separate tax credit that lets money-losing businesses get refunds for taxes paid in previous years, providing them with an immediate source of cash.
Senators in both political parties were hoping to add both tax provisions to a bill that would give people running out of unemployment insurance benefits up to 20 more weeks of federal aid. The Senate could vote on the overall bill as early as Thursday, but lawmakers were still haggling over several unrelated amendments Wednesday evening.
Popular bills like the one to extend unemployment benefits often attract amendments that would have a difficult time passing on their own.
Republicans were demanding that they be given a chance to offer amendments to restrict federal aid to the beleaguered community activist group ACORN and on requiring that people receiving unemployment insurance be processed through E-Verify, an Internet-based system that employers use to check on the immigration status of new hires.
Majority Democrats have refused to add the amendments.
If the Senate passes the bill, it would go to the House, which passed a similar bill extending unemployment benefits last month. House leaders have also said they support extending the tax credit for homebuyers.
Sen. Chris Dodd, D-Conn., has been negotiating for several weeks with Sen. Johnny Isakson, R-Ga., to craft an extended tax credit for homebuyers that would pass the Senate.
Lawmakers didn't release a cost estimate for extending the tax credit, though similar proposals were projected to cost about $10 billion.
Industry representatives said uncertainty about the tax credit is hurting new home sales. September's decline was the first since March.
It takes 45 days to 60 days to close on a house, making it unlikely a sale made today would be consummated by the end of November, said Lucien Salvant, spokesman for the National Association of Realtors.
"Buyers right now have an incentive to hold off, not knowing whether the credit will be extended," Salvant said.
About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.
The tax credit for money-losing businesses is a favorite among Republican lawmakers. Businesses could get tax refunds by using losses from 2008 and 2009 to offset taxable profits made in the previous five years. Under current law, they can only offset profits from the previous two years.
The provision would help a variety of industries, including retailers, manufacturers and home builders, though it's expensive.
"It's clearly a way to put cash in the hands of some major economic players," said Clint Stretch, a tax policy expert at Deloitte Tax.
A similar proposal that was ultimately dropped from the economic stimulus package enacted in February would have cost nearly $20 billion over 10 years. Lawmakers are working to reduce the price tag.
"Because everybody is so cash strapped, this is a good way to get refund when businesses need it for operating expenses," said Rachelle Bernstein, vice president and tax counsel for the National Retail Federation.