It's a Great Time to Buy... and this is why...

Rates on an FHA 30 year fixed are at an all time low. We know this is an odd time of year to purchase but there are some great deals and very motivated Sellers ready for Buyers like you.

Couple of things to remember on FHA loans:

• 1.) Minimum credit score is ONLY at 600!!!!
• 2.) Now you need 3.5% down as of Jan. 1, 2009
• 3.) Seller can pay up to 6% of the purchase price towards closing costs.
• 4.) The 3.5% down payment can be a gift, an unsecured loan that a family member took out or 401K funds (no penalty for a home).
• 5.) If you are first time buyer look into the $7,500 tax credit if you buy before July 1, 2009...BUT here is the thing...if you buy in 2009 BEFORE you file taxes...you can claim the $7,500 credit on their 2008 taxes. This means you could pay back mom, brother, sister.....for that 3.5% down payment you borrowed to get into the house immediately!!!

With great rates, awesome supply and a possible $7,500 credit it has never been a better time to buy. Check out our first time buyer blog post for more information on this program.

Just a little FYI on FHA mortgage limits...

Effective January 1, 2009 are new FHA mortgage limits for Wake County. The new limit is now $271, 050 for Wake County.

Update: The $819 billion stimulus packaged passed by the House on Jan. 28 would eliminate a requirement that the $7,500 tax credit for first-time home buyers be repaid over a period of 15 years. Click here for the full article.

For those you wondering about the $7500.00 tax credit and how it applies to your situation as a first time home buyer, here are some details that might help you decide if it is worth pursuing.

This is a "tax credit", not a deduction. A tax credit is a dollar for dollar reduction on the final amount owed (tax liability) on your income tax returns. The maximum credit amount is $7500.00. If by chance your tax liability is less than the $7500.00, then you could also receive a "refundable" credit from the IRS when all is said and done.

Naturally, there are strings attached to this program. The biggest being that the tax incentive or credit must be paid back. Any Buyer who claims the credit must pay it back over 15 years. Consider it an interest free loan where you pay back the total amount borrowed in increments of 6.67% each year over 15 years. For example, if you were credited the full $7500.00 then repayment would be about $502.50 a year. There is no interest charge on the outstanding amount while you are in the process of repaying the credit. If you take the credit in 2008, the first payment would be made when file your 2010 tax returns.

If you happen to sell your home, before the 15 years are over then the remaining amount would be taken out of your proceeds (profit) from the sale and given to the IRS. If there is no gain or even a loss taken on the sale of the home, then you don't have to repay the credit. Shortfalls between the profit of your home sale and the amount owed are forgiven as well. This is good news!

Now, what are the qualifications? In short:

• First-time home buyers who have had no home ownership interest in a principle residence in the previous three years.
• Home must be purchased between April 9, 2008 and July 1, 2009
• Income restrictions: Single taxpayer with adjusted gross income up to $75,000 and married taxpayers with joint adjusted gross income up to $150,000 are eligible for the full $7,500. A reduced credit is available for incomes higher than the above range.

For more information visit the National Association of Realtors summary page.

As with any tax law change, we recommend you consult with your tax advisor regarding your specific situation and questions regarding this provision. These highlights of housing bill H.R. 3221 was based on information available on July 30, 2008.

Things to Remember when Refinancing

Appreciation & Appraisals:

If you have been in your home less than 1 year the lender will use the sales price to determine your loan to value NOT the appraised value. So if you are close to that one year mark ask yourself and your lender "Does it makes sense to wait to refinance so you can use any appreciation to help your rate & terms?"

Refinancing Costs:

A refinance is NOT free!!! Just because you are not paying any money directly out of pocket on the day of closing it does not mean you got a good deal! Most lenders roll closing costs into the loan, so remember your loan balance is increasing and there is no such thing as a free refinance. Make sure you shop around for the best rate and affordable closing costs.

Loan Details:

Is your lender showing you the total interest cost and pay off time of your new loan as compared to your current loan? If not...find a lender who offers this to you UPFRONT. You should always look at the total cost of what you are doing to determine if it is a smart financial move.

Compliments of Debbie Sheets, Mortgage Consultant
Debbie.Sheets@SunTrust.com
SunTrust Mortgage
(o) 252-756-3912
(m) 919-616-2868
(f) 866-458-4942

Friends,

For those of you considering a home purchase over the new few months, you might be interested in this proposed stimulus package. It differs greatly from the first time buyer tax credit.

The National Association of Homebuilders has representatives in Washington DC pressing for passage of a proposed bill, "Fix Housing First". Here are two summary points to their proposal:

(1) The federal government would offer a tax credit of between $10,000 and $22,000 (depending on locale) to anyone closing on the purchase of a home, new or resale, by December 31, 2009. The credit would not have to be repaid, which is a major upgrade from a tax credit passed last summer; and

(2) The government would provide a federally-subsidized 30 year fixed rate mortgage of 2.99 for all home purchases, new and resale, closing by June 30, 2009. After that, the rate would be 3.99 for purchases closing by December 31, 2009.

Visit Fix Housing First for more information. If you want to support this effort, then take action and tell Congress by emailing your Senators today.