Mike Ortiz- Miami's FHA & VA Expert

With Congress reaching an agreement on 789 Billion Dollar Stimulus Package the clock is now ticking for Miami First Time Home Buyers looking to take advantage of the goverment offered tax credit. Although the goverment did not pass the $15,000 tax credit like we hoped for, the new tax credit has some better features then the one that was in place. The following are the two changes made to the previous $7,500 tax credit: 1. The new tax credit will not have to be paid pack if the purchaser or home buyer stays in the home for at least 36 months. The previous tax credit required that you payed it back with no interest over the course of 15 years. 2. The new tax credit has been extended from June 1, 2009 to August 31, 2009. This will allow home buyers with challanged credit to start working on their credit reports in order to qualify by June or July. 3. The tax credit can now be up to $8,000 or 10% of the Purchase Price whichever is less.

How the $8,000Tax Credit Will Help You Qualify

In Miami, FHA Loans offer the lowest down payment option for home buyers that are not Veterans of the United States Armed Forces or are purchasing a Fannie MAE REO with the Home Path Mortgage. The minimum down payment required for a Miami FHA Mortgage is 3.5%. FHA allows this down payment to come from a number of flexible sources, below is a list of the types of allowed down payments:

• Gift Funds- FHA guidelines allow for a down payment to be a gift. The gift received for a down payment can only be from a relative, the borrowers employer, charitable organization, a Government agency or public entity that has a program to provide home ownership to low and moderate income families or First Time Home Buyers
• Goverment Second Mortgage- A second mortgage issued by the Miami-Dade Housing Finance Authority Bond Revenue Program. This program is only available to select lenders. The HFA bond revenue program provides up to 4% in the form of a second mortgage amortized over 30 years at a rate of 6.55%. The HFA bond revenue program is subject to income limits.
• Borrowers own funds- As in any mortgage the borrower can use their own funds from a checking, savings, or 401k withdrawal.
• Family Provided Second Mortgage- FHA allows for a family member to give you a second mortgage for the down payment needed. The loan must be secured byt the property and the terms of the loan must be disclosed.

With all of the down payment options offered for a Miami FHA Mortgage and the home buyer tax credit you can now feel comfortable approaching your parents, close family, or a friend to lend you the 3.5% needed for the down payment because you will be able to pay them back at tax time next year. Their is one thing you need to take into consideration when you are asking for this favor, you need to know/ confirm that you will receive a tax refund and that you will not have to pay income taxes at the end of the year. Here is how it works if you receive an average tax refund of $2,500 then after your purchase your property you will receive a tax refund of $10,500. Now, if you pay normally pay the IRS $5,000 in income taxes at the end of the year once you purchase your home you will only receive a $3,000 refund ( $8,000 tax credit - $5,000 payable income taxes = $3,000 tax refund). Since I am not an accountant I would advice that you consult one before assuming what your situation will be.

Michael Ortiz, CMPS Branch Manager Primary Residential Mortgage 111 NE 1 Street 3rd Floor Miami, Fl 33132 O. (305)731-2462 E-mail: info@mike-ortiz.com

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Miami's FHA Expert

2008 was a year that brought many changes, Miami Real Estate declined by as much as 60% in some areas, lenders went out of business, a plethora of people are loosing their homes, and now we are in a Global Recession.

In 2008 the Congress and the Bush Administration passed the Housing and Economic Recovery Act of 2008. This Act was supposed to stmulate the economy by allowing those who have larger loan amounts that do not fit into the Conventional or FHA loan limits, qualify for a Conventional or FHA loan. This ACT also included several changes to FHA financing, such as an increase in down payment from 3% to 3.5%, prohibited the down payment assistance programs by those that have financial interest in the sale (i.e. sellers), created a $7,500 dollar tax credit for first time home buyers (repayble over 15 years), and created a refnance program that would allow lenders to write down qualified mortgages to 85% and they would create a new FHA fixed rate mortgage at 90% of the curren value. This program is know as Hope for Homeowners or H4H and since it's inception on October 1, 2008 not one closing has been documented. It is clear to say that th Hope for Homowner program was hopeless.

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