Dawn Tittsworth

Senate leaders have agreed on an extension of the $8,000 first-time homebuyer tax credit along with a new $6,500 tax credit for move-up buyers, but it is unclear when the chamber will vote on the measure. The credit extension would run from Dec. 31, 2009 through April 30, 2010 and give buyers with a binding contract an extra 60 days to close. The tax credit extension raises the income limits to $125,000 for single-filers and $225,000 for joint filers. This applies to first-time and repeat buyers. To qualify for the $6,500 tax credit, repeat buyers must have used a previous home as a principal residence for five of the previous eight years. The Obama administration said it supports an extension of the first-time homebuyer tax credit. "In extending the tax credit, we urge Congress to include strict measures to combat tax fraud and protect responsible homeowners," Treasury secretary Timothy Geithner said. The tax credit extension is expected to be attached to a bill extending unemployment benefits by 20 weeks. Still, it is unclear when the Senate will pass the extension bill (H.R. 3548), despite broad bi-partisan support. The current $8,000 first-time homebuyer tax credit is set to expire Nov. 30.

Senate Votes To Extend Homebuyer Tax Credit

WASHINGTON (AP) ¯

York Pennsylvania here!

Lot's on the docket today, so read on! Good news #1- After the carnage of Wednesday, as of right now, we have reclaimed half of that days loss of 207 "basis points" (34 bps yesterday and 94 as of right now today!) This is very encouraging as it may show that the move on Wednesday was indeed a "panic selloff" and we will move back to those levels. I have heard many analyst and pretty smart people commenting that the FED will have to make some announcement as to their intentions for the MBS program and that they may even announce even more money being targeted for MBS's to calm the markets. The last thing this economy needs is to shut off the recovery in housing just when it's taking hold. So for now, I would advise people to "hang out" and see which direction we go, if we get back close to where we were, lock in and be happy.

#2-- FHA has announced that they will allow buyers to immediately use the $8,000 for "costs" in buying a home. NOT DOWNPAYMENT! This just goes to show why we should not get involved in "speculation" about possible new programs. As with the initial comment that sparked all sorts of "we know what is coming" proclamations from many, details have not been announced and NO ONE has this program yet. Once the final details are released and we know how this will work, I'll pass that on.

Important fact--While we are recovering from Wednesday's drop, that is EXACTLY what we have in store WHEN, NOT IF, the government stops holding rates down. Moves like Wednesday's were not supposed to happen while the Gov is doing what they are---but it did! This tell us that the market can move at any time, regardless of "outside" pressure. The problem is that all this action is creating the very real threat of future inflation, or 'hyper-inflation", that is very bad for mortgage rates in the long term. So, as we go forward, while our rates should remain very low, be aware that the day is out there when all this stops. Then, we very likely will move into the mid 6% range and maybe even 7% range within days. So--get on the phone and let all your fence sitters know what happened Wednesday and let them know that is peanuts compared to what may happen when the Gov steps out of the MBS market. The way it looks right now, that should be sometime early next year--BUT- that does not mean the market will not force their hand earlier--WEDNESDAY IS A CLEAR..

York County Pennsylvania here!

All comsumers need to know this! !!!!

One lender is all you need, and you may or may not end up working with that lender.

A mortgage pre-approval is the same as an approval in the sense that both involve a check of your finances and your credit. Pre-approval is something less than approval, however, because the property value is preliminary and won't be definitively established until you have a purchase contract. Furthermore, a pre-approval may not specify a mortgage price, and if it does specify a price, it is not binding on the lender.

So what exactly is it? It is a statement of opinion by a lender that a prospective buyer has the income, assets and credit to carry the mortgage required to purchase a house of some assumed value. Since the borrower's mortgage-carrying capacity depends on an interest rate that is not yet known, and since the price of the house is preliminary, a pre-approval has a lot of slack.

It is adequate, however, for the purpose for which it is intended. That purpose is to convince a home-seller that a prospective buyer has the means to make the purchase and should therefore be taken seriously.

The only reason for you to obtain a pre-approval is because the owner of the house you want to purchase is looking for you to have one. More than one would serve no purpose.

Why do lenders offer them? Their hope is that the purchaser will view the pre-approval as the first step in obtaining a loan. It is a way of generating a promising lead. But you should not view it that way.

Selecting a lender for no other reason than that the lender had issued you a pre-approval, would be a mistake.

On the other hand, there is no reason to exclude that lender from your search for a loan provider. If your experience with the pre-approval was favorable, and if you are having difficulty making a decision among loan providers, you might want to give the lender providing the pre-approval an edge over the others seeking your loan.

York County Pennsylvania here!

I have had several clients wanting to explore Lease-to-Own Purchases lately. I look forward to this helping comsumers.

What Is a Lease-to-Own Purchase?

A lease-to-own house purchase (also "rent-to-own purchase" or "lease purchase") is a lease combined with an option to purchase the property within a specified period, usually 3 years or less, at an agreed-upon price. The borrower pays an option fee, 1% to 5% of the price, which is credited to the purchase price. The borrower pays rent, and an additional rent premium that is also credited to the purchase price. If the purchase option is not exercised, the buyer loses both the option fee and the rent premium.

As with any kind of financial contract, lease-purchase deals can be structured in such a way that all the benefits flow to one of the parties and none to the other. Buyers especially need to be careful. But lease-purchase plans have a solid economic rationale, which means that they can be structured so that both parties benefit.

Contract Features of a Lease-Purchase

A lease-purchase has 6 major provisions. The sale price of the house and the rent are market-determined, yet subject to negotiation just as in a straight purchase or rental transaction. Buyers often know less about the market than sellers, which places buyers at a disadvantage unless they do some homework, which is advisable.

Buyers generally prefer a long option period because it provides more time to build equity and repair credit. A long period can boomerang on them, however, if they are never able to exercise the option, since they lose the rent premium they have been paying all the while, in addition to the option fee. Sellers generally prefer a short option period, but if it is too short, the house won't be sold.

The option fee and rent premium are viewed differently by buyers and sellers. To the buyer, they are part of the equity in the house they will soon own. Fully anticipating that they will exercise the option, the only cost is the interest they would otherwise have earned. To sellers, however, these payments are the best guarantee that their houses will sell; if they don't sell, the payments are retained as income. That the benefit to the seller generally exceeds the cost to the buyer makes the lease-to-own deal a possible win-win.

A lease purchase also may give the renter/buyer the right to assign the option to buy. This will usually have considerable value to the buyer, because it means that the option can be sold in the event that it has value but the buyer is not able to exercise it. It is a cost to the seller for the same reason.

Using a Lease-Purchase to Buy

A possible alternative to a lease/purchase deal for consumers with poor credit and/or no cash is a sub-prime loan. The high-cost sub-prime market, which actively solicited clients and victimized many, was pretty much gone by 2008 but sub-prime loans continue to be available at reasonable prices from community groups or state and local finance agencies. Borrowers have to search out these sources, but if they can qualify for a loan from one, it is probably a better route than a lease/purchase.

The lease-purchase offers homeownership opportunities to consumers who can't qualify for a loan from any source, but who are prepared to bet on themselves. The bet is that before the option period expires, they will qualify for the mortgage they need to exercise the purchase option. During the option period, they have the opportunity to rebuild their credit and accumulate equity while living in the house.

Consumers who need to rebuild their credit rating during the option period should understand that paying their rent on time won't do it. Rent payment information is not used in compiling credit scores. While Fair Isaac, the company that developed credit scoring, has recently unveiled an "expansion" score based on "non-traditional credit data," it does not yet include rent payment information from individual home owners. Lease-purchase buyers who need a higher credit score must focus on their credit cards and loans.

Even though it is costly, the right not to exercise the option is of value to buyers. If there is something seriously wrong with the house, neighborhood, or neighbors, the money left behind on a lease-purchase is much smaller than the cost of an outright purchase followed by a quick sale.