Jason Sardi, Mortgage Banker

Let's first define "First-Time Homebuyer". Actually, let's define what the heck I'm addressing in the first place. It's the First-Time Homebuyer Tax Credit. I trust you've at least heard about it and if not... no biggie... I will give you some of the talking points and the direct address to the site momentarily.

The whole concept of "First-Time Homebuyer" can be a tad misleading for some of you. You are considered a first-time homebuyer (under this tax credit) if you have not owned another home at any point in time during the three years prior to the date of purchase.

So what is this Tax Credit all about?

• It acts like an interest free loan because it must be repaid over a 15-year time frame. If you die, don't worry about it as long as you filed your taxes individually. If you filed a joint return, it's up to wifey or hubby to pay this interest free loan. Death, like life & love, can cost money:)
• This only applies to primary residences in the United States of America. Sorry, the vacation house in Greenwich, Connecticut doesn't qualify. As far as that Villa in Italy, count that out as well. Feel free to drop me a bottle of Chianti in the mail, though. It's got to be your home... the very roof over your head. On a personal note, I do believe we'd be better off if when buying a home... we'd consider it more than an "investment". It's where you live folks! Investments, for most of us, happen over time. I ain't (love that word) no day trader or speculator. And I never will be.
• What's the time frame? You buy the home after April 8th, 2008 and before July 1st, 2009. Let's face it, we have low interest rates and a large inventory and considering it is a buyers market in a lot of areas... it may be a damn good time to go ahead and buy that home. Historians may look back to this period of time and wonder what the fuss was with not wanting to committ, waiting for a more opportune time. There may be NO more opportune time than now. Of note, the preceding is a sales pitch delivered by folks to increase business and consumer confidence. The same can be written about all the bad news flying around. Don't think that news organizations aren't rolling in dollars about how much "bad news" is being reported.
• How much is the credit? Quite simply, 10% of the purchase of the home, a maximum available credit of $7500.00 worth of dead presidents.
• How will the IRS know if someone sells their residence before the 15 years are up? I gotta laugh at this question, though it isn't a stupid one. In my mind, the only stupid question is one not asked. To answer this, the website says the following: "Through both self reporting and third-party information." Right, how ripe. Without imposing political beliefs upon the masses, they will know. While I believe in conspiracies, this isn't one in my book. This is intelligence, the right kind. I know folks who blatantly took advantage of the system, good for you. Just don't bitch because we are all in a bundle. YOU were just as responsible...
• It's repaid, but how? After the second year of claiming the credit, you must repay that interest free loan. From what I've read, you will be repaying as an additional tax on your returns for the next 15 years.... $500.00 a pop.

One more thing, before I present the second thing which will end up "lastly". Real Estate Investors have been stifled because of all these happenings in the Mortgage World. Personally, I think that is a mistake. They say you can only own so many properties and your credit score has to be this and your mother has to a direct decendent of Henry the freaking 8th? Some folks invest in Real Estate for a living, don't ignore them. Keep that in mind PMI Companies and Credit Scoring Agencies, because I bet ya that you won't be running this industry much longer.

Lastly, and my English Teacher hated starting a sentence like that which is one of the reasons I just did... it's a buyer's market. That doesn't mean it is right for you, yet it is most certainly something to explore. In a few years, if you didn't pounce on this, you may just be making someone else a lot of money... who owns your home.

Direct website @ http://www.irs.gov/newsroom/article/0,,id=186831,00.html

Have some fun @ http://www.youtube.com/watch?v=tfBoMV-HIP4

Sardi

January 1930 - There are two great dangers to the continuance of prosperity. The first is the false idea that business is still governed by a cycle of boom and depression, and the second is that the leaders of business will think that the country is broke because some of their friends are. And also there is the danger that many executives who have been playing the market instead of working will not know how to get back to real work.

Samuel Crowther, The World's Work

The following news is old, a bit antique in the "live feed" internet world we live in. Yet, it's vital for the loan du jour these days in a very different lending atmosphere.

*Picking up so much funding slack (my guess is at record levels) because of conventional Pricing changes and the disappearance of the sub-prime market. Mistake folks, big mistake. I give you the "All Eggs..." analogy.

*Subprime folks who penetrated the FHA product early on. FHA is NOT subprime and certainly not a viable substitute.

And to the news...

* If it is a cash-out refinance over 85% of your home's worth, two appraisals need to be done. I've seen (in my area) appraisals being done for anywhere from $375.00 to $400.00. The positive spin on this is that your equity position probably won't be over-inflated. The reality is that you are going to have to pay for two appraisals. Make sure you have the cash-flow to do it.

* Property Condition Issues - Peeling paint is a No-No. GFCI outlets (those things that you plug stuff into) must be upgraded if they already aren't. They must have a reset button, which is usually red. (This applies to kitchens and bathrooms or anywhere there is running water)...

* The down payment has risen to 3.5% since the New Year.

* 620 may be the magic credit score. Don't count on civilian credit checks to see what you may qualify for. Of note, scores can be lower than 620... just make sure that right now... you know that credit scores mean a damn along the merry little way and may even mean more down the road. Ironically, I wrote this post in "draft mode" before this other post came to be.

* How about those DPA's:) Down Payment Assistance Programs have received more scrutiny than Mr. T attending a Richard Simmon's Summer Home Pajama Party. For me, it's another way for a seller to sell their house and the buyer to be able to buy it. Done legitamately, it is a worthwhile product & amenity to Mortgage Financing.

* 203K loans are one of the only Rehab Loans I know of at this point. You know, you find a property at a decent price that needs work but you don't have the cash to buy it and do the improvements yourself. These loans must be owner-occupied (as all FHA loans stipulate) and it's a great example on how you can turn a dive into a palace. Or, at least better your abode and respective neighborhood.

I've done a few more Conventional and even Hard Money Rehab Loans and most of the banks/lenders backed out of delivering the product. The FHA 203K Loans are alive and swinging.

December 2008 - People, especially Americans, started believing that they can live on other people's money. And more and more so. First other people's money in your own country. And then savings rate comes down, and you start living on other people's money outside. At first it was the Japanese. Now the Chinese and the Middle Easterners.

We-the Chinese, the Middle Easterners, the Japanese-we can see too. Okay, we'd love to support you guys-if it's sustainable. But if it's not, why should we be doing this? After we are gone, you cannot just go to the moon to get more money.

Gao Xizing, president of China Investment

If you've stuck around this long, here's a song...

Every story deserves a song...

I recall being a young sprout riding in the backseat of my parent's car, coming home from a bonfire party at their friend's abode. Somehow, the subject of money became a conversation. I was curious and open with them in those days. In latter years, I was zit-ridden and remote. Ya got to love puberty:)

My question at the time was in regards to bank checks as we still know them. I didn't comprehend why money would ever be an issue if you had this piece of paper that you could "pay" anybody any amount of money with. Heck, all you had to do was fill in the blanks. My father then told me that, "If you write that amount to pay them on that piece of paper, it means you have to have enough in your account to do so." It was then when I learned about not bouncing checks that can't be cashed.

Before I entered the Mortgage Industry in 2001, I was in tough times because of my own creation. I remember it well; my mother was celebrating her 50th birthday and we (my brother, Dad, & I) all took a cruise to Mexico in that very celebration. I had a credit card with a credit limit and while I'm not much into gambling, my addictive personality threw myself into the essence of that very notion. I gambled everything I had and didn't have, in hopes that luck would look my way. It looked my way and gave me the proverbial finger. It was then when I learned about spending.

I thought my woes would be solved when I got into the Mortgage Business. Hell, that's how & why I initially got involved. My quest was to make a crap-load of money and make that aspect of my life one less worry. Then, I developed a passion and knowledge of the business. I even developed relationships in this very business. Money took a backseat to trust, as it always should. It was then when I learned about greed.

Have you ever watched the movie, "Wallstreet"? One of my favorite speeches in any movie is the one Gordon Geiko gives on Greed. Here it is...

And my retort...

Management should always have a stake in any company it owns/is a part of. Frankly, WE own the company and the franchise and the government we are under. In fact, WE have a bigger role than we give ourselves proper credit for. (Who WE are is a subject of debate. even if we can suspend any economic bounds).

For the people, by the people, blah and blah again. Without us, there is no them. End of that story.

I believe in Capitalism, the Free Market, & Ethics. I also believe in Humanity. I'm not some pious bastard living off the streets proclaiming anarchy and instant change to all those who don't share the same luxuries... I'm the bastard who would simply like to put everyone (including me) in their respective place.

I see an athlete asking 18 million when he is offered 14 million, without fans... he gets nothing.

I see depository & non-depository banks asking for your money but lending little of it out. Give them a "free pass" on dollars given to them and they can pay their high-ranked CFO's & CEO's.

I see politicians squandering every bit of credibility by doing the same thing over and over again. That costs, especially Locally.

But I don't see a pessimistic fear. I see a compromising light. Color me stupid, yet stupendous greed and blinding reality ensures that Mr. Sardi ain't that little boy any longer. I won't write that check if it won't clear. I don't and won't trust anybody whose greed is larger than the ego I already have. And I absolutely will take no part in the extremes that seem so unnatural... at least to me.

Greed is good when it incites riots of relevance. To you, Mr. Geiko (the movie persona that you are) I offer up "making money one less worry in life."

That holds no greed, circumsizes no sins, and behooves the very ones who live in the lap of the poverty they perceive.

Mr. Geiko, greed isn't good... we are. Besides, we created that phenomenon in the first place.

(And I didn't even hit on the good parts/points)

If I was a football player, I'd want to be Troy Polamalu. I've stated that for years. For me, the guy represents all that is right with the game of football. Sure, he could end up in some steroid scandal or a back-lot scuffle with Rottweilers while betting who will chew who's ear off first... but my guess is that he will just remain Troy. A pious dude who is a bad-ass when he needs to be... specifically, on the field of play.

The guy is just damn good. And he is five years younger than me, which kind of pisses me off;)

Athletically, he's a natural. Troy is a literal cat on a human battlefield. What seems to separate him from the pack is his intellectual grasp of the sport that is America's version of Football. Even the most avid Steeler-Hater would probably want Troy on their team.

I don't mean to take anything away from the rest of the Pittsburgh Steelers. Face it, that's a damn good franchise. Someday, they may even rub off on the Pirates. My heart still quivers when somebody mentions Sid Bream and Francisco Cabrera in the same sentence. Damn!

Anyway, a big Congrats to my Black & Gold friends. They are that damn good.

To the Cardinals, whom we will face in the Super Bowl... you've done good. Color me concerned. Your team is more than worthwhile. Just watch out for Troy, he may kill you.

I like war machines:)

Consumers, aren't we all? If you own a home or are thinking about buying one, you just may be familiar with one of the battles going on right now. That battle involves interest rates. "Spoiled are we, yes we are," I say in my best Yoda voice.

In a world where some houses have stagnated or plain tanked in value, the same world where credit extended to folks in a position of uniqueness may have been stopped, we live in an economic atmosphere where some consider lower interest rates a part of the cure. (Between me and you and please don't tell a soul... these lower rates have probably been going on WAY too long as an economic stimulus. Frankly, should of ended long ago, but...)

Take advantage of them while you can! Many folks are sitting on the proverbial fence, wanting to know if rates may jump down a 1/4% or 1/8% or even a full freaking point! Today, interest rates still hover in the high 4% range for prime borrowers on a 30-year fixed rate mortgage.

Hesitation may cost or that roll of the dice may save you a buck or two. There are folks everywhere predicting where interest rates may end up. I believe in the cycle, the circle. Heck, I think we need to learn from nostalgia. More than that, my best advice is the following:

Turn in your mortgage application and supporting documentation right now! If you aren't ready to jump, at least you can practice that vertical leap when you are ready to lock in. This way you will have already set the wheels in motion whether you are waiting to buy or refinance or getting on the bandwagon right away. Here's a brief (albeit not totally extensive) list of what you'll need to get together:

* Last 2 years W-2's and 2 most recent pay-stubs

* If you are a renter, have your Landlord's name, address, and phone number handy. Make sure you have that info for the last 2 years of your rental history. Assuming you pay your rent by check (and I hope you do) get 12-24 months of cancelled checks.

* Last 2 Months Bank Statements (All Pages) & the most recent statements on all asset accounts (401K, IRA, Mutual Funds, Retirement, Etc.)

* If you are Self-employed, you'll need the last two years tax returns with all schedules and attachments... along with a year-to-date Profit & Loss for your business.

* For purposes of identification, you'll need copies of your social security card and photo I.D. (typically your Driver's License)

* If you are refinancing, you'll need a few of the things above... but will also need your most recent Mortgage Statement & Homeowner's Insurance Dec page (which is the top page of your Homeowner's Insurance). It's also a good idea to get copies of your most recent statements on all other accounts you want to pay off... assuming you want to consolidate high interest debt.

* If you own more than one property, you'll need the most recent Mortgage Statement, Homeowner's Insurance Deck Page, & copy of any leases you have on rentals.

* Any credit issues (late payments, bankruptcies, judgments, etc) must be addressed in a very detailed credit explanation letter and appropriate supporting documentation, if applicable.

* If you aren't currently escrowing your taxes, you will need copies of paid/unpaid tax bills.

* Retirement/Social Security award letters if you are receiving that type of income.

Getting these things together and submitting to the lender will help ensure there are no delays when you want to lock-in to that killer interest rate.

Think about it... hard and wise. Speculation got us in trouble. Don't let it do the same to you. While you may turn out right in interest rates dropping a slight percentage here and there, it may not be wise to opt for a $300.00 savings if you can get approved for something that will save you $200.00 right now. What if that $200.00 savings goes away all together? Roll the dice all you want, my friends... if you can attain (at a relatively decent cost) fixed rates on a mortgage of any kind in the 4% bracket, history will probably be very kind to you. Expect at least 7% before the Mayan Calender comes into play:)

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