Bainbridge Island, WA

Fannie Mae and Freddie Mac have once again begun offering "Premium Pricing," which is a way for a lender to charge you a higher interest rate but pay for some or literally all of your closing costs.

For many months the "no cost" refi (a misnomer because the "cost" is a higher interest rate) disappeared as Fannie and Freddie offered no extra fee for a loan with a higher interest rate. But with declining loan volumes, the secondary agencies are clearly trying to attract new volume by bringing back this option.

How it works: if rates are 5.00% with 1 point, and you have a loan amount of at least $300,000 (higher loan amounts are needed for most no cost loans as the premium is paid to the lender as a percentage of the loan amount), you are likely to be able to get a "no cost" option for about 5.50%.

At Golf, over 60% of our total loans closed in October were purchase loans, as refi volume overall has decreased even though rates stay at or below 5.00%.

Bainbridge Home Sales Are Up Nearly 10 Percent Year-to-Date

The Northwest Multiple Listing Service says its members reported a 63 percent jump in pending sales during October compared to the same month a year ago, a gain many brokers attribute to the first-time buyer tax credit.

On Bainbridge Island, according to the number crunching and meticulous tracking by local agent Jim Peek, single-family detached home sales (excludes condos) through October 2009 were 9.4 percent higher compared to the same period last year.

Peek's calculations shows October home sales totaled 23 on Bainbridge, versus just 12 in October 2008. Totals for the year at the end of October are 173 versus 158 for the same period last year. By comparison, through October 2007, there were 301 home sales on Bainbridge.

The NWMLS also noted that for the four-county Puget Sound area (King, Snohomish, Pierce and Kitsap), inventory has shrunk 20 percent compared to last year.

Tax Credit Extended AND Expanded

President Obama signed into law the Worker, Homeownership, and Business Assistance Act of 2009 that will extend the $8,000 first-time home buyer tax credit as well as offer a new tax credit up to $6,500 for current homeowners who buy a new primary residence.

Estimates say that more than two-thirds of all current homeowners and nearly all first-time buyers will be eligible for the credit.

Here are the highlights:

KEY DATES
-Purchase & Sales Agreement must be dated by all parties with a date on or before Friday, April 30, 2010.
-Purchase must close on or before Wednesday, June 30, 2010.
-For current homeowners, the home must be purchased on or after November 7, 2009 to qualify for the credit.

AMOUNT
-$8,000 or 10 percent of the home value, whichever is less, for first-time buyers.
-$6,500 or 10 percent of the home value, whichever is less, for current homeowners who buy.

INCOME LIMIT
100% credit up to $125,000 for individuals
100% credit up to $225,000 for married couples
There is a phasing out of the credit if income exceeds these amounts.

NEW DOCUMENTATION RULE
Buyers will be required to attach a copy of their final HUD-1 with their return.

AGE REQUIREMENT
You must be 18 years or older to claim the credit (exception: married couples where only one spouse is 18 years or older)

PROPERTY RESTRICTION
Must be a primary residence and real property.

FIRST-TIME BUYER DEFINITION
You cannot have owned a primary residence in the last three years, even if you own either a vacation home or a rental property and you did not live in it.

CURRENT HOMEOWNER BUYING RULE
Must have lived in their home for at least five consecutive years of the past eight years.

HOME PRICE LIMITATION
The price of the new home must be $800,000 or less.

PAY BACK CLAUSE
A buyer must occupy the home as a primary residence for three years or more after the purchase or the tax credit would need to be paid back.

FILING EARLY
Buyers can claim the tax credit on their 2009 taxes, even if the purchase was made in 2010 by filing an amended return. The buyer has the option of taking the credit in either tax year (2009 or 2010).

ACTIVE MILITARY
Active service personnel who served more than 90 days outside of the US have a one year extension and until 2011 to take advantage of the tax credit.

TAX CREDIT IS REFUNDABLE
This means if the amount of income taxes you owe is less than your tax credit, the government will send you a check for the difference. So if you owe no taxes, qualify for the first-time buyer credit and file a return, you will receive a refund for $8,000.

According to the IRS, it has processed over 1.5 million claims from individuals and families who have purchased a home between January and September 2009 and the National Association of Realtors estimate that some 350,000 of these buyers would not have purchased the home without the tax credit.

FULL TEXT OF THE BILL PASSED & SIGNED INTO LAW (H.R. 3548)
http://www.govtrack.us/congress/billtext.xpd?bill=h111-3548

Comments & Questions? Send them to khawkins@golfsavingsbank.com

When Fannie Mae and Freddie Mac started offering "Premium Pricing" again -- is a way for a lender to charge you a higher interest rate but pay for closing costs -- the move also benefited those wanting to lower the rate on their rental property.

This move can benefit those that have four or less total properties (at Golf we currently can help those with more than four properties in certain circumstances) and just want to lower the rate.

Fannie and Freddie add on 1.75 points automatically to a rental/investment property. Without Premium Pricing, those with rentals had to pay hefty points to get a lower rate.

But today an investor with great credit and lots of equity can lower their interest rate to
5.375% with no points for a 30 Year Fixed Rate loan.

Again, superior credit (720 mid credit score), lots of equity (75 percent loan-to-value or less) are needed, but this is an opportunity we have not seen for quite a while for investors.

Edward and I have have just listed the most elegant and well designed coastal home on Pleasant Beach on Bainbridge Island. This home (www.PleasantBeachHome.com) is a new construction 4 bedroom gracious home with elements of turn of the century eastern coastal homes. The Builder, Gene Knox of Blue Fish was designer, architect, & builder. Having roots in Boston, Gene brings both traditional elements together with current north west styling. (check out the viking kitchen and luxurious master bath) This home will be open Sunday november 15th from 1 - 4 at Pleasant Beach Drive. Maureen