Review & Giveaway – The Skinny on the Housing Crisis (What Every Homeowner & Homebuyer NEEDS TO KNOW!!!)

Review:

Jim Randel has created a brilliant and super simple book called the The Skinny on the Housing Crisis.  The book talks simply about how we came about this mess of a Housing Crisis we like to call it.  The story is told from a young couple’s viewpoint on buying a home with a mortgage and getting foreclosed on a year later.

If you ever wanted to know the WHOLE process from the very beginning of finding a home with a Real Estate agent to the nuts & bolts reasoning behind Wall-Street and the Finance World to the end result of the Bubble, then this is the book for you.  Even if you already are a homeowner or thinking about buying a home, this book brilliantly displays the whole concept in a super simple format to understand.

The great concept behind this book is that is beautifully illustrated in this 168 page book with 2/3rds in Stick-Figure picture format making this an easy concept to grasp that even a 5th grader can understand.

This reminded me of the Sub-Prime Stick figure video that was being passed around the net talking about how Sub-Prime came about, the same concept is applied here and was actually inspired from the famous Japanese Manga stips they have out there.

The housing and finance industry can be very boring and dull to most of the world but Jim’s book really makes it in layman terms so that everyone can understand the concept of the housing crisis.  Simplicity is key and I believe because of this successful recipe the book is a must own to everyone who is looking to buy a house or anyone who has a home currently.

 

Giveaway

It’s quite SIMPLE, just leave a comment on this post and just make sure you fill in your e-mail address and name.  I will use a computer generated randomizer to pick a random comment and send the lucky blog commenter the book….

There’s a bonus!!!

Jim Randal’s latest book the The Skinny On:™ Credit Cards – How to Win the Credit Card Game will also be given away too!

This book is amazing and has taught me a few things I didn’t know about the credit card industry and provided me insight on how to not get caught up in the credit card game!

So comment away and enjoy!!

American Recovery and Reinvestment Act of 2009 Passes Tax Credit of $8,000 For Home Buyers

 

 

The Real Estate world was hoping for the $15,000 tax credit that was provisioned in the Stimulus Bill of 2009 set forth by President Obama.  Unfortunately, the House has negotiated to remove the $15,000 tax credit and replace it with a more moderate provision instead.

The 2009 Tax Credit is an $8,000 tax credit for First Time Home Buyers just like the previous tax credit fo $7,500 but even better mainly due to that you don’t have to repay this credit back.

Friday February 13th 2009, both the House and the Senate passed the American Recovery and Reinvestment Act of 2009 and President Obama is expected to sign it into law early this week.

$8000 tax credit highlights include:

• The $8000 tax credit is available only to first-time home buyers and primary residence only.   (A first-time home buyer is considered a person who has not any ownership interest in a property in the last 3 years)
• This is a tax credit and not tax deduction. It is a true dollar for dollar reduction on taxes owed. 
• The credit can result in a true tax refund! If, for example, you were to get back zero on your 2009 taxes and you qualify for the full $8,000 credit, you would then receive a tax refund for $8,000. 
• The $8000 tax credit is available only to first-time home buyers buying a primary residence between January 1, 2009 and December 1, 2009
• The tax credit is not a loan and does not have to be paid back if owned more than 3 years 
• Single taxpayers with an Adjusted Gross Income (AGI) up to $75,000 and married taxpayers with a joint AGI of up to $150,000 are eligible for the full $8,000 credit. A lesser tax credit is still available if your income is above these amounts.

This is Great News for First-Time Home Buyers in 2009!

If you are on the fence or need to borrow money from a family member who needs reassurance they will be paid back, this is a great resource to take advantage of.

For more information or if you want to get pre-qualified to buy a home feel free to contact me for more details

Justin Williams

Home Mortgage Consultant

757-692-3464

Justintimeloans@gmail.com

*I am not a tax preparation firm and the above information does not represent formal tax advice; please seek council from a tax professional for details on your personal situation.

The New FHA Reverse Mortgage For Purchase – January 2009

Reverse Mortgage For Purchase

January 2009 HUD instituted a new program for Seniors (Age 62 or older) to purchase a new principal residence and obtain a reverse mortgage within a single transaction by eliminating the need for a second closing.

The program was also designed to enable senior homeowners to relocate to other geographical areas to be closer to family members or downsize to homes that meet their physical needs, i.e., handrails, one level properties, ramps, wider doorways, etc

A Reverse Mortgage main concept is to have NO MORTGAGE PAYMENT.  Now HUD is saying that Senior Citizens can buy homes or downgrade to a smaller home without ever making another mortgage payment as long as they live.

The Benefits

• The Housing and Economic Recovery Act of 2008 gives Unprecedented Consumer Safeguards With No Credit or Income Qualifications.
• Lower Fees than before
• Never Give Up Title to Home!
• Never Owe More than Home’s Value!
• Never Have to Move
• Never Make a Payment aslong as you live or sell/move the house!

An Example

Senior has $125,000 in equity but wishes to move.  REALTOR lists and sells departure home.  REALTOR writes contract on new $350,000 home by combining $125,000 down payment with $225,000 reverse mortgage purchase money:

SENIOR HAS NO MONTHLY PAYMENT!!!

Reverse Mortgages are now becoming more and more suitable for Seniors and with the New Reverse Mortgage for Purchase, A Senior Citizen doesn’t ever have to worry about losing the house or making another mortgage payment.

Virginia State Mortgage VHDA Increases To 50% DTI Change 2009

 

VHDA Changes to Maximum Qualifying Ratios

New Changes to the Maximum Debt to Income Ratio 50.00% for all VHDA Loans which was upped from 43%.  This will allow more people to qualify with limited income.  This is great news! Below are the official changes taking place Feb 2009.

All VHDA loans (including FHA, VA, RHS, PMI or uninsured loans) will be limited to a maximum of 50.00% debt to income ratio when using an automated underwriting Approve/Eligible Decision.

Stated program ratio guidelines will apply for manually approved loans. This new restriction is effective for loan reservations made beginning February 1, 2009.

FHA Plus: (103% Financing)

VHDA will continue to accept FHA Total Scorecard approvals for FHA Plus with the following limitations:

Loans may exceed FHA’s standard ratio requirements of 31% payment to income and 43% debt to income (to a maximum of 50% debt to ratio) only if the applicable credit score is 620 or above.

Credit scores below 620 and non traditional credit must adhere to the maximum 31%/43% FHA program ratios. 

This new requirements are effective with loan reservations made beginning February 1, 2009. 

Reminder: FHA Changes Effective Jan 1st 2009 Highlights

Reminder: FHA Changes Effective Jan 1st 2009 Highlights

Changes

• Maximum LTV Financing: The required cash down payment will be 3.5% of the appraised value or the sales price (whichever is less). Closing costs may not be used to meet the minimum 3.5% cash down payment requirement.
• Maximum base mortgage amount: For purchase loans, the maximum base mortgage loan amount will be 96.5% of the appraised value or the sales price (whichever is less). (Upfront Mortgage Insurance Premiums (UFMIP) may still be financed in the loan)
• Maximum refinance LTV amount*: the maximum refinance LTV will be 97.75% of the appraised value. This LTV will replace the High-Cost/Low-Cost Factors in the maximum loan calculations. 

Note: although a Mortgagee Letter has not been published as of the deadline for this article, the FHA previously indicated that 97.75% LTV will be published and effective on Jan 1, 2009. Any other changes announced in the Mortgagee Letter will be analyzed and communicated as soon as possible.

Note:At this time, the revised LTV does not impact: 203(h) for disaster victims & HUD 184 for Native American loans

Virginia Fannie Mae and Freddie Mac Loan Limits for 2009

 

CONFORMING LOAN LIMIT FOR U.S. TO REMAIN $417,000 IN 2009.

Other Loan Limits vary by different counties. 

 

Below are the major limits for the State of Virginia.

Alexandria $625,500

Williamsburg – $458,850

Richmond – $535,900

Hampton – $458,850

Newport News – $458,850

Portsmouth – $458,850

Suffolk – $458,850

Chesapeake – $458,850

Norfolk – $458,850

Virginia Beach – $458,850

 

Bottom line is that if you have a higher loan amount than these loan limits then its kicked over to classification “Jumbo or Non-Conforming” status which is usually more stricter mortgage guidelines and higher rates normally.

VA Mortgage Cash Out Refinance 100% 411

 

VA Mortgage Cash Out Refinance 100%

VA Mortgage Cash Out Refinance 100%

Veterans’ Benefits Improvement Act of 2008 Changes recently signed by President Bush on 10/10/2008 implement 4 major changes below.

The official Bill Circular is found  HERE

1.)  Mortgage Loans allow Cash Out Refinances to 100% changed from 90%.

2.)  The VA ARMs (Adjustable Rate Mortgages) are good through 2012. 

3.)  The Temporary Extended Loan Limit Amounts are extended through Dec 31st 2011

4.)  Guaranty of refinances from $36,000 to the same guaranty for purchase deals.

FHA Sweat Equity – Alternative to FHA Down Payment Assistance 411

FHA Sweat Equity

Labor performed or materials furnished by borrower before closing may be considered as the equivalent of a cash investment.

Believe it or not FHA Sweat Equity Program has been around forever.  The idea behind Sweat Equity is a way to have the Seller Credit for Purchaser’s Down Payment through Labor or Materials being put forth into the house.

Sweat equity may be gifted subject to both gift requirements and additional requirements. 

• Existing construction – only the repairs or improvements listed on the appraisal are eligible for sweat equity. Any work completed or materials provided prior to the appraisal are not eligible.
• Proposed construction – the sales contract must indicate the tasks to be performed by the borrower during construction.
• Borrower’s labor may be considered as the equivalent of cash if the borrower can demonstrate his/her ability to complete the work in a satisfactory manner.
• Lender must document the value of the labor through either the appraiser’s estimate or through a cost estimating service. 
• Delayed work (on-site escrow), clean up, debris removal, and other general maintenance cannot be included as sweat equity.
• There can be no cash back to the borrower in sweat equity transactions.
• Sweat equity on a property other than the subject property being purchase is not acceptable. Compensation for work performed on other properties must be in cash and properly documented.
• Sweat equity credit cannot exceed the estimated cost of the work or the materials.
• Verification of source of funds used to purchase materials and market value of materials must be provided on any materials furnished by borrower.
• Paid receipts for the materials should be obtained. 

1. Buyers to get with the Contractors after an appraisal is done to lend “LABOR” to compensate for “Credit” towards down-payment.
2. Buyers to paint the house or do some side jobs to help earn “Credit” for the “Labor”
3. The Sellers will pay for the credit and can raise the sales price in order to compensate for the credit.

 

FHA Cash to Close Savings Plan – Alternative to FHA Down Payment Assistance 411

 

FHA Cash to Close Savings Plan

 

FHA Cash to Close Savings Plan – Alternative to FHA Down Payment Assistance 411

Borrowers are eligible to save cash to close during the construction period. The following criteria and documentation must be adhered to:

• Borrowers must provide a written statement as to how they intend to save the funds to close.
• A monthly savings plan that identifies the borrower’s savings plan for the funds needed for closing must be completed in its entirety.
• This form must be included in the file submitted to Underwriting. The underwriter has the final decision of the borrower’s eligibility for this program.
• The funds saved must be held by a disinterested 3rd party. The funds cannot be held by Wells Fargo, but can be held by Wells Fargo Bank.
• Credit approval will be subject to the completion and verification of the approved savings plan.
• Gift funds are not allowed after Underwriting has issued a credit approval; however, exceptions to this may be allowed on a case-by-case basis.
• The underwriter must document the file accordingly. All funds must be saved in accordance with the approved savings plan.

The Cash to Close 411!

The FHA cash to close savings plan is a way to get pre-approved for a Construction loan being built without having the liquid assets at the time of application.  This is a great way to Buy Now & Save Later.

FHA Bridal Registry Account – Alternative to Down Payment Assistance 411

FHA BRIDAL REGISTRY

HUD allows couples who are planning to get married to establish a bridal registry savings account to help them accumulate the down payment necessary to purchase first home together.

Bridal Registry Account is also available for other situations where an individual or individuals typically receive gifts.

The following documentation and procedures should be adhered to when using bridal registry funds to document assets:

*The borrowers must open an interest bearing savings account with a financial institution supervised by a federal or state agency

*The borrowers are responsible for providing information regarding the bridal registry account and how it works to friends and family

*The borrowers must provide a register showing the names of all donors and the dollar amount that has been deposited into the bridal registry account

*There is no requirement that the bridal couple be married prior to closing the mortgage loan

*The borrower must provide bank statements verifying all deposits into the bridal registry account

*All donations were from friends and relatives that they do not have a financial interest in the transaction; and No donations made from participants with a financial interest in the transaction. (Participants include the seller, Home Mortgage Consultant, builder, real estate agent, etc.)

THE FHA 411

This is just another creative way to find financial assistance to the downpayment of future homebuyers.  What better way to ask for a donation towards your new house rather than getting another Blender or Toaster that you won’t need!  Perfect for First Time Home Buyers!