Tag Archives: Mortgage

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



*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

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:


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.

Reminder: FHA Changes Effective Jan 1st 2009 Highlights

FHA Changes Highlights 2009

Reminder: FHA Changes Effective Jan 1st 2009 Highlights


  • 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

FHA Co-Signers & Co-Borrowers Continued 411 Mortgage Loan

FHA Co-Signer / Co-Borrwer Family

FHA Co-Signer / Co-Borrower Family

FHA Co-Signers & Co-Borrowers Continued 411

This post is a continuation post from FHA First Time Home Buyer Cosigner Kiddie Condo Loan

Most people refer to this loan as the Kiddie Condo Loan because the main concept was to help your children with buying a first house or help out with the housing while your children are gone for college.

Well interestingly enough this guideline also serves another purpose.

Co-Signer / Co-Borrower to help with Income and Debt-To-Income Ratios

I had a client that was having trouble getting FHA approved for his new home purchase.  He tried 3 different ways and the 3rd time he finally got approved and here’s how.

1st Time – My client Mr. Livingston was applying for a standard FHA loan, all seemed pretty normal until his Federal Student Loans came up in the Debt-to-income guideline.  Mr. Livingston had about 10 outstanding Federal Student Loans.  Now normally the student loans will not be counted towards the client’s ratios if the Student Loans were “Deferred Payments”.

When I questioned Mr. Livingston if the Student Loans were deferred, he told me they were but there was 1 problem.  The deferrment period was every 6 months instead of every 12 months.  Within guidelines we had to count the Student Loans as debt and therefore made Mr. Livingston’s Debt-To-Income too high.

FHA Father Son

FHA Father Son

2nd Time (The Family Co-Signer / Co-Borrower) – This time we utilized the Non-Occupying Co-Borrower / Co- Signer of Mr. Livingston’s Father.  Per FHA guidelines we don’t have to have the Parent’s to move in this house as the primary residence, they could just help by co-signing for income purposes.

Normally this would work out great!  Unfortunately for Mr. Livingston’s situation, his Father actually brought on more debt that didn’t help much on the ratios, even though we were adding more income we still have to include the Father’s debt too.

3rd Time (The Long-Time Friend) – This is very powerful not only is the Co-Signer and Co-Borrower only limited to Family Members, per FHA guidelines you can add Friends too!  Mr. Livingston had a life-long friend who agreed to co-sign and help out Mr. Livingston (what a great friend) this time around it worked, the ratios were good and debts were good.

Now the Friend does have the Debt included in his credit report now as a Real Estate Mortgage he owes on.  So now if he wants to buy a house, he has to keep in mind to get removed from this loan by Refinancing Out from the loan.

FHA Sweat Equity – Alternative to FHA Down Payment Assistance 411

FHA Sweat Equity

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


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


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.)
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!