Mortgage Information and insight from a Utah Mortgage Lender.

$8000 - $6500 Tax Credit - Tick Tock, Tick Tock

 

Somewhere In, UT

Tick tock, tick tock, the clock is ticking on the tax credit currently available to first time home buyers and those that have lived in their homes for 5 years who are looking to buy.  The program comes to a close on April 30, 2010.   First time home buyers in Utah have the most to gain as the government by way of the IRS is going to line your pockets with $8000 big ones just for signing on the dotted line(s) at closing.  Yes line(s) is plural because there are hundreds of lines you will be signing on.

Where was my $8000 handout when I bought my first home?  No where to be found I can tell you that.  All I got was a crappy 2/228 arm from Long Beach mortgage with a 7.25% rate and a cheap welcome package from our builder.  Man o man what I would have given to get the $8000 bucks that these kids are getting today.  I have some clients that are using it to buy furniture, some are planning to landscape and still some others are paying off their car loans.  No matter how you use it, you can't really lose as long as you don't miss out.

Slightly less enticing but still amazing is the $6500 available to those that have lived in their current home consecutively for the last 5 years or more.  Although not quite the $8000 being shoveled out to the greenies $6500 seems to be enough to get some of the fence sitters off the fence and into the game.  I have several clients out looking right now so they can cash in just in time to claim their prize.  One lovely lady I explained this move up credit to was attentively writing down notes so that she could go back to her husband with exactly what they qualified for and see if she could use her best methods of persuasion on her husband to get him to leave their home of 26 years and cash in on one of the many bank owned deals of a century that are to be had right now in Utah County.   I didn't ask what her method was.....moving on.

The moral of the story folks is to make sure you understand the time lines and deadlines to this program.  As much as I would like to see it extended over and over again, I tend to think that all good things must come to an end, at least that's what my Mom used to tell me when we were leaving Lagoon after our annual Questar family day, boy how I hated to see those days end.

We can get mortgage's done start to finish in as little as 7 days but why wait till the last tick of the clock?

For more useful information and frequently asked questions on the federal tax credit go to http://www.federalhousingtaxcredit.com/ I found this site to have some great information on the topic.

Your comments are always welcomed.  Stetson Lowe is a expert in the mortgage industry specializing in FHA, Conventional, USDA and Utah Housing Loans.  Don't attempt to blog like this at home:)

 

Saratoga Springs, UT - Rural Devlopment Loans - USDA

 
(A view from Saratoga Springs looking back over Utah Lake at Mt. Timpanogos)

Saratoga Springs, UT

What is the USDA Rural Development Loan?  Many of you have been asking the same question.  It sounds like a loan that an egg farmer would take from the government to improve his chicken coops, and in some cases that may happen on the commercial side.  What many people are now finding out is that the USDA also lends on residential homes located in what is deemed to be rural areas.

Many Utah residents can benefit from these loans as over 2/3rds of Utah is deemed to be "rural".  If you are looking to buy a home in Utah county in one of the following cities then pay close attention as this loan may be your very best option.

Saratoga Springs, Eagle Mountain, Payson, Elk Ridge and Santaquin are all found in the eligible areas for USDA home financing.  Click this link to view the map and read more details on USDA loan programs.

The USDA mortgage is much like FHA in that it does require an upfront fee.  In the case of the USDA loan it is called a guarantee fee instead of FHA's terminology which call's it upfront mortgage insurance.  Ultimately it is the same thing.  The upfront fee from both loans is essentially pooled in a fund that is used to guarantee the lender/investor against any future losses on the loan in case of default by the borrower.

The guarantee fee for new USDA loans is 2% of the loan amount.  In the case of a $200,000 loan the borrower would pay a $4000 one time upfront fee to the USDA to guarantee their loan.  The nice thing about the USDA loan is that much like FHA you are allowed to finance the fee into your loan.  This loan already allows for 100% financing for credit qualifying borrowers whose job history and debt and income are in line with the underwriting requirements.  This is a true 102% loan to value loan when you take in to account the fact that you can finance the 2% guarantee fee above and beyond the price of the home.

What an amazing option for those that have little or no down payment.  If you can save enough money for an earnest money deposit you can be on your way to home ownership.  Debt to income ratios on this loan are lower then conventional and fha loans so you may not qualify for quite as much home with the USDA loan but the USDA loan does not have monthly mortgage insurance so your monthly payment is also lower then it would be on a conventional or fha loan which does require 3.5% or 5% down respectively.

If you are looking to buy a home in Utah County and down payment is an issue, consider the USDA rural development loan, it just might be the ticket you are looking for.

Remember the USDA loan can be used in parts of if not all of Saratoga Springs, Eagle Mountain, Spanish Fork, Payson, Elk Ridge and Santaquin.  If you don't have a down payment, don't give up looking all together tell your agent you would like to expand your search into one of these beautiful cities.  Then lets get you pre-approved for a USDA Rural Development loan today.

Stetson Lowe - www.utahloantips.com

Provo, UT - No Down Payment Loan - No Problem

(View from Y mountain  looking south west over Provo)

Provo, UT

My last post was on Federal Housing Grants and how to get them.  After discussing that post with interested readers I felt that I should post again on municipal programs that ARE often available for home buyers that are willing to buy in specific cities or even neighborhoods.

Provo Utah has a program aimed at getting owner occupants back into older neighborhoods.  One of these down payment assistance programs is called the home purchase+.  This program lends home buyers up to $20,000 at 0% interest and 0 payments!  Yes you read that right 0% interest and 0 payments on the loan while you are living in the home.

To good to be true?  It gets better, the longer you live in the home the less you will eventually have to pay back.  On this specific program after 5 years of living in the home Provo City will forgive $5000 of the $20,000 loan.  Then for each additional year after the first five years you continue to live in the home you are forgiven $1000 up to $10,000.  So if you live in the home for 10 years before you decide it is time to move, when you sell your home your payoff to Provo City will be $10,000.  Pretty cool that they give you the money for your down payment and let you use it free of any interest or repayment for 10 years and then knock $10,000 off the loan when you move as a little thank you for living in our city limits.

This program is great for first time home buyers who don't mind putting a little sweat equity into a home, although I have a client right now that is buying a home with this program and it is in perfect condition.  New carpet, paint and tile showers and bath's.

I have helped buyers to get 2 of these grants/loans in the last 2 months and the buyer's couldn't be happier to be taking advantage of free money.

There are many ways to buy a home with NO MONEY DOWN in Utah right now.  This is just one of the ways.  Check back soon and I will continue to post ideas of how you may be able to buy your next home with NO Money Down.

You can read more about how to get this community loan money through provo city at http://www.provo.org/redev.homepurchaseplus.html but remember that provo city does not do the first mortgage.   There are only a handful of lenders that will lend the first mortgage with this community 2nd behind it, so give me a call today if you are interested in taking advantage of this down payment program or you can apply for a mortgage in Provo on-line at www.applywithstetson.comthis is a secure on-line mortgage application and can be utilized by anyone living in Utah or moving to Utah.

Federal Housing Grants - How to Apply

How to Get Federal Housing Grants

The first step in the process would be to get in touch with the local HUD office. Their website is www.hud.gov. Or look them up in the government section of your phone book. Set an appointment to go in and fill out an application or go on line to the website and look for any available housing grants. Fill out the applications to all the grants that are available for your area. Make sure you fill them out completely, thoroughly, and have made no omissions. Once you have filled those out, set up a time to sit down and meet with or upload your application to a grant adviser who will look that over and see if you meet the necessary qualifications for a federal housing grant. In my experience as a mortgage professional, I've seen that these federal housing grants are few and far between, so if you do find one available in your area, jump right on it. Don't delay. Get that application submitted as quickly as possible because they do go quickly. What a great way to get started in a...in a home and get your down payment granted to you from the federal government. And if they're available, you might as well take advantage of them.

Call me to find out about local housing grants that are available all the time. I can walk you through the application process 801-318-4996

FHA Increasing Upfront Mortgage Insurance Premium

 

This just in....

FHA is going to increase the upfront mortgage insurance premiums on all purchase, streamline and full credit qualifying refinances to 2.25% that is up from 1.5 and 1.75% currently.

For those of you who don't know what upfront mortgage insurance is, it is a premium paid to HUD to insure a portion of your loan against the borrowers defaulting.  For example the FHA insurance may guarantee the first 30% of the loan value against any loss including interest.

So when you buy or refinance your home using an FHA loan you now pay and will continue to pay a big chunk of that loan upfront to FHA to go into this insurance pool.

It must be that all of the foreclosures have finally drained the tank putting FHA into the RED therefore causing them to up the upfront premiums to help beef back up the reserves to protect against further losses.

My clients already were feeling the pain from the increase from 1.5% of the loan amount to 1.75% which took place about 18 months ago.  Now FHA is taken it to them once again.  It has always been and will continue to be my opinion that it should be a sliding scale based on the borrowers past credit history.  This premium should not be a one size fits all approach with the borrowers with a 800 fico being charged the same amount as the borrowers with a 620 fico.  Everything does not always have to be equal in life, if you take good care of your creditors and pay your debts on time always you should be rewarded, I have always felt.

Apparently the folks in Washington DC don't feel the same as they are sticking to their equality for all home owners with this latest increase.

I think that part of it is rubbish. 

I have posted the text from the official mortgagee letter from today January 21, 2010 below.

Thanks,

Stetson Lowe - Security Home Mortgage - Orem, UT 801-318-4996

 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

WASHINGTON, DC 20410-8000

ASSISTANT SECRETARY FOR HOUSING-FEDERAL

HOUSING COMMISSIONER

January 21, 2010

MORTGAGEE LETTER 2010-02

TO: ALL APPROVED MORTGAGEES

SUBJECT: Increase in Upfront Premiums for FHA Mortgage Insurance

Effective for FHA loans for which the case number is assigned on or after April 5,2010,

FHA will collect an upfront mortgage insurance premium of 2.25 percent. This policy change will

increase premiums for purchase money and refinance transactions, including FHA-to-FHA credit-qualifying

and non-credit qualifying streamlined refinance transactions.

Programs Covered by Insurance Premiums Shown Below

The upfront and annual premiums and the requirements described in this Mortgagee Letter

apply to all mortgages insured under FHA's Single Family Insurance Programs except those listed

below:

- Title I

- Home Equity Conversion Mortgages (HECMs)

- Hope for Homeowners (H4H)

Section 247 (Hawaiian Homelands)

Section 248 (Indian Reservations),

- Section 223(e) (declining neighborhoods)

- Section 238(c) (Military Impact areas in Georgia and New York)

Upfront Premiums

FHA will charge an upfront premium in an amount equal to the following percentages of the

mortgage:

• Purchase Money Mortgages and Full-Credit Qualifying Refinances = 2.25 percent

• Streamline Refinances (all types) = 2.25 percent

• HOPE for Homeowners (Delinquent Mortgagors) = 2.00 percent

• Home Equity Conversion Mortgages = 2.00 percent

www.hud.gov espanol.hud.gov

Annual Premiums

Annual premiums will not change at this time.

For FHA traditional purchase and refinance products, the annual premium, shown in basis

points below, is to be remitted on a monthly basis, and will be charged based on the initial loan-to value

ratio and length of the mortgage according to the following schedule:

• HOPE for Homeowners (delinquent mortgagors)

In accordance with guidance issued in Mortgagee Letter 2009-43, HOPE for Homeowners

borrowers will pay 75

basis points (.75 percent of the base loan amount), regardless of the loan to-

value ratio, which is collected monthly.

• Home Equity Conversion Mortgages (HECMs)

The annual premium for all HECM borrowers is

50 basis points (.50 of the outstanding

mortgage balance) and is collected monthly.

First-Time Homebuver with HUD-Approved Pre-Purchase Counseling

The National Housing Act, as amended by the Housing and Economic Recovery Act in

2008, authorizes upfront premiums of up to 3.00 and authorizes premiums of up to 2.75 percent for

first-time homebuyers who complete HUD-approved pre-purchase counseling. Since the upfront

premium rate of 2.25 percent remains below the statutory cap, no variable rate for counseled firsttime

homebuyers is provided for under this Mortgagee Letter.

If you should have any questions concerning this Mortgagee Letter, call 1-800-CALLFHA.

Persons with hearing or speech impairments may access this number via TDD/TTY by calling 1-

877-TDD-2HUD (1-877-833-2483).

Sincerely,

David H. Stevens

Assistant Secretary for Housing-

Federal Housing Commissioner