Archive for February, 2009
Home Buying 101 - Step 7: Other Loan Programs
February 27th, 2009 categories: Home Buying 101
This is the seventh post in a series of twelve on buying a home, now updated for 2009.
In addition to conventional loans, home buyers may also utilize one of the following government insured or guaranteed loans. In fact, FHA mortgages now make up around 25% of all mortgages, compared to 2% during the height of the real estate market. Here’s what you should know about the loans - although please note this continues to change.
These are loans you, as the consumer, may have to bring to the attention of your mortgage lender, especially the programs that aren’t commonly used.
CHFA
CHFA, or Connecticut Housing Finance Authority, offers a “first time home buyer” program which can be a great deal for the right person. There are income limits (currently $81,000/year for a 1-2 person household in most of Hartford County) and sales price limits (vary greatly depending on area and number of units). The property must be owner-occupied throughout the entire term of the loan and if the home is sold within 9 years, the profit may be subject to a recapture tax if certain conditions are met.
There are some really great things about the CHFA program:
–Low interest rate - currently 5%
–More lenient credit guidelines
–First time home buyer only means that you cannot have had ownership in a property in the last 3 years
–You can borrow more than 100% in some cases
–Borrowers can lock in rate for 4 months
–Single family properties, condos and 2-4 unit multi-families are eligible
FHA
The Federal Housing Authority insures loans for first time home buyers that lenders may not otherwise offer. Similar to CHFA in that FHA loans have certain borrower guidelines, FHA has sales price limits as well as credit requirements. FHA allows borrowers to put as little as 3.5% down. And, a borrower can ask for closing costs or credits but they can’t exceed 6% of the purchase price.
VA
Available through many lenders, VA loans are guaranteed by the federal government to give military personnel more access to home ownership. Eligible borrowers include active and inactive members of the armed forces who meet a certain criteria for length and time of service. Reserve forces may also qualify, depending on length of service, as may those who were discharged and widows/widowers provided spouse’s death was service related. The biggest negative to VA loans is a lending fee which varies depending on the borrower’s eligibility. However, the lending fee may also be financed.
If you qualify, there are many positives about getting a VA loan:
–No Private Mortgage Insurance
–No money down required
–100% financing plus closing costs, which are limited
USDA Rural Development
The USDA provides 100% financing for mortgages on homes in “rural” areas, including many in Connecticut. Towns like Burlington, Avon, Granby, Canton, East Windsor and Suffield in Hartford County and towns such as Marlborough, Hebron, East Hampton, Colchester and Ellington in surrounding counties.
There are income limits - for Hartford County the current limit for a 2 person household is $73,150 and the program is only available for owner occupied, single family homes.
But there are also some significant benefits for qualifying properties and buyers:
–Seller may contribute closing costs.
–No down payment required.
–Competitive rates.
–No minimum credit score.
–No monthly mortgage insurance premium.
Here are some other programs:
Good Neighbor Next Door - for teachers, law enforcement, firefighters or emergency technicians.
Home of Your Own - for home buyers with disabilities.
Military Homeownership Program - a CHFA program for military personnel.
Police Homeownership Program - CHFA
You might also enjoy reading:
Five Things Every Home Buyer Should Know About Mortgages and Mortgage Lenders
Want Some Free Money? Little Known Loans and Grants Can Help You Buy a House
Do you dig real estate news, tips and advice? Sniffing around for pet-related information in Connecticut? Get Unleashed - the blog that’s helping to find homes for people and pets.
| Discussion: 8 Comments »
Creative DIY Cat Litter Box Solution for Wall-mounted Bathroom Sink
February 25th, 2009 categories: Pets & People
Lifehacker.com (originally from IkeaHacker) has a great post on how to make a cat litter box with a cover that will fit under a wall-mounted bathroom sink.
Don’t have a wall-mounted sink? Read the comments for more ideas on what other readers did to answer the timeless question, “where do I put the cat litter box?”
He War by Cat Power
You may also like reading:
DogCars.com Announces Dodge Grand Caravan is 2008 DogCar of the Year
Do you dig real estate news, tips and advice? Sniffing around for pet-related information in Connecticut? Get Unleashed - the blog that’s helping to find homes for people and pets.
| Discussion: 2 Comments »
Real Estate Market Mixed Messages - Higher Fannie & Freddie Fees Penalize Home Buyers
February 20th, 2009 categories: Home Buyers, Real Estate Market
While the new Stimulus Plan offers incentives for home buyers to buy (up to an $8,000 tax credit), Fannie Mae and Freddie Mac announce higher fees for home buyers.
From the National Association of Realtors:
Fannie Mae and Freddie Mac are both toughening their credit score and down-payment rules as of April 1.
In response, major lenders are already factoring in the higher fees, which reduces the effectiveness of the stimulus efforts.
Under the new guidelines, buyers with down payments of less than 25 percent will be charged a three-quarter point add-on penalty, no matter how high their credit score.
Buyers of duplexes, where one unit is owner-occupied and the other is rented, will be charged a 1 percent add-on.
Refinancers who take cash out will be charged as much as three points if they have a low to moderate equity stake.
Freddie spokesman Brad German says the loan categories and credit risk combinations targeted by these fees “default at four to eight times” the rate of other mortgages backed by Freddie. “We have to manage these risks appropriately,” he says.
Higher fees for people who have 20% down? Regardless of credit score?
Let me get this straight - you’re a buyer who has worked for years to save 20%, have excellent credit, and resisted the temptation 2 years ago to buy a house using a funky mortgage. And you’re the one who has to pay?
Fannie Mae and Freddie Mac, banks, governments, realtors and everyone else who makes a living when people by houses should be licking your feet in appreciation that you want to buy a house, have decent credit and have money for a downpayment.
Did I actually think future borrowers were not going to be punished for Fannie Mae and Freddie Mac’s carelessness and mismanagement?
Did I actually think future borrowers weren’t going to be the ones to pay for the people who went before them, those who can’t now or never could afford their mortgages and are now going to get their mortgage payments reduced?
Somebody has to pay for the mortgage rescue plan, and it’s not going to be those who ultimately benefit.
I have real sympathy for people who’ve lost a job or through some great misfortune cannot afford their mortgage payments. Or were legitimately duped by a lender.
I don’t have any sympathy for those who treated their home equity like an ATM. I can’t find current statistics but Naked Capitalism had a post in 2007 estimating that 50% of subprime loans were actually cash-out refinances - where borrowers used the equity in their home to pay off credit card balances, student loans, plastic surgery, new car, remodeling, etc. And these people get to not only keep their cars or the stuff they bought on their credit cards, but also get to stay in their homes and pay less?
Mad yet? This guy is.
Here are some other articles on the mortgage rescue plan and Fannie Mae/Freddie Mac’s fee increases. I’m going to go kick some dirt.
| Discussion: 8 Comments »
Energy Star Site Updated to Reflect Stimulus Package Changes
February 18th, 2009 categories: Home Owners
For updated information on the energy efficient tax credits in the stimulus package…
| Discussion: 2 Comments »
Goodies in the Stimulus Package for Home Buyers and Home Owners
February 17th, 2009 categories: Real Estate Listings, Real Estate Market
Home buyers and home owners can benefit from some significant tax credits in 2009 courtesy of The American Recovery and Reinvestment Act of 2009.
Home Buyer Tax Credit
A refundable tax credit of up to $8,000 or 10% of home purchase price, whichever is less. Credit can be taken on 2008 or 2009 income tax returns. The tax credit is refundable - the entire amount must be paid back at the time of sale if buyers sell house within three years. In order to qualify:
Buyers must be “first time home buyers” or can not have owned a home within the last three years
Buyers can earn no more $75,000 (single) $150,000 (couple) for full credit - higher incomes eligible for partial credit
Owner occupied properties only
Purchase home between January 1, 2009 and November 30, 2009
Here’s an excerpt from the Senate Finance and House Ways & Means Committees’ Summary of The American Recovery and Reinvestment Act of 2009:
Refundable First-time Home Buyer Credit. Last year, Congress provided taxpayers with a refundable tax credit that was equivalent to an interest-free loan equal to 10 percent of the purchase of a home (up to $7,500) by first-time home buyers. The provision applies to homes purchased on or after April 9, 2008 and before July 1, 2009. Taxpayers receiving this tax credit are currently required to repay any amount received under this provision back to the government over 15 years in equal installments, or, if earlier, when the home is sold. The credit phases out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return). The bill eliminates the repayment obligation for taxpayers that purchase homes after January 1, 2009, increases the maximum value of the credit to $8,000, and removes the prohibition on financing by mortgage revenue bonds, and extends the availability of the credit for homes purchased before December 1, 2009. The provision would retain the credit recapture if the house is sold within three years of purchase.
Energy Efficient Improvements to Existing Homes
In addition to the home buyer tax credit, the federal tax credits for energy efficient improvements have been increased from 10% of cost to 30% of cost through 2010, with a total cap of $1,500 per homeowner for all properties qualifying for credit (cap was $500). If you’ve been thinking about installing new windows or doors, adding insulation, replacing a heating system or water heater, among other things, now might be a really good time.
Visit the Energy Star site for a list of qualifying improvements, but please note that as of today, they have not updated the tax credit information.
Click here to read the entire summary. Thanks to my client for making my life easier by sending this to me.
You may also like reading:
Home Buying 101: Should you buy? And when?
Top 5 Real Estate Market Predictions for Hartford Area Real Estate 2009
One Day Like This - Elbow
Do you dig real estate news, tips and advice? Sniffing around for pet-related information in Connecticut? Get Unleashed - the blog that’s helping to find homes for people and pets.
| Discussion: 8 Comments »
