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Some First-Time Home Buyers are Scrambling to Meet The Deadline for The $8,000 Tax Credit!
The $8,000 tax credit is a blessing formost first-time home buyers and could become a curse for the one’s that don’t make the deadline. Today is Oct. 26th, if a buyer doesn’t have a ratified contract in process the odds of a buyer making it to settlement by the Nov. 30th deadline is going to be very unlikely.
Many title companies and mortgage companies I have spoken with are swamped trying to meet the deadline. I am hoping that the deadline gets extended but no word yet. Just a lot of speculation. A few words of advice to any buyer trying to meet the deadline.
1. Talk with your agent and lender once or twice a week for progress reports. You don’t want anything to fall through the cracks.
2. Make a check list of things you must do and get them done quickly.
3. If the lender or the processor contacts you about information they need from you get it to them immediately.
4. If your settlement or closing date is scheduled for Nov. 30th try to move it up a day or two (check with your agent or lender). If you can avoid the last day that would be great!
5. If you are just writing you offer on a property you must accept that you might not make the deadline. Your lender will try but most will not guarantee Nov. 30th.
The month of November will be a little crazy for some just hang in there the end results could be worth it!
Always Know Your Numbers!
In today’s world 85% of consumers starttheir home buying search for properties on the Internet. Many potential home buyers whom are referred to me will give me a list of properties they have been looking at on the Internet and some time they have actually driven the area and viewed the properties from the outside. While I applaud the dedication and seriousness of the clients most have not been prequalified and “know their numbers.”
The first step in the home buying process for everyone no matter the price range is to get prequalified so you know your numbers. Especially in this market. Lender guidelines are changing sometime daily.
These are the numbers you should always know before you start your home search;
1. What is my qualification amount?
2. What is my estimated interest rate?
3. How much down payment and closing cost do I need?
A lender can provide this for you in the form of a Good Faith Estimate in writing. I will not show houses to clients who do not know their numbers. If you request a Good Faith Estimate from a lender and he or she refuse to give you one I would proceed with caution. I can also assist you in obtaining one. So get a Good Faith Estimate and take some of the stress out of the home buying process.
And always KNOW YOUR NUMBERS!
Community Development Block Grant Program (CDBG) $5,000 for Closing Costs and Down Payment Assistance
Baltimore City’s Community Development Block Grant Program started this month. The program provides funding that can be used as closing cost and downpayment assistance. Only first-time home buyers with family incomes of 80 percent or below the area median income qualify for the program.
Community Development Block Grant Program 2009 Income Limits are:
1 person $44,800
2 person $51,200
3 person $ 57,600
4 person $64,000
5 person $69,100
6 person $74,250
7 person $79,350
8 person $84,500
What are the benefits?
$5,000 down payment and closing assistance structured as a 5-year loan forgivable 20 percent per year. Buyer must contribute at least $1,000 towards purchase and must use the property as the principal residence. The home must be inspected by a member of the National Association of Home Inspectors or the American Society of Home Inspectors. The home must be free of any flaking, peeling or chipping paint insider and outside, and the home inspector must document no unstable paint surfaces. Closing on the property must occur within 90 days of the contract date. Loan is forgivable over 5 years.
This program is similar to the Baltimore City ADDI Program that started is October 2008 but ran out of funds by January 2009. The ADDI Program was assisting with $10,000 towards closing costs and down payment. Hopefully this program will last longer. Contact me for updates and availability of the funds.
What is “Rescoring!”
If you have paid your bills on time but your credit report says you haven’t, your mortgage lender might be able to fix your report fast. Typically, the three credit bureaus each require at least 30 days to investigate and make changes to your credit report. But if you are in the process of applying for a mortgage, your lender might be able to get the changes made in just a few days. It’s called “Rescoring.”
Rescoring is a service offered only to mortgage lenders by independent credit reporting agencies, which compile information from the three credit bureaus (Equifax, Experian, and TransUnion). The independents can work with the Big Three, fix errors, and then recalculate your credit score. If your score can go up, even a little, after the errors are fixed, you could save thousands of dollars on your mortgage interest.
The key is that rescoring works only on real errors. If you have a low score because you don’t pay your bills on time, then you can’t rescore. You must demonstrate to your lender that you have a legitimate error on your report and provide proof, such as payment records. If your lender does decide you have a legitimate case, you will have to pay up to $150 to have the rescoring done.
Rescoring is really an emergency maneuver. If you are planning to apply for a mortgage, you should get a copy of your credit report first. Go to www.annualcreditreport.com. You can get one free report each year from each of the credit bureaus. You will have to pay to get your score.
Short Sales: When is Offer ‘Accepted’?
There has been some confusion about when a short sale offer is “accepted.” A short sale is a sale of a house in which the proceeds fall short of what the owner still owes on the mortgage. The owner will request that the lender (third party) agree to take less and forgive the rest of what is owed on the mortgage. When an offer is submitted on the property the seller who is still legal owner of the property in most cases must be the first to “accept” the offer. When the seller accepts an offer under these conditions and a contract is formed, the offer is “accepted,” although it will have at least one unresolved contingency: the lender’s approval of the short sale.
If a seller receives more than one offer on the property, the seller picks the best one and signs that offer only and sends it to the lender. I hope this clarifies when an offer is “Accepted.”
Who is a First-Time Home Buyer?
“First-time home buyer” is defined by the Cranston-Gonzalez National Affordable Housing Act of 1990. The code specifies:
The term “first-time home buyer” means an individual and his or her spouse who have not owned a home during the 3- year period prior to purchase of a home with assistance under subchapter II of this chapter, except that– (A) any individual who is a displaced homemaker may not be excluded from consideration as a first-time home buyer under this paragraph on the basis that the individual, while a homemaker, owned a home with his or her spouse or resided in a home owned by the spouse; (B) any individual who is a single parent may not be excluded from consideration as a first-time home buyer under this paragraph on the basis that the individual, while married, owned a home with his or her spouse or resided in a home owned by the spouse; and (C) an individual shall not be excluded from consideration as a first-time home buyer under this paragraph on the basis that the individual owns or owned, as a principal residence during such 3- year period, a dwelling unit whose structure is– (i) not permanently affixed to a permanent foundation in accordance with local or other applicable regulations, or (ii) not in compliance with State, local, or model building codes, or other applicable codes, and cannot be brought into compliance with such codes for less than the cost of constructing a permanent structure. (15) The term “singe parent” means an individual who– (A) is unmarried or legally separated from a spouse; and (B) (i) has 1 or more minor children for whom the individual has custody or joint custody; or (ii) is pregnant.”
Federal Home Loan Bank of Atlanta Funds are Available up to $10,000 for First-Time Home Buyers!
The Federal Home Loan Bank of Atlanta funds are available with some participating lenders. Member Banks can access up to $1 million annually and distribute matching FHP awards up to $10,000 per household to eligible home buyers. The program is a 5 to 1 match. If a buyer puts $2,000 of their own funds in the transaction the buyer is eligible for the entire $10,000. Some participating lenders have received their funds and some have not. Contact me to receive a list of participating lenders who have received their funds.
Some of the eligibility requirements for home buyers are as follow;
Funds are only available to first-time home buyers.
A home buyer must owner-occupy the property.
A home buyer must contribute at least $500.
Home buyers must complete home buyer counseling, debt management planning, and default prevention program. The curriculum will include, but is not limited to;
Choosing the right mortgage, avoiding predatory lenders, budgeting and saving, maintaining your new home, and preventing foreclosure.
FHP funds must be used only for down payment and closing costs assistance and must be reflected on the HUD Settlement Statement. FHP funds cannot be used for reimbursement of earnest money deposits, pay discount points, or to pay cash to the borrower at closing.
If you are interested in receiving funds from an participating lender, I would advise you to set up your counseling class immediately. Federal Home loan Bank of Atlanta funds traditionally becomes available in January each year. This year we were informed that the funds would not be available until March 3rd but the participating lenders did not receive funds until April. Many first-time home buyers have been waiting for the program to start since January and they have already completed their counseling requirements. I do not think the funds will last long. With interest rates being low, home prices dropping, plenty of housing inventory, sellers willing to negotiate with buyers, and the $8,000 tax credit the market is starting to heat up. Don’t wait and miss out on a golden opportunity!
Long-Term Mortgage Rates Hit Record Low!
The Washington Business journal reported that the 30-year fixed-rate mortgage rate has dropped to its lowest level on record. The average rate is the lowest in McLean-based Freddie Mac’s weekly survey dating to 1971. Freddie Mac says its Primary Mortgage Market Survey shows the 30-year fixed-rate mortgage averaged 4.85 percent with an average 0.7 point for the week ending March 26, down from last week when it averaged 4.98 percent.
Last year at this time, the 30-year FRM averaged 5.85 percent. The 30-year FRM has not been lower in the life of Freddie Mac’s weekly survey, which dates back to 1971 for the 30-year FRM. Rates for 30-year FRMs peaked last year at 6.63 percent on July 24th. With last week’s 30-Yr FRM, the interest rate difference is almost 2 percentage points, which amount to a savings of about $225 in monthly mortgage payments for a $200,000 loan.
Now is the Time to Buy a House!
Now is a great time for first-time home buyers to buy a house! I have helped several first-time home buyers in the last 30 days become homeowners and receive fantastic deals on their properties. Unfortunately, many first-time buyers are still sitting on the fence. The opportunities that are available will not last forever. Interest rates are low, prices have dropped, sellers are willing to help with closing costs but many buyers who can buy are still waiting. The theme for my seminar presentation Monday evening was “Now is the Time to Buy a House.” I am not saying this just because I am a real estate agent. I feel so passionately about this because I see every day so many wonderful opportunities that first-time home buyers are missing out on because they will not get off the fence. I have a client who is under contract on a property for $162,900 and the seller gave $9,700 towards closing. The properties in this community sell between $220,000-240,000. My client is actually getting this property for $153,200 what a deal! Don’t miss out on your opportunity call me today!
Free Home Buyer Workshop with Harbel Housing Partnership!
I will be presenting this evening for Harbel Housing Partnership from 6-9pm at the White Marsh Library 8133 Sanpiper Cir. 21236. Harbel is a nonprofit organization that specialize in homeownership education for first-time home buyers. They conduct numerous workshops throughout the year. I have been working with Harbel for 5 years. If you would like to attend one of their workshops they can be reached at 410-444-9152. I am looking forward to bringing everyone up to speed on the current real estate market.
