Tax Credit Ends April 30th

The Federal Tax Credit for home buyers is ending April  30th. Come April 30th first time home buyers will no longer receive an $8,000 tax credit as a first time home buyer. Also, repeat home buyers will no longer receive a $6,500 tax credit. If your looking to purchase you need to move quickly to receive this benefit. However, don't let the ending of this program push you into a hasty decsion. Purchasing a home is typcially your biggest investment you can make throughout your life time. There is no need to make a hasty decsion. Also, you never know if Obama will look to gain more votes by extending the plan further. Good luck home buyers.

 You can contact me with any additional questions about the program.

Points or No Points

When refinancing borrowers should consider paying points depending on their specific situation. A point is typically 1% of the total mortgage loan. If the loan amount is $200,000 than 1 point would be $2,000. In general, the points a borrower pays should equate to a lower interest rate over the life of the loan. No points typically equates to lower up front costs but a slightly higher interest rate over the life of the loan.

If you plan on staying in your home for several years, you may find it beneficial to obtain a lower interest rate and pay more points. A lower rate will provide the borrower with lower monthly payments and the money you pay for points may be tax-deductible over the life of the loan term.

Obama Administation Expanding Modifcation Program

The Obama administration is focusing on expanding the mortgage modification program to assist a greater number of unemployed homeowners. Tomorrow, Obama’s administration will provide more information about their plans to assist unemployed homeowners. Obama hopes to help homeowners that have been directly affect by the economic crisis “through no fault of their own”, according to an administration official. This change should provide more flexibility to mortgage servicers to help both unemployed and homeowners that saw a large decline in home values in their local market.

I’ll keep you posted about the program once I hear more.

Bank of American Lowers Princpal Mortgage Balances

Bank of American announced that it would begin lower the principal balances of 45,000 customers. Although this is a small amount of mortgages that are under water, many feel this may spark a trend among lenders. Banks that accepted TARP money had made promises to assist distressed homeowners, however very few followed through with their promises. Bank of America and other lenders may wait to see how their good faith pans out with the government and public before making a larger attempt to help customers.

Although, Bank of America says that this program is by invitation only, you may want to contact the customer service to see if you can qualify for the program. The squeaky wheels gets oiled.

Refinance Tip

Some borrowers can deduct in full those loan fees from a refinance in that same year of the refinance if you did not deduct loan fees from a previous home loan refinance. Speak with your accountant for more details about this benefit.

203K Program - Rehab Loan

The 203k program is one of the hottest loan products out today. This product is relatively new and provides a unique opportunity to home buyers interested in the rehabilitation of a property.

The borrower can get just one mortgage loan as opposed to obtianing seperate financing for the purchase of the home versuses the rehabilitation of the property. The borrower can obtain a long-term fixed or adjustable rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. To minimize the risk to the mortgage lender, the mortgage loan (the maximum allowable amount) is eligible for endorsement by HUD as soon as the mortgage proceeds are disbursed and a rehabilitation escrow account is established. At this point the lender has a fully-insured mortgage loan.

This loan program provides an important service to communities. It provides the opportunity to revitalize and improve areas while expanding homeowner opportunities. I expect to see many more 203k loans funded in the next several months.

Mortgage Tip - Pay Off Your Mortgage Early

Borrowers can pay off their mortgage early and save $1,000's of dollars on finance charges. Borrowers that choose to pay off their mortgage early save on the interest they would of paid over the entire life of the loan. Many borrowers will pay an additional payment per year applied to the principal to pay down their loan early.

However, not every person is able to pay an addtional payment. Borrowers can receive a benefit bay paying a small amount to the principal every month. Just make sure that you write on the check that the money should be applied to the principal balance. If you do not write this on the check, mortgage companies will apply the additonal payment to the princpal and you'll loose the benefit fo saving on future finance charges.

Fannie Mae will Purchase Delinquesnt Loans - Quick Update

Fannie Mae announced that it will significantly increase its purchase of mortgage backed-securities with loans that are least four months delinquent.