Joe Knows Mortgages

Please join us Thursday June 17th in the Grant Valkaria are to view two spectacular properties for this Beatiful Home Showcase .

With one listing from The Waterman Team of National Realty and Shari Ayers from Keller Williams, this is sure to be an event that you will not want to miss!

Please contact Shari Ayers or The Waterman Team for directions, or with any questions on properties.

New Eligibility Rules Announced From Fannie Mae!

There’s great news from Fannie Mae for home buyers who have experienced a short sale or deed in lieu of foreclosure. To help the housing market’s continued stability, Fannie Mae is changing the “waiting period” (i.e. the amount of time that must elapse after the preforeclosure or short sale event) before home buyers can qualify for a loan.

Several factors will impact these changes, including the required down payment or loan to value (LTV) for the transaction and whether extenuating circumstances contributed to the individual’s financial hardship (e.g. a job loss). The following chart highlights the new rules:

(1)The maximum LTV ratios permitted are the lesser of the LTV ratios in this table or the maximum LTV ratios for the transaction per the Eligibility Matrix.

Note that the terms ‘short sale’ and “preforeclosure sale’ are both referenced in Fannie Mae’s announcement and have the same meaning – the sale of a property in lieu of a foreclosure, resulting in a payoff of less than the total amount owed, which was pre-approved by the servicer.

The bottom line:  Buyers who have experienced a short sale or deed in lieu of foreclosure may be eligible for financing sooner than previously expected…especially if they have 20% to put down.  If you have any buyer prospects who may benefit from this change, I’d be happy to help you put them in a home.

Read the full announcement from Fannie Mae.

95% LTV on Conventional Loans in Florida! 90% LTV on Second Homes!

It looks like we are starting to see some improved guidelines here in Florida.  Up until last week, borrowers could not get better than a 90% (primary residence) loan to value because of the lack of mortgage insurance in the state.  That has now officially changed.  I have attached the guidelines that are being used for those loans below.

While these are not the only guidelines for these loans, here is the short list:

Primary Residences max 95% LTV
Purchase/Rate and Term Refinances only
680 minimum credit score
1-unit only 
Up to $417,000 loan amount
41% max DTI
2 months PITI reserves
No condos or attached housing in Florida
Full interior/exterior appraisal required

Second Homes max 90% LTV!
Purchase/Rate and Term Refinances only
720 minimum credit score
Second Homes must be located in resort or vacation area
1-unit
Up to $417,000 loan amount
41% max DTI
2 months PITI reserves
No condos or attached housing in Florida
Full interior/exterior appraisal required

If you know of anyone who may be able to benefit from these new and improved guidelines, please let me know.  As always, if you know of anyone looking to buy or refinance their home, please have them give me a call for their free, no cost and no obligation consultation.  Thank you and I hope to hear from you.

Brevard County Mortgage and Brevard County Real Estate Market Data For February 2010

It is a great time to be involved in the Real Estate industry; home prices are great, interest rates are at historic lows, and there are still government incentives to purchase a home.  The government incentives are set to expire, and you will need an executed contract by the end of April to take advantage of the tax credit.  There is still time to get in on this once in a lifetime deal, so do not delay, act now!          

 The trend of lower price listings selling continues into February.  With almost 80% of the transactions in Brevard County under $200,000, there seem to be great deals out there, with buyers purchasing value.  These low prices are allowing those who were not able to purchase what they where looking for a few years ago, to get into the right home at the right price now. 

While 50% of homes are still being financed, this February 2010 we had 254 cash Transaction which accounted for 49% of the market.  With almost 50% of all homes in Brevard county being purchased with cash, following January’s trend, it appears as though Cash is still ruling the market.  This is a sign that people see no better place for their money than in real estate.  This is a true signal that we are at or near the bottom. 

While we have almost returned to a “normal” market, it has been shown that homes are selling.  If the home is priced right, it will sell in a reasonable amount of time.  New listings that are aggressively priced are quickly sniffed out by those looking to buy, and usually have offers in on them in a short amount of time.  If you find a home that you love, and it is priced right, then you have to act fast.  With interest rates as low as they are, government incentives still on the table, and homes aggressively priced – It is a great time to be a buyer.  If I can help you discover your purchasing power, or take a look at your financing options, please contact me today!

 Brevard County Mortgage and Real Estate Market Data For January 2010 

       Welcome to the first market data report for Brevard County Real Estate of 2010.  While 2009 turned out to be a good year for both the reduction in inventory, and sales of existing inventory, it also proved to be the year of lending changes, and bottoming out prices.  With 2009 in the distant past, we now get our first glimpse into the new decade for 2010. 

        Not too surprising, the vast majority of sales were under $200,000 with 76% of all residential transaction selling between $0 and $199,999.  This trend has been consistent over the past year as the first time homebuyers are greatly incentivized to come in and purchase.  However, we did see an increase in the average price sold of homes to $160,079 in January 2010 versus $148,474 in January 2009.  This data could be telling us that we have hit bottom, and are going up. 

        The biggest surprise for January is the sheer number of cash transactions that are taking place.  This January 2010 we had 252 cash Transaction which accounted for 52% of the market.  Again, Real Estate has historically been a decent investment, and with so few places to put your money right now, buyers are choosing to use their cash instead of financing.  When the cash on the sidelines starts coming into the game at this pace, that is a sign that we have hit bottom. 

        Whether or not the Brevard County market has hit its bottom or not, one thing is certain: it is an outstanding time to buy real estate.  If you are a first time homebuyer, the government is still offering the $8000 tax credit, however, there is an end date, so you better act soon to find your home and claim your government incentive.  Also, we know that the federal government will stop their Mortgage Backed Security purchase program which will almost instantly add to the increase of interest rates.  So, if you are on the fence, or if you know someone who is thinking about buying, now is the time to act.  If you have any questions, please contact me.

First Time Homebuyer Tax Credit Extended Into 2010!
Plus…A New Tax Credit for Certain Existing Home Owners!

It’s official. President Obama has signed a bill that extends the tax credit for first-time homebuyers (FTHBs) into the first half of 2010. This program had been scheduled to expire on November 30, 2009.

In addition to extending the tax credit of up to $8,000 through June 30, 2010, the extension measure also opens up opportunities for others who are not buying a home for the first time.

So Who Gets What?
The program that has existed for FTHBs remains intact with the one exception that more people are now eligible based on an increase in the amount of income someone may now earn.

Additionally, the program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Deadlines
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Higher Income Caps in Effect
The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price
Qualifying buyers may purchase a property with a maximum sales price of $800,000.

First-Time Homebuyer Tax Credit “ Frequently Asked Questions
Here are answers to some commonly asked questions about the tax credit.

What is a tax credit?
A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.

What is the tax credit for first-time homebuyers (FTHBs)?
An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is eligible for the FTHB tax credit?
Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible. This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How do I claim the credit?
For those taking advantage of the tax credit in 2009, you may choose to either apply for the credit with your 2009 tax return or you may apply for the credit sooner by filing an amended 2008 tax return with Form 5405 (http://www.irs.gov/pub/irs-pdf/f5405.pdf).

Can you claim the tax credit in advance of purchasing a property?
No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a taxpayer claim a credit if the property is purchased from a seller with seller financing and the seller retains title to the property?
Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Examples of this would include a land contract, contract for deed, etc. According to the IRS, factors that would demonstrate the ownership of the property would include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property.

Are there other restrictions to taking the credit?
Yes. According to the IRS, if any of the following describe your situation, a credit would not be due.

• You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
• You do not use the home as your principal residence.
• You sell your home before the end of the year.
• You are a nonresident alien.
• You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
• Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
• You owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2009, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2006, through July 1, 2009.

Can you buy a home from a step-relative and be eligible for the credit?
Yes. Provided the person you are buying a home from is not a direct blood relative, the purchase would be allowed.

Can parent(s) who will not live in the property cosign for a mortgage for their child and the child that is a qualifying FTHB still be eligible for the credit?
Yes.

Can a separated spouse who has not owned a home for four years qualify for the FTHB tax credit if the spouse has owned a property anytime in the last three years?
No. However, the spouse may be eligible for the repeat buyer credit. The best path to take in any situation regarding income taxes is to speak with a professional tax preparer or CPA.

If you have any questions that fall outside the situations here, give me a call and if you do not have an accountant to speak with, I can refer you to one.

Is the Market Changing?

Brevard County real estate sales continue to thrive.  New listings are down, sales are up, and interest rates are still at historically low levels.  With sales up almost 20% year over year, and inventory down about the same, it seems as though the market is moving at a fairly decent pace.  So ask the question: is the market changing?

Sales continue to show strong numbers, and inventory is decreasing.  With 79% of the sales being under $200,000, buyers are still looking for the bargains.  These “bargains” are going fast, as 37% of September sales sold in less than 30 days.  That means that if the price is right, the house will sell, fast!  I do not think we are in a sellers market, however, in the lower price points, it is starting to feel that way.

With 60% of homes being financed in the Brevard County area, buyers are still taking advantage of the historically low interest rates.  With the majority of the financing being done through FHA and VA loans, many are enjoying the benefits of these government insured and guaranteed loans.  With the $8000 First time Home Buyers credit still being offered, first time homebuyers are rushing to the market to find their dream home, however, the deadline is fast approaching.

All in all September’s Brevard County mortgage and market data proved to be in line with the theme that the market is improving and changing.  Sales are up, inventory is down, rates are still low, and with incentives to purchase for first time homebuyers, it is an amazing time to purchase real estate!  So, make sure that you speak with a mortgage professional to get an idea of you purchasing power and financing options, and then go out there and get yourself a deal before the market has “changed”!

According to the  Brevard County MLS, 30% of the single family residence sales, year to date, are marked as bank owned properties.  I am not sure of the exact amount that are short sales, however, these are also dominating the market. While we may be reaching the bottom of the market, these transactions are not going away anytime soon.

With the continual arrival of new foreclosed properties in the market place, I thought it would important to review and dispel some myths about bank owned properties from my personal experience.  This information comes purely from personally experience, and has not been derived from things I have read, or things that are taking place in other markets.  This information has come from the purchase of Real estate Owned (REO) in Brevard County.

Myth 1) Banks will not pay any closing costs.

Banks look at the bottom line.  They are holding onto a depreciating asset, and are motivated to sell properties in order to mitigate future losses.  With this in mind, they are willing to do what a normal seller would do in this buyers market; this includes paying closing costs, contributing down payment and closing costs to a gift fund, and sometimes even paying for repairs.

Myth 2) I can low ball an offer on a foreclosure.

While there are many great deals out there, banks are looking to get as close to market value on their listings as possible.  Before a foreclosure is listed a BPO is done, as well an appraisal.  The bank has a good idea of the real market value of the property in its current condition.  Also remember that foreclosures are usually listed on the low end of market value, so there may be many parties interested in the property.  You may not have the ability to go back and forth with the seller.  You may only have one shot to give your highest and best.  Make sure your offer is strong.

Myth 3) You’re the only party interested in that foreclosed property.

In many cases I have seen multiple offers on the same property.  I have even seen foreclosures sell above the list price.  I have also seen over 30 offers in on the same property.  Granted the property was a great deal, it just shows that others are out there looking for that great foreclosure deal.  Again, make sure your offer is strong.

Myth 4) This is like any other real estate transaction.

For the most part the above statement is true, however, it can become slightly more complicated.  Remember, the seller you are dealing with has an oversupply of product, and an undersupply of staff.  Things can take longer than expected, and have the capability of becoming slightly more complex.  Most issued are solved, and most transaction close as long as all parties are in agreement.  It is always best to work with people who understand the process.

Myth 5) The foreclosure property will be move in ready.

While foreclosures remain an excellent way to get a great deal on a property, there may be some downside.  Many of these properties may have been vacant for months, poorly maintained, damaged, vandalized, and in some cases gutted.  If the house has been poorly maintained, and there is apparent damage, it is possible that the house may not qualify for conventional or standard government financing.  These properties may be excellent candidates for rehabilitation or construction financing.

While you may hear that this is a buyer’s market, once you start looking, you may find that is not the case.  With properly priced properties moving at a decent pace, it may take a couple of offers on different properties before you actually come to an agreement. With some outrageous deals out there, interest rates still low, and the first time homebuyer incentive is still in effect, it is a great time to be a homebuyer.  Don’t wait, you may just find that you missed your window of opportunity!