Joe Knows Mortgages

The Fourth of July holiday weekend is upon us. Please have a great holiday and be safe while Boating, BBQ’ing, and driving.

The Homebuyer Tax Credit Closing Deadline Finally Extended. While Obama still has to sign this into law, which he is expected to do, those who wrote contracts prior to April 30th, 2010 will have until September 30, 2010 to close on their home purchases and still be eligible for the Tax Credit.

Rates are still at historic lows. If you know of anyone who is thinking about refinancing their current homes, or taking advantage of the combination of low rates and low prices by buying a home, please tell them to give me a call. THank you and have a great holiday weekend!

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.

The First step in the homebuying process should be your pre-approval. A pre-approval could save you significant time and money, and allow you to make your offer with confidence. Please contact me today for your free, no obligation, pre-approval meeting.

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.

Currently, there are very few ways to get 100% financing to purchase a home in Brevard County.  If you are a veteran with VA eligibility or you are purchasing a home in a USDA declared “rural” area, you may be eligible to purchase a home with 0% down.   However, for everyone else, mortgages require a down payment.

What do you do if you do not have the money necessary for a down payment, but you are an otherwise excellent candidate?  There are some other options out there;

• FHA loans require a 3.5% down payment, and the whole amount can come as a gift from an eligible source.

• On a conventional loan, you can get a gift from an eligible source too; however, if the gift is not for 20%, the buyer must have 5% of their own funds for closing costs.

• Brevard County has a first time homebuyer program through Brevard County’s
  First Time Home Buyer Program that will give qualified applicants money for down payment and closing costs.

Whether you are planning on getting gift funds, taking advantage of community or governmental funds, or selling your antique GI Joe collection, make sure to speak with your mortgage professional to assure that you are properly documenting the funds for the underwriter.  There are many rules and regulations surrounding gift funds and cash to close and improper use could spell disaster.  Please contact me anytime for further information.

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.

While it is not official yet, it looks like the FHA is about to make several major changes that will affect borrowers in Brevard County, Florida and the rest of the country.  The talked about changes will affect the cost of mortgage insurance, the down payment, the amount of seller paid closing costs, and also some steps towards being able to better oversee and regulate lenders originating FHA loans.

The FHA does not actually lend money; the FHA insures loans made by lenders that meet the guidelines set forth by the FHA.  In order to insure these loans, all FHA loans have an up-front mortgage insurance premium that is meant to cover the costs of defaults.  Because there are so many defaulting loans, the FHA has to increase the loans up-front cost. It looks like the cost will be raised from 1.75% to 2.25%.  The up-front mortgage insurance premium is a cost that is actually financed into the loan, so it is not something that the borrower has to bring to closing.

Currently the FHA has a minimum down payment of 3.5% for all qualified borrowers; it seems as though the FHA will increase the down payment to 10% for those borrowers with a credit score below 580.  This is kind of a moot change.  The reality is the majority of lenders have a credit score floor of 620; some lenders have even raised their minimum credit score to 640 and higher.  Unless lenders plan to lower their minimum credit scores, this should really not be a factor.

The FHA allows the seller to pay up to 6% of the purchase price towards the buyers closing costs and pre-paids.  The new rule will only allow the seller to pay up to 3% of the sales price towards those items.  As the many of the closing costs are fixed costs, this rule will really impact those lower priced buyers who have enough for a down payment, but who do not have enough funds to cover all of the closing costs.

Lastly, the FHA is looking to better oversee and regulate the current lenders that originate FHA loans.  Recently, Taylor Bean and Whitaker, a Florida based operation, was shut down due to originating loans that the FHA said did not comply with the rules.  It is likely that we will see more of this in the future. 

All in all these changes will most likely continue to make the FHA loan as a viable source for people with challenged credit, less money to close, and many others.  These changes only seek to strengthen the FHA, and make sure that it continues to have the ability to ensure loans for years to come.

Let me make a statement, and I hope you truly digest what I am about to say: the interest rates on mortgages here in Brevard County, Florida are about 1/8% off of their lowest levels in history.  That means that if you qualify for a mortgage, you could potentially get a better rate on your loan than just about anyone in history.  With interest rates and home prices as low as they are, and with the first time home buyer tax credit extended into 2010, people should be lining up to buy homes.  However, these rates have only one way to go, and we are headed there soon.

One of the biggest factors in our low rates right now is not the Fed’s decision to keep the overnight rate as low as it is, rather it is from their decision to continue to purchase mortgage backed securities in the many Billions of dollars per week.  When this purchase program ends, the demand for Mortgage Backed Securities will be less, therefore the price will decrease, and the yield (or interest rate) will increase. 

Another factor that is keeping rates low, has been the low threat of inflation.  While inflation is not happening right now, there are many concerns of inflation coming once the economy starts to improve.  We are already seeing signs of inflation as the Core CPI (Consumer Price Index) came in higher than expected, and a little higher than this time last year. It is inevitable that when you dump as much into the economy as we have, and when the cost of money is as low as it is that we will see inflation.  In inflationary times, bonds are not as attractive because they become devalued. 

So, with Inflation around the corner, and the Fed finishing their Mortgage Backed security purchasing program coming to an end in 2010, interest rates are going to increase.  The increase in interest rates will affect buyer’s purchasing power, as well as their cost of money.  I have said it before, and I will say it again: Now is the time to buy!  Rates are low, but rising; home prices are down, but will go up; sellers are generous, but they will be greedy.  Please take advantage of this opportunity, before it goes away. If you are currently renting, talk to a professional to see if you can buy; if you know someone who is renting, encourage them to see if they can buy.