THE REAL ESTATE ECOBLOG

New Program to Help Homeowners:

The Obama Administration is desperate to help homeowners with a new program after getting somewhat lackluster results from the mortgage industry overhaul and the loan modification programs that are already out there. Because it is clear that more needed to be done, there is a program in place now that will pay homeowners to sell for less than what they actually owe while giving them a little cash on top of that. This program is ready to begin on April 5th through a short sale process. The problem is- will the mortgage and banking industries be willing to forgive the difference between what is owed and what the house will sell for through a short sale? 
To help that this program is very beneficial to the homeowners that find themselves facing foreclosure. With this program the bank that holds the mortgage will get $1,000. Another $1,000 can go towards a second mortgage if the house has one against it. The government will also be giving the homeowners in this situation $1,500 in what they are calling relocation assistance. Another upside to this program is that they will get an assurance from the lender that they won't later be taken to court for the unpaid mortgage balance. 
For a long time short sales have been thought of as lengthy and complicated. Many lenders tend to shy away from them. Will this stream lined process now be the one to help our struggling real estate market and discouraged homeowners?

Extension of Home Buyer Tax Credit Passes in the Senate

Just this afternoon the United States Senate passed the bill extending unemployment benefits and the First Time Home Buyer Tax Credit.  This is great news for a struggling housing market.  Once the bill is officially signed into law by President Obama, I will provide an analysis on what the bill contains and who could benefit.

In the meantime if you have any questions feel free to shoot me an email or give me a call....

Mortgage Rates fall this week!

Mortgage rates fell an average of 0.7% this week.  Primary Mortgage Market Survey (PMMS) Released results in which 30-year fixed rate mortgage (FRM) Averaged 5.036 percent down from last week when it averaged 5.15 percent.  At this time last year 30-year FRM averaged 6.13 percent.

"Mortgage rates had room to ease this week following news of a weaker jobs market, which may slow consumer spending and keep inflation at bay," said Frank Nothaft, Freddie Mac vice president and chief economist. "The 30-year fixed-rate mortgage rate remains very close to January’s all time recorded low of 4.96 percent. Indeed, mortgage rates have drifted up and down only by about one-quarter of a percent in the first months of this year."

DTI Ratios – My what Ratios?!

Homeowners need to know that their DTI (debt-to-income) ratios are crucial to determining an affordable house payment.  The current Government plan defines an affordable house payment or PITIA (principal, interest, taxes, insurance, and any association’s fee) on the first mortgage cannot exceed 31% of the household’s gross monthly income.

Calculating DTI ratios are simple.  Divide house payment by their monthly household income (gross income):

House payment / Gross monthly household income = DTI

Lenders will be scrutinizing these ratios to determine homeowner eligibility.

More Mortgage Help for Home Owners

Finally we are seeing the help we have all been waiting for! Not just more money for banks to spend wherever they please but real incentives for banks to do the right thing! Foreclosures are hitting new hits even as the sub prime mortgages that things started in is over half way through their interest resets. Mainly because as the economy softens more people are losing their jobs and subsequently their homes as their ability to find a new job dwindles.

This new plan is sorely needed and includes help with renegotiated terms that can save few hundred to a thousand dollars a month in an individual mortgage payment. It does not come at no cost but speaking for myself I would much prefer my tax dollars go to helping families rather than Wall Street! The total cost is estimated at $75 million.

This is welcome news for today's sellers as it will translate into less competition in the long run and hopeful a rise in there homes value!

For question feel free to call or email me, you can also visit www.watersrealtymn.com for more market information.

FHA Loan Amounts Increase

The federal governments attempt to spur the housing market is long overdue. The National Association of Realtors has worked hard for many years to have FHA loan limits raised as the housing became more expensive. It is unfortunate that it has taken this long for these limits to be raised. The increase in the limits and the Energy Efficient Financing that FHA offers make it a perfect time to purchase!

The higher loan limits will help people qualify for a government insured mortgage through the Federal Housing Administration. This will allow more people to purchase a home under less risky obligation than the debunked sub prime financing vehicles. This will be beneficial to those who are first time home buyers and those who are purchasing their second or third home.

These higher limits in FHA financing will not allow buyers to purchase there homes with zero down, you will still need to have a down payment. In many cases FHA financing will require you to have at least 3% of the homes purchase price as a down payment. When clients ask me about financing I usually advice them that for the best deal it is a good idea to have 10 to 20 percent of the home's purchase price for a down payment!

If you have questions or would like to learn more. Please feel free to call Cheri Kuhn or Jody Thorpe of Waters Realty LLC. You can also visit our website by clicking Waters Realty.

What is the Real Cost of Financing?

For any of you who have purchased a home and sat at a closing table, you know how confusing and difficult it is to understand your mortgage documents. Even before that the process of applying for and comparing different mortgages can be very complicated. One of the key numbers consumers and mortgage brokers use to determine the best value in a mortgage is through the APR, the Annual Percentage Rate.

The APR is a tool used to compare different loan programs but what many consumers do not realize is that the APR is not regulated and is not always calculated the same way between lenders. So as the old expression goes how does one compare apples to oranges?

We start by asking what numbers are used to calculate the APR and then comparing these numbers but taking into count which fees are included and which are not. Below is a list of some of the fees APR's sometimes include, such as various closing costs and fees associated with the loan. The lender than takes these fees and spreads these figures out over the life of the loan. The objective is to limit the ability of the lender to hide fees and upfront costs behind low interest rates in their advertising.

Fees which are generally included:

1) Calculated Points 3) Pre-Paid Interest 5)Loan Processing Fees
2) Underwriting Fees 4) Document Prep. Fees 6) Private Mortgage Insurance

On Occasion Lenders will Include the f>ollowing

1) Loan App. Fee 2) Credit Life Insurance

Fees that are not Included are:

1) Title 4) Escrow 7) Attorney Fees
2) Home Inspection 5) Recording Fees 8) Transfer Taxes
3) Appraisal 6) Notary 9) Credit Report

If you have more questions or would like to find out if you qualify for a loan, please feel free to visit www.watersrealtymn.com or email me at cherikuhn@watersrealtymn.com. And as always please feel free to call me with any questions at 612-865-9150.

Mortgage tax relief cannot come fast enough!

On December 20th, President Bush signed into law the Mortgage Tax Relief act into law. What does this mean? Well in our troubled real estate market and with foreclosures at an all time high. This act reversed the standard practice of requiring individuals to pay taxes on the portion of the loan which the bank forgives in the process of a foreclosure. Not only is this practice questionable and unfair, but it was hurting American families when that can least afford it! This act will help many families to recover from a foreclosure faster and get their feet back underneath them.

For more information on how this can affect you please feel free to call or me at 612-865-9150 or cherikuhn@watersrealtymn.com. As always for up to date real estate information please feel free to visit my website at www.watersrealtymn.com

FHASecure...

Many of us have heard if not felt the recent woes in the mortgage market and the deeper problems that have now come to light with some of the practices and guidelines involving sub-prime financing.  It is a very uncomfortable situation for some and a terrifying situation for others.  The federal government although slow is starting to respond to the issues and the most recent vehicle that Congress and the President put in place is a program called FHASecure. 

FHASecure is a federally funded (temporary) lending program available to lenders as I am writing this post.  Basically FHASecure works with qualified homeowners seeking payment relief from their adjustable rate mortgage's (ARM's).  The program allows homeowners to restructure their loan into a more stable, fixed-rate program even if they are deliquent on payments.  I think this is a great start to try a help homeowners who are now in trouble to help keep foreclosure at bay and keep the home they have worked so hard for. 

Congress is working on a few other programs to offer relief.  I will put up new posts as those programs become available.  If you or someone you know needs help with finding one of these programs.  I would be happy to direct them in the right direction.  Please feel free to call or email me at 612-865-9150 or cherikuhn@watersrealtymn.com.  You can also visit my website at www.watersrealtymn.com for up to date market information, home searches, and many more useful tools!