Understanding Current Lending

by admin

By Tammy Hajjar

Lehman Brothers files for bankruptcy, AIG receives monetary infusion from the Fed, Bank of America acquires Merrill Lynch, the White House signs a $700 billion financial market bailout, JP Morgan Chase swoops in to save Washington Mutual — the list is long. These are tumultuous times in the financial markets, but don’t let the woes of Wall Street shade the opportunity we have before us.

As I’m sure you’d agree, right now it’s all about buying right — the right property, in the right location, at the right time and for the right price. This seems to be the ultimate task upon all of us in both the real estate and financial industries today: Educate Main Street of this incredible buying opportunity and how we play into that winning equation.

Also, despite all the media hype, there are plenty of programs available for first-time homebuyers, move up buyers and investment buyers, including special incentives such as the $7,500 tax credit, flexible credit programs and even closing cost grant funds to those who qualify.

Since there’s been a lot of talk about both the tax credit and FHA loans, here’s a quick list of the basics of each.

The FHA loan has not been as prevalent in the past five to seven years; however, with the constriction of Alt A product, it has regained quite a bit of ground as a viable finance alternative for your buyers.
• Three percent minimum down payment (this will increase to 3.5 percent on Jan. 1, 2009) on one- to four-unit purchases
• New permanent loan limits: one-unit is $410,000, two-unit is $524,850, three-unit is $634,450 and four-unit is $788,450
• Up to 6 percent seller concessions toward closing costs or pre-paids (taxes and HOA dues paid by builder/seller allowed for the first year up to the 6 percent cap)
• Gift funds from blood relatives allowed
• Non-occupant co-borrowers allowed
• Non-traditional credit allowed
• Low monthly PMI premiums

$7,500 First-Time Homebuyers Tax Credit
There were many facets of the Housing and Economic Recovery Act of 2008, but one that is a great talking point with your buyers is the first-time homebuyers tax credit. For additional information on the credit, please visit federalhousingtaxcredit.com.
• First-time homebuyers (someone who has not owned in the past three years) purchasing any kind of home, new and existing, are eligible.
• $7,500 credit is a 15-year, zero percent interest loan, repaid $500 per year through their annual tax filing.
• Purchase must occur on or after April 9, 2008 and before July 1, 2009.
• Participating is easy and no other applications or forms are required, all your client has to do is inform their tax preparer.

This marketplace is ever changing, so please take the time to consult with a reputable mortgage professional regarding programs and product options available, as well as market news.


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