Market News
Down Payment Assistance is back!!!!!
The Texas Department of Housing and Community Affairs has released a
90-DAY DOWN PAYMENT ASSISTANCE PROGRAM
This program is a 2nd lien designed to help first time homebuyers use the $8,000 tax credit to assist them with down payment and closing costs. Here’s a brief overview:
· For first time homebuyers only (or who have not owned in the last 3 years)
· For principal residences only
· Purchase must occur before 12/1/09
· Income limit for single taxpayers is $75K; $150K for married taxpayers
· Amount available – 5% of the total mortgage up to a max of $7,000
· Buyers must complete a pre-purchase homebuyer education course
· First 90 days, 0% interest to encourage payoff with tax credit refund
· Thereafter, 2 year term at 10% interest ($323 a month for $7,000)
· Borrower must qualify for the loan using all current FHA guidelines
· $250 cashiers check or money order to TDHCA required up front for processing fee
NEW TAX CREDIT FOR NEW BUYERS COMES AT JUST THE RIGHT TIME
On July 30, President Bush signed into law what is by far the most important housing legislation this nation has seen in the last 50 years. Passed by Congress with widespread bipartisan support, the landmark housing bill should help restore confidence among prospective home buyers, stop the erosion of home values, provide a lifeline to borrowers facing foreclosure, and help repair an ailing housing finance system.
One important component of the bill is a $7,500 tax credit for first-time home buyers. This credit is available to anyone who has not owned a home in the last three years and meets certain income requirements. Specifically, singles who earn less than $75,000 or married copules earning less than $150,000 qualify for the full credit. It's only available for those who close on a home between April 9 and June 30, 2009, so you can't wait forever to take advantage of this once-in-a-lifetime opportunity. For details on how the tax credit works, including its refundable character and recapture requirements, go to www.federalhousingtaxcredit.com.
As a home builder, I believe the stimulative effect of the temporary first-time home buyer tax credit is likely to ripple throughout the entire housing market. For one thing, 40 percent of all home buyers are first-timers. But also, you have to understand that the marketplace functions like a ladder, where someone has to make it onto the bottom rung before someone else can trade up to a bigger, better home on the next rung. So helping first-time buyers should make it easier for everyone to move up a notch.
In addition to the tax credit, another key provision of the new law permanently raises the conforming loan limits for Fannie Mae and Freddie Mac, which account for about 70 percent of all home mortgages being written today. Loan limits are also increased for FHA-insured loans, and that agency's programs are substantially modernized and expanded to allow it to once again play a valuable role in the affordable mortgage market. This last element is especially important since the fallout of the subprime mortgage mess has caused credit for lower-income borrowers to all but evaporate.
Of course, the latest housing legislation is not going to turn around the national housing downturn overnight. But it does represent a critical turning point for all of us, and the promise of a much brighter and healthier marketplace on the horizon.
- Corpus Christi Caller Times, Written by Dolores Sanchez, president Builders Association Corpus Christi
It's Official: FHA Hike of 75bps Will Come April 1
The Federal HousingAdministration is following through with its pledge to increase upfront andannual insurance premiums on its forward single-family business.
Unveiled late Monday, the increases are designed tostrengthen FHA's capital position and "have minimal impact on the marketand borrowers," according to FHA acting commissioner Carol Galante. Shenoted that FHA streamline refinances are exempt from these premium hikes.
Starting April 1, FHA will hike its upfront premiumby 75 basis points to 175 bp on all single-family loans, including jumbos.
FHA is also hiking the annual premium on loanbalances of up to $625,500 on April 1. On higher balance loans or jumbos,FHA is planning to implement a 35-bp hike in the annual premium on June 1.
The federal mortgage insurance agency currentlycharges a 115 bp annual premium when the loan-to-value ratio is above95%.
These premiums are expected to slow FHA originationsfrom $218 billion in the current 2012 fiscal year that ends September 30 to$150 billion in FY 2013.
