Less Than 3 Months Left to Claim Up to $8000 from Your Rich Uncle

Have you been looking for a home? Thinking about it? It is your first home (or have you not owned a home in 3 years)?

STOP! Stop looking & considering. Start FINDING one.

If you are a first time homebuyer, you must close on the purchase of your first home by the end of November* to earn a tax credit of up to $8000. Note that this is a CREDIT not a deduction. If you are expecting a refund, it will increase your refund by the amount of your credit. If you will owe taxes on your 1040, your taxes will be reduced by the amount of the credit and you will receive a refund if due. Before I continue, as with any tax advice here or from any source that is not your trusted professional, you should review this with your trusted professional to apply to your situation.

First time home buyers (and those that have not owned a home in the last 3 years) can claim a tax credit of 10% of the purchase price of their primary residence. The maximum credit is $8000 and there are income limitations on who can claim.

MORE EXTRA GOOD NEWS - If you buy your home in time to claim this credit, you can amend your 2008 tax return even though your purchase may be in 2009! This will get the money in your hands sooner!

*So, why less than 3 months left if the clock stops at the end of November? Because you must CLOSE your purchase by then. It generally takes 30 days from offer to close (although we can perform faster in many cases).

Let me know if you have any questions that I can help with.

Tim Epps
918-528-4010
tim@myfairway.net

$8000 First Time Home Buyer Tax Credit for FHA Down Payment? NO (and maybe)

Much has been written and Tweeted about the US Department of Housing and Urban Development allowing the use of the $8000 First Time Home Buyer Tax Credit as down payment on a new home. First, HUD said yes. Then, HUD said no. Now, HUD says maybe. Mortgagee Letter 09-15 which was released and then rescinded has now been revised & re-released. Despite fairly clear language in ML 09-15 (below - emphasis mine) there are still many that mis-understand and mis-report.

• Pursuant to 12 U.S.C. 1709(b)(9), the homebuyer’s downpayment required for eligibility for FHA insurance may not consist of any funds (including funds derived from a sale of the homebuyer tax credit) provided by the mortgagee, the seller, or any other person or entity that financially benefits from the transaction (or by any third party or entity that is reimbursed, directly or indirectly, by the financially benefiting person or entity). Accordingly, the proceeds of the sale of the tax credit to FHA approved mortgagees, the seller, or any other person or entity that financially benefits from the transaction (or any third party or entity that is reimbursed, directly or indirectly, by the financing benefiting person or entity), may not be used to meet the 3.5% minimum downpayment, but may be used as additional downpayment, buying down of interest rate, or other closing costs.

IF a buyer is eligible for the credit, and IF there is a lender (or agency) available to do so, buyers can use their tax credit as collateral on an additional loan over and above their FHA mortgage to pay some of their closing costs, pre-paids, points for lowering rate, or down payment IF they are putting down the minimum required 3.5% down payment without those funds. Bottom Line - you MUST still have the 3.5% down payment from funds outside of the tax credit.

Your 3.5% down payment can come from savings, gift from relative or employer, your 401k/IRA, etc. Any use of the tax credit at the time of closing can go toward down payment over the 3.5% minimum ONLY.

The use of the tax credit at closing is as collateral on a loan to help you with costs. However, just because HUD has allowed this on FHA loans does not mean that you will be able to find a lender or agency in your area that will assist with this. As of now, there are precious few opportunities to accomplish this. No one in Oklahoma has announced their participation to date. Also, the major national lenders have yet to release their guidelines for underwriting FHA loans with these secondary liens included.

How then can a First Time Homebuyer use this credit to their advantage? There are many ways - savings, emergency fund, home repairs/renovations, etc. For most buyers, the last resort should be using it in getting an additional loan to help with closing.

Speak to a Mortgage Professional about your specific conditions, needs and goals. Have a conversation - do not be sold. Get the RIGHT loan for YOU.

Tim Epps

918-528-4010

Tim@MyFairway.Net

Broken News! Call a Mortgage Professional to Discuss Your Down Payment Options

Yesterday, Shaun Donovan, the Secretary of Housing & Urban Development (HUD) announced at the morning session of a meeting of the National Association of Realtors (NAR) that HUD intended to allow the use of the First-Time Homebuyer Tax Credit as collateral on a bridge loan to assist borrowers with the 3.5% down payment required for an FHA loan and any closing costs. This was also posted on HUD's website Monday night in Mortgagee Letter 09-15. That posting has since been rescinded and pulled.

Why was this pulled? Because HUD had not fully prepared for this. Thank goodness they did not allow you to print coupons for it. Think if this had been announced on Oprah, and she had said to go to www.unthinkFHA.com? Well, this has happened to an extent.

Many Realtors, home builders, (and even some Mortgage Professionals) who have an active blog or Twitter account, have been shouting from their virtual rooftops that this is now available to First Time Home Buyers. IT IS NOT!!!!! It never was! I waited to post or tweet about this because it is too easy to get expectations built too high without the facts to support them. Secretary Donovan delivered the announcement in a prepared statement so it cannot be said that it was an idle comment by the Secretary. And, the Mortgagee Letter 09-15 was posted for awhile on the HUD website exhibiting that they had full intention of carrying this out. However, many things were not yet in place to allow this to happen at this time. Who would underwrite and fund the bridge loans? Will the IRS allow assignment of the tax credit to a third party?

The moral of this story? Be wary of "Breaking News" in real estate. Seek advice on property matters from your Realtor. A proper Mortgage Professional will always refer you to your Real Estate Professional for advice on selection, pricing, negotiation, etc. But, at the risk of upsetting my Realtor friends, partners and future partners, please seek advice on real estate financing from your Mortgage Professional. There is a vast array of programs and terms to suit prospective homeowners. These programs and guidelines change every day. Rate sheets have a life span of less than 6 hours in today's market. There are many down payment options from no-down and low-down to all you care to put down. This never-even-official program was not the only way to go. Allow your Mortgage Professional to prepare for you the best package of rate and term to meet your situation and desires. Allow your Realtor to find you the best home at the best price to you meet your situation and desires.

My role is to work as a teammate in the purchase of your home. I may post here about home values in our market. I do so, not as an appraiser or Realtor, but as an active participant in the real estate profession and to help Oklahomans understand that much of the national news about home values does not affect us here. National news affects lending guidelines for local buyers but not local values. I will NOT advise a client on the proper price to pay for a home (or to sell it for). I WILL advise them on the amount they can be approved for and how to pay for it. I will NOT advise a client on where to buy a home. I WILL advise them on what loan programs may be available in certain areas. Additionally, although I am knowledgeable on the First Time Home Buyer tax credit and other tax advantages of home ownership, I will NOT attempt to replace their current trusted tax professional or give specific advice on my clients' situation. I WILL link to IRS Form 5405 for reference and convenience.

If I can help you (buyers, Realtors, sellers - you will need approval for a new home), please let me know. It would be my pleasure to serve you with sound advice and not hype.

Tim Epps

918-528-4010

Tim@MyFairway.Net

Has your mortgage professional talked to you about the HVCC?

This is not about your HVAC (Heating Ventilation and Air Conditioning). This is about the HVCC which stands for the Home Valuation Code of Conduct. You can do your own search for its hsitory and draw your own conclusions about its need. But the reality is that the HVCC takes effect on Friday, May 1st, 2009 and it will have an effect on your next mortgage. This Code is currently only directly related to loans originated by mortgage brokers and to conventional loans - those delivered to Fannie Mae & Freddie Mac - originated mortgage bankers. FHA, VA, USDA and some other programs are not required to comply, but many lenders will choose to do so for sake of consistency.

The Home Valuation Code of Conduct essentially puts a wall between mortgage lenders and appraisers so that there can be no influencing of appraisers to manufacture false values. This is well intended and may seem like a small, behind the scenes change. But, in practice the HVCC will make your loan take longer to obtain.

Do not make the mistake of not asking your mortgage lender about the HVCC and how it will effect you.

Mortgage brokers are the ones most impacted since they are seen as having no "skin in the game". Mortgage bankers fund the loans in their own name and have some risk. Mortgage brokers will no longer be able to engage appraisers directly at all. If the broker needs to take your loan to another funder, he will have to order a new appraisal from a different appraisal management company. This will cost you more money. (Note: This post is not intended to enflame or start a debate on the merits of working with a mortgage banker vs. a mortgage broker. This is only intended to inform of the facts of how the HVCC impacts borrowers.)

What is the direct impact to Oklahoma consumers and Realtors who are not getting an FHA/VA,USDA loan OR who are working with mortgage brokers?

• It means that you can’t expect an appraisal to be done in 3 days any more if you are if you are working with a mortgage broker.
• It means that you can’t get an appraisal done with one lender and take it to another lender if you are working with a mortgage broker.
• It means that your mortgage broker no longer has “control” over which appraiser and/or the quality of the appraisers. That control has probably all been relegated by an appraisal management company.
• It means that your either your appraisal will cost more or the appraiser will make less if it is ordered through an appraisal management company.
  
• It means that it’s important to work with a mortgage banker who is on top of things and plans ahead - such as ...

Tim Epps

Fairway Independent Mortgage

918-528-4010

Tim@MyFairway.net

First-Time Homebuyer Seminar - How to get $8000 to buy the home you want!

You will hear about options like: 

•       $8,000.00 tax credits & more
  
•       Lowest interest rates in 40 years
  
•       Bank owned homes
  
•       How to find and get the best deal
  
•       Available homes in your price range
  
•       Meet with industry professionals (Mortgage Lender, Realtor, Insurance Agent) that can show you how to get started
  
•       Q & A session to answer all your questions
  
•       No obligation necessary
  
•       Convenient to all at TCC Southeast campus
  

Event will be held Saturday, April 25, 2009 from 10AM to Noon.

You will be out in time to attend open houses and find your new home!

Call or e-mail TODAY to register – Seating IS limited!

918-528-4010 or Tim@MyFairway.net

Brought to you by:

Tim Epps - Fairway Independent Mortgage - 918-528-4010

Dean Dretske - Keller Williams Realty - 918-340-8303

John Buchanan - Country Financial - 918-481-6900