Davis County $423,750 $417,000
Morgan 423,750 417,000
Salt Lake 652,500 516,250
Summit 652,500 516,250
Tooele 652,500 516,250
Weber 423,750 417,000
As I have mentioned in previous Blog posts, I am going to be watching government spending and the increasing Federal debt and the effect on Bond prices and resulting effect on Mortgage rates.
The following is a very sobering commentary on the out of control Government spending going on that will have far reaching implications on our debt structure. Remember, future inflationary worries from Government spending will negatively effect Bond prices and increase mortgage rates.
The Senate was very busy in the season of giving, approving a 10-year, $871 Billion Bill yesterday that would extend health insurance to millions of Americans. The vote was split 60 to 39, down party lines. The Bill is being framed as the biggest change to the health care industry in decades, but it’s not a done deal yet. Now the Senate and the House must come together to hammer out a compromise between their two versions, which means more discussions, negotiations, and debates.
Frequently Asked Questions
About the Move-Up/Repeat Home Buyer Tax Credit
The Worker, Homeownership, and Business Assistance Act of 2009 has established a tax credit of up to $6,500 for qualified move-up/repeat home buyers (existing home owners) purchasing a principal residence after November 6, 2009 and on or before April 30, 2010 (or purchased by June 30, 2010 with a binding sales contract signed by April 30, 2010).
The following questions and answers provide basic information about the tax credit. If you have more specific questions, call me and I will visit with you about your unique situation.
FHA Will Hike Premiums, Credit Scores and More
December 2, 2009The Federal Housing Administration is asking for an increase in mortgage insurance premiums to replenish its diminishing capital reserves while hiking credit scores for applicants. Housing secretary Shaun Donovan will ask Congress Wednesday afternoon to raise the 55-basis point cap on annual government MI premiums. Administratively, FHA officials are expected to raise the 1.75% upfront premium and prohibit those points from being rolled into the loan amount. (The agency does not need Congressional approval to raise upfront premiums.) Even though it is hiking loan costs, HUD will allow the upfront premium to be priced into the interest rate. It also will allow home sellers to pay the premium. "The good news is that they are doing this administratively and taking leadership," said Brian Chappelle, a mortgage-banking consultant with Potomac Partners. As the health of the mortgage insurance fund improves, FHA can reduce the premiums and other restrictions, he added.
For immediate release November 18, 2009
A Qualified Mortgage Consultant Can Outline Your Options
Renters Have Much to Gain by Pursuing Home Ownership
By Loan Marty Qualls, Sr. Mortgage Loan Officer
Primary Residential Mortgage
Primary Residential Mortgage
Ogden, UT – Buying a home vs. renting is a big decision that takes careful consideration, as most mortgage consultants will agree. But the rewards of home ownership are great. For many years, purchasing real estate has been considered an extremely profitable investment. It is an achievement that offers a sense of pride, financial stability and potential tax advantages.
Yes, there are certain responsibilities associated with owning a home. Landlords will often argue the benefits of renting, and for obvious reason. If you are renting, you’re helping them make their mortgage payment.
The numbers are staggering if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will increase 5% every year, then over the next five years you will pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won’t benefit when the property value goes up!
However, if you were to purchase your own home or condominium, you would be well on your way toward building equity within that same five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates drop, and this would cause your monthly mortgage commitment to go down.
In addition to building equity, there are tax advantages that come into play with home ownership. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.
To find the loan program that is right for you, your mortgage consultant will need to evaluate your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for financing. It is also important to let your mortgage consultant know what your future goals are, because this will help narrow down which loan option is the best fit for your long-term needs.
There are many different types of loan programs available, including “low” and “no” down payment mortgage programs. These types of programs require the borrower to provide less than 3 percent of the loan amount as down payment. FHA lenders rule that the mortgage payment, including principal, interest, taxes and insurance (PITI) should not exceed 31 percent of your gross income, and the PITI plus other long-term debt (car payments, etc.) should not exceed 43 percent of your gross income.
Housing is an expense that takes a big bite out of the monthly budget. If you are a renter and feel that “home” is more than just someplace to hang your hat, think about the advantages of purchasing real estate. It may be time to take the step into building your personal net worth as a home owner.
FHA Condo Update
By FHA expert Marty Qualls
This update contains the temporary changes to the FHA Condo Approval Process as outlined in Mortgage Letter 2009-46 B.
Here are the 5 things you need to know about these changes:
1. These temporary changes are effective on December 7th, 2009 through December 31st, 2010; except for Spot Loan Approvals.
2. Spot Loan Approvals will be eliminated as of February 1st, 2010.
3. FHA loan concentration may be increased to 100% if the following criteria are met: a. Project construction has been 100% complete for at least 1 year, b. All units have been sold and no single entity owns more than 10% of the units, c. Project holds 10% of the budget in reserves for capital expenditures and deferred maintenance, d. Control of Home Owner's Association has been transferred to the owners, and e. Owner-occupancy is at least 50%
4. FHA requires a 50% owner-occupant ratio but bank-owned units that are either vacant or tenant-occupied are not required to be included the calculation.
5. New construction pre-sale requirement is temporarily reduced to 30%.
Call me with questions you may still have about whether your condominium purchase or refinance will qualify through FHA!
Homebuyer Tax Credit Extended…
Plus, New Tax Credit for Existing Home Owners!
It’s official! President Obama has signed a bill that extends the tax credit for first-time homebuyers (FTHBs) into the first half of 2010. In addition, the extension also opens up opportunities for others who are not buying a home for the first time.
First Time Homebuyer Tax Credit Extended Into 2010!
Plus...A New Tax Credit for Certain Existing Home Owners!
It's official. President Obama has signed a bill that extends the tax credit for first-time homebuyers (FTHBs) into the first half of 2010. This program had been scheduled to expire on November 30, 2009.
In addition to extending the tax credit of up to $8,000 through June 30, 2010, the extension measure also opens up opportunities for others who are not buying a home for the first time.
So Who Gets What?
The program that has existed for FTHBs remains intact with the one exception that more people are now eligible based on an increase in the amount of income someone may now earn.
Additionally, the program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.
Higher Income Caps in Effect
The amount of income someone can earn and qualify for the full amount of the credit has been increased.
Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.
Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.
Maximum Purchase Price
Qualifying buyers may purchase a property with a maximum sales price of $800,000.
First-Time Homebuyer Tax Credit – Frequently Asked Questions
Here are answers to some commonly asked questions about the tax credit.
What is a tax credit?
A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual's primary residence.
What is the tax credit for first-time homebuyers (FTHBs)?
An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.
Who is eligible for the FTHB tax credit?
Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible. This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.
As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.
How do I claim the credit?
For those taking advantage of the tax credit in 2009, you may choose to either apply for the credit with your 2009 tax return or you may apply for the credit sooner by filing an amended 2008 tax return with Form 5405 (http://www.irs.gov/pub/irs-pdf/f5405.pdf).
Can you claim the tax credit in advance of purchasing a property?
No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.
Can a taxpayer claim a credit if the property is purchased from a seller with seller financing and the seller retains title to the property?
Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Examples of this would include a land contract, contract for deed, etc. According to the IRS, factors that would demonstrate the ownership of the property would include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property.
Are there other restrictions to taking the credit?
Yes. According to the IRS, if any of the following describe your situation, a credit would not be due.
Can you buy a home from a step-relative and be eligible for the credit?
Yes. Provided the person you are buying a home from is not a direct blood relative, the purchase would be allowed.
Can parent(s) who will not live in the property cosign for a mortgage for their child and the child that is a qualifying FTHB still be eligible for the credit?
Can a separated spouse who has not owned a home for four years qualify for the FTHB tax credit if the spouse has owned a property anytime in the last three years?
No. However, the spouse may be eligible for the repeat buyer credit. The best path to take in any situation regarding income taxes is to speak with a professional tax preparer or CPA.
If you have any questions that fall outside the situations here, give me a call and if you do not have an accountant to speak with, I can refer you to one.
"Marty and I have had the opportunity to work together on many occasions. As a Sr. Loan Officer it is his responsibility to ensure a successful transaction with my clients.
My clients rely heavily upon his knowledge, experience and people skills, all of which Marty excels in.
I have never had a client be disappointed with Marty’s work.
He is quick to respond and isn’t afraid to address tough issues.
As a result of his upfront, honest and kind nature he has proven himself as an excellent Loan Officer time and time again.
In the three years that we have known each other Marty quickly became one of the few people that I consider referring.
I feel that the work my Loan Officer’s perform is as big of a reflection of who I am and how I conduct my business, as it is to them and their own clients and business.
Marty is capable of handling any Loan that I could ever send him.
He is willing to go the extra mile to make sure things are done correctly.
When you are considering a mortgage loan and loan officer, Marty is the one you should choose.
Principal Broker / Owner
Sorensen & Company Real Estate, Inc."
Governor signs bill for new homes grant
Gov. Jon Huntsman Jr. signed a bill yesterday that will provide $6,000 grants to buyers of newly constructed, never-occupied homes. Upon his signature, he immediately directed the Utah Housing Corporation to begin dispersing grants under the “Home Run” program to buyers who finance a recently constructed home with a 30-year (or less) fixed-rate mortgage and meet other qualifications.
Senate Bill 260 created a fund that will use federal stimulus dollars to provide about 1,600 grants to be distributed through Utah Housing Corporation to home buyers on a first-come, first-served basis.
To apply for the grant, home buyers should work through their lender. Any mortgage lender qualified to make mortgage loans under Utah law can assist home buyers to secure the Home Run grant, but Utah Housing has a list of currently approved lenders. Lenders will work directly with Utah Housing Corporation to apply for the grant money. Examples of qualifying mortgages include conventional, FHA, VA, Rural Housing and Utah Housing loans. Cash buyers should work directly with Utah Housing.
Consumers do not have to be first-time buyers to qualify for the program but incomes cannot exceed $75,000 for singles and $150,000 for married couples. Buyers who qualify for both programs can take advantage of the $8,000 federal home-buyer tax credit as well as a Home Run grant.
“It is up to the states to use the federal stimulus money in a way that truly has a beneficial impact on our economy. This is an immediate stimulus targeted at the weakest area of Utah’s economy,” Huntsman said in a press release. “This investment of $10 million will result in 8,800 jobs in the market and $324 million in wages into our economy. This boost is critical for us to reverse our current position.”
To learn more about program details and how buyers can apply, visit www.UtahHousingCorp.org . Also visit www.UtahHousingFacts.com for information about both the Home Run program and the $8,000 federal first-time home buyer tax credit.
The reading shows that the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970. “History suggests that home sales can rise even in times of job losses when housing affordability rises,” said Lawrence Yun, the association’s chief economist. (Source: The
Refinance Opportunities Now Available
to Those Who Lack Sufficient Equity
Revised March 4, 2009
One of the initiatives in this program is aimed at helping responsible homeowners "refinance" their loans to take advantage of historically low interest rates. Here are some common Questions and Answers about the Refinancing Initiative in the program.
Who is eligible?
You may be eligible if:
How do I know if my loan is owned or controlled by Fannie Mae or Freddie Mac?
Simply call or email me. I'll help you determine if your mortgage is backed by Fannie Mae or Freddie Mac.
I owe more than my property is worth. Do I still qualify to refinance under the Making Home Affordable Program?
Eligible loans will include those where the first mortgage will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less, you may qualify. The current value of your property will be determined after you apply to refinance.
If I am delinquent on my mortgage, do I still qualify for the Refinance Initiative?
No. But the good news is, you may qualify for the Modification Initiative. Contact me to discuss your situation and review your options.
I have both a first and a second mortgage. Do I still qualify to refinance under Making Home Affordable?
As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible for the Refinance Initiative.
Will refinancing lower my payments?
That depends. If your interest rate is much higher than the current market rate, you would likely see an immediate reduction in your payment amount.
However, if you are paying interest only on your mortgage, you may not see your payment go down. BUT... you will be able to avoid future mortgage payment increases and may save a great deal over the life of the loan.
What are the terms of the refinance and what will the interest rate be?
All loans refinanced under the plan will have a 30- or 15- year term with a fixed interest rate.
The interest rate will be based on market rates at the time of the refinance. Currently, interest rates are at historical lows, which makes this a good time to examine your refinancing options.
Will refinancing reduce the amount that I owe on my loan?
No. Refinancing will not reduce the principal amount you owe. However, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.
Can I get cash out to pay other debts?
No. Only transaction costs, such as the cost of an appraisal or title report may be included in the refinanced amount.
How do I apply for the Refinance Initiative?
Call or email me today to discuss your specific situation and to examine your options. If this plan is right for you, we can begin working on your refinance immediately.
As part of the discussion, we may need to look at the following information:
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.
Tax Credit Versus Tax Deduction
It’s important to remember that the $8,000 tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing.
Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a homebuyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit… and still receive a check for the remaining $4,000!
According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.
To break down what this phaseout means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:
Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.
Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.
Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.
The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principle residence also qualify.
More good news – there is an extension on the additional tier of conforming loan amounts which had been first established in 2008. This tier of home loans are those greater than $417,000, and with a maximum that depends on the area, but is not greater than $729,750. These loans will again be eligible for rates that are slightly higher than conforming loan rates, but less expensive than the standard “jumbo” loan rates.Additional Housing-Related Provisions
Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.
Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.
Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.
Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.
More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.
According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.
While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.
The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.
As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.