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Even Without Uncle Sam’s Help, Mortgage Rates Still Holding Steady

Rod Herman — Fri, 23 Apr 2010 14:52:45 +0000

If you checked out the Freddie Mac Weekly Mortgage Survey box on the left sidebar of our web site late yesterday, you’ll see that interest rates remain virtually unchanged from last week’s survey — which is a very good sign.

It’s now been three weeks since the federal government stopped buying mortgage-backed securities. And despite a prevailing consensus that rates would go up perhaps a half-percentage point shortly after Uncle Sam stopped propping up the mortgage market, so far so good.

As you’ll recall, the first week after the government got out of the mortgage-buying business was a little iffy, as rates immediately jumped 1/8%. But then last week, they dropped back down by almost that same amount to an average nationally of 5.07% with 0.6 points.

And, as you can see in the box on the left side of our website, this week’s rate is essentially a carbon copy of last week: 5.07% with a 0.7 point for a 30-year fixed rate mortgage.

So on a $200,000 loan, aside from that mere $200 increase in points, everything’s the same as it was a week ago.

The longer we go without any significant interest rate increases, the more confidence it should give to the overall mortgage market, which in turn, would keep rates affordable and enable more people to buy a home.

Remember that, as I pointed out last week, the 5.07% rate is a national survey, so the rates you can get locally will likely be marginally different.

Your actual rate will depend on your credit score, loan amount, loan program and various other factors. So be sure to consult with a local loan professional for current rates and fees (or, if you don’t have one and want a recommendation, contact us and we’ll be happy to suggest one).

In the coming weeks, I’ll keep watching this rate survey and will report any significant or noteworthy changes. For now, though, so far so good!

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Haven’t We Learned Anything?

Rod Herman — Wed, 21 Apr 2010 03:30:00 +0000

I just got the following email in my spam folder, from a mortgage lender out of Southern California:

Even though we’re not even close to getting out of our nation’s worst financial mess since the Great Depression, we’re already beginning to see a smattering of snake oil salesman peddling loans that look and feel just like their subprime cousins that started this whole economic tailspin.

I guess I was naive to think that those flim-flam men and women who pushed people into homes they clearly couldn’t afford had left our industry for good.

No, it looks like they’ve just been laying low for the last few years.

Yet here they come, even as traditional, institutional lenders are still tightening guidelines to ensure that the only ones who get a loan are those who truly qualify. And as the government government continues to unveil programs to help borrowers caught in the cross-fire of the recent subprime meltdown.

It didn’t take long for these sharks to start peddling their smelly wares again, did it?

Call me naive, but shouldn’t a lender or investor know a little bit about the borrower’s financial ability to repay before giving them hundreds of thousands of dollars?

Yet, according to this email, all this lender wants is a verification of employment (VOE). That’s right, as long as your boss says “yep, Charlie works here” you’ve got yourself a loan.

So as long as I put 20% down, I don’t need to show any paystubs, W-2’s nor tax returns. And with a score of 720, I can borrow almost three-quarters of a million dollars. Plus, I can close escrow in 10 days?

Do the words “too good to be true” come to mind? And you know what they say: if it smells like a rat, it MUST be a rat.

Now let me ask you — isn’t this exactly the type of lending that got us into the economic cesspool we’re in right now?

I wondered how long it would take before the predators would reappear. I was pretty optimistic, I guess, for I figured it might take another 3-4 years before we started to see a rebirth of these smell-like-a-rat loan programs.

Yet, in the last 4-6 weeks, I’ve started to notice a few emails like the one above hitting my spam folder.

Hopefully most of my fellow real estate agents will do just what I did and trash the email right away. And hopefully any borrower who comes in contact with someone peddling one of these loans will run like the wind.

I really thought we’d learned from what’s happened over the past 3-4 years.

Obviously not!

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Good News For Solano Home Buyers: Interest Rates Drop Back Down This Week

Rod Herman — Sat, 17 Apr 2010 19:03:12 +0000

There’s been a lot of talk in recent months (including right here) about what would happen to interest rates once the federal government stopped buying mortgage-backed securities and mortgage pricing was left solely to the free market.

The prevailing sentiment at the end of March was that rates would go up by about a half-percentage point in the coming weeks. And that’s exactly what started to happened when the calendar changed from March to April.

As I reported last week, Freddie Mac’s weekly mortgage survey on April 8, showed that rates had reached an 8-month high at 5.21%.

So we all waited with baited breath for this week’s report to come out, wondering whether we’d see another 1/8 point jump in the rates.

Well, this week, the mortgage market did an about-face and rates are again right back to where they were on April 1, which is a very encouraging sign.

According to Freddie Mac’s weekly survey (which appears on the left sidebar of our web site), rates for a 30-year fixed-rate mortgage (with 0.6 “points”) averaged 5.07% nationally this week. That’s down from 5.21% a week ago and even lower than it was the first two weeks of January.

So what does this mean for Solano County homebuyers?

Well, as I wrote in that same post on April 8, on a $200,000 loan, for every 1/4% change in the rate, the payment goes up or down about $30/mo. and the loan amount you qualify for changes by about $5,000.

Earlier this year, there was a great fear that once the government got out of the mortgage-buying business, rates would immediately skyrocket. That fear was tempered somewhat as the end of March approached, but most experts still expected a 1/2% jump in relatively quick fashion.

So seeing rates back to the same point they were the day after the government exited the mortgage purchase arena is very welcomed news.

Keep in mind that your own mortgage lender will likely quote rates that are slightly different than what appears in the Freddie Mac chart, since that is a national average. Local factors and things like credit scores, down payment and loan type can all affect your interest rate.

But regardless of the number your lender quotes you, it definitely should be lower today than it would have been a week ago. And that’s certainly good news.

I’ll keep tracking it. You can too, simply by coming back regularly and checking the Freddie Mac box on our web site. The rate survey usually comes out on Thursdays.

If you’re just starting out or don’t have a lender, please contact us and we’ll be happy to recommend a reputable local lender. To search for homes in Solano County direct from our own MLS feed, be sure to visit our Home Search page and contact us for further details on any homes that interest you.

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Mortgage Rates Up This Past Week; How Will That Affect Solano County Home Buyers?

Rod Herman — Thu, 08 Apr 2010 22:42:26 +0000

In the first week since the government officially exited the mortgage assistance business, interest rates have started to rise, as many experts predicted would happen.

Highest Rates In 8 Months

Freddie Mac released its weekly mortgage market survey earlier today (see the left sidebar) , which shows that the average 30-year mortgage is 1/8% higher today than it was a week ago (5.21% this week vs. 5.08%) and the highest its been since the middle of last August.

Now the big unknown is whether this is the start of a continued climb to even higher rates or just the market correction that everyone expected would occur as soon as the federal government stopped buying mortgage-backed securities.

How Rate Increases Will Affect Local Home Buyers

If you’re in the market to buy a home in Solano County right now, you’re probably wondering just how much a rise in interest rates will impact your buying power.

Well, the answer depends partially on how much you’re borrowing, for the greater the loan amount, the greater the difference.

On a $200,000 loan, if you start out at 5%, for every quarter-percent increase in the interest rate, your payments will go up about $30/mo. On a $300,000 loan, it’s about an extra $45/mo.

So if you’re borrowing $200,000 and rates go up to 5.5%, your payment is going to jump about $60/mo. Borrow $300k and you’re looking at about $90 more every month.

A Rate Jump Could Mean Less Buying Power

That’s all well and good as long as you can still qualify for a payment that high. But if you’re only qualified to borrow $200,000 at 5%, then your buying power would drop by about $5,000 for every 1/4-percent rate increase in the rate.

So if rates went from 5% to 5.5%, instead of being able to borrow $200,000, you’d only be able to borrow about $190,000.

And on a $300,000 loan, going from 5% to 5.5%, your buying power would drop from $300,000 to about $283,000.

One last note: the box on the left sidebar with Freddie Mac’s weekly mortgage survey results is a national average. Interest rates locally can vary somewhat, so it’s best to check in with your mortgage lender to get the most current local rates, especially since interest rates for many loan programs are now very credit score driven.

If you’re just starting out or don’t have a lender, feel free to contact us and we’ll be happy to recommend a reputable local lender. To search for homes in Solano County direct from our own MLS feed, be sure to visit our Home Search page and contact us for further details on any homes that interest you.

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6 Big Real Estate Changes For Benicia-Vallejo Home Buyers & Sellers This Month

Rod Herman — Tue, 06 Apr 2010 01:31:12 +0000

If you’re planning to buy or sell a home in Benicia, Vallejo or even anywhere else in Solano County, you may need a scorecard to keep track of all the changes that either already have occurred or will take place by the end of April.

I’ve been a real estate agent since 1995. And before that I worked in the title and new homes sectors of our business — dating all the way back to 1978. And in all the years I’ve been in the real estate business, I can’t remember another time when this many changes occurred in one single month.

So if you’ve got your scorecard ready, here’s a quick overview of some of the changes that are taking place in April:

1. Government’s MBS Buy-Back Program Ends

April 1 was the first day in over 14 months that the government wasn’t buying mortgage-backed securities, which it had been doing since Jan. ‘09 to keep mortgage money flowing and interest rates affordable.

Without Uncle Sam there to prop up the mortgage market, it’s now up to the free market to to decide just how high mortgage rates should really be.

Some experts have said that rates would skyrocket without the government’s help, while others expect the change to be very subtle.

For more details, see the post I wrote on the final day of the U.S. government’s MBS Buy-Back program.

2. Faster Short Sales Starting Today?

Today is the day the federal government’s Housing Affordable Foreclosure Alternatives (HAFA) program goes into effect.

The Obama administration announced the program last fall but wanted to allow plenty of time for mortgage lenders to prepare for participation in the program.

Among other things, the HAFA program enacts strict deadlines, requires banks to determine the minimum net proceeds they’ll accept up front and provides cash incentives for banks, sellers and even 2nd mortgage holders who participate in a short sale.

Sellers must meet eligibility requirements for the Home Affordable Modification Program (HAMP) in order to participate in HAFA. Lenders who are already participating in HAMP must agree to also participate in HAFA.

On paper, the program looks like it will expedite the process and take away much of the frustration and uncertainty that buyers, sellers and real estate professionals have endured over the past few years.

However, from what I’ve heard, many of the people working in the loss mitigation departments for many of the banks who are supposed to participate claim they’re not yet familiar with HAFA.

So implementation and compliance by the banks may not necessarily be an immediate thing.

3. Higher FHA Mortgage Insurance Costs As Of Today

Borrowers who are using an FHA loan to finance their purchase (which probably includes at least 90% of the first-time buyers in Solano County) will be subject to a costlier up-front mortgage insurance premium (up from 1.75% of the cost of the home to 2.25%). On a $200,000 home that works out to about a $1,000 increase.

However, since most buyers finance the up-front MIP, on a $200,000 home, increasing the loan amount by $1,000 really only adds about $6/mo. to the payment.

So in the big scheme of things, it’s not a big enough change to severely impact most FHA buyers.

4. Smaller FHA Seller’s Credits Starting Today, Too

This change could have a significant impact on many FHA borrowers. For starting today, the most a seller can credit the buyer in an FHA transaction is 3% of the purchase price, which is half of what it was yesterday.

Here in Benicia, Vallejo and vicinity, where so many homes continue to get multiple offers, those FHA buyers who were asking for large closing cost credits haven’t had a lot of success getting their offers accepted in recent times. So from a practical standpoint, the change may not be felt too much for right now.

But if the inventory continues to climb and gets to a point where multiple offers are no longer the order of the day, we could find some otherwise qualified FHA buyers exiting the market due to limited funds beyond their down payment.

5. Federal Tax Credit Going Bye-Bye

Barring a sudden change of heart by Congress, the federal home buyer tax credit will expire at the end of this month. The credit provides up to $8,000 for first-time buyers and $6,500 for move-up buyers.

In order to qualify, you must have entered into a purchase agreement by Apr. 30. You’re allowed an additional 60 days to close escrow. So the clock is definitely ticking.

If you’re not able to get into contract in time to get the federal credit, all may not be lost. For the day after the federal credit expires, California’s recently announced first-time buyer and tax credit goes into effect.

6. New Purchase Contract Coming

And finally, a new standard purchase contract is slated to come out at the end of April, which will change the way some parts of a real estate transaction are conducted.

The form is produced by our California Assn. of Realtors (CAR) and is used for most local real estate sales here in Solano County. It’s the first major change for this form in about 8 years.

One of the changes is that buyers will no longer have to write a deposit check up front. They’ll be able to wait to do so until after the seller has accepted the offer.

Another change: sellers will no longer be automatically on the hook to cover the cost of any lender-required repairs on FHA loans.

The new contract also does a good job of specifying what happens if a closing date or other contractual event falls on a weekend or a holiday. Up until now, that’s always been subject to interpretation.

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Is The Party Over For Low Mortgage Rates?

Rod Herman — Wed, 31 Mar 2010 23:28:43 +0000

Will Rates Skyrocket As Some Previously Predicted?

Today marks the end of an unprecedented era for the mortgage market.

That’s because this is the final day of the Federal Reserve’s 14-month program to buy up mortgage-backed securities (MBS) — a practice that has kept mortgage rates down in the 5-percent-and-below range.

The Fed’s MBS purchase program was initiated by the government in order to keep mortgage money flowing at the time our economy was suffering through its darkest hours.

Buoyed by a consensus that the economy was on the mend, last fall, the government proclaimed that it would end its MBS buy-back program by the end of the first quarter of 2010.

In other words: today.

A New Era Starts Tomorrow

So starting tomorrow, MBS purchases will fall on the shoulders of regular investors, which means that mortgage rates will again be determined by the free marketplace, without any governmental support.

Before I lose you with too much high-finance talk, let me explain what this really means to the average home buyer or mortgage consumer.

In a nutshell, if the people who purchase these mortgage backed securities don’t buy them at the same pace that the federal government has been purchasing them, then mortgage rates will climb.

For weeks now, many “mortgage scholars” have been predicting that we’ll see a spike in mortgage rates as soon as the government exits the MBS arena.

6% Mortgage Rates Overnight?

Some have said that rates, which have been hovering in the high-4% to low-5% range for months now, could rise to the mid-5’s or even 6% within a matter of days or weeks after the Fed’s program goes away.

In recent weeks, some of these experts have scaled back their doom-and-gloom predictions and said that rates will probably go up a bit, but not perhaps as high or as quickly as they previously envisioned.

Before the government started buying MBS’s in Jan. ‘09, the flow of mortgage money had reached a serious bottleneck, as back then, very few investors were excited about putting their money into an investment that was backed by the ability of American homeowners to make their mortgage payments.

And without anyone to invest in those MBS’s, the supply of mortgage financing would have dried up almost instantly, which would have devastated an already punch-weary housing market.

Uncle Sam’s $1.25 Trillion Life Preserver

So in an effort to keep mortgage financing flowing and prop up a weakened housing market, Uncle Sam announced in Nov. ‘08 that it would allocate $1.25 trillion to purchase mortgage-backed securities starting in Jan. ‘09.

The theory was that by the time that money was gone, the investment community would again have enough confidence in these securities to keep mortgage money flowing.

The big unknown at this point, of course, is just how much confidence investors really have in these MBS’s.

Or, more importantly, whether they’ll buy them at the same pace or at the same cost as the government has been doing for the past 14 months.

In anticipation of this day, the government started scaling back its MBS purchases last fall in order to hopefully create a gradual transition from governmental support to free-market investors.

Since rates have stayed in the same general range since the government’s phase-out began, that’s considered a good sign — and one which has convinced some of the doomsayers to reconsider their original predictions of interest rates climbing a full percentage point in a matter of weeks once the government buy-back program ended.

Tomorrow Is Day One

So now we’re at ground-zero. Tomorrow is Day One of a new era. Or should I say a return to the way things were done before the mortgage meltdown.

That means we’re about to find out just how much our economy has recovered.

Most experts seem to think that rates will probably go up at least a little bit — perhaps somewhere between 1/4 to 1/2 percent in the coming weeks.

If such an increase occurs over a 5-6 week period, I wouldn’t expect it to impact the housing market too much.

But if rates were to rise quickly or by more than 1/2 percent, then the real estate market could take a hit — especially since it would coincide with the end of the federal tax credit and the introduction of FHA’s tighter new policies.

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BofA Will Slash Loan Balance By 30% For Some Underwater Borrowers Starting In May

Rod Herman — Sun, 28 Mar 2010 17:08:41 +0000

Bank of America just announced a new loan modification program that could help hundreds if not thousands of underwater Solano County homeowner.

This represents the first attempt by a major bank — and they don’t get much bigger than banking giant BofA — to slash an underwater borrower’s principal rather than simply reducing the interest rate for a period of time.

BofA’s newly announced program is slated to start in May and it’s not available for every BofA borrower. According to BofA’s press release announcing its principal reduction plan, it’s mainly for former Countrywide Home Loan borrowers with “certain subprime and Pay-Option adjustable rate mortgages (ARMs).” (Bank of America took over Countrywide in 2008).

Borrowers Must Meet HAMP Guidelines

In order to qualify, you must fall within the guidelines of the government’s Home Affordable Modification Program (HAMP). Additionally, you must be at least 60 days late on your mortgage payments and have a loan that’s at least 20% underwater.

For those with qualifying loans, rather than modifying the interest rate, as it’s done up until now, BofA will instead look first at reducing the loan amount in order to get the payment down to HAMP’s targeted 31 percent of household income. If it’s necessary to reduce the interest rate, too, that will also be considered.

A Forbearance Program With A Twist

Initially, the principal reduction will be set up as an interest-free forbearance plan.

However, unlike a traditional forbearance program, where the principal and deferred interest must be repaid, under BofA’s new program, borrowers who keep their payments current will have up to 20% percent of the forbearance amount permanently forgiven every year over a five year period.

That means the entire forbearance amount (up to 30% of the current loan amount) will be forgiven for those borrowers who stay current all five years.

To illustrate, let’s say your home is worth $200,000 but your mortgage is $300,000. Under BofA’s new program, your loan balance would be temporarily reduced to $210,000. If you kept your payments current for the next five years, your loan balance reduction would become permanent.

100% Loan-To-Value Requirement

The only caveat with all of this is that the loan amount can never drop below 100% of the home’s then-current value.

So if property values increased and your home was worth $230,000 by year five, then your permanent loan balance reduction wouldn’t go below $230,000.

Whether this will work out as well in real life as it sounds on paper remains to be seen.

We all remember the high expectations that accompanied the government’s HAMP program when it was unveiled last spring, But in the year since, the number of successful modifications have fallen way short of those lofty expectations.

So we’ll have to wait and see whether BofA’s new 30% principal reduction program really makes an impact.

If it’s successful, it could prompt other banks to follow suit, which could ultimately substantially reduce the number of homes that might otherwise head towards foreclosure.

Stay tuned…

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Is The Party Over For Local FHA Borrowers?

Rod Herman — Sun, 14 Feb 2010 06:59:49 +0000

Big Change For Benicia-Vallejo FHA Buyers Starting Monday

The party may not necessarily be over FHA borrowers just yet, but starting Monday, one of the big advantages that FHA borrowers have enjoyed for the past 9 months goes away.

I’m talking about the ability for a lender to send out their favorite appraiser in hopes of making sure nothing goes awry in the buyer’s attempt to buy the home of their dreams.

Come Monday, all FHA appraisers will have to follow many of the same rules that appraisers on conventional (Fannie Mae/Freddie Mac) loans have been following since last May.

New Appraisal Policy Starts Feb. 15

The new FHA policy is supposed to help ensure that lenders provide financing based on the true market value of the home rather than on a potentially trumped-up/inflated appraisal.

If you look at FHA’s appraisal policy for the past 16 years, you’d have to agree that it wasn’t the most cleverly designed system. For, the person with the most motivation for the loan to go through — the loan officer — was also the one who selected the appraiser.

So you had a system that put appraisers between a rock and a hard place.

Do Your Job Or Help Your Business?

They could be truly objective and run the risk of not getting any more appraisal business if they continually came in low and killed the loan officer’s deals.

Or, they could make sure every appraisal came in just where the loan officer wanted it and ensure a steady stream of repeat business from that lender.

Now, not every loan officer nor every appraiser took liberties like those I just suggested. In fact, the vast majority did a reputable, honest job and avoided the temptation to put self-gain above professionalism.

But neverthless, there was a very small minority who clearly put their own interests above those of the company lending the money.

They Finally Realized What Was Happening

But it wasn’t until the mortgage market collapsed that lenders fully realized how some lenders and appraisers took full advantage of the system by working in cahoots with one another in transactions that were out-and-out fraud.

The Home Valuation Code Of Conduct (HVCC) was adopted in May and it made radical changes to the way appraisals were done on conventional (Fannie Mae/Freddie Mac) loans.

And the new FHA appraisal policy is another attempt to take away the opportunity for unscrupulous loan officers, mortgage brokers and real estate agents to push through deals where the home isn’t worth anywhere close to what the trumped-up appraisal says it is.

The Pendulum Swings To The Other Side

By adopting this new policy, FHA has swung the pendulum from one side of the room all the way over to the other. For, while it takes the selection of the appraiser out of the loan producer’s hands, which is probably a good thing, it also eliminates the opportunity for a buyer to get an idea of whether or not the house might have an appraisal problem before making an offer.

Up until now, a buyer could ask their lender to call the appraiser ahead of time to get a read on how much he could legitimately offer without creating an appraisal problem.

So if you looked at the comps and felt that $265,000 seemed like a fair price, your lender could usually run that price by the appraiser before you wrote your offer just to make sure he or she agreed. You could make your officer with confidence and also provide the sellers with the peace of mind that if they accepted your offer, the loan should sail through without any appraisal surprises.

Now Nothing You Can Do Now But Wait

Now, though, FHA buyers can look at the comps inside and out and make an offer that they feel shouldn’t pose any appraisal problems. But you won’t really know for sure until the appraisal comes back, since your loan office can’t select the appraiser nor have any contact with him or her.

When Fannie & Freddie adopted their HVCC, they unknowingly created a system whereby many lenders went to outside appraisal management companies who raised appraisal fees and then often sent out appraisers who were either inexperienced, unfamiliar with the areas they were being sent to or had limited access to local comps and other market data.

FHA has attempted to prevent many of the problems that has plagued the HVCC by requiring appraisers to certify that they know the area and have full access to the area’s relevant market data.

Ever since the HVCC came out, there have been all sorts of horror stories about appraisal injustices that have caused some buyers to lose the home of their dreams.

Whether FHA’s new policy will simply make sure that appraisals are legitimate and accurate or instead create problems similar to what’s occurred in the months following adoption of the HVCC remains to be seen.

FHA Learned From The HVCC’s Mistakes

I think the FHA policy-makers are starting out with a program that is vastly better than what conventional loan borrowers encountered last May when the HVCC went into effect.

It will probably take a few months before we see just how much the new FHA policy affects the real estate purchase market. Hopefully it will do just what it was designed to do and nothing else.

But we shall see.

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Suisun Helping First-Time Home Buyers With Zero Interest Loans

Rod Herman — Fri, 05 Feb 2010 08:55:26 +0000

Up To 25% When You Buy A Suisun Foreclosure

If you’re a first-time buyer looking to buy a foreclosed property, Suisun City has a program that might increase your buying power by opening the door to homes you might otherwise never have been able to afford.

I’m talking about their First Time Home Buyer program, which not only helps those looking to get into their first home, but also helps prevent neighborhood blight at the same time.

The basic details:

It’s a “silent second” mortgage, with deferred payments and no interest.

You can borrow up to 25% of the value of the home.

You must purchase a foreclosure (or a short sale that’s already in foreclosure).

When you sell, you repay the loan PLUS the equivalent percentage of the home’s accrued appreciation.

To qualify, your household earnings must not exceed 120% of the area’s median income.

Homes must be located within Suisun’s Redevelopment District.

Here are the current income limits, which are based on the number of people in your household.

Right now, the city still has $3.4 million of the $4.4 million that was allocated to the program. Based on Suisun’s current median sales price for December ($195,000), that’s enough to fund approximately 70 first-time home buyer purchases.

And even though Suisun Economic Development Director Jason Garben anticipates that there should be enough money to last several years, he says that there is also a source of replacement money through the city’s Redevelopment Agency.

How It Works

In a nutshell, here’s how the program works. First, you get pre-approved for a first mortgage with a traditional lender. Then, the city bridges the gap between your minimum down payment and the total cash needed to get into the home, up to a maximum of 25% of the purchase price.

As you saw above, the city shares in a portion of the appreciation when you sell. So if you borrow 25% and make $100,000 on the home by the time you sell, then you keep $75,000 and give $25,000 to the city.

More Home For Your Money

But the real beauty of this program is that it enables eligible buyers to increase their buying power by up to 25% and thereby afford a home they otherwise never would have been able to buy.

And what’s in it for the city? Well, they get to provide an immediate new owner-occupant for a home that might have otherwise fallen into disrepair or become a neighborhood eyesore. So it’s, as they say, a “Win-Win” situation.

Right now, there are 18 homes on the market in Suisun which are eligible for the city’s First-Time-Home-Buyer financing program, ranging in price from $121,900 to $475,000.

Most, But Not All Homes Qualify

To qualify, homes must be located within the city’s redevelopment district, which includes just about every residence in town except for Peterson Ranch (off Walters Rd.).

Contact us for more details or for a current list of homes that qualify for the city’s FTHB program. Also, check out the city’s brochure and Suisun’s web site, both of which have further information, including details on Suisun’s neighborhood revitalization grants, which are also available to eligible first-time buyers.

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New 3.5% Seller Credit For Some Solano Buyers…But You Have To Close By April 30

Rod Herman — Sat, 30 Jan 2010 01:05:48 +0000

If you’re planning to buy a home in Benicia, Vallejo or any other Solano or Contra Costa County city we serve, you might want to focus your eyes on Fannie Mae-owned homes for the next month or two.

For yesterday, Fannie announced a new incentive program which will provide up to a 3.5% credit to cover closing costs or a combination of credits & new appliances for qualified buyers who purchase a Fannie Mae-owned home between now and the end of April.

The details:

The offer must be accepted on or after Jan. 28, 2010
Escrow must close by April 30, 2010.
Buyers must be owner-occupants (no investors)
Qualified buyers get an incentive worth up to 3.5% of the cost of the home
The incentive can be used to cover closings costs, new Whirlpool appliances or a combination of the two

So, on a $250,000 home, for example, if you qualify for the full 3.5% credit, you could apply the entire $8,750 towards closing costs or intstead use $5,000 towards closing costs and the remaining $3,750 towards a new refrigerator, washer, dryer, microwave & stove.

Notice, though, that I said the credit was “up to” 3.5%. In order to get that full amount, you have to make sure you’re using a loan program that allows a credit that high.

If you’re using an FHA loan, the current guidelines allow a maxiumum 6% seller credit (but that, too is changing soon). On some conventional loans, however, the max is 3%, which means that you’d could be forced to walk away from that last half-percent.

The new Fannie Mae incentive program is only good on homes that Fannie Mae has taken back as foreclosures. Currently, there are almost 50,000 Fannie Mae-owned homes nationwide.

I just searched Fannie’s local inventory and there are currently 67 Fannie Mae owned homes on the market or coming soon in Solano County, including 6 in Benicia, 22 in Vallejo, 11 in Fairfield, 5 in Suisun City, and 17 in Vacaville — in various price ranges.

And this 3.5% credit can be used in addition to the $8,000 first-time buyer federal tax credit or $6,500 move-up buyer tax credit (both of which also expire at the end of April).

If you’re in the market to buy and want to take advantage of this new Fannie Mae incentive, time is certainly of the essence, since you must be CLOSED by the end of April.

So realistically, if you anticipate 45 days to close escrow from the date your offer is accepted, that means you probably need to be in contract by mid-March.

It’s often possible to close escrow in 30 days if all your ducks are in a row when you write your offer (and if things beyond your control go smoothly during the escrow).

But if, by chance, you get into contract on Mar. 25 and somehow don’t end up closing until May 3, that 3.5% credit is out the window.

If you’d like to see how this program might help you get into a home in the coming months, please contact us and we’ll be happy to get the ball rolling for you.

You can get a quick preview of Fannie Mae’s current inventory on their HomePath web site. Keep in mind that their information may not be as current as what’s in our MLS system, so some homes that appear to be available on HomePath may really already be under contract.

If you’ve signed up to search for homes on our web site, you can also perform your own cross-check to see the current MLS status for the same property. Or, better yet, if you’re a client or prospective client, just give us a call or send us an email and we’ll be happy to do all that legwork for you.

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