Financing – Page 2 – Parsons Realty

Fannie Mae Improves “First Look” Program for REO Property Sales

First Look program helps owner occupant home buyers get first opportunity over investors to buy Shasta County bank owned (REO) properties.

Fannie Mae’s First Look, initially started in late 2009, is designed to provide owner occupants a “first look” at Fannie Mae homes. Under this policy, Fannie Mae will only consider offers from owner occupants and buyers using public funds during the First Look marketing period which is typically the first 15 days a property is listed. If the property is still for sale after the First Look Marketing period expires, investor offers may be submitted and will be considered. Properties in the First Look marketing period will have a timer with the number of days remaining on the Fannie Mae Home Path property details page.

To start searching for Foreclosures and Bank owned properties in Redding and Shasta County.

New 2010 California Home Buyers Tax Credit

Yesterday the State Franchise Tax Board announced a tax credit for new home purchases and first time buyers. The new credit will start May 1, 2010.

Here is some general information.

Tax credits are available for taxpayers who purchase a qualified principal residence on or after May 1, 2010, and before January 1, 2011. Additionally, the New Home Credit is available for taxpayers who purchase a qualified principal residence on or after December 31, 2010, and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010. The purchase date is defined as the date escrow closes.

The tax credits are limited to the lesser of 5 percent of the purchase price or $10,000 for a qualified principal residence. Taxpayers must apply the total tax credit in equal amounts over 3 successive tax years (maximum of $3,333 per year) beginning with the tax year in which the home is purchased. The tax credits cannot reduce regular tax below tentative minimum tax (TMT). The tax credits are nonrefundable and unused credits cannot be carried over.

For more information about the tax credits click here

See all available Redding homes in the Shasta County MLS or Search New Construction Homes with our custom Shasta County New Home Search

Key Interest Rate To Remain Low – Good News?

According to what I read on Bloomberg’s web site, the Federal Reserve has decided to keep key interest rates near zero for an extended period. The Federal Reserve also confirmed that it will stop buying mortgage backed securities at the end of March.

So, what does this mean if you’re thinking of buying a house and need a home loan? As you may know, the Federal Reserve is the central banking system for the United States. Its job is to protect the stability of our monetary system. That is to keep inflation to a minimum and maintain economic growth. The Federal Reserve doesn’t interact with you or me; it sets the federal funds rate. The federal funds rate is the interest banks must pay to borrow money from each other. Many people think a bank receives money from depositors and in turn, loans out the money to borrowers. This is true, but wait, there’s more. Banks can actually loan out up to ten times as much money as it owns. That’s great for the Banks but I just want a loan.

Just like automobiles and hot dogs, if retailers can buy the product at a lower cost, they can retail (sell) the product at a lower cost to you the consumer. The number of consumers for any commodity increases as the retail price of the commodity decreases. As consumers, we like low prices. In this example, the money you want to borrow is the commodity and the cost of the loan is the retail price, also known as the interest rate you pay.

If the key interest rate stays low, it’s my opinion this is good news for people wishing to obtain a loan to buy a house. But what happens if the Federal Reserve stops buying mortgage backed securities?

First, a simple definition: A mortgage backed security is an asset backed security. In this example, the promissory note a borrower signs to obtain a home loan is only a piece of paper. However, the owner of the “paper” has the right to foreclose and take the house (asset) from the borrower if the borrower does not make their loan payments. Therefore, if the Federal Reserve stops buying mortgage backed securities (paper) there could be less “new” money for the banks to lend.

I have some concerns if the Feds stop buying mortgage backed securities. Primarily, what will happen to mortgage interest rates? Could near term interest rates rise? If so, how much will the increase be? I’ve been hearing from one quarter of a percentage point all the way up to three quarters of a point.

Long story short, sometimes it’s better to get going while the getting is good. Or, if you snooze you lose…you get the point. If you’ve been thinking about buying, NOW could be the time. With some Redding homes selling for less than the cost to build and interest rates at historic lows; it doesn’t get much better for buyers. Just my thoughts for the day, what do you think?

Home Buyers $8,000 Tax Credit Extended

The U.S. House of Representatives decided Thursday to extend and expand the federal homebuyer tax credit. The legislation passed with a vote of 403 to 12.

It cleared the Senate Wednesday, with unanimous approval. President Obama is expected to pen his name to the bill on Friday.

The $8,000 tax incentive for first-time homebuyers, which had an expiration date of November 30, will be extended through April 30 of next year.

The tax break has been expanded to include a new category of buyers – those who have lived in their current home for at least five years, but want to purchase a new home as their primary residence. The credit amount for these buyers will begin on December 1 and is $6,500.

The April 30 deadline is the date by which buyers must have signed a purchase contract, eliminating the mad frenzy to eek closing out by the sunset date. Another 60-day window beyond the end of April is allowed to complete the closing of the deal.

The credit is available for the purchase of primary residence homes costing $800,000 or less – in other words, no tax break for vacation homes or investment properties.

The measure raises the income limits for those able to claim the credit to $125,000 for an individual and $225,000 for a couple.

Sen. Johnny Isakson, a former real estate agent himself, has pressed his fellow lawmakers for a meaningful tax credit for homebuyers since January of last year.

“Tax credits like this only work by creating the sense of urgency to take advantage of them,’ Isakson said. “This is the last extension of the homebuyer tax credit, and I urge all Americans whether they’re first-time buyers who’ve always dreamed of having a home of their own or someone who’s been gridlocked in the failure of our move-up market to take advantage of this opportunity.”

The legislation also includes anti-fraud language that gives the Internal Revenue Service greater oversight during the processing of the return rather than waiting for an audit situation. The amendment requires the taxpayer claiming the credit to be 18 or older, and requires a HUD-1 settlement statement to be attached when claiming the credit.

Robert E. Story, Jr., CMB, chairman of the Mortgage Bankers Association (MBA), called the passage of the tax credit extension a critical step in sustaining the momentum that’s beginning to emerge in the housing and mortgage markets.

“The existing credit for first-time homebuyers has helped move a segment of potential homebuyers off the sidelines and into their first homes,” Story said. “By expanding it to qualified existing homeowners, we can help stimulate even more home purchases for qualified buyers.”

Story also commended lawmakers for including provisions in the bill that will help eliminate fraudulent use of the tax credit.

Fannie Mae Removes 4 Property Limit For Investors

Last Friday Fannie Mae announced that they are lifting the rule that limits investors to only four financed properties starting March 1st. Fannie Mae’s policy change will increase the limit of four financed properties to ten. This should get investors active again which will help keep the inventory of foreclosures and short sales down.

Homeowners buying a 5th, 6th, 7th, 8th, 9th or 10th home will need to meet the following standards, as set forth by Fannie Mae

1. 720 credit score

2. 25% downpayment for a 1-unit (30% for a 2-4 unit)

3. No mortgage delinquencies in the last 12 months

4. 6 months of reserves for each investment property

Shasta County Down Payment Assistance Program

What is the Shasta County Down Payment Assistance Program?

Shasta County Housing and Community Action Programs provides 0% interest loans to qualified low-income, first-time home buyers to help with their down payment and closing costs. The program is available in the unincorporated area of Shasta County and inside the City of Anderson.

How much can you borrow?

The loan amount can be up to 40% of the purchase price, not to exceed $80,000.00. The maximum purchase price of the home is $225,000.00. The borrower must contribute at least 3% of the purchase price to the sale transaction. This may be a gift.

Who is eligible?

The program is available to first-time home buyers, who qualify under the following income guidelines. Gross household income must be below these limits.

A first-time home buyer is someone who has not owned a home in the last 3 years, or who qualifies as a “displaced home-maker”

More information can be found in the Shasta County DAP Brochure click here