The State of Arizona issued this statement today to all lenders across Maricopa County:
RE: Funding availability for Maricopa County
Allocated funding for the above referenced County has been expended. Therefore, no additional Commitments will be issued for this County. If and when there is a change in the status of funds for this County an announcement will be sent out.
Friday, November 20, 2009
Monday, November 9, 2009
FHA Condo Update
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:
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:
- Project construction has been 100% complete for at least 1 year
- All units have been sold and no single entity owns more than 10% of the units
- Project holds 10% of the budget in reserves for capital expenditures and deferred maintenance
- 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%.
Homebuyer Tax Credit Update
Last week, President Obama signed a bill to extend the tax credit for first-time homebuyers (FTHBs) through June 30, 2010. The bill also opens up opportunities for others who are not buying a home for the first time.
To learn what the new tax credit means to you and your clients, take a look at the concise overview below.
Who Gets What?
First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.
Current Owners: The tax credit 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.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.
What are the New Deadlines?
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.
What are the Income Caps?
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.
What is the Maximum Purchase Price?
Qualifying buyers may purchase a property with a maximum sale price of $800,000.
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.
How Much are First-Time Homebuyers (FTHB) Eligible to Receive?
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 fort 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 Much are Current Home Owners Eligible to Receive?
The tax credit program includes 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.
Can Homebuyers 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. Some examples of this would include a land contract or a contract for deed.
According to the IRS, factors that would demonstrate the ownership of the property would include:
1. Right of possession
2. Right to obtain legal title upon full payment of the purchase price
3. Right to construct improvements
4. Obligation to pay property taxes
5. Risk of loss
6. Responsibility to insure the property
7. Duty to maintain the property
Are There Other Restrictions to Taking the FTHB Credit?
Yes. According to the IRS, if any of the following describe a homebuyer’s situation, a credit would not be due:
Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.
If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?
Yes, provided that the child meets the other requirements for the tax credit.
To learn what the new tax credit means to you and your clients, take a look at the concise overview below.
Who Gets What?
First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.
Current Owners: The tax credit 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.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.
What are the New Deadlines?
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.
What are the Income Caps?
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.
What is the Maximum Purchase Price?
Qualifying buyers may purchase a property with a maximum sale price of $800,000.
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.
How Much are First-Time Homebuyers (FTHB) Eligible to Receive?
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 fort 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 Much are Current Home Owners Eligible to Receive?
The tax credit program includes 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.
Can Homebuyers 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. Some examples of this would include a land contract or a contract for deed.
According to the IRS, factors that would demonstrate the ownership of the property would include:
1. Right of possession
2. Right to obtain legal title upon full payment of the purchase price
3. Right to construct improvements
4. Obligation to pay property taxes
5. Risk of loss
6. Responsibility to insure the property
7. Duty to maintain the property
Are There Other Restrictions to Taking the FTHB Credit?
Yes. According to the IRS, if any of the following describe a homebuyer’s situation, a credit would not be due:
- They buy the home from a close relative. This includes a spouse, parent, grandparent, child or grandchild. (Please see the question below for details regarding purchases from “step-relatives.”)
- They do not use the home as your principal residence.
- They sell their home before the end of the year.
- They are a nonresident alien.
- They are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
- Their home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
- They owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.
Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.
If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?
Yes, provided that the child meets the other requirements for the tax credit.
Saturday, November 7, 2009
MY 203K FHA LOAN CLOSED - WHAT HAPPENS NOW?
Are you purchasing a home in Phoenix? Is the house bank-owned, does it need some TLC, or would you just like to paint, carpet and put in some new appliances? The FHA 203k Streamline loan is the perfect solution. For a more detailed guide on specifics on how the 203k loan works...call me today!
FHA's Streamline 203(k) mortgage program allows Phoenix homebuyers to finance up to an additional $35,000 into their mortgage, to improve or upgrade their home before they move-in. Phoenix homebuyers can use this type of loan to pay for property repairs, such as those identified by a home inspector or FHA appraiser. These improvements are not just limited to repairs and can also be cosmetic upgrades to the existing property.
Now that you have gone through the whole financing process and you have reached your closing date, what happens next? Rehabilitation construction should begin within 30 days after closing, and all work must be completed within six (6) months from the closing date.
How does your General Contractor get paid? After the closing, your loan is typically sold to a servicing company, like Bank of America. This process normally takes 7-10 days, but is currently taking approximately 21 days. This is due to an influx of new loans being purchased from the recent closure of various mortgage lenders. After the loan is sold, 50 percent of the rehabilitation funds are disbursed immediately to the borrower and/or contractor. Included with the initial disbursement is an instruction letter that explains how the final disbursement will be made upon completion and provides the necessary contact information. The balance is disbursed upon completion of all work. If the cost of the renovation is over $15,000, an inspection by the original appraiser is required.
For borrowers working with a contractor, a W-9 must be provided to set up the contractor, and a two-party check is made out to the borrower and the contractor and sent to the borrower. If multiple contractors are being used, 50 percent of the cost of the repairs for each contractor is disbursed up front. For borrowers performing work themselves, a self-help agreement must be signed before the funds are disbursed. The check is then made out directly to the borrower. A borrower is typically only allowed to perform work themselves if they have experience in that line of work.
Who handles all of the disbursements and other requirements during the rehabilitation process? The servicing company handles all rehabilitation disbursements and project inspections. The amount designated for repairs and improvements, including the contingency reserve, holdback, and PITI, if applicable, are deposited into an interest-bearing repair escrow account, insured by the Federal Deposit Insurance Corporation (FDIC).
What happens if your repairs have unexpected costs? The contingency reserve is required to cover unexpected repairs. The reserve is usually only required if the repairs exceed $7,500 and is typically 10 percent of the total repair amount. The contingency reserve can only be used on those changes that affect the borrowers health and safety, or is due to an increase in cost for an item of necessity. If a change order results in a decrease in costs, the amount will be added to the contingency reserve. Additional improvements that do not affect the health and safety, or an increase in cost due to a necessity item, must be paid for directly by the borrower and not paid out of the contingency reserve fund. The remaining balance in the contingency fund, after all work has been completed, will be used to pay down the principal balance of your loan.
Congratulations! It's time relax and enjoy yourself.
If you're considering purchasing a home that may need some cosmetic upgrades or repairs, please contact the Jim Barnett Home Financing Team to get pre-approved. Jim can be reached at 602-616-5469, 877-594-7600 or Jim.Barnett@WJBradley.com.
* These are guidelines for loans funded by W.J. Bradley Mortgage Capital Corporation and may not be the same as other lenders. You should consult your mortgage company to see if the same rules apply.
FHA's Streamline 203(k) mortgage program allows Phoenix homebuyers to finance up to an additional $35,000 into their mortgage, to improve or upgrade their home before they move-in. Phoenix homebuyers can use this type of loan to pay for property repairs, such as those identified by a home inspector or FHA appraiser. These improvements are not just limited to repairs and can also be cosmetic upgrades to the existing property.
Now that you have gone through the whole financing process and you have reached your closing date, what happens next? Rehabilitation construction should begin within 30 days after closing, and all work must be completed within six (6) months from the closing date.
How does your General Contractor get paid? After the closing, your loan is typically sold to a servicing company, like Bank of America. This process normally takes 7-10 days, but is currently taking approximately 21 days. This is due to an influx of new loans being purchased from the recent closure of various mortgage lenders. After the loan is sold, 50 percent of the rehabilitation funds are disbursed immediately to the borrower and/or contractor. Included with the initial disbursement is an instruction letter that explains how the final disbursement will be made upon completion and provides the necessary contact information. The balance is disbursed upon completion of all work. If the cost of the renovation is over $15,000, an inspection by the original appraiser is required.
For borrowers working with a contractor, a W-9 must be provided to set up the contractor, and a two-party check is made out to the borrower and the contractor and sent to the borrower. If multiple contractors are being used, 50 percent of the cost of the repairs for each contractor is disbursed up front. For borrowers performing work themselves, a self-help agreement must be signed before the funds are disbursed. The check is then made out directly to the borrower. A borrower is typically only allowed to perform work themselves if they have experience in that line of work.
Who handles all of the disbursements and other requirements during the rehabilitation process? The servicing company handles all rehabilitation disbursements and project inspections. The amount designated for repairs and improvements, including the contingency reserve, holdback, and PITI, if applicable, are deposited into an interest-bearing repair escrow account, insured by the Federal Deposit Insurance Corporation (FDIC).
What happens if your repairs have unexpected costs? The contingency reserve is required to cover unexpected repairs. The reserve is usually only required if the repairs exceed $7,500 and is typically 10 percent of the total repair amount. The contingency reserve can only be used on those changes that affect the borrowers health and safety, or is due to an increase in cost for an item of necessity. If a change order results in a decrease in costs, the amount will be added to the contingency reserve. Additional improvements that do not affect the health and safety, or an increase in cost due to a necessity item, must be paid for directly by the borrower and not paid out of the contingency reserve fund. The remaining balance in the contingency fund, after all work has been completed, will be used to pay down the principal balance of your loan.
Congratulations! It's time relax and enjoy yourself.
If you're considering purchasing a home that may need some cosmetic upgrades or repairs, please contact the Jim Barnett Home Financing Team to get pre-approved. Jim can be reached at 602-616-5469, 877-594-7600 or Jim.Barnett@WJBradley.com.
* These are guidelines for loans funded by W.J. Bradley Mortgage Capital Corporation and may not be the same as other lenders. You should consult your mortgage company to see if the same rules apply.
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