Please click the link for current information on FHA Loan Limits.
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Tuesday, September 6, 2011
Wednesday, February 23, 2011
NEW FHA Changes effective April 18th, 2011
These changes are effective for all case numbers pulled after April 18, 2011
Upfront MIP will remain at 1.00%
30 yr fixed
Monthly MIP for loans greater than 95% will be 1.15%
Monthly MIP for loans less than or equal to 95% will be 1.10%
15 year fixed
Monthly MIP for loans greater than 90% will be .50%
Monthly MIP for loans less than or equal to 90% will be .25%
Get your case numbers ordered prior to April 18 to lock in the lower monthly MIP.
Tuesday, September 21, 2010
Changes coming to FHA effective October 4th 2010
On August 12, 2010, the President signed into law a bill that authorizes HUD to increase the annual mortgage insurance premiums for FHA loans, effective October 4, 2010.
For those unfamiliar with FHA loans, the mortgage insurance on these loans is divided into two types:
1) The Up-Front Mortgage Insurance premium (UFMIP) collected at closing and normally financed into the loan, and,
2) The annual mortgage insurance premium which is collected as part of your monthly mortgage payment.
HUD has always had the authority to change the UFMIP and has done so regularly, but they needed special approval by Congress to change the annual premium. The President’s signature finalized the approval HUD had requested.
FHA survives based on the mortgage insurance it collects. This is not a tax increase of any sort. FHA needed to do something to increase its reserves. However, given the role FHA plays in the housing industry, especially for lower-income buyers and entry-level housing, the proposed changes (which go into effect on October 4) will make it harder for future borrowers to qualify for FHA loans. At the very least, FHA mortgages will be more expensive.
Currently the UFMIP on FHA loans is 2.25% while the annual premium for 30-year fixed mortgages with less than 5% down payment is 0.55%. Effective for new loans after October 4, 2010 (loans with FHA case numbers assigned after this date), the UFMIP will be lowered to 1%, while the corresponding annual premium will increase to 0.90%. I have broken it down here:
| Monthly Mortgage Payment Comparison | ||
| Current | After October 4 | |
| Base loan amount | $ 100,000 | $ 100,000 |
| Total loan amount | $ 102,250 | $ 101,000 |
| Principal & Interest (PI) | $ 548.90 | $ 542.19 |
| Mortgage Insurance (MI) | $ 45.53 | $ 74.50 |
| PIMI | $ 594.43 | $ 616.69 |
| Difference | $ 22.26 | |
| *5% interest rate used. MI based on rate for 3.5% down payment | ||
The monthly mortgage payment for FHA borrowers will now be 3.75% higher than under the previous premium structure. Since an important qualifying factor for potential borrowers is the ratio of their debt to their gross income, these FHA changes will just make it a little harder to qualify.
Taken another way, the changes will cost the borrower more in the long run. For anyone planning on staying in their home longer than four years, FHA will collect more total mortgage insurance premiums.
| Comparison | |||
| Current | After October 4 | Difference | |
| UFMIP | $ 2,250 | $ 1,000 | $ (1,250) |
| Annual MIP | $ 550 | $ 900 | $ 350 |
The annual MIP is recalculated every year based on the current principal balance, so it will decrease slightly every year until it is cancelled. As you can see though, after four years, the savings from the lower UFMIP percentage is eliminated.
For additional information contact:
Michelle Bennett
Mortgage Consultant
15531 Ventura Blvd Ste.100Encino CA 91436
Ofc: 818.380.5218
Cell:818.861.9798
Fax: 818.380.5101
e:MichelleBennett914@gmail.com
Tuesday, May 25, 2010
Monday, April 12, 2010
2010 New Home Credit and First Time Buyer Credit
(If you are looking for more information regarding the 2009 New Home Credit, see FTB Publication 3528, New Home Credit, or search using the “Forms & Publications” tab above.)
Applying for the 2010 New Home/First-Time Buyer tax credits: Applications must be faxed after escrow closes. The new application will be available by May 1, 2010. We will deny the application if the 2009 form is used or if we receive the 2010 application before May 1, 2010.
Check this page often. We will add updates as they become available.
General Information: These tax credits are available for taxpayers who purchase a qualified principal residence on or after May 1, 2010, and before January 1, 2011. Additionally, these tax credits are 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. Taxpayers may apply for the tax credits if they have entered into a contract before May 1, 2010, as long as escrow closes on or after May 1, 2010.
These 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.
The total amount of allocated tax credit for all taxpayers may not exceed $100 million for the New Home Credit and $100 million for the First-Time Buyer Credit. However, since many taxpayers will not be able to utilize the entire tax credit, the legislation specifies that the $100 million cap for the New Home Credit will be reduced by 70 percent of the tax credit allocated to each buyer and the $100 million cap for the First-Time Buyer Credit will be reduced by 57 percent of the tax credit allocated to each buyer. For example, if a taxpayer is allocated $10,000 for the New Home Credit, the $100 million cap for the New Home Credit will only be reduced by $7,000. If a taxpayer is allocated $10,000 for the First-Time Buyer Credit, the $100 million cap for the First-Time Buyer Credit will only be reduced by $5,700. The 70 and 57 percent reductions do not impact the amount that can be claimed by the taxpayer.
We will allocate the tax credits on a first-come, first-served basis.
Only one tax credit is allowed per taxpayer. If a taxpayer qualifies for both tax credits, the law specifies that we will allocate the amount under the New Home Credit.
Taxpayers will not be eligible for either tax credit if any of the following apply:
Reservations: Taxpayers who qualify for the New Home Credit may, but are not required to, reserve a tax credit prior to the close of escrow. Reservations will become important as we near the $100 million cap for homes that may not close escrow before the cap is reached, as a reservation will "hold the taxpayer's place in line" until 2 weeks after escrow closes. To reserve a tax credit, the taxpayer and seller need to complete, sign, and fax to us a reservation request to certify that they have entered into an enforceable contract on or after May 1, 2010, and on or before December 31, 2010. A copy of the signed contract must be included with the reservation request. Taxpayers who reserve a tax credit still need to fax an application and a copy of the settlement statement within 2 weeks after the close of escrow. Taxpayers may not reserve a tax credit if the contract was entered into before May 1, 2010. We will post the reservation form and details about the process by May 1, 2010.
If you are only applying for the First-Time Buyer Credit, you will not be able to reserve the tax credit before escrow closes.
Claiming the tax credit:
Important Update (04/07/10): The 2010 New Home Credit and First-Time Buyer Credit begins May 1, 2010.
The New Home / First-Time Buyer Credits are available only for purchases that close escrow on or after May 1, 2010.Applying for the 2010 New Home/First-Time Buyer tax credits: Applications must be faxed after escrow closes. The new application will be available by May 1, 2010. We will deny the application if the 2009 form is used or if we receive the 2010 application before May 1, 2010.
Check this page often. We will add updates as they become available.
General Information: These tax credits are available for taxpayers who purchase a qualified principal residence on or after May 1, 2010, and before January 1, 2011. Additionally, these tax credits are 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. Taxpayers may apply for the tax credits if they have entered into a contract before May 1, 2010, as long as escrow closes on or after May 1, 2010.
These 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.
The total amount of allocated tax credit for all taxpayers may not exceed $100 million for the New Home Credit and $100 million for the First-Time Buyer Credit. However, since many taxpayers will not be able to utilize the entire tax credit, the legislation specifies that the $100 million cap for the New Home Credit will be reduced by 70 percent of the tax credit allocated to each buyer and the $100 million cap for the First-Time Buyer Credit will be reduced by 57 percent of the tax credit allocated to each buyer. For example, if a taxpayer is allocated $10,000 for the New Home Credit, the $100 million cap for the New Home Credit will only be reduced by $7,000. If a taxpayer is allocated $10,000 for the First-Time Buyer Credit, the $100 million cap for the First-Time Buyer Credit will only be reduced by $5,700. The 70 and 57 percent reductions do not impact the amount that can be claimed by the taxpayer.
We will allocate the tax credits on a first-come, first-served basis.
Only one tax credit is allowed per taxpayer. If a taxpayer qualifies for both tax credits, the law specifies that we will allocate the amount under the New Home Credit.
Taxpayers will not be eligible for either tax credit if any of the following apply:
- The taxpayer was allowed a 2009 New Home Credit.
- The taxpayer is under 18 years old. (A taxpayer who is married as of the date of purchase will be considered to be 18 if the spouse/registered domestic partner (RDP) of the taxpayer is 18 or older on the date of purchase.)
- The taxpayer or the taxpayer’s spouse/RDP is related to the seller.
- The taxpayer qualifies as a dependent of any other taxpayer for the tax year of the purchase.
- Be a single family residence, either detached or attached. This can be a single family residence, a condominium, a unit in a cooperative project, a house boat, a manufactured home, or a mobile home. A home constructed by the taxpayer is not eligible since the home has not been "purchased."
- Have never been occupied. Sellers must certify that the home has never been occupied in order for a taxpayer to receive an allocation of the credit.
- Be eligible for the California property tax homeowner’s exemption.
- Be occupied by the taxpayer as their principal residence for a minimum of 2 years immediately following the purchase.
Tax credit allocation:
- A Certificate of Allocation will not be issued if:
- The seller does not certify the home has never been occupied.
- We do not receive the application and a copy of the properly executed settlement statement within 2 weeks (14 calendar days) after the close of escrow.
- We receive the application or reservation request after the total tax credits available have been allocated.
- FTB's determination may not be protested or appealed.
- Be a single family residence, either detached or attached. This can be a single family residence, a condominium, a unit in a cooperative project, a house boat, a manufactured home, or a mobile home. A home constructed by the taxpayer is not eligible since the home has not been "purchased."
- Be eligible for the California property tax homeowner’s exemption.
- Be occupied by the taxpayer as their principal residence for a minimum of 2 years immediately following the purchase.
Tax credit allocation:
- A Certificate of Allocation will not be issued if:
- We do not receive the application and a copy of the properly executed settlement statement within 2 weeks (14 calendar days) after the close of escrow.
- We receive the application after the total tax credits available have been allocated.
- FTB's determination may not be protested or appealed.
Reservations: Taxpayers who qualify for the New Home Credit may, but are not required to, reserve a tax credit prior to the close of escrow. Reservations will become important as we near the $100 million cap for homes that may not close escrow before the cap is reached, as a reservation will "hold the taxpayer's place in line" until 2 weeks after escrow closes. To reserve a tax credit, the taxpayer and seller need to complete, sign, and fax to us a reservation request to certify that they have entered into an enforceable contract on or after May 1, 2010, and on or before December 31, 2010. A copy of the signed contract must be included with the reservation request. Taxpayers who reserve a tax credit still need to fax an application and a copy of the settlement statement within 2 weeks after the close of escrow. Taxpayers may not reserve a tax credit if the contract was entered into before May 1, 2010. We will post the reservation form and details about the process by May 1, 2010.
If you are only applying for the First-Time Buyer Credit, you will not be able to reserve the tax credit before escrow closes.
Claiming the tax credit:
- The taxpayer must receive a Certificate of Allocation from us to claim the tax credit on their California personal income tax return. The Certificate of Allocation will state the maximum amount the taxpayer can claim listed by tax year.
- The taxpayer should refer to the 2010 New Home / First-Time Buyer Credit Publication for instructions on claiming the tax credit (the publication will be available by December, 2010).
- Special rules apply to married/RDP taxpayers filing separately, in which case each spouse/RDP is entitled to one-half of the tax credit, even if their ownership percentages are not equal. For 2 or more taxpayers who are not married/RDP, the tax credit amount will have already been allocated to each taxpayer occupying the residence on their respective tax credit allocation letter.
- If the available tax credit exceeds the current year net tax, the unused tax credit may not be carried over to the following tax year.
- The tax credit may not reduce regular tax below TMT.
- The tax credit is not refundable.
- Any disallowance of the tax credit may not be protested or appealed
Saturday, April 3, 2010
3 Reasons Why Those Who Don't Buy Will Regret It
RISMEDIA, March 24, 2010—Buying a home is one of the biggest decisions an individual can make. So it’s understandable that one considering a home purchase may take their time to avoid rushing into such a large financial commitment. However, several factors might leave prospective home buyers who don’t purchase a property now wishing they had taken action sooner.
“Current market conditions have created a perfect storm of sorts that has made it an ideal time to purchase for first-time and trade-up buyers alike,” said James M. Weichert, president and founder of Weichert, Realtors. “Those who have the means and the desire to buy now but don’t, aren’t likely to see such a great opportunity again anytime soon.”
Specifically, Weichert offered three reasons why those who aren’t under contract to purchase a new home by April 30, 2010 might regret it.
1. They won’t receive a sizeable amount of money from Uncle Sam.
For the past two years, the federal government has offered a home buyer tax credit to help stimulate the economy. But that financial incentive is set to expire soon. First-time buyers who aren’t under contract to purchase a home by April 30, 2010 will leave the $8,000 that is available to them through the tax credit on the table. Meanwhile, repeat buyers will miss out on the opportunity to collect up to $6,500 from the government.
2. They might not lock-in on the historically-low interest rates.
Thanks to measures taken by the Federal Reserve including the purchasing of mortgage-backed securities, interest rates have remained historically-low for several years. With the economy beginning to show signs of recovery, it is widely believed that the government will soon put an end to these stimulus efforts.
If that happens, many economists believe we will begin to see a sharp increase in interest rates which could result in a much higher monthly payment for those who wait. For example, an interest rate increase of 1% on a 30-year fixed mortgage of $300,000 could cost a buyer $188 more a month or $67,000 more over the span of the entire loan.
3. They might miss out on record home price affordability.
Home price affordability is at its most optimal level in decades. As a result, those who wait to buy will likely pay more for the home they purchase than what that same home would cost right now. In fact, home prices have already begun to rise slightly in some markets. Instead of getting a better bargain, waiting to buy a home might net buyers a higher purchase price, less appreciation and less house for their buck.
“There is no time to waste for anyone who wants to take advantage of this great buying opportunity. Particularly for those who have a home to sell first,” added Weichert. “If you are prone to saying ‘what if’ and wondering what could have been, you will thank yourself down the road for buying now.”
For more information, visit www.weichert.com.
Michelle Bennett
Bank of America
Mortgage Consultant
Ofc:818.380.5100 ext 150
Cell:818.565.9456
eFax:877.681.0569
E. Michelle.E.Bennett@BankofAmerica.com
E: MichelleBennett914@gmail.com
"To give real service you must add something which cannot be bought or measured with money, and that is sincerity and integrity.”
You can also apply for pre approval on my website:www.MichelleBennettLoans.com
Connect With Me Online : 
Sunday, March 28, 2010
California's improved home buyer tax credit a day late
A repeat windfall for home buyers, and once considered as hopeless as a balanced budget in the Golden State, California's popular home buyer tax credit is back -- and it's better than ever.
In fact, it's twice as good as it was before.
The Golden State's home buyer tax credit sequel, AB 183, recently signed by movie star Governor Arnold Schwarzenegger, is back and it's upstaged the original deal by providing $200 million in home buyer tax credits, double the original $100 million for qualified first time home buyers who purchased new homes, and the new version is not just for first-time home buyers.
"I have been up and down the state pushing this important housing bill that will get people off the fence and into homes while creating jobs and stimulating our economy and today I am proud to take action and put it into law," said Governor Schwarzenegger at the legislation's signing ceremony.
At 12.5 percent, California has the fifth highest unemployment rate in the nation.
The new law's $200 million allocations is split 50/50 between eligible first time home buyers who purchase an existing home and anyone purchasing a new home. First-time buyers are defined as those who have not owned a home in the past three years.
"The American dream is on sale. It's the Blue Light Special of home buying in California!" exclaimed Julie Larsen Wyss, a broker associate with Intero Real Estate in San Jose, CA.
Unfortunately, the immediately obvious flaw in California's home buying carrot is that it takes effect May 1, 2010 the day after the existing and also expanded federal home buyer tax credit is scheduled to end, April 30, 2010.
When both the California and federal home buying tax credits were available simultaneously, Californians struck a mother lode of a home buying tax credit up to a maximum total of $18,000.
The first $100 million tax credit, approved in February 2009 was only for first time home buyers who purchased only new homes. Funds ran out after just four months with 10,659 Californians claiming the credit.
Under the new California home buying tax credit there's $100 million for first-timers purchasing resale homes and $100 million for anyone buying a new home. There's no limit on the price of the home and no income limitations on buyers.
The tax credit is equal to the lesser of 5 percent of the purchase price or $10,000. It is not a refundable tax credit like the federal tax credit but must be taken in equal installments over three consecutive years to offset state taxes due.
Home buyers taking the credit will be required to live in the home as their principal residence for at least two years or forfeit the credit by repaying it to the state. Buyers also must be at least 18 years old and be unrelated to the seller.
First come-first served eligible taxpayers must close escrow between May 1, 2010 and Dec. 31, 2010, or after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010
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