FHA Loans for Pinellas Home Buyers
July 1st, 2009 categories: Mortgage Updates
If you’re looking to finance a Pinellas short sale or Pinellas foreclosure and have 3.5% for a down payment, then an FHA loan is your ticket to home ownership. The FHA is not a lender, nor do they set interest rates. The Federal Housing Administration is a federal government agency (a division of the U.S. Department of Housing and Urban Development, or HUD), that offers mortgage insurance on loans originated by their approved lenders. In a nutshell, it’s insurance that protects the lender in case the borrower defaults.
The FHA was created in 1934 after the Great Depression, and was widely popular until recent years when subprime lenders offered something seemingly better: artificially low interest rates, no-interest payments and a false dream. Daily, lender requirements are becoming more and more stringent, and, as a result, FHA loans are once again commonplace and the only vehicle for many to own their Duendin homes.
Advantages of an FHA loan include:
- low 3.5% down payment and closing costs
- gifts from family members, employers or charitable organizations are welcomed
- minimum credit scores are lower than for conventional loans
- lenders will consider payment of rent, utility bills and auto insurance premiums when evaluating the applicant
But Whoa! Hold on, there’s a tiny downside …. Read the rest of this entry »
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First Time Homebuyer Tax Credit for Pinellas Real Estate: The Truth, The Whole Truth, and Nothing but the Truth
June 5th, 2009 categories: Mortgage Updates
The American Recovery and Reinvestment Act of 2009 was the heavily debated economic stimulus package that was signed into law in February of 2009. The home buyer tax credit is a component of this package and was created to promote home ownership.
The bill originally provided for an $8,000 tax credit available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009.
There’s great news, however, if you’re in the market to purchase Pinellas Real Estate! Buyers may now use the credit upfront as extra down payment money, to lower payments, pay discount points (reducing their interest rates), or to supplement closing costs.
The big “BUT” here is that buyers CANNOT use the first time home-buyer tax credit toward the 3.5% minimum that is required of FHA insured loans. The buyer still has to present those down payment funds, yet they can be a gift from a relative.
The Truth About the Misinformation Currently Being Circulated Amongst the Mis-Informed:
There’s a lot of misinformation out there saying that the $8,000 can be used for your down payment, but that’s just not the case! It’s a convoluted mess because HUD originally released this Mortgagee Letter 2009-15, later rescineded it (the details as to why are unclear other than they realized they made a mistake), and now it’s up for public speculation as to what’s going to happen with that aspect of it. For crying out loud, we reported last October that the FHA had just done away with all seller-funded closing costs - now they want to essentially reverse that?! For the real facts, keep checking back, or better yet subscribe to The Pinellas Peach and you’ll be notified automatically.
Eligibility for the $8000 tax credit can be found Read the rest of this entry »
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Beware: Don’t Miss the Boat(s) on Your Pinellas Real Estate Purchase! How Rising Mortgage Interest Rates Hurt Your Bottom Line … Even in a Declining Market
May 30th, 2009 categories: Mortgage Updates
As Pinellas real estate prices have continued to drop each month, some Pinellas home buyers continued to play it cool, sit back and wait until a particular Dunedin Fl neighborhood becomes affordable in their eyes. Beware! There’s another boat you don’t want to miss.
Conventional interest rates had been hovering at historic lows of 4.75% – until this week, where they ended at 5.27%! It is unlikely they will stay in these low ranges, whether the 4’s or the 5’s for any length of time say most experts. Mortgage interest rates are tied to the bond market which has begun to take hits due to the state of the economy. Money.com had this good synopsis Thursday if you want to delve deeper.
So, if you’re waiting for that $200,000 home to fall another $10,000 or 5% – this will take about three months in our current market. Now its September 1st and you’re going to offer $190,000 and save about $50/mo on your mortgage payment. But wait! Interest rates have risen one point to 5.75%. Now your mortgage payment is $125.00 MORE than it would have been last week. This scenario has now cost you an additional $75.00/month – for the next THIRTY YEARS!!
$200,000 home with an 3.5% FHA 30 year loan:
4.75% = $1006.78/ mo payment
5.75% = $1126.30/mo
6.75% = $1251.79/mo
Some will say, “not a big deal.” Really? A 2% jump in interest equates to an additional $3,000 per year and over $162,000 over the life of the loan. Hmmm…
What’s the other boat? Trying to time the bottom of the market. A post for another day!
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