Interest on fixed home loans has fallen in four of the past five weeks, and Freddie Mac economist Frank Nothaft says rate activity during that time has lowered the monthly payment on a $200,000 loan by $56.

Here’s a look at how other mortgage rates performed this week:

• 15-year fixed loans fell to 4.63 percent from 4.69 percent.
• One-year adjustable-rate mortgages fell to 4.76 percent from 4.82 percent.
• Five-year hybrid ARMs bumped up a notch to 4.83 percent from 4.82 percent.

City of Portland To Offer Up To 50k Interest Free Loans

The City of Portland’s new Portland Housing Bureau is preparing to launch a brand new homebuyer assistance program called the Own Your Own Loan Program. With federal and state Neighborhood Stabilization Program funding, the program is estimated to help first-time homebuyers purchase a home of their own by providing them a silent second mortgage of up to $50,000 to be used for down payment, closing costs and home repairs. The secondary loan, payable to the State of Oregon, does not accrue interest and does not require monthly payments. The program does have a declining five year share of appreciation provision to encourage longer term ownership and also requires the borrowers to occupy the homes for the life of the loan.

Eligible Properties Are Limited To Foreclosed Properties

Eligible properties are limited to foreclosed properties in specific target areas located in Fairview, Gresham, Portland, and Troutdale. Click on the map below to find out which areas are included:

The Fine Print…

• Neither the purchase price or the after-rehab appraised value of eligible properties may exceed $266,000.
• The purchase price of the property must be at least one percent below the property’s appraised value.
• Program is only open to borrowers who have not owned a home in the past three years (first time homebuyers)
• Borrower may not earn more than 100 percent of the Median Family Income (MFI) adjusted for household size.

More news and updates here.

FHA’s approved lenders will now be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

On May 12th the secretary of the U.S. Department of Housing and Urban Development announced:

“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment”

Click here for details!

UPDATE: Not so fast! Looks like we won’t see these changes quite as soon (see John’s comments – in the comments section). It appears that authorization for bridge-loans may be limited to states in which the state housing finance agency already has a tax credit bridge-loan program in place. It also remains unclear if if lenders will accept loans under new guidelines. We have seen several cases where lenders adopt underwriting guidelines that are more conservative than what HUD allows.  For example HUD allows credit scores as low as 580 while most lenders now have a 620 minimum score.   We also know that HUD used to allow sellers to pay the buyers down payment via the Nehemiah or AmeriDream programs and these loans had nearly three times the default rates as compared with loans where the buyer paid their own down payment.

by Josh Leake, Guest Contributor

You have a great rate and the perfect loan ready to close.  Suddenly, you don’t qualify any more because the program is not available. What happened? Is there any protection or insurance to save the day? Many lenders have gone out of business recently. Even big names like Countrywide, Washington Mutual don’t offer any protection against closure. So what are you supposed to do?

One common item shines amongst all of the failing lenders and programs; lock your rate in. That’s right, even if you had a mortgage with Countrywide; if you had your rate locked before their announcement of reducing programs or closure, they will still honor the commitment. A few years ago, a few lenders went out of business that didn’t honor their commitments; but with bank bailouts and purchases by other lenders, they are required to honor commitments. And your rate lock is a program and time period commitment.  So next time you are looking to purchase a property or refinance your mortgage, set yourself up a security blanket and lock your rate.

If you are working with a mortgage professional, they should be offering you free float downs if rates lower during your transaction. So really is there a downside to locking? Not in my opinion.

Contact: Josh is a Senior Mortgage Consultant (OR LICENSE #ML-3328, WA LOAN ORIGINATOR #510-LO-27544) with Plum Tree Mortgage Inc. Josh can be reached at www.joshleake.com

Click here (PDF opens) to find out more about eligibility and criteria for properties bought in 2008 vs. 2009.

30-year fixed-rate is lowest since March 2004
The 30-year fixed-rate mortgage averaged 5.47% for the week ending Dec. 11, down from last week’s 5.53% average and 6.11% a year ago. The rate hasn’t been lower since March 25, 2004, when it averaged 5.40%.

Foreclosures Boost Pending Home Sales
Despite early indications of more housing market gloom October, pending home sales were not as low as many predicted.

How bad is Oregon’s mortgage market?
It’s growing worse but not as bad as it was here in the 1980s and not bad as the country as a whole.

Treasury may set mortgage rates at 4.5% to boost sales
The Treasury Department is contemplating a proposal that would cut mortgage rates for new loans for homes, the Wall Street Journal says.

Easing Mortgages Isn’t a Panacea
Many troubled homeowners are quickly falling behind again on their mortgage after their loan is modified, government data show.

Simply pay an additional month per year! It is an old trick and not really anything revolutionary, but on a 175k loan* it could save you more than $40,000 dollars over the term of the loan. What’s new is that lenders are becoming more lenient in allowing extra payments. They have removed some of the pre-payment penalties that didn’t allow for more than 10% of the loan to be paid in a given year. Some lenders will structure loans so they are paid bi-weekly allowing for a 13^th payment a year which will reduce a 30-year mortgage by about 7 years. In a bi weekly payment plan you are not changing your current loan.  What you are doing is changing the way you pay your loan.  Instead of making one payment every month for a total of 12 payments per year, you are halving your monthly payment and making one payment every two weeks.  The benefit to the borrower is that they will be making 26 payments per year which ends up being the same as making 13 regular monthly payments per year. Generally the lender will request that the bi weekly payments be deducted electronically so payment deductions are consistent through out the year.

If the ability to make bi weekly payments conflicts with pay periods, then the borrower has two more simple options. The borrower can add an additional 1/12^th of the monthly loan amount to each month’s payment or pay a lump some at the end of each year and achieve the same results. Each loan is structured differently with potential pre-pay penalties. Consulting a lender before paying extra is highly advised.

Note: In order to build equity in your home more quickly, you must have a lender that will immediately credit each 1/2 monthly payment upon receipt. If your lender waits until the second payment has been received before crediting your loan, you’ll never see the benefits.

Calculate Your Savings Here.

*(Loan parameters: 30-yr fixed, excellent credit, 80% LTV, 6% interest rate, APR 6.1%)

This tip was brought to you by Chris Hanson , Mortgage Consultant (OR ML#1952) with Mortgage Express. Chris can be reached at 503.517.2424 (phone) or 503.520.0620 (fax).

Subject to program availability and client qualification.  All associated terms including, interest rate, APR, fees, and terms are subject to change.  Equal Housing Lender.

]]> http://agent503.com/2008/09/26/save-thousands-on-your-30-yr-mortgage/feed/ 0 http://agent503.com/2008/09/24/reduced-taxable-income-exclusion-for-some-home-owners-who-sell-their-primary-residences/ http://agent503.com/2008/09/24/reduced-taxable-income-exclusion-for-some-home-owners-who-sell-their-primary-residences/#comments Wed, 24 Sep 2008 20:55:29 +0000 agent503 http://agent503.wordpress.com/?p=746 After 2008, some home sellers who don’t use their properties as principal residences for their entire ownership period may wind up paying more of a tax bill than they would under the old rules. The tax break affected is the home sale exclusion.  That break generally allows up to $250,000 of home sale profit to be tax-free if a home was owned and used by the seller as a principal residence (i.e., main home) for at least 2 of the 5 years before the sale. In general, the tax-free break can only be used once every 2 years. The tax-free profit amount is up to $500,000 for married taxpayers filing jointly for the year of sale if several conditions are met. A reduced maximum exclusion may apply to taxpayers who must sell their principal residence because of health or employment changes (or certain unforeseen circumstances) and as a result either fail the 2-out-of-5-year ownership and use rule, or previously used the home sale exclusion within two years.

For sales after 2008, the home sale exclusion will be reduced proportionately for the period of time a home wasn’t used as a principal residence. The prime example is a vacation home that is turned into a principal residence by its owners, but the new rule also can hit individuals who use a property as a main home for a while, rent it out for a period of time, and then move back in. There are, however, a number of exceptions. For starters, pre-2009 periods of non-principal-residence use don’t count, and neither do periods of temporary absence totaling no more than 2 years due to health or employment changes (or certain unforeseen circumstances), or up to 10 years of absence for qualifying members of the military or certain government employees.

The new rules are quite complex and may cause some homeowners big headaches. Check out the fine print and talk to your tax advisor.

How is this all connected? Fannie and Freddie will be permitted to expand their direct investments in mortgage-backed securities from $1.5 trillion to $1.7 trillion over the next year. With the government standing behind their debts, investors are also expected to be more willing to buy mortgage-backed securities guaranteed by Fannie and Freddie. As demand for such securities picks up, all else being equal, prices will rise – essentially lowering the yield.That could push the rate for a 30-year fixed-rate conforming mortgage down from 6.35 percent last week to “well below” 6 percent, according to Mark Zandi, chief economist at Moody’s Economy.com.

Rates are already coming down to around 6 percent today, but it will take 30 to 45 days to get a sense of how the takeover will ultimately affect rates. Today’s lower rates “could be a one-day reaction,” so you may want to consider locking in.

A plan to rescue hundreds of thousands of homeowners at risk of foreclosure cleared the final hurdle today and was approved by President Bush. The bill takes several approaches to curing the ailing housing market, but is anchored by a $300bn rescue fund to help an estimated 400,000 homeowners get cheaper loans – widely considered the biggest and most costly bailout in American history. Ultimately the taxpayer, especially the prudent one, will have to foot the bill – not the administration. The bill also means that additional liquidity will soon hit the market. This is not good news for inflation. Nor is this bill good news for the dollar. Time will tell if we hit another all time low against the Euro.

The bill does provide some material benefits that prudent homeowners may wish to take advantage of. However, it’s important to note that (at least some of ) Uncle Sam’s gifts come with strings attached. Here’s a closer look at the two most relevant features for “regular, non-distressed” homeowners:

First-time homeowner tax credit: The law will extend a tax credit of up to $7,500 to first-time homebuyers. A first-time homebuyer is defined as someone who hasn’t owned a home in three years. The tax credit is for 10% of the purchase price, up to $7,500, but phases out for higher-income homeowners. Homeowners are eligible for the tax credit if they bought after April 8 of this year or buy before July 1, 2009. This is a tax credit, not a deduction. It reduces the homeowners’ tax bill by up to $7,500 for the tax year in which the purchase was made. It’s a one-time credit; you don’t get to keep taking it year after year. There is a catch, and that is that the money has to be repaid over 15 years, starting two years after you buy the house. That makes the tax credit an interest-free loan. If you take the full $7,500 tax credit, your income tax bill will increase by $500 a year for 15 years. If you sell the house before then, you’ll have to pay Uncle Sam the remaining balance.

Property tax deductions for all homeowners: Under current law, you can deduct your property taxes from federal income tax – but only if you itemize deductions on Schedule A. That leaves out people who don’t have enough deductions to warrant filling out Schedule A. They have to take the standard deduction and that means they can’t deduct their property taxes. The housing rescue bill changes that. For homeowners who pay property taxes, it increases the standard deduction by $500 for single filers and $1,000 for couples filing jointly. This will be a boon to people, such as retirees, who own their houses outright, and therefore don’t pay any mortgage interest, so they can’t itemize. You can’t increase the standard deduction by more than the property-tax bill. So if you’re married filing jointly and you pay $800 in property taxes, you get an $800 deduction, not a $1,000 deduction.

The bill includes several other provisions that may be relevant to you such as regulations on reverse mortgages, manufactured housing (yippie more double-wides to come!), protections for veterans etc. If you would like to find out more, click here to read all 694 pages of the bill or shoot me a note