PARAMOUNT MORTGAGE - LENDER'S BLOG

As we say goodbye to 2008 and prepare our new year’s resolutions, there are a few items of which you should take note for 2009.

First-time home buyer’s $7,500 tax credit – This credit will expire June 30, 2009. There are only six months left for first-time home buyers to take advantage of up to the $7,500 tax credit limit (or the less amount of 10% of the home purchase price) to buy a home. We have all the tax credit details on our website previously posted. Link: http://www.paramountmortgage.com/First-Time+Home+Buyer's+%247%2c500+Tax+Credit

New FHA Maximum Loan Amounts – Starting off 2009 the FHA maximum loan amounts for St. Louis Metro are:

• One-Family: $271,050
• Two-Family: $347,000
• Three-Family: $419,400
• Four-Family: $521,250

FHA 2009 Down payment is now 3.5% – FHA loans are still quite a bargain as down payments are only 3.5% for the borrower. Interest rates are at historical lows as we enter one of the best buyers’ market in years. An FHA loan is one avenue that allows deserving borrowers the ability to purchase a new home.

One of the great advantages of the FHA loan is that all of the down payment funds can come from a gift.

This allowance of gift sourced down payment funds are great for parents looking to help their children buy a home, relatives helping out family members, or even close friends helping out each other. Gift funds can also be used for a variety of needs during the FHA mortgage transaction including closing costs, prepaids, or points.

Increased emphasis on compliance in 2009 will require that the borrower provide proof of the source of these gifted funds. To prevent fraud for example, lenders will investigate the source to make sure the seller or realtor didn’t just give money to Mom and Dad to pass on to the borrower.

A gift letter, signed by the borrower and donor, can be used. It must indicate donor information including relationship to the borrower and a statement outlining that no repayment is required of the gift. The source of these funds must be verifiable usually by producing a bank statement from the donor. 

Using FHA backed loans is the smart way to purchase a home in 2009.

St. Louis - The Missouri Housing Development Commission (MHDC) has developed a new product for first-time homebuyers – the Tax Credit Advance Loan (TCAL).  First time homebuyers can receive a portion of their $7,500 federal first-time homebuyer tax credit to use as a down payment for purchase. This program is the first of its kind in the nation.

The Housing and Economic Recovery Act of 2008 passed by Congress last summer offered the $7,500 tax credit to encourage new homebuyers to purchase homes and stimulate the housing market. However, the federal tax credit has been largely ineffective.

The main shortcoming is that the homebuyer doesn’t receive the money until several months after the home has been purchased and the federal income tax has been filed. MHDC’s TCAL program eliminates the down payment obstacle facing these first-time homebuyers.

How the MHDC TCAL program works:
MHDC makes a second mortgage to the homebuyer at the time of closing worth the lesser amount of 6% of the home purchase price or the TCAL limit of $6,750. Any TCAL funds received can then be applied to down payment or closing costs.

The tax credit advance loan is paired with MHDC financing for a safe, 30 year fixed-rate mortgage. Loans are made through Paramount Mortgage, a certified lender. The homebuyer then files for the federal tax credit and uses the credit refund to pay off the MHDC tax credit advance loan.

Paying off the tax credit advance loan by MHDC’s June 1, 2010 deadline ensures the homeowner pays no interest other than a modest servicing fee. If the tax credit advance loan is not paid by the deadline, principal and interest payments begin automatically to repay the loan over 10 years.

• Funds available for immediate home purchase
• No waiting for your tax credit funds
• Up to $6,750 available for closing or down payment costs
• No repayment until June 1, 2010
• Household incomes up to $85,000

MHDC will review the last 2 years of tax returns to determine if the borrower will be eligible for the maximum second mortgage amount. In addition, the borrower must successfully complete an online credit counseling seminar which will ensure the borrower understands the terms of the loan, the requirement to obtain the tax credit, and the repayment terms of the tax credit.

Link: MHDC’s TCAL

One in four boomers plan to move

Washington - A new study funded by AARP reveals that one in four baby boomer generation households (26%) expects to move from their current home in the future. The majority of these boomers will be looking for a single-level home that is more comfortable or convenient.

There are a significant number of boomers on the horizon; 78 million to be exact. The United Nations population division gauges that presently 8,000 boomers a day are turning 60. AARP's Senior Vice President, Elinor Ginzler estimates "the sheer number of boomers will increase demand for a whole variety of home and community options."

What types of housing and amenities will boomers look for?

Many will be looking for a better house, a better climate or a home that is closer to family and friends. More than half of those boomers (age 45-64) planning to move expect to look for a home that's all on one level (59%). About half said they will look for a newer home (50%) or a smaller home (49%).

The types of coveted amenities in these "boomer friendly" homes will range from larger faucet handles to wider doors to fake lawns. Baby boomers are looking for products that are easy to use, easy to navigate and easy to maintain. This is especially true as they prepare for the latest trend of "aging in place" in their new, smaller home.

Product manufacturers are stepping up with unique and innovative products.  Interior lighting will have bigger controls. Cabinet hardware will come with easy-grip handles. Bathrooms will have adjustable shower heads, seats and bars, and bathtubs with textured bottoms.

And for the ultimate boomer home option, don't be surprised to find a home elevator. An average unit price is $20,000, depending on product type, geographic location, building codes and labor costs.

Builders are offering them as an option now with new construction. "Homes with elevators draw a wider variety of buyers," states Stacie Sorenson, marketing director with Waupaca elevators.  "Any age level can benefit from a home elevator, from the high school student on crutches to young mothers with babies and strollers to older people with walking issues."

Read more about the AARP study: Boomers on the move
Boomer home trends: Age in Place

Wanted: First-time homebuyers willing to turn the market around

Reported by Mary Delach Leonard, St. Louis Beacon

St. Louis, MO - The online news publication, St. Louis Beacon reported this week that "opportunity is knocking" for first-time homebuyers willing to take advantage of bargain home prices, low-interest mortgages and a temporary federal tax credit.

Mary Delach Leonard from the St. Louis Beacon surveyed St. Louis area Realtors for their insights into the area's current housing market. Leonard's article reported about a shared sentiment among real estate professionals that "it's going to take motivated first-time homebuyers to jumpstart the slumping market."

St. Louis Realtor Marty Ribaudo, of RE/MAX Associates Plus, was quoted by Leonard stating that "first-time buyers could, in effect, 'bump up' the market, enabling current homeowners to move up into larger, more expensive homes."

These elusive first-time buyers in St. Louis are just beginning to step forward in response to interest rates hovering at a range of around five percent or lower and a surplus of affordable properties on the market. The financial incentives, loan programs, and funds are available for the asking. These options include:

• First-Time Homebuyer $7,500 Tax Credit from the 2008 Housing and Economic Recovery Act;
• FHA (Federal Housing Administration) backed loans with a 3.5% down payment;
• VA (Veterans Administration) backed loans with no down payment requirement and available 100% financing;
• Tax Credit Advance Loan (TCAL) program from MHDC (Missouri Housing Development Commission) offering a cash advance loan of the federal first-time homebuyer tax credit (expected early 2009).

Christa Mulchek, a Realtor with Prudential Select Properties, offered that "buyers are also taking their time because they are bargain hunting. If you want to sell your home, you have to price it a lot lower." Realtor Merry Dahms of RE/MAX, added that this is "the best buyers' market she has seen in her 22-year career."

The most promising news was reported from Nancy Milton of Coldwell Banker Brown stating, "we are actually seeing a lot of movement in first-time buyers," she said. "And I think that the low interest rates are really making them sit up and take notice that this is a great time for them to move from a rental situation to a home of their own."

Milton continued that "the buyers she has worked with recognize that their personal financial situations are better than the gloomy national economic news might have them believe."

Read the entire St. Louis Beacon article online: Wanted: First-Time Homebuyers