Important if you are planning on buying a home. FHA new guidelines

The FHA has announced policy changes that will affect you, the buyer. These changes are not expected to take effect until the spring or early summer.

Some of the highlights
1) Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending. The first steps will include raising the upfront MIP to 2.25% and secondary steps will involve shifting some of the increase to the annual MIP. An official mortgagee letter on this particular guideline is scheduled to be released tomorrow.

This is for buyers without enough down payment. You will now be required to pay more upfront (however, I believe you may still be able to wrap it into your new mortgage(

2) Update the combination of FICO scores and down payments for new borrowers. New borrowers with less than a 580 FICO score will be required to put down at least 10%.


This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.


3) Reduce allowable seller concessions from 6% to 3%.  (for instance a seller may concede to pay for closing costs where before you could ask for up to 6% of the price, now you will only be able to ask for 3%)


This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.


 4.) Increase enforcement on FHA lenders.

FHA is the Federal Housing Administration


Here is a link to the press release if you would like to read it yourself.

Bottom line...buy your new home before the April 30th cutoff for the tax credit and try to get it all done before these changes take place!

Fannie Mae First Look program and how it will affect you

Fannie Mae is changing its former Homepath program. The new program, dubbed, "First Look" appears as if it will be very beneficial to First time and owner occupant buyers.  There is going to be a 15 day period where only owner occupants will have a chance to get in on the ground floor.

This is actually "great news" for first time buyers and owner occupant buyers. This program is somewhat similar to the HUD program which gives owner occupants a 10 day running start.

In my experience, many owner occupants have been "outbid" or even underbid by investors with Cash. The listing Banks preferred to take the cash instead of waiting out the the possibilites of the owner occupant getting a mortgage.

With this new Fannie Mae First Look program coming up in 2010, if you are going to occupy the home yourself and even if you need a mortgage to do so, you will now have the first shot!

Here is the link to the Media announcement from Fannie Mae to learn more about this program.

Keep tuned to this Rhode Island Real Estate blog to find out more, as it happens!

         

To all our Agents, Clients, soon to be clients, Friends and Family.

We wish you a peaceful and prosperous Holiday Season!

Rhode Island is in serious trouble. Should you buy now?

Rhode Island Real Estate is in a state of flux right now. Yes, we had a flurry going for awhile with the tax credit for first time buyers. Amazingly homes were going so fast during the last couple of months, that it almost seemed as if prices would start going up. And they did, but very minutely.

Now, according to CNN News Rhode Island again is in the top ten. It seems we are always in the top ten of something! This time, it's our financial problems. I clearly remember the reason our governor ran for this position. He ran a business and knew how to manage money!! You can go here to see the CNN article

Here is the chart for "states in fiscal peril"



So, what does this mean for the housing market here in Rhode Island? Well one could say that yes, it is still a good time to buy. We now have an extension on the tax credit and an additional incentive for people who may have wanted to list their homes and make a move, but were afraid to because of the volatile market. Now if you wanted to list you would have a better chance of a buyer actually considering your home and when you moved, you would also be able to collect a few thousand (above and beyond).  This is nothing to sneeze at and will be ending April, 2010.

However, who is to say that homes will not continue to decline? We are all hearing those rumors about the foreclosures stuck in the "pipeline". In my business, I do a lot of traveling throughout Rhode Island and I see many, many unoccupied homes. Are they future foreclosures? And why are they not on the market now?  What is holding up the banks in these instances?

Also, anyone who has had the misfortune opportunity to be on either side of a short sale, already knows how futile they can be.  Yes, a buyer can get a really good bargain. (Better than a foreclosure because the plumbing is usually still in the house). However, that buyer needs to excersise extreme patience because it can be months and months before they even hear back from the bank. Why? 

I would venture to say that if you now want to list your home, it would be a pretty good time to do so.

I am a Realtor. I write about Rhode Island. Rhode Island has some beautiful coastline and picturesque country. I live in Rhode Island and grew up here. But, we are in financial trouble.  This is a good time for someone from out of state to come in and snap up a waterfront or bayside home. Our beaches are now sporting some great home deals! These homes were once coveted and now are on the market. Rhode Island's troubles are someone elses' gains, as is the case with just about everything.

Here's hoping Rhode Island gets back on its feet and shows its stuff. We have a lot of great places here. All we need is jobs!

TAX CREDIT MAY BE EXTENDED!!!!! President to sign Friday

Its looking pretty good that the tax credit will be extended until April 2010. Just waiting on the Senate and House votes...this one will also include a tax credit to people who have already owned a home for 5 years.

--------------------


WASHINGTON - Key Senate leaders agreed yesterday to extend a popular tax credit for
first-time home buyers and to offer a reduced credit to some buyers who already own
houses.

The tax credit provides up to $8,000 to first-time home buyers, but it is set to
expire at the end of November.

Senators agreed to extend the existing tax credit for first-time home buyers while
offering a reduced credit of up to $6,500 to repeat buyers who have owned their
current homes for at least five years, said Regan Lachapelle, a spokeswoman for
Senate majority leader Harry Reid, a Democrat from Nevada.

The home buyers’ credit would be available to individuals earning up to $125,000, or
$250,000 for couples, up from $75,000 for individuals and $150,000 for couples under
the current law, Lachapelle said.

The agreement was announced after the Commerce Department said sales of new homes
unexpectedly fell in September.

Lawmakers want to keep home sales from slipping as the economy struggles to recover
from the worst drop in prices since the Great Depression. Economists say a recovery
in housing is a key to rebuilding the confidence and finances of American consumers,
whose spending makes up 70 percent of the world’s largest economy.

The tax credits would be available to home buyers who sign sales agreements by the
end of April. They would have until the end of June to close on their new homes,
said a congressional aide, who spoke on condition of anonymity because he was not
authorized to discuss the deal.

Senator Christopher Dodd, a Democrat from Connecticut, has been negotiating for
several weeks with Senator Johnny Isakson, a Republican of Georgia, to craft the
extended tax credit. Senate minority leader Mitch McConnell, a Kentucky Republican,
agreed that most lawmakers support the homebuyer measures.

Senators were still negotiating the expansion of a separate tax credit that lets
money-losing businesses get refunds for taxes paid in previous years, providing them
with a source of cash.

Senators in both political parties were hoping to add both tax provisions to a bill
that would give people running out of unemployment insurance benefits up to 20 more
weeks of federal aid. The Senate could vote on the overall bill as early as today,
but lawmakers were still haggling over several unrelated amendments last night.

If the Senate passes the bill, it would go to the House, which passed a similar bill
extending unemployment benefits last month. House leaders have hinted they would
support extending the tax credit for home buyers.

Lawmakers didn’t release a cost estimate for extending the tax credit, though
similar proposals were projected to cost about $10 billion.

Industry representatives said uncertainty about the tax credit is hurting new home
sales. September’s decline was the first since March.

It takes 45 days to 60 days to close on a house, making it unlikely a sale made
today would be consummated by the end of November, said Lucien Salvant, spokesman
for the National Association of Realtors. “Buyers right now have an incentive to
hold off, not knowing whether the credit will be extended,’’ Salvant said.

Purchases of new homes dropped 3.6 percent last month to a 402,000 annual pace,
which was lower than the most pessimistic economist’s forecast, according to
Commerce Department figures.

Material from Bloomberg News was used in this report.

© Copyright 2009 Globe Newspaper Company.

Short Sales in Rhode Island

Have you been thinking about using a Short Sale to sell your home before it goes into Foreclosure? Stonehurst Realty can help you. Please email us or call for a confidential (free) consultation. We have all the necessary means to list and sell your home with a miminal amount of stress!

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RI Market Update by Karen

Once again the market in Rhode Island has stumped even the most long term astute professionals. While everyone knows about the economy, school and church consolidations, high unemployment and numerous short sales and foreclosures that have racked Rhode Island for the past 4 years or so, no one could predict the current market.

Earlier this year there was a flurry of home buying, mostly bank owned homes, or fixer uppers. This flurry led to an increase in sales as was reported by the NAR. Then in spring, another small flurry took place, this time first time home buyers were coming out to try and take advantage of the $8,000 tax credit and the unusually low interest rates, combined with the monthly dropping of prices. This really was an excellent time to buy.

The biggest problem being that most of these homes needed work and rehab, thereby cutting out the first time home buyer who was looking in their price range and then would have to add an additional $10,000 to $30,000 to get the home up to par. Even with all the new programs, first time home buyers are still at a disadvantage when it comes to buying bank owned homes. The selling banks, 90% of the time, will accept a lower offer as long as the offer is CASH and AS IS. A first time buyer, especially one going through FHA, has to offer higher and then has to be able to finance the repair items. Most selling banks do not want to sit and wait for this to happen.

Another major problem, that I have seen repeatedly, is the Title's of many of these bank owned properties not being clear to close. Once this happens, extensions need to be signed and discussed, some lasting 3 months or more after initial closing date, forcing some buyers to have to back out of the contract. An important note to this is that Rhode Island prices have been dropping so quickly, that the house you bid on in January and waited for it to close for three months is now worth less than you bid!!

All these are daily happenings and all contribute to the disillusionment of buyers. It becomes a vicious circle and right now there is no end in sight. I spend most of my time searching for "deals" for my clients. It takes diligence and hard work and patience, but eventually we find the one.

Yes, everyone knows the market will eventually come back, but the damage done in this particular market has been almost devastating.

For the rest of this year, I would advise First time buyers to act quickly, not only to take advantage of the lower rates (which will definitely go back up), but also to take advantage of the tax credit. This is probably the best time you will ever see to purchase a home. Yes, it's a lot of work and somewhat disappointing to not get the house you bid on, but if you are diligent, your home will appear and it will be the right one.