Good News for FHA Condo Buyers!

New FHA Condo Approval Process Will Mean More Options For Chicago Condo Buyers 1st July 2009 With an upcoming change, FHA will be able to finance a lot more condominiums here in the Chicago area and throughout the nation. A recent FHA mortgagee letter detailed the new process that will streamline condo project approval and will open up a lot of properties which up until now have not been eligible for FHA financing.

Over the last 2 years condo financing has become increasingly harder with tightening guidelines, restrictive mortgage insurance policies and loan level price adjustments which made condo financing much more expensive for anyone without a big down payment. Over the last 10 years almost all the condos in Chicago were financed with conventional loans and as more and more condo units came on the market through new construction or conversions from rental units, few of these properties applied for FHA project approval. The bright spot for many lower down payment condo buyers was the FHA spot loan. The FHA spot loan approval process allowed home buyers a way to buy units in condo buildings that weren’t FHA approved with the better terms that FHA offered (including competitive rates and a low 3.5% down payment), as long as the building met certain guidelines. This has been a great program, and it has helped a lot of new buyers, but there were a lot of otherwise well managed properties which have been excluded from this program.

With the new changes, set to take place on October 1st, some of the problems in the program will be fixed and more condo units will now be available for FHA financing. The FHA spot approval was a great program, but there were some glitches: Any property which had a “right of first refusal” in its Decs and By-laws was automatically rejected. Because of rules regulating how many units in a project could be FHA funded, the condo project had to have at least 5 units. This meant that all the smaller condo units, including a lot of 2 and 3 unit buildings which were converted over to condos during the housing boom, were not eligible for spot loans. The project had to be 90% sold out, meaning only well established properties were eligible, and more recent conversions or new construction condo would not be able to be approved. The spot loan was for a single unit only. If someone else bought in the same building after a spot loan had been approved, they had to go through the same process again. The new FHA condo approval process changes each of these, meaning more properties will fit the terms and be able to qualify for FHA financing. As of October 1st FHA will do away with the spot approval process and begin the new process. Under the new terms, properties won’t be restricted if they have the first right of refusal in their condo docs as long as they don’t discriminate, buildings with 2 units and up will be eligible, newer properties will work once they are 51% sold. The approval is not for the individual unit but the project itself, so once approved other units will then be eligible for FHA financing up to maximum concentrations (1 FHA financed unit in buildings of 3 units or less, and up to 30% FHA financed in larger buildings). One big change in the guidelines is that going forward the approvals will be handled by only FHA direct endorsement lenders (my company is FHA direct endorsed) with “staff knowledge and expertise in reviewing and approving condominium projects”. This means that the lender will be responsible for collecting all the documentation needed and putting together the full project approval. This means more paperwork and responsibility for the lender (though this is similar to what is needed for many conventional approvals now), but once the approval is complete the project will be added to the FHA approval list and then any FHA lender or broker will be able to do loans in the building. The company I work for is gearing up for this program by hiring a condo specialist who will work with our underwriters and processors to get these approvals out as quickly and smoothly as possible. I think this will be a big help to the market and will give buyers a lot more selection to choose from. Here are some of the particulars of the new process taken directly from the mortgagee letter:

The new rules go into effect on October 1st 2009:

Projects consist of two units or more.

Projects must be covered by hazard and liability insurance and, when applicable, flood insurance.

Right of first refusal is permitted unless it violates discriminatory conduct under the Fair Housing Act regulation in 24 CFR 100.

No more than 25 percent of the property’s total floor area in a project can be used for commercial purposes.

The commercial portion of the project must be of a nature that is homogenous with residential use, which is free of adverse conditions to the occupants of the individual condominium units.

No more than 10 percent of the units may be owned by one investor. This will apply to developers/builders that subsequently rent vacant and unsold units.

For two and three unit condominium projects, no single entity may own more than one unit within the project; all units, common elements, and facilities within the project must be 100 percent complete; and only one unit can be conveyed to non-owner occupants.

No more than 15 percent of the total units can be in arrears (more than 30 days past due) of their condominium association fee payment.

At least 50 percent of the total units must be sold prior to endorsement of any mortgage on a unit. Valid presales include an executed sales agreement and evidence that a lender is willing to make the loan.

[1] At least 50 percent of the units of a project must be owner-occupied or sold to owners who intend to occupy the units.

[2] For proposed, under construction or projects still in their initial marketing phase, FHA will allow a minimum owner occupancy amount equal to 50 percent of the number of presold units (the minimum presales requirement of 50 percent still applies). Legal Phasing is permitted for condominium processing. It is recommended that developers submit all known phases for initial project approval. For purposes of calculating the owner-occupancy percentage: a. On multi-phased projects the owner-occupancy percentage is calculated on the first declared phase and cumulatively on subsequent phases if the ownership of the condominium project b. remains the same; c. If multi-phasing includes separate ownership per phase, each phase is calculated individually; or d. Single-phase condominium project approval requests must meet the owner-occupancy percentage requirement.

· FHA Concentration a. Projects consisting of three or less units will have no more than one unit encumbered with FHA insurance. b. Projects consisting of four or more units will have no more than 30 percent of the total units encumbered with FHA insurance.

· Reserve Study – a current reserve study must be performed to assure that adequate funds are available for the funding of capital expenditures and maintenance. A current reserve study must be no more than 12 months old – if recent events or market conditions have affected the finished condition of the property that information must be included. When reviewing the reserve study, consideration must be given to items that have been replaced after the time that the reserve study was completed.

Information courtesy of:
Peter Thompson

Illinois Mortgage Broker

 

For more information about this our how to get started finding your dream home, contact us today at kjpremier@atproperties.com.

 

Make your yard an oasis

 Economic uncertainty has many families skipping expensive vacations and opting for so-called “staycations” in their own backyards. They’re cooking, camping and enjoying outdoor activities right at home, making their lawns the perfect spot for an oasis of fun and relaxation.

Because people are spending more time around their homes, there is a renewed emphasis on the health, maintenance and vitality of grass, trees, flowers, shrubs and other plants and natural areas in the yard. Rising sales at garden centers for items like shrubbery, decorative accessories, fertilizers and pesticides show that consumers are creating inviting, usable lawn and landscape environments.

The benefits of healthy lawns and landscapes are numerous. Trees, shrubbery and plants can create a private and tranquil personal retreat. Well-maintained green spaces have been proven to lower blood pressure, reduce muscle tension related to stress, and reduce feelings of fear, anger and aggression. Lush lawns act as a soft cushion for play areas, remove dust, dirt and allergens from the air, and can significantly decrease carbon dioxide levels. Lawns also act as a filter to help improve water quality by reducing erosion and absorbing runoff so it doesn’t find its way into the gutter and eventually into public drinking water and other sources.

‘When healthy and functioning at their best, lawns and natural areas provide a limitless array of benefits for individuals, communities and the environment,’ says Allen James, president of RISE (Responsible Industry for a Sound Environment) — a national organization representing the manufacturers, formulators and distributors of pesticide and fertilizer products. ‘To reach their full potential and keep them free from harmful pests, many lawns and landscapes require the judicious and responsible use of fertilizer and pesticide products. Especially as people are spending more time in their yards, using these products as directed to grow healthy plants and protect against potential pest threats is increasingly important.’

While this is the time of year when people can enjoy their lawns and other outdoor settings with pets, family and friends, it is also important to remember that encounters with certain common pests are more frequent during warmer weather. Tick activity and the prevalence of Lyme disease, as reported by the Centers for Disease Control and Prevention (CDC), is especially high during summer months. According to information from the CDC Web site, approximately 75 percent of all reported cases are acquired from ticks picked up during activities in back yards and around home. Lyme disease is an increasingly common problem, now documented in 49 states as well as parts of Canada, Europe and Asia, and the number of positive cases here in the United States is on the rise. In the 15 year span from 1992 to 2007, CDC reports of Lyme disease across the nation have steadily increased from approximately 10,000 cases per year to more than 27,000 cases nationally.

Though Lyme disease and similar pest-related health risks are a problem, paying attention and taking a few simple, preventative steps can help homeowners and their families reduce the risk of these pest dangers that affect millions of Americans each year.

‘Human health conditions like Lyme disease, West Nile virus and others are spread and transmitted through the bites of ticks, mosquitoes and other pests we encounter in our backyards almost every day,’ James says. ‘Taking the time to eliminate high grass, standing water and other potential pest habitats is a very simple, very effective measure for reducing the prevalence of these unwelcome and unhealthy annoyances.

‘Also, insecticide sprays can be applied to turf, plantings and natural areas,’ he adds. ‘As for personal protection, applying insect repellents and inspecting ourselves and our children regularly and thoroughly after having been outside are some simple precautions that go a long way toward preventing many of these common, but serious health risks.’

By taking the proper precautions and a few easy steps to maintain a healthy, vibrant and pest-free yard, it is easy to create an enjoyable, usable backyard oasis for outdoor fun all year long.

Any questions regarding your house and making it a home, or to prepare it to put on the market, please contact us today- kjpremier@atproperties.com.

Experts Predict that Low Mortgage Rates Won’t Last Forever!

We’ve been hearing about historic low mortgage rates for months now, but they could be going away if buyers don’t act quickly enough. CBS 2’s Vince Gerasole explains why some analysts say those sitting on the fence may want to hurry.

Those low rates have encouraged many buyers who were hesitating to jump into the housing market, especially first time buyers. But just as more are deciding they might take the plunge, rates are heading back up. Market watchers say if buyers wait too much longer, it may cost them.

At 25, Alex Filin is buying his first place and he’s hunting down the perfect condo.

“It’s a little headache, but the adrenaline rush, the excitement is getting me going,” Filin said.

An $8,000 tax credit for first time buyers, sellers lowering their asking prices and historically low interest rates are pushing people like Filin into the mark in numbers real estate agent Paul Fortman with @properties hasn’t seen in two years.

“Just within the last four weeks I have accepted seven contracts, and I have five closings in the month of June,” Fortman said.

But buyers like Filin who have decided to jump into the market may want to act fast. Mortgage interest rates in the past week have jumped at least half a percentage point, from an almost unheard of low of 4.75 percent to a still impressive 5.25 percent. But critics caution they may not drop again.

Analysts blame rising government debts from the bailout of the auto industry, for example, that push up all sorts of long term loans including mortgages that have looked so appealing in recent months.

Keep in mind with first time home buyers every dollar in mortgage payment can make a difference in whether they can afford the house or not. For example, for a house selling for roughly $250,000, with 20 percent down, the difference between last week’s interest rate and this week’s is roughly $60 more each month in mortgage payment.

Don’t wait for your opportunity to own a home to pass you by….email us at kjpremier@atproperties.com today to find your dream home in either the suburbs or the city.

HUD: Tax Credit Can Be Used on Closing Costs

FHA-approved lenders received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according to eagerly awaited guidance from the U.S. Department of Housing and Urban Development on so-called home buyer tax credit loans that was released today.

Under the guidance, FHA-approved lenders can develop bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent.

The loans can’t be used to cover the minimum 3.5 percent, senior HUD officials told reporters on a conference call Friday morning.

Thus, buyers applying for FHA-backed financing with an FHA-approved lender that offers a bridge-loan program can get a bridge loan to bring down the upfront costs of buying a home significantly but would still have to come up with the minimum 3.5 percent downpayment.

There remain many sources of assistance for buyers needing help with the 3.5 percent downpayment, including many state and local government instrumentalities and nonprofit lenders.

In addition, some state housing finance agencies have developed their own tax credit bridge loan programs, so buyers in states whose HFAs offer such programs can monetize the tax credit upfront to cover all or part of their downpayment. These programs are separate from what HUD announced today.

The first-time homebuyer tax credit was enacted last year–and improved upon earlier this year–to help encourage households to enter the housing market while interest rates are low and affordability is high. The credit is worth up to $8,000 and is available to households that haven’t owned a home in at least three years. The credit does not have to be repaid, and is fully reimbursable, so households can get their credit returned to them in the form of a payment.

Learn more about the credit, including how to apply for it this year even if you’ve already filed your taxes, at REALTOR.org.

Source: Robert Freedman, REALTOR® Magazine Online

Neighborhoods at a Glance: Pilsen

It won’t take you long to feel the decidedly Latino beat of the South side neighborhood of Pilsen.  Catch a glimpse of some of the area’s famous murals near 19th and Ashland, or 18th and Wood.  Find silver and stone jewelry, beaded keepsakes, and other local art at shops like Oxala (1653 W. 18th St., 312-850-1655).  Also stop in the National Museum of Mexican Art, which highlights Mexico’s rich culture from ancient times to the present and from around the globe to down the street.  Then dine at the authentic,  Nuevo Leon at 1515 W. 18th St.  It’s a family-run BYO since1962 and it’s sure to delight!  Or a quick bite at the no-frills at Tacqueria Los Comales at 1544 W. 18th.  Need a snack?  Be sure to grab some Mexican candies or chili-spiked lollipops from Dulceria Lupitas (1730 W. 18th St.).  Lastly along the hopping 18th street strip, be sure to check out Knee Deep Vintage for some stylish duds and killer boots (1425 W. 18th St.)!

For more information about the Pilsen neighborhood, or other areas of Chicagoland, please feel free to contact us at kjpremier@atproperties.com.  Or, if you are looking at home values, be sure to check the @report for detailed up to date information about your favorite neighborhood.

$8000 Tax Credit May Now Be Used for Down Payment!

Previously, first time buyers would not be receiving their $8000 credit until filing their tax returns, until now.   The Federal Housing Administration just announced that they would allow lenders to use the first time buyer credit as a portion or all of a buyers down payment at the closing table.

Shaun Donovan, secretary of the U.S. Dept. of Housing and Urban Development addressed a group of Realtors at the NAR mid year meeting and had some other positive things to speak about.  “Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.”  He also commented that the overall market was beginning to stabilize.

This is great news, both as a first time homebuyer, and as a seller looking to sell and move up.  The first time market will continue to purchase, thus allowing the buy up seller to spend in a higher price point.  To read the full story, click here.

To find out if you qualify for the first time buyer tax credit, or to help with pricing your home for a quick sell, contact us today at kjpremier@atproperties.com.

Mortgage Rates/Update

30 Yr Fixed Conforming:     5.000%     APR  5.089%

5 Yr ARM Conforming:       4.000%     APR  4.070% 

30 Yr Fixed Jumbo:          6.375%     APR  6.445% 

5 Yr ARM Jumbo:             5.625%     APR  5.695%

  

Prime Rate is at 3.250%

 

Mortgage News

Mortgage markets faced a broad sell-off last week, sparked by the Federal Reserve and consumer sentiment. 

 

This caused mortgage rates to spike from Wednesday to Friday and it caused the “lowest rates of all-time” to seem like an opportunity lost.

 

It’s the first time in 4 weeks that mortgage rates rose overall.

 

Last week was a strange week, to say the least.  Aside from the large docket of economic data, there was also:

• A Federal Reserve Meeting
• 160 of the S&P 500 firms reporting earnings
• A global public health emergency

It all combined to make for a volatile week in mortgages and the biggest losers were the people that hadn’t yet locked a mortgage rates.  Based on the current market, each quarter-percent that mortgage rates rose added $32 per month per $100,00 borrowed.

 

This week, the market should be similarly jumpy. 

 

1. If the outbreak’s intensity grows, look for Safe Haven to lower rates much like it did last Monday.

 

Also, be aware and listen for Stress Test rumors.

 

Thursday, the government is expected to release its bank Stress Test results.  However, history shows that markets often make large movements before news is ever official — mostly on rumors. As a result, expect mortgage markets to carve out wide ranges on Tuesday and Wednesday in advance of the reports, making it very hard to “time” low mortgage rates.

 

And lastly, Friday brings us April’s employment data.  There’s nothing the report can show us that we don’t already know so the biggest risk here is that employment is not as bad as we all expect it to be. 

 

If that’s the case, stock markets will rally and mortgage rates will rise.

 

Like always, mortgage markets can change in an instant — especially when there’s outside influences on “normal” trading like we’re seeing with Swine Flu and the Stress Test.  If you’re offered a rate and it fits your budget, consider locking right away.  It may not last long.

If you have further questions regarding interest rates or finding what’s right for you and your housing needs, please contact us at kjpremier@atproperties.com.

*Information provided by Guaranteed Rate.

Department of Treasury Releases new Details on “Making Your Home Affordable”

Among the details released, this plan will allow home owners the ability to either apply for a loan modification due to economic hardships and a resulting decrease in salary or if you have experienced a rate adjustment which is causing your payment to be more than you can afford.  The second point is the ability to reapply for an FHA refinance when you’re home may not have previously had enough value to support a traditional re-fi.  The one point that must be taken into consideration here though, is that you must be current on your monthly payments.  Click here to see the press release in its entirety. 

The dept. is also offering a website where you can check your eligibility to see if you too can qualify for one of the loan assistance/modification programs.  These new programs are aiming to offer assistance to 7-9 million more homeowners, allowing more troubled Americans to stay in their homes, thus helping to deplete some of the surplus of housing inventory in much of the United States.  This will give another shot in the arm to the housing inventory as we go full steam into the Spring market.  To see if you qualify for one of these programs, click here.

For more questions on how to make your home more affordable or with help in finding a new one, contact us today at kjpremier@atproperties.com.

Weekly Mortgage Report

Rates for the Week Ending April 24th, 2009*

30 Yr Fixed Conforming: 5.000% APR 5.089%

5 Yr ARM Conforming: 4.250% APR 4.320%

30 Yr Fixed Jumbo: 6.250% APR 6.320%

5 Yr ARM Jumbo: 4.875% APR 4.945%

Prime Rate is at 3.250%

Mortgage News Last week, like the 3 weeks prior, mortgage markets were all over the place from day-to-day. But, also like the 3 weeks prior, when the week ended Friday, rates were right back where they started from Monday. For the 4th straight week, mortgage rates started and ended the week essentially unchanged. Whether or not this is good news depends on your perspective. For active home buyers who have yet to find the “right home”, long-term flatness like this is terrific. While interest rates stay even, buyer purchasing power holds flat and pre-approval letters stay valid. For buyers under contract or homeowners looking to refinance, though, the market’s pattern is a little more rough. Although rates are holding steady week-to-week, the day-to-day action is quite different. Bond markets are volatile and rate swings of a quarter-percent in a day have been common. How good of a rate you get depends on day on which you shop. This complicates the process of “locking a rate” and makes it very hard for people trying to time a market bottom. This week, though, the market may finally make a run and break its range. Aside from it being an unusually data-heavy week, the Federal Reserve meets Tuesday and Wednesday to discuss monetary policy. The data combined with the Fedspeak may push the markets one way or the other towards economic optimism or pessimism for the latter half of 2009. Lately, it’s been a combination of the two — a “cautious optimism” — and that’s a big reason why mortgage rates have held in a tight range for so long. Understand, though, that when mortgage rates finally do move, they’re going to move in a big way. So, if you’re among the crowd looking for lower rates, the best possible outcomes you can hope for this week are: Weak consumer confidence data (Tuesday, Friday) Weak consumer spending data (Thursday) Falling “cost of living” calculations (Thursday) Fed concerns about deflation and/or recession (Wednesday) Any of these four events would likely temper hope for a quick economic revival, sending mortgage rates lower. On the other hand, if confidence or spending is strong, or the Fed has no regard for deflation or recession, expect mortgage rates to rise.

Information Courtesy of Guaranteed Rate

More Positive Press for the $8000 Stimulus Package!

What could you do with an extra $8000?  If you’ve never bought before or have had no home ownership interest in the previous three years, you could make an easy $8000 if you buy before December 1st, 2009.  This article below from the Chicago Tribune talks about the decision to buy now, while loans are cheap and the government is giving you a great rebate.

Call or email us today to see if now is a great time for you to get into the Real Estate market, while there is great inventory with low prices, and low rates!  kjpremier@atproperties.com.

 

Stimulus plan’s $8,000 housing credit can be sweet in the right circumstances

Chicago Tribune

April 13th, 2009

Receiving $8,000 to buy a house is a tempting deal.

And Uncle Sam is willing to offer it to you, under certain conditions.

Under the economic stimulus plan that became law last week, if you are buying a home for the first time, you can get your hands on up to $8,000. In fact, if you are one of the savvy people who saw the housing bubble threat in 2005, sold your home and have been renting since then, this could be an especially sweet deal if you go bargain-hunting this year.

Under the rules for the new $8,000 tax credit, you have to buy your first home between Jan. 1 and Nov. 30, or have had no ownership interest in a home for the last three years, said James Seidel, director of federal taxes for Thomson Reuters.

This could be a way to help come up with a down payment, or to receive $8,000 to save for emergencies. Keep in mind, however, that Uncle Sam doesn’t put the money directly into your hands when you need it most—at the point when you close, or complete the legal formalities, on the purchase of your home. You must come up with your down payment, then file your tax return and seek the $8,000 as a tax credit.

As a credit, you receive money the way you would a tax refund. The good part: This is a refundable credit, which means that even if you do not owe much in taxes, the government will give you the money, Seidel said. That makes it better than a normal credit or a deduction.

There are some caveats: You would receive less than $8,000 if the house you buy costs less than $80,000, or if you owe the government taxes that weren’t taken out of your paychecks. The $8,000 is a maximum. If the house you buy costs less than $80,000, you will receive 10 percent of the price.

For people desperate for a down payment, the waiting period might not work. But for those who can turn to a relative for $8,000, the home buyer could use the cash at the closing on their new home, move into the house, apply for the credit on their 2008 tax return, obtain the money from the government and repay the relative if necessary.

The $8,000 credit that just went into effect is a much better deal than the one aimed at luring home buyers last year. In 2008, first-time home buyers could receive a $7,500 tax credit, but important strings were attached: The home buyer has to repay the sum to the government over 15 years.

In contrast, home buyers this year can receive $8,000 without any obligation to repay the money, provided they live in the home for three years.

And if people buy a home soon, they can capture the new $8,000 credit quickly, on their tax return for 2008.

Even if you filed your 2008 tax return already, a first-time buyer can still claim the credit on a home purchased early this year. Seidel suggests filing an amended return with Form 1040X. If you plan to buy a home later this year, you can request an extension of your 2008 taxes and claim the credit as you complete your tax return by Oct. 15, Seidel noted. The other option is to claim the credit on your 2009 tax return.

Despite the attractive credit, buying a home is not a simple decision.

Home prices are still dropping, and unemployment is rising, so think carefully about whether your job is secure and how you will pay for your home if you lose income.

As a rule of thumb, people should not buy homes if the monthly payments will consume more than 28 percent of their income and if they are carrying balances on their credit cards from month to month.

Before buying, run through your income and expenses to make sure a house is affordable now and will continue to be if you face a layoff. For a new homeowner, keep in mind that you must calculate mortgage payments; condo fees, if applicable; property taxes; homeowner’s insurance; utilities; and maintenance. As a rule of thumb, it’s wise to put aside $150 a month for repairs in case you must call in the plumber or face some other unbudgeted expense. Try working a budget with www.kiplinger.com/tools/budget/index .html.

To compare the cost of renting versus owning, try www.dinkytown.net/java/MortgageRentvsBuy.html.