IS THIS YOUR FIRST TIME?

According to the National Association of Realtors over 50% of homes purchased in March were by first-time home buyers. This is great for the ex-renters and our economy to get us back on the right track. Overall housing inventory dropped by 1.6% by the end of March creating an upswing in sales as buyers are starting to jump off the fence. This in large part is due to the fact that home prices have dropped over 12% from this time last year. Rates are very low and there is plenty of money even if you have less than perfect credit. As of this posting a 30 year FHA fixed loan with a 625 credit score is running around 4.875%. However, if this is your first home, you might want to consider a couple of things before you sign a contract.

1. Are you ready to take on the responsibility?
2. After your total closing costs do you have a couple of months expenses in reserves?
3. How stable is your job?
4. Have you considered extra homeowner expenses?
5. If gas prices rise will it be a budget buster?
6. Do you have extra money to pay down your credit card balances?

Remember even though home prices might be low do you have the reserves to pay for maintenance. Make sure you get a home inspection and a home warranty so that you know what you are getting into. The $8,000 tax credit should kept in reserve to help cover expenses that may arise. Be a Boy Scout and always be prepared.

CAN FHA HELP ME SELL MY HOME EVEN THOUGH IT NEEDS UPDATING?

One of the most exciting opportunities for homebuyers today is Foreclosures and Short Sales. In my market you can typically pick-up a home for a deep discount if you look at these properties. The big problem is that these properties normally need work and most people do not have the money to repair them out of pocket.

Back in 2005 FHA saw this problem and developed the 203k( Streamline) limited repair program. This loan permits homebuyers and those refinancing to borrow up to an additional $35,000 into their mortgage to improve or upgrade their home.

The following is a list of rules that apply:

1. Purchase or Refinance of 1 to 4 units properties.
2. Must be owner occupied.
3. Property must be at least 1 year old.
4. Total loan amount cannot exceed FHA limits.
5. Landscaping not allowed.
6. Cannot be used to repair structual damage.
7. 2 Appraisals are required.

The following is a list of common 203k improvements:

1. Kitchen & Bathrooms.
2. Decks & Patios.
3. Flooring.
4. Basement finishing.
5. Roofs.
6. Painting.
7. Home Theaters.
8. Handicap Accessibility.
9. HVAC systems.
10. Appliances.

By using this program it creates alot of wins. The buyer gets a great deal on a home that is tailored to suit their needs. It employees the contractor industry. If it is a Short Sale it keeps the sellers from going into Foreclosure. If it is a Foreclosure it helps minimize the banks losses. Most importantly it helps increase the Neiborhoods property value. Remember If you are looking for a deal on a property that you can make your own this is your program.

WAYS TO SPEND YOUR TAX REFUND

For most of us Tax day has come and gone. According to our President, most Americans recieved a refund. I am glad for the ones who did because I had to pay. Now the question becomes what to do with your windfall. Here are some of my thoughts.

1) Since we are Americans, the most generous country in the world, give to a charitable cause. We have recently been working with a innercity church who ministers to the homeless.
2)Pay down your credit cards. Most people think they should pay down the highest rate first. I subscribe to paying off the smallest balance then cutting that card up.
3)Increase your emergency fund. Most experts agree that everyone should have at least 3 months of total expenses into a seperate money market account. Once you have 3 months put away forget about it. Rainy days come to everyones life.
4)Increase your childrens college fund. Tuition has increased substantially and will probably continue the upward trend.
5)Buy something MADE IN AMERICA and give it to someone else. I believe that the more good deeds you do the better your life will be.

This is only a few things, but after all how large can your refund be?

TWO INDIANA COUNTIES REPORT INCREASED SALES IN FEBRUARY

I would like to thank Laura Gillis for contributing this article.

As you read this report,remember the basic principal of supply and demand. As supply decreases, price increases. We are still in the market where supply is decreasing, but prices have not yet increased in all areas.

More than 1,600 Central Indiana homes pended in February, with two counties reporting significant increases compared to the same period last year, according to pending sales statistics compiled by F.C. Tucker Company. Madison County posted a 14.7 percent increase, and Boone County sales rose 11.4 percent.

Availiable homes for sale in the nine-county region dropped 14.3 percent in February 2009 with 15,377 homes on the market, 2566 fewer homes than in February 2008. Three counties experienced significant inventory declines. Shelby County experienced the greatest decrease in inventory at -23.4 percent, followed by Marion County with -20.4 percent and Hendricks county at -17.2 percent.

The continual drop in inventory is a good sign for the overall market," said H. James Litten, president of F.C. Tucker Company's Residential Real Estate Services Division. "It's a strong signal that our local market is strengthening."

Tucker's data also indicates that one Central Indiana county - Johnson County - saw an increase in average home prices for the second consecutive month, compared to January and February of last year. Homes in Johnson County sold for an average of $141,208 in February 2009, compared to $135,178 in February 2008, a 4.5 percent increase in the average home sales price.

Conditions have been improving for home buyers," said Litton, " Improved affordability, low interest rates and the first-time buyer tax credits are catching the attention of buyers who may have otherwise waited on the sidelines". 

DON'T GIVE A BAND AID TO AN AMPUTEE

This week the President unveiled his plan to help the distressed American homeowner. This plan is like giving a band aid to an amputee. The $75 BILLION dollar bail out is not going to fix the root of the problem. The real problem is that the banks need to get rid of their toxic assets. If the government wants to help our economy they would set up a National Bank, and buy these troubled mortgage loans for 60% of the loan amount. This would give the banks the capital they need to make good loans.

This program should also stipulate that if the banks unload these assets they have to put the money back into the communities in new loans. Our tax dollars should not be used to help banks buy other banks. Any industry that gets any tax dollars should not be able to donate to any government official. Allowing Citibank to give Barney Frank money and not expecting something in return is like putting a case of scotch in front of Ted Kennedy and expecting him not to crash in to a river.

The foreclosed properties could be released in a number of ways. One of my favorites is to discount VA loans to veterans in the form of 2% lower interest rates than FHA . The men and women who serve our country deserve a cost effective house to call home. They should be able to purchase the government foreclosures for a deeply discounted price. If they are disabled due to military service they should be able buy a home with a 2% loan and the money to make it handicap accessible. I also feel they should be able to go to a state school free of charge. If it was not for our veterans we would not be free.

The government could release the homes slowly to organization's like Habitat for Humanity. The Habitat group not only makes the new homeowner work on their home, but also requires that they go thru classes on budgeting and personal finance. Something that I believe should be taught in High Schools across the country. A portion of these homes could be discounted to High Schools and Community Colleges to raise money. The schools could have classes lead by trades and business people in carpentry, plumbing, electrical, mortgages, insurance and real estate. The kids could acquire skills that could help them land jobs after they graduate. They could learn about budgeting, fund raising, finance, insurance, selling as well as the trades. After the home is sold the school could take the profit and buy another.

This program could be called the Heroes and Education plan. It could also be extended to teachers, nurses, police and firemen. All of the end users should be required to complete a personal finance program as well as be required to work for a number of hours  repairing other homes. This disposition method should not be used by appraisers in calculating home values. This program should not lower the non participant neighbors home value.

My last thought is that we need to honor those that protect and educate us. We need to be responsible and hold ourselves accountable for our actions. We need to stop being so negative and THANK GOD for all that he has given us. Remember we are Americans and we can do anything.
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Do you Qualify for the new Foreclosure Prevention plan?

The President today released his fix to help millions of Americans stay in their homes. The initial price tag is a mere $75,000,000,000. This program is broken down as follows:

1)Loan Modifications- This is where your mortgage contract is changed to usually drop your interest rate and or increase your payment time. 

To qualify you have to do the following.

A)Demonstrate a hardship ( loss of job, sickness, etc.).

B)Owner occupied homes only.

C)Fully document income.

D) Jumbo loans do not qualify.

The lender will look at your situation, if you qualify, lower your payment to know more than 31% of your gross income. In other words if your gross monthly income is $10,000 a month your mortgage payment could drop to $3100. To sweeten the deal borrowers that pay on time could get up to $1,000 a year for the first 5 years.

The second part is to help those homeowners who cannot refi due to dropping property values.

Right now if you owe more than your property is worth you cannot take advantage of these historically low rates. This program allows lenders to refinance you up to 105% of your property values. Recently you could not refi unless you had 20% equity. This is also for the owner occupied, non Jumbo loans that can prove income and assets. As always if you have any questions about this or anything else mortgage related email me. chris@themtgmaster.com 

Weekly Mortgage Advisory

This week our Fed Chairman will deliver his semi-annual testimony on the state of the economy late on Tuesday. Look for Mr. Bernanke to address the Banking and Housing crisis specifically and their impact on the overall economy. February's Consumer Confidence Index is also released on Tuesday. This index measures our willingness to spend. Consumer spending makes up two-thirds of our economy. The bond traders are expecting a drop in confidence from 37.7 in January to 36.0 this month. The lower the number the better it is for interest rates.