Many ask “What’s the big deal?”  First, take a look around at our market.  Part of the mess we are in is due to this NOT being a ‘big deal’.  Yes, there are very legitimate deals to be had by both sellers and buyers, but thanks to all those that commited fraud in the process, there are more and more obstacles to be overcome.  Major market investors will only remember the transactions they were burned on, and require more strict guidelines accordingly.  People purchased homes, stating they were going to be ‘owner occupied’, hoping to flip it for a profit, only to not be able to sell, and ultimately walked away, causing the banks to lose quite a bit of money in the process.

Most ‘flips’ started with a ‘flop’.  A Flop is where a property is intentionally devalued by an appraiser, usually working directly with the seller and the realtor, so that the property will sell for less than what it is worth, causing the bank holding the note to write off a larger balance than necessary to allow a Distress Sale to take place.  A Flop can also occur in a Foreclosure Bailout scheme.  In either case, the purchaser of a Flop can now benefit, thru fraudulent means, by Flipping the property for a profit.  In a Flop/Flip scheme (yes, people are paid to come up with these names), the profits will be shared amongst all parties to the transaction.  If the value given on the appraisal is at market without any pressures on the low side, then a Flop does not take place.

So now you would like to purchase a home, and in the listing, you may see that financing is not an option, cash only, as the property is considered a ‘flip’, or, “FHA Financing is Not Available on this property”.  This may not be the case, and may be stating as such due to the listing agents lack of knowledge of todays financing options in this regard.  For example,  Veterans Administration loan programs do not have the 90 day seasoning rule, nor does many Conventional lending channels.  As long as the title is held by the original owner of record, without transfers, the purchase may not be an issue, may not as some lenders have additional overlays based on their tolerance to risk.  FHA only just recently added a Seasoning Waiver, allowing for the potential purchase by FHA Approved clients of a property flip.

If the seller of the property has done documented upgrades and repairs, AND the net increase is 19% of the original sales price or $40,000, whichever is lower, there generally will not be an issue.  If the property was originally obtained via a foreclosure or sheriffs sale, and there have not been any questionable transfers since the purchase date, the property may be eligible to be flipped.  In either case, a non-arms length transaction is required with full transparency…no one can have an indentity of interest to anyone in either the initial purchase, or the subsequent flip.  If the seller stands to gain more than a 19% increase in value, or more than $40,000, one of the main requirements is for two separate appraisals with the lower of the two values used.  Also, the purchaser can not own any other properties at the time of purchase.

There are other requirements for both Conventional and FHA financed purchases to take place where an under 90 day  ownership period (known as seller seasoning) is present.  With some basic investigations and education for all parties, it can be very easily determined if a property and situation qualifies.  It should be stressed to NOT place a contract on such a property without first consulting with your loan officer, and even then, get a second opinion, as rules can differ amongst different lenders.  There are many bargains to be had in today’s marketplace, and knowing the rules can help you make a much more informed decision, and get the bargain you deserve.

John Engel Fairway Independent Mortgage June 1st Rate Sheet

John Engel

Fairway Independent Mortgage Corp.

6611 Jeffereson Street Suite 302

Haymarket Virginia 20169

703 283 2351

Northern Virginia Real Estate Times

As part of the normal approval process, any recent inquiries are investigated to determine if a new account was opened, and what the repayment terms are.  This new policy takes it one step further, and is looking for any additional increases in credit card debts and the resulting increase in payments that may go along with it.  This process can have a devasting effect, should the resulting new credit score fall below either the acceptable level necessary for an approval, or fall below a level where a ‘risk based price adjustment’ is charged.  As this is done immediately prior to settlement, a purchaser who is not careful could find them either paying more at settlement, or even discover that they no longer qualify for the home.

There are ways to have an existing credit report updated without re-pulling a full file, but this is not an automatic process, and can take as long as 1-2 days for the updates to be completed.  Since this requirement has to be done prior to the Funding of a loan (lender money delivered to the settlement agent), it will be much quicker and simpler to just re-pull a bureau.  Here are some tips to follow to stay within these new guidelines:

1.)               NEVER stop shopping for a rate if one company has pulled your credit.  Ask for a copy of your credit report, and share that credit scores and debt payments with other lending sources.  A Professional loan officer will let you know the credit score parameters you may be facing, if any, by working with multiple lenders at once.  This could backfire into people being fearful of losing a loan approval based on the unprofessionalism of a loan officer afraid of losing a client to a lower rate competitor.

2.)               DO NOT make inquiries for any other reason than applying for a mortgage during the home purchase process.

3.)               DO NOT increase your credit card debt without first discussing with your Loan Officer.

4.)               Pay by check or money order for the appraisal, avoid using your credit card to pay for this in advance of settlement.  Depending on where the balance is in relation to a high credit, this could help to lower a credit score.

5.)               DO NOT close any revolving accounts during the home purchase process, without first discussing with your Loan Officer

This is an excellent time to purchase your first home, or move up to a larger one.  A little common sense and forethought can still make this a fun and fulfilling time for you and your family.  Take advantage of our still historically low rates, consult with a Realtor and Loan Officer in advance of starting the process, and get started today on making your financial future a bright reality.

John Engel

Fairway Independent Mortgage Corp.

6611 Jeffereson Street Suite 302

Haymarket Virginia 20169

703 283 2351

Northern Virginia Real Estate Times

Many homeowners read the constant reports concerning foreclosures, short sales, and the poor economy with indifference.  But for those that were either the victim of poor lending practices, made poor decisions in regards to their mortgage program, or suffered such an event, those reports hit home each day they hear or read those reports.

Our Country is all about 2^nd chances, and many are now finding out that they may just be granted such a chance, and to coin a phrase, find a ‘bank error in your favor!’.  If your home was foreclosed, or you enacted a Short Sale, on or before April 22, 2007, then the FHA may be willing to give you a 2^nd chance.  FHA base requirements are 3 years from the date of Foreclosure or Short Sale.  Fannie Mae requires 2 years from a Short Sale date if there were no mortgage lates, 4 years if there were mortgage lates, and 5-7 years if a prior home was foreclosed on.

For FHA, the minimum down payment is still 3.5%, and in most cases, requires a 620 credit score.  With 3 years removed from this major hit to ones credit report, that is very obtainable.  But think about this…based on todays home values, you would be able to buy your home back or one very similar for .50-.75 cents on the dollar, at an interest rate of 5% or better depending on current market activity!  That is the ‘bank error in your favor’, and a quality 2^nd chance at homeownership.

If you fall in to this category, or will be eligible for financing in the next 6 months, give me a call for a realtor referral in your area.  With the median sales price having mortgage payments LESS than the average rents for similar properties, and rates are still are historic lows, begin the process now in order to qualify when your are once again eligible.  Owning a home is still the American Dream, so begin today to make this a reality.

Time Is Money

Northern Virginia Home Buyers Time Keeps On Slipping into the Future.  No I am not talking about Steve Miller, but rather the First Time Home Buyer & Extended Home Buyer Tax Credit.  As well as some other dates of Interest you MUST be aware of.

Mortgage Backed Securities: As of yesterday The Feds Program To purchase Mortgage Backed Securities or (MBS) expired.  There has been no mention as of yet as to whether or not they will extend this program and continue to purchase these securities.  Why do we  mention this?  While The Fed was in the market to buy securities, it would be a dumb thing to raise interest rates, as it would cost them more to buy them.  Now that the program has expired Interest Rates could rise. We believe if they do raise rates it could be anywhere from a quarter point to three quarters of a point.  Still, even if they do raise rates.  They are still very low so lock in on a Loan now!

FHA & FICO SCORES: Starting April 15th New Changes to FICO scores are set to take place.  This could mean it will force you to put more money down in order to qualify, or even knock you out of eligibility all together.  Dont take a chance.  If your credit score is shaky run dont walk to get a loan and a new home in Northern Virginia.

FIRST TIME HOME BUYER TAX CREDIT: Today is April 1st Also known as April Fools Day.  Dont be a fool and put off taking advantage of the First Time Home Buyers Tax Credit and Extended Home Buyers Tax Credit.  There is exactly 30 days left.  You must buy a Home before the end of April and close before the end of June.

Dont delay, contact a Northern Virginia Real Estate Agent and a Local Direct Lender today to ensure you can have your new home in Northern Virginia today!

Northern Virginia Real Estate Times

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Dont Get Locked Out Of Your New Northern Virginia Home

Dont Get Locked Out Of Your New Northern Virginia Home.  LOCK IN on a rate now! You may hear this all the time from Real Estate Agents and Loan Officers alike.  The truth of the matter is that this time it is true.  The Fed has been participating in a program to purchase Mortgage Backed Securities or ( MBS).  However, this program is set to expire March 31st 2010.

What does this mean to you? It could mean the difference in whether or not you qualify to buy that new Northern Virginia Home or not.  It could also mean that even of you do qualify, you could end up paying more for that new Northern Virginia Home.  The Fed has no plans to extend this program.  They have kept rates down while they were in the market to buy.  Now that the program is set to expire tomorrow, the Fed could raise Interest Rates anytime.

If you are in the market to buy a New Home in Northern Virginia, dont delay, you need to get pre- approved before you can buy a home anyway.  Why not LOCK IN on an Interest Rate today! Rates are at All Time lows!

Northern Virginia Real Estate Times

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David Stevens FHA Commissioner

FHA Commissioner David Stevens says Changes are coming to the FHA as early as April 15. Hear what he has to say. Keep in mind the FHA is currently serving one third of the mortgage market.

Raising Up Front Premiums for borrowers to 2.25%

Slashing Seller Concessions form 6% to 3%

Increase Down Payments on FICO Scores of 580 or less

Try to raise the annual premium, however this would need the support of Congress.

FICO changes alone could take about 6% of FHA borrowers out of eligibility.  However David Stevens states that this 6% equates to 31% of delinquency rates. So we are taking out borrowers that are the least sustainable.

FICO SCORES

580 + 3.5% Down Payment

500 – 579 10% Down Payment

Below 500 Ineligible

Half of FHA borrowers in 2009 were First Time Home Buyers.  This was alot to do with the First Time Home Buyer Tax Credit.  This is of course expected to expire at the end of April.  9.2% of FHA Loans are now 90+ Days Delinquent.  However, keep in mind that FHA Loans are up 31% from January 2010.

The FHA also suspended anti flipping rules.  This in an effort to get investors into the market.  Investors can get an FHA loan and hold on to the property for 90 days and then sell it.

David Stevens believes that we are seeing signs of recovery in the Housing Market.

Northern Virginia Real Estate Times

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What if you could get a guaranteed loan with no money down?  Diana O’lick of CNBC reports on how you can use the USDA or United States Department of Agriculture to actually get a guaranteed loan with no money down.  Yes Even in this Real Estate Market.

The loans are real the default rates are low, and the USDA is behind it.  This 60 year old program was intended for rural development, but in today’s Housing Market the lines are blurry she states.  Home Builders across the country are starting to push USDA Loans to get the inventory sold.

In just the past three years USDA has gone from backing over 31,000 loans or 3.7 Billion in 2006 to to over 133,000 loans or 16.2 Billion in 2009.

Any city or municipality that has a population of 20,0000 or less is considered rural.  The Delinquency and Foreclosure rates on USDA loans are far lower than FHA Loans.  USDA says this has to do with their payment ratios and credit standards.

All USDA Loans are 30 year fixed

You have to have High Credit  Scores

Interest Rates Follow those of Fannie Mae and Freddie Mac

You cant currently own a home

You don’t have to be a First Time Home Buyer

If you get into trouble on your loan they have a program where if you get into trouble on your loan they do one one one counseling and get your Debt to Earning Ratio inline.

The Secretary of Agriculture is Tom Vilsack

Learn more about the program: United States Department of Agriculture

You could in essence make money from buying a home using a USDA government backed loan with no money down, and use the First Time Home Buyer Tax Credit if you qualify.

Northern Virginia Real Estate Times

Dr. David Crow is the Chief Economist at the NAHB or National Home Builders Association.  In this video he explains the First Time and Repeat Buyer Tax Credit.

On Nov. 6, 2009 President Obama signed into law new legislation that extends the first-time home buyer tax credit beyond its Nov. 30 deadline and expands it to a wider group of home buyers. This video explains the facts and answers many home buyer questions regarding the tax credit. You can get more information by visiting www.federalhousingtaxcredit.com.

If you are a First  Time Home Buyer looking to buy a home in Northern Virginia, or a repeat buyer looking to take advantage of the expansion of the Tax Credit, now is the time to buy Northern Virginia Real Estate, as interest rates are at all times lows and the tax credit has been extended and expanded.

Senate Approves Extension and Expansion of Home Buyer Tax Credit

Last Night the Senate approved the Extension and Expansion of the First Time Home Buyer Tax Credit.  This should be a done deal by Friday, November 6th, 2009.  The new bill will allow for the Extension of the First Time Home Buyer Tax Credit through April, 30th, 2010.  Also the First Time Home Buyer Tax Credit will be Expanded to Move Up Buyers allowing them a $6,500.00 credit.   Here is CNBC’s Diana O’lick

Keep in mind, in order to extend and expand the First Time Home Buyer Tax Credit, the Senate had to attach it to the Bill extending Unemployment Benefits.  Still This will help Home Buyers throughout Northern Virginia to buy that first home, or go out and take advantage of these home prices and interest rates by buying a new home.  This will help the Northern Virginia Real Estate Market even though inventories are still low.

Northern Virginia Real Estate Times

Tim Geithner - US Treasury Secretary

Shaun Donovan Secretary U.S. Department of Housing and Urban Development

Today both The US Secretary Of The Treasury, Tim Geithner, and Secretary of (HUD) Housing and Urban Development Shaun Donovan both called on Congress, the US Senate and the House of Representatives, to Approve Key Housing measures.

Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan called on Congress to approve three important measures to improve housing and the housing market for Americans: extension of the First Time Homebuyers Tax Credit for a limited period, extension of higher loan limits for home mortgages, and secure funding for the Housing Trust Fund.

If you are in favor of extending the Home Buyer Tax Credit, Expansion to current Home Owners, and Secure Funding for the Housing Trust Fund, it is never to late to contact your Congressional Leaders and Senat0rs in Northern Virginia.  Click Here to read the entire Press Release from the Treasury Department. Click Here to read the Press Release form the Department of Housing and Urban Development

To contact your Virginia Senators:

Mark Warner

Jim Webb

Virginia House Of Representatives members

US Senate looking To Revise, Extend, & Expand Home Buyers Tax Credit

Both Top Democrats and Top Republicans are both in favor of extending the First Time Home Buyers Tax Credit.  The current Home Buyers Tax Credit is set to expire on November 30th, 2009.  However it is unclear as to when Congress would act.

The Senate Majority Leader Harry Reid stated that both Democrats and Republicans are in favor of extending the tax credit.  The Senates top Republican Mitch McConnell also stated that most senators are in favor.

Several prominent senators have agreed on Extending The Tax Credit through the end of April, 2010. They also agreed to expand the tax credit to cover repeat buyers who have been in their home 5 out of the last 8 years. First time Home Buyers would continue to get the $8,000 tax credit, while repeat buyers purchasing a primary residence would be eligible for a $6,500 tax credit. Credit would be extended to individuals making $125,000 a year, as well as couples making up to $225,000 a year.

Northern Virginia Real Estate Times

With Home Prices falling throughout the Northern Virginia area, if someone had offered you an insurance policy that insured you in the event that if the price of your home depreciates in value from the time you purchased your Northern Virginia home until the time in which you decide to sell your Northern Virginia home, would you buy it?

Here is an interview from Michelle Cabrarra of CNBC and Craig Schmeizer, CEO of Working Equity talking about a product they sell called an Equity Protection Policy.  This Equity Protection Plan can be purchased by consumers to help defend against home price declines.  These declines are based on local market declines keep in mind.

The cost for this type of policy is roughly averaged around 1% of a homes value.  Consumers can also choose to purchase a monthly plan that starts at about $20.00.  Of course if you purchase this policy and the value of your Northern Virginia home goes up, there is no refund given.  Think of it like car insurance.  You may never get into an accident, but yet you have it.

The company is also using this as an equity protection program for those selling a home.  Perhaps getting the Seller to purchase this product for the potential home buyer in order to facilitate a sale.  They offer this program to both Home Buyers, Home Sellers, and current Home Owners.  They even allow distributors as they call them such as Real Estate Agents, Developers, Mortgage Brokers, and Financial Advisers promote their equity protection. product. Take a look at their Seller Advantage Program.

Northern Virginia Real Estate Times

The debate over Existing Home Sales for September, and The First Time Home Buyers Tax Credit.  Diana Olick, & Steve Liesman of CNBC and Steve Ricchiuito, Chief Economist with Mizuho Securities.

Think of it this way if 21% of all Home Sales were from Zero Dollars to $100,000. And another 48% of all Home Sales were from $100,000 to $250,000. Most of the market is FHA or Federal Housing Administration. That means that a First Time Home Buyer that wants to take advantage of the First Time Home Buyer Tax Credit, and wants to do an FHA Loan for which the Home Buyer only needs to come up with 3.5% down can purchase that $200,000 home by putting down as little as $7,000 dollars. They then will in-turn receive a tax credit of almost half of that back.

Steve Ricchiuito, seems to feel that we are selling homes now that we wont be selling in the future once the First Time Home Buyers Tax Credit expires.  The National Association of Realtors wants to see the Home Buyer Tax Credit Extended, and possibly even expanded.  This despite known fraud taking place in the Home Buyer Program.  He also mentions that lower priced homes are the only ones selling and not the Higher priced homes.

In Northern Virginia,  Real Estate Agents are seeing the lower the price of the home, the quicker it is under contract.  There is a lack of inventory currently, and many distressed properties also known as Foreclosures and Short Sales.  If the First Time Home Buyers Tax Credit does expire and is not extended, I think we will see an interesting 4th quarter with High Home Sales for October and November of 2009, and a dramatic drop in Home Sales in December, 2009.  This leads to speculation as to what the first quarter of 2010 will look like not just for the Northern Virginia Real Estate Market, but throughout the United States.

Northern Virginia Real Estate Times

Erin Burnett, Diana Olick of CNBC discuss extending and expanding the First Time Home Buyers Tax Credit despite nearly half a billion dollars in fraud within the program.  Kenneth Rosen of UC Berkeley, and JD Foster of the Heritage Foundation debate the pros and cons of continuing and expanding the First Time Home Buyer Tax Credit.  Nearly 1.4 million Home Buyers qualified through August, 2009.   Although the housing market is stabilizing, are we stealing future home sales for homes sales today?  In other words, just like when the government was offering “Cash For Clunkers”, sales of new cars sky rocketed.  However, shortly after that program ended sales of new cars dropped dramatically.  Will we face the same result if we dont extend and or expand the First Time Home Buyers Tax Credit?

Northern Virgina Real Estate Times

Shaun Donovan Secretary U.S. Department of Housing and Urban Development

Today the HUD ( Housing & Urban Development ) Secretary Shaun Donovan stated today in a statement before the Senate Banking Committee spoke on the First Time Home Buyer Tax Credit. As everyone knows by now that the tax credit expires on November 30th, 2009. The Obama Administration has not really taken a stand or shown their cards as to whether or not they support the extension of the First Time Home Buyer Tax Credit, let alone Expansion of this program to all Home Buyers.

Here is what he had to say:

I am also aware of the strong support in Congress for doing more to support the housing market, including extending the First Time Home Buyer Tax Credit beyond 2009. At the same time, I am mindful that these proposals can be very expensive, especially at a time of significant budget deficits. I can assure you the Administration will work with Congress to fashion appropriate and effective home buyer incentives, mindful of both their benefits to stimulating new demand and their costs to the American taxpayer.

By the end of his statement Secretary Shaun Donovan stated that they would have an answer one way or another in a few weeks.  Does mean by the end of October?  By mid November?  The clock is ticking and although the American taxpayer has helped to bail out the banks and brokerage firms, should they reach into their pocket once more to help themselves out and extend the plan?  Perhaps even go a step further and expand the tax credit to all home buyers?

Northern Virginia Real Estate Times

Democrats Working To Extend Homebuyer Tax Credit Before It Expires November 30th

Democratic Congressional Leaders are working with the White House to extend an expiring $8,000 tax credit set to expire on November 30th, 2009.  There were even talks of making this available to current homeowners as well who purchase a new residence.

Extending and quite possibly expanding the home – buyers credit cold help in continuing to stimulate the economy.  This in light of a higher unemployment rate and weaker dollar.  Just the mention of  the Speaker of the House Nancy Pelosi, and the Senate Majority Leader Harry Reid having talks in the Oval office with President Obama sent Home builder stocks up as well as the Dow.

It is estimated that by the time the Homebuyers Tax Credit is set to expire December 1st, 2009, the Home-buyers credit will be responsible for nearly 400,000 sales of new and existing homes.  Lawrence Yun, the chief economist for the NAR or the National Association of Realtors , stated that each house sale on average yielded $63,000 in goods and services spent.  We would like to know what you think.  Do you think the Home Buyer Tax Credit will or should be Extended?  Do you think the Home-buyer tax credit will or should be expanded to allow current homeowners the opportunity to purchase a new home?  Do you think the Republicans will or should support either extending and or expanding the Home buyer Tax Credit?

Attention First Time Home buyers.  You have heard of this tax credit and have been sitting on that white picket fence that surrounds your new home.  Your debating whether to jump into the Northern Virginia Real Estate Market or not.  You have questions regarding the tax credit.  Perhaps you have contacted a real estate agent in Northern Virginia already and are even more confused.  If you call up five different real estate agents, chances are you may get five different answers.  That’s ok, we are here to help.  This video fully explains who qualifies and does not qualify for the $8,000 tax credit. Now that you have all the facts, get out there and purchase that new home in Northern Virginia or Washington DC.  Not only will you have a new home for which you will hopefully enjoy for years to come, chances are your bum will feel better too.