Keeping people in Utah up to date on what is going on in the mortgage market. Dispelling rumors and giving them the facts. Utah Mortgages are what I do!
Many of you have heard about the $10,000,000 that the state of Utah has set aside in what is called the Utah Home Run Grant Fund. It will fund over 1600 grants valued at $6,000 per grant. These funds are going to be administered by the Utah Housing Corporation and will be available through approved brokers. Envision Lending is on the approved broker list so I will be doing my part to match home buyers up with these funds.
The $6,000 will be available to ANYONE buying a newly constructed home that has never been lived in. The money is a gift with no repayment required. Since there is only $10,000,000 allocated for these grants it is important for people to act fast.
I feel like this is a great thing that the state of Utah has put together and I applaud Governor Huntsman for singing it into action so quickly.
If you have been waiting on the sidelines because you did not have a down payment, wait no longer. I can match you up with a Realtor that will find you a home priced closed to $180,000. With an FHA loan your required down payment is 3.5% or $6300. With the Utah Home Run Grant of $6,000 that would leave you coming in with $300. If you cant come up with $300 then you are obviously not ready for home ownership, but if $300 works for you then this scenario could be a reality in just a matter of a few weeks.
If you are looking to purchase a new home that has never been occupied And if you would like a $6,000 gift to be received at closing give me a call today at 801-655-5111.
I have been receiving a lot of calls lately about HR 3221 and more specifically about the $7500 First Time Home Buyer Tax Credit. As The Utah Mortgage Insider it is my duty to post about it today and answer everyones questions about exactly who qualifies and how it works.
Anyone who has not owned a home during the last 3 years falls into the governments definition of a first time home buyer and would therefor qualify for the tax credit.
The tax credit is not a typical tax credit, it is set up as an interest free loan of up to 10% of the purchase price of the property (not to exceed $7500). This tax credit (should you choose to receive it) will come to you as a credit on your filed income tax return. For example if you are a first time home buyer by definition and you are owed a tax refund from the IRS of $2000 and you have purchased a home between April 8, 2008 and July 1, 2009 then you are entitled to a refund of up to $9500.
The $7500 tax credit is an interest free loan for 15 years with payments made each year when you file your taxes. The minimum payment due each year is $500. If one chooses to pay the minimum each year the interest free loan will be paid in full in 15 years. If at anytime during those 15 years you should sell your home or cease to occupy the home as your primary residence, the balance of the loan becomes due.
There are some income restrictions for qualifying for the credit. Singles making up to $75,000 and married couples making up to $150,000 qualify.
Should you take the money?
Sure when I was a first time home buyer there where many things I could have used the money for, here are a just a few you may want to consider: Home improvement (if you purchase an older home, things that add the most value are bathroom remodels and square footage additions), build your slush fund for unexpected expenses, fund an IRA, or pay off a high interest rate credit card.
You can't beat interest free but just remember that it is a loan and not free money all together.
This act has been making its way through the House and the Senate very rapidly and was signed into effect today by George W. Bush
Here is the best summary I have found of what it will mean to those in the real estate and mortgage industry. For any questions you may have on any of these items give me a call at 801-655-5111.
H.R. 3221, the “Housing and Economic Recovery Act of 2008,” passed the House on July 23, 2008,by a vote of 272-152. On Saturday, July 26, 2008, the Senate passed the bill by a vote of 72-13. The President signed the bill on July 30, 2008. The bill includes the following provisions:
GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The downpayment requirement on FHA loans will go up to 3.5% (from 3%). The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
Homebuyer Tax Credit - a $7500 tax credit that would be would be available for any qualified purchase between April 9, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).
FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.
Seller-funded downpayment assistance programs – codifies existing FHA proposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.
VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.
Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year. This provision is effective from October 1, 2008 through September 30, 2009.
GSE Stabilization – includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.
Mortgage Revenue Bond Authority – authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.
National Affordable Housing Trust Fund – Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.
CDBG Funding – Provides $4billion in neighborhood revitalization funds for communities to purchase foreclosed homes.
LIHTC – Modernizes the Low Income Housing Tax Credit program to make it more efficient.
Loan Originator Requirements – Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.
For the most part a very positive set of legislation. The only real big losers today are the first time home buyers who have been able in years past to take advantage of Down Payment Assistance with an FHA loan. This assistance was paid for by the seller and then gifted to the buyers for their down payment. As of October 1, 2008 those arrangements will not be accepted. So long Nehemiah!!!
The $7500 tax credit repayable over 15 years sounds interesting. It raises the question in my mind, "If I have a borrower who needs the money today to close on their house but tax credits are given with a filed tax return how does that work?" And if you have to buy the home to receive the credit it becomes the chicken and the egg, you can't have one without the other. I will look into it for every one and I will be ready with the appropriate answers so bring on the first time home buyers in Utah. Give me a call today 801-655-5111.
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