As home prices continue to decline in certain markets, home owners with adjusting interest rates face the obstacle of not being able to refinance due to their mortgage balance exceeding the value of their property.

The FHA Short Refinance program may be able to help if you are in this scenario.

There are a few options available when considering a FHA Short Refinance:

1.  Short Refinance - Also phrases as a Mortgage Write Down, the short refinance is the process of negotiating with your current mortgage lender to allow them to accept a payoff less than you currently owe.  Since banks are not excited about acquiring new property, they may be willing to look at this option knowing that they would have to sell the property for less if they were to proceed with a foreclosure.

2.  FHA Secure Refinance - In the case that you have a first and second mortgage, the FHA Secure Refinance would allow for the second lien to be subordinated while the first mortgage was refinanced at a lower loan amount.

3.  FHA Secure Short Refinance - Through a process of negotiating with your current lender, there is a possibility that a deal could be put together where they would write off a portion of the outstanding mortgage balance and arrange for the remaining unsecured debt to paid with new terms and rates.  This would help the bank in the fact that they are not at a complete loss on the total amount owed.

With any of the above options, it is important that you seek the help of an experience professional who knows how to work with lenders for a win win scenario.

Written by Mark Madsen, a Las Vegas Loan Officer.

Last week there was some very HUGE news in the mortgage industry with the U.S. Government bailing out both Fannie Mae & Freddie Mac as they were facing financial issues in today’s hurting mortgage industry.

Short Term - This was a must for the mortgage industry. If the government wouldn’t have stepped in and bailed out these two giants, what could have happened otherwise would have been catastrophic. High fives should be going around the house with this news. This is going to give our conforming industry back the stability it needs to continue funding loans and driving in new business. I wouldn’t be surprised if we see a drop in interest rates down to the 5.500% range and rally back and forth for some time because of this huge take over.

Folks, please also note that this is not the end of the mortgage crisis. All this is really going to do is allow us to still continue to move forward with the same crisis we were already facing in our mortgage and economic economy. Why is this good news then? Because if what could have happened if the government would not have bailed these giants out would of destroyed or us. Imagine for just a bit if the conforming lending had just the same if not worse restrictions on it as the jumbo loans do now. This could have and would of shut us down and caused worldwide effects.

So Short term, this is great news because we can continue to move forward. What we have to keep our eye on is the long term effects. There are still major companies in economic shambles and the government can’t help them all out. What will happen to these companies, and how will that continue to affect our economy?

Regards,

Fred D. Williams, Jr.
Mortgage Advisor
Mid Valley Financial Service
(559) 256-3645

Are you currently in the process of looking to purchase a home for the 1st time? Do you have clients that may be struggling to come up with the down payment to purchase a home? If so, you need to be aware of one of the many benefits that will take effect due to the H.R. 3221 Bill that was singed by President Bush on July 30, 2008.

Within the H.R. 3221 Bill there is a provision that allows first time home buyers to have up to $7,500 as a tax credit for purchasing a house. The max is $7,500 or 10% of the purchase price, which ever is less. So as long as you have a purchase price over $75,000 your tax credit will be $7,500. This $7,500 tax credit is looked at as a loan and will need to be paid back over a period of 5 years. The exciting part is it is less than $42 a day and it is interest free money.

There are income restrictions on this money if you are single or married. If you are single you will not qualify for the full $7,500 if you make more than $75,000 a year. If you are married your combined income can not exceed $150,000. If for any reason your income does exceed these amounts when filed, your tax credit will be reduced from the full possible amount of $7,500.

You will need to pay your tax credit back in full if you decide to rent out the property while you still owe on your tax credit. They only way to get out of not paying this money back is if your number expires and you were to pass way.

Take advantage of your tax credit today by getting a loan from a family member! If you can’t wait until tax time to get your tax credit Perhaps a family member would be willing to gift you a down payment for your purchase today (with possible interest) and pay them back in full once the tax credit is recieved at tax time. If this is a plan that they decide to go with, please make sure to talk to a CPA who has possibly filed there taxes in the past. If they are an individual that usually has to pay on there taxes, they better be prepared to not get the entire $7,500 tax credit or what ever is due to them (Uncle Sam gets his slice of the cake before anyone). So if you were to file your taxes in 08′ and it turns out that you owe $1,500 and you were also expecting a tax credit  of $7,500. Your amount due to you will drop to $6,000. 

So if you are going to borrow from a family member with the anticipation to pay back at tax time, be sure that you know where you stand with your CPA.

I hope that this has shed some light on the new tax credit that is coming our way from the H.R. 3221 bill. 

Regards,

Fred D. Williams, Jr
Mortgage Advisor
Mid Valley Financial Services

Written by:  Mark Madsen - Las Vegas Home Loans

In response to the new “HOPE for Home Owners Act” (HR 3221) that was recently passed by the House of Representatives, FHA announced new Mortgage Insurance Premiums starting October 1, 2008 through September 30th, 2009. 

Up-front Mortgage Insurance Premiums:

• Purchase Money Mortgages and Refinances = 1.75%
• Streamline Refinances (all types) = 1.5%
• FHA Secure (Delinquent Mortgagors) = 3%

Monthly Mortgage Insurance Premiums:

• 30 yr mtg. -  LTV > 95%, monthly will be @ .55%
• 30 yr mtg. -  LTV < 95%, monthly will be @ .50%
• 15 yr mtg. -  LTV > 90%, monthly will be @ .25%
• 15 yr mtg. -  LTV < 90%, monthly will not be required.
• FHASecure - LTV > 95%, monthly will be @ .55%
• FHASecure - LTV < 95%, monthly will be @ .50% 

* This information was provided by Jeff Mifsud @ FHAGamePlan.com 

Written By:  Mark Madsen Las Vegas Home Loans

Down payment assistance for potential Las Vegas home buyers may be going away sooner than most people are anticipating. 

While somewhere in October is the official date that seller-funded down payment assistance, including the popular Nehemiah program,  becomes obsolete, many wholesale lenders have already stopped approving mortgages tied to these programs. 

I would suggest that potential home buyers get their complete files into underwriting as soon as possible.  Some banks are allowing approved loans, even on a To Be Determined property, to slip through the cracks and last a little longer.   

Mark Madsen  |  702-496-5626  |  mark_madsen@frostmortgage.com   

Will the new federal housing bill help the Las Vegas Real Estate Market?  Without a doubt!  The federal housing bill should stop future foreclosures, stabilize home prices, encourage a wave of more home buyers and reduce the housing inventory.

The federal housing bill will allow distressed homeowners who might be facing an eminent foreclosure to refinance out of their existing mortgage and into more attractive terms.  According to the bill, financially distressed homeowners have the opportunity to reduce their mortgages to 90 percent of their home’s current appraised value. The newly created mortgage will be a 30-year fixed FHA loan at the prevailing interest rate.  In exchange for refinancing, the homeowner agrees to share a substantial portion of any future appreciation with the original lender and the FHA.

So this gives a homeowner two choices.  They could either go through with foreclosure and destroy their credit or refinance their home at 90% of the appraised value and share any future appreciation with the original lender and the FHA.  I think this is an easy choice, don’t you?

The Federal Housing Bill will reduce the amount of future foreclosures on the market, which is significant.  This means the current housing inventory will decrease at a quicker rate and home prices should stabilize because of the decline in inventory.  We have had 6 straight months of increased home sales and it has been making a small dent in the standing inventory because of the increase in foreclosures.  So with foreclosures decreasing because of the new bill, we should see a decrease in the inventory over the next 8 to 10 months.  With the decrease in inventory comes with the stabilization of home prices.  Home prices should start to level out over the same period.

I think this bill was exactly what we needed to help the Las Vegas Real Estate Market which will ultimately have a positive effect on the Las Vegas Economy.

Down Payment Assistance Programs may be a thing of the past as of October 2008.  It may seem to be the end for those clients without the assets needed to enter this market, but there may be a solution.   A first time homebuyer program may become available as a replacement.  A second lien would be allowed which can provide up to $10,000 in assistance.  There will be strict qualifying criteria such as mandatory homebuyer counseling, income and asset limitations, as well as puchase price limits.  So all you worrying about losing those DPA programs…hang in there.  It looks like we may be able to still offer 0 down financing.

What exactly IS a Las Vegas Reverse Mortgage?

A reverse mortgage is a loan that enables homeowners who are 62 years of age or older to access the equity in their homes as tax free income without having to sell the home, give up title or take on a new monthly mortgage payment.

With a regular mortgage, money is borrowed to purchase the home and payments are made.  The difference between what you borrowed and the market value of the property is your equity.  As time goes on, the payments reduce the amount borrowed and hence, the equity enlarges.  A bonus is also the appreciation in value of the property over time which also contributes to your equity stake.

A reverse mortgage works in the opposite direction.  You use the equity in your home to receive cash, either as a lump sum, a line of credit, monthly amounts, or a combination of all three.  As time rolls on, the payments to you increase the loan amount and your equity in the home decreases

How do I qualify for a Reverse Mortgage?

You must be 62 years of age or older and have equity in your Las Vegas Home. 

How is my benefit amount calculated?

The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA’s mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.

What properties qualify for Reverse Mortgages?

Most property types are eligible for reverse mortgages.  These would include Single Family Homes, qualified condominiums, townhouses, manufactured homes and 1 to 4 family owner occupied residences are eligible. 

How do I get my money?

You have three options on how to receive your funds. 
• Monthly Payments (made to you)
• Lump Sum Cash to you
• Line of Credit - unscheduled payments or in installments, at times and in amounts of borrower’s choosing until the line of credit is exhausted.

What are the Benefits of a Reverse Mortgage?

Funds from a reverse mortgage are tax free and do not effect your eligibility for regular social security and Medicare.

Reverse mortgages allow you to access the equity in your home while allowing you to stay in the home. 

No monthly obligation of a mortgage payment.

A Reverse Mortgage borrower cannot be forced out of his/her home. Nor will he ever owe more than the value of his house. Reverse Mortgages are “non-recourse” loans, meaning in the rare case of drastic declines in home prices, the homeowner can never be held liable beyond the value of the subject home.

Requirements of maintaining a Reverse Mortgage

You continue to be responsible for payment of property taxes, hazard insurance and the proper upkeep of the home.  Any breach of these obligations renders the outstanding loan due and payable. 

Similarly, any absence from the home of the last surviving borrower for more than twelve consecutive months terminates the agreement.  Selling or renting out all or part of the home or having liens attached to the home for whatever reason also means that all bets are off and the transaction ends.

What happens when I die?

At the time of your passing, the reverse mortgage comes due and payable in full.  At that time, your heirs have two options.  First, they can payoff the balance and keep the home.   Second, they can sell the home and they would receive any proceeds above the reverse mortgage balance.

If you are interested in receiving more information about a reverse mortgage or would like to speak to someone about a reverse mortgage, please visit our website: http://www.senasellsvegas.com/reverse_mortgage.htm or call us at 702.376.0088!

After many months or maybe years, you have finally decided to buy your own home. You have pinched every penny to save up a sizeable down payment. You have made open houses a weekend ritual but still can’t seem to make the leap into purchasing a home. Why not??

Maybe you’re comfortable in your current space. You have accepted the shortcomings of where you live whether it is loud neighbors or no parking readily available. Not many surprises since you have been there so long.

First time home buyers tend to freeze up when it comes time to actually picking a house. Will they be happy there? Will they like their neighbors? Will they be tied down because they are now house rich and cash poor? What happens if their financial situation changes for the worse? Basically, the fear of the unknown becomes a constant nagging in their ear and prevents them from moving on towards purchasing their dream home.

Here are some steps to try and then maybe you can take the leap to homeownership:

• Get comfortable with your finances: Make sure you sit down and go over all of your current finances and the new ones that will occur with home ownership. Things like property taxes, home owners insurance, commuting to work and cost of utilities should be factored into your monthly expenses to make sure you are buying within your limit.
• Partner with a Realtor: You need to pair up with a knowledgeable realtor. Even though the internet will allow you to do lots of research on your own, you can’t get the low down on a property without help from a realtor. They will be able to answer questions you will have and give you the inside scoop on the property. They will also help you write an offer and make sure you get a good deal.
• Accept some risk: There is uncertainty in everything about life, you just need to deal with it. Learn from people you know that have purchased a home. Find out their mistakes and what to look for. Make sure you don’t drain your bank account with purchasing the home, keep a safety net in case of emergency.
• Fine tune your “must-haves”: Make your list of “must haves” in your new home. A garage, the neighborhood, size and layout of the home, and anything else you feel is important and that you can’t live without. You may find that you are willing to sacrifice one feature, if the rest is fabulous. If you are not crazy about the house, don’t bid. It is important you love the home you are bidding on, after all you will be living there for some time.
• Be ready to bid: Great homes and prices don’t stay around for long. If you love the home, have your realtor help you make an appropriate bid. If you are wavering, ask yourself, “How will I feel if I don’t get this house?” You might just get it, and if not, at least you’ll you know you tried.
• Find an experienced Mortgage Professional: Sit down with an experienced mortgage professional and have them help you analyze your options for financing your new home. Finding the right mortgage can be as important as finding the right home. Make sure you clearly understand what type of mortgage you are getting. Ask as many questions as you need too until you are absolutely clear on the type of financing you are applying for. Remember, you are the one paying back the mortgage.

I hope this pushes all of you “on the fence” home buyers “off the fence” and into the home of your dreams. Happy House Hunting!!!!

By Shelli Crysler

Fuel prices skyrocketing out of control. Heaven forbid you own a diesel which is now pushing $5 per gallon. The floods in the Midwest are impacting our food supply which in turn is costing us more money. The salmonella scare of fresh tomatoes in threatening a shortage. And now the mortgage interest rates are on the climb as well, joining the long list of things that are becoming more expensive.

According to Bankrate.com which is a national survey of large lenders, the 30 year fixed rate rose 26 basis points. A basis point is 100th of 1 percentage point. One year ago the mortgage index was 6.84%, 4 weeks ago it was 6.19% and today it is 6.52%. The 15 year fixed jumped a dramatic 28 basis points to 6.12% and the 30 year jumbo rose 13 basis points to 7.6%. Even the adjustable rate mortgages have taken a hit, the 5/1adjustable rate went up 27 basis points to 6.07%. UNBELIEVABLE!!!

This is the biggest increase for the 30 year fixed mortgage rate since Feb 20th when it rose 41 basis points. According to a weekly survey by Bankrate, the 30 year fixes has jumped up more then 25 basis points 7 times in the last 10 years with 3 of those 7 instances being in 2008. Not a good trend for ‘08.

Need some consolation right now? The rates were substantially higher a year ago. However, last years high rates were due to the hot stock market which drew investors away from bonds. This caused the bond yields to rise followed closely by the mortgages rates. This year is a whole different story. The rates are rising in response to inflation fears and concerns about credit quality.

Even though the rates are on the rise and prices are steadily going up on many consumer goods, it looks like some areas in the country have less expensive housing then others. According to the Beige Book home prices are down in New England, Florida and California. The NAR (National Association of Realtors) reported this week that its index of pending home sales were up in April. This signals a possible increase in home sales in the last half of the year. Keep your fingers crossed.

“Sharp price reductions are leading to a quicker discovery of price equilibrium points,” the Realtors’ chief economist, Lawrence Yun, says.

According to some analysts this translates into the foreclosure issue out West cutting into home prices in parts of the country.

Right before the increase in mortgage rates this week, the president of the National Association of Realtors, Richard Gaylord, said: “Overall affordability conditions are the best we’ve seen since the middle of the housing boom in 2004, but with far more choices and much less pressure than buyers experienced four years ago to make an investment in their future.”

The question is “has some of the affordability been lost now that the mortgage rates have climbed a quarter of a percentage point?” I would say yes.

By Shelli Crysler