FHA and Investor Specialist

Hi Everybody

New Jersey Home Buyer Tax Credit in the News



We could all use some good news for a change couldn't we?

Now that the Federal home buyer tax credit has expired, New Jersey home buyers have come a little bit closer to getting a terrific benefit for our home state government.


Last week the New Jersey State Assembly passed a bill on Thursday that would provide New Jersey home buyers with a tax credit of up to $15,000. The bill still needs to pass the State Senate before it becomes law. The details are not yet announced but here are some of the highlights.

The tax credit is to be paid out to home buyers over three years. During which time the new buyers must continue to occupy the home. The credit has benn capped at a total of $100 million, which will be distributed on a first come first served basis.



$75 million of the total credit is earmarked for new construction.

This emphasis put on new construction is because that sector of the housing market has been lagging behind resales for quite sometime now. If new home construction can get back on its feet, it will provide a bigger stimulus in terms of new jobs that does resale housing.

We are going to be watching the developments of this new bill with great anticipation, and how it will effect us in Bergen County and the real estate market, if and when it becomes a reality.

Keep your fingers crossed.

If you or someone you know is planning a Move in the near future, call your Pascack Valley experts, Lisa & Bob Hammerstein at (201)218-6802 or visit us on our website at www.HammersTeam.com.  We'll be able to help you if you're Moving to any of the Pascack Valley towns in Bergen County New Jersey.


For more Local Information about the Pascack Valley area of Bergen County, New Jersey, call Bob & Lisa at (201)218-6802.

Your Real Estate Resource for Bergen County and the entire Pascack Valley!

__________________________________________________________________

Robert & Lisa Hammerstein • Sales Associates • Coldwell Banker • (201)315-8618

• Address • 50 Broadway • Hillsdale, NJ 07642 •

 

DISCLAIMER: I must disclaim liability for any damages or losses, direct or indirect, that may result from use of, or reliance on, any information contained in this blog, or for the accuracy of comments or opinions expressed by visitors to my blog. The information contained in the articles is deemed reliable but is not guaranteed, and the opinions expressed in these articles are mine.

One of the most critical factors that will determine if you qualify for a mortgage or whether you will receive a favorable rate on your mortgage is your credit score.  For some people, how a credit score is determined or what they can do to improve their credit score is a complete mystery.  However, you CAN take matters into your own hands and control your own destiny when it comes to credit scores.

Factor 1 - Bill Payment History (35%):  In order to improve this part of your score, pay your bills in  full and on time....every time.

Factor 2 - Amounts Owed vs. Total Credit Limit (30%):  In order to improve this part of your score, make sure that you are not charging above 1/3 of your credit limit for each card you possess.   For example, if you have a $10,000 credit limit on one card and $20,000 on another, the goal is not to charge more than $3,333 on the first card and $6,666 on the second.  This may take a little more attention on your part but the impact is worth it.

Factor 3 - Length of Credit History (15%):  In order to maintain this part of the score, don't close out old accounts, even if you don't use them.  As a matter of fact, use your cards twice a year to make sure that the card issuer does not cancel the card....they have been doing that lately.  By using your card twice a year, you will not have an inactive card that is subject to being closed by the issuer.

Factor 4 - New Accounts (10%):  If you have a lot of new accounts, you are perceived to be a greater credit risk.  So don't accept those department store credit cards, even if it means saving an extra 15% at the register!

Factor 5 - Diversification of Debt (10%): It looks better if you have a variety of debt types (i.e., credit cards, student loans, car loans, mortgages, etc.  I cannot in good conscience recommend you go into more debt solely for the purpose of diversifying your debt.  Therefore, I would not recommend you focusing on this aspect of your score. If you already have a variety of debt types, this part of your score will be stronger.

Why is a credit score important???  Because the amount you can save in interest if your score is higher is substantial.  So work on your credit score now and enjoy the savings later!

The latest environmentally friendly home features aren't just good for the planet - they look great and are a huge draw for conscientious buyers, too. From energy-efficient light bulbs to solar-paneled roofs, consumers have gravitated to the idea that they can help the earth by making smarter purchases and lifestyle decisions, even if it's not always cheap or easy. Many of these changes are happening in their homes, thanks also to manufacturers, builders, and architects who are encouraging green products. There are plenty of reasons why focusing on the environment has become so popular lately. Whether is global warming or rising energy prices, Americans have been forced to rethink everyday habits and purchases, and its not limited to one age group, demographic or geographic area. Many experts predict that in a few years green construction will become so pervasive that the term "green" won't even be needed. Green Trends to Become Familar with:      Copper Roofs: Copper and copper alloys, such as brass and bronze, are showing up on roofs, entryways, facades, gutters, and downspouts. Despite being quite pricey to purchase and install, they're seen as a good long-term investment because they tolerate inclement weather, and can last over 100 years.           Timber framing: Timber framing requires significantly less lumber than the traditional "stick-built" housing and almost always incorporates superior insulating panels (SIPS), which keeps heat and air conditioning from escaping the house. There's less waste when large timbers are used, compared with conventional construction that produces sawdust and waste every time a 2-by-4 stud is planed.           Windows: Windows that beat the heat. Low-emittance (Low-E) windows, doors, and skylights offer natural light while blocking the sun's UV rays that heat up the inside of a home, sometimes necessitating air conditioning. The special low-E glazing also stops the sun from fading fabrics, wall coverings and artwork.           Rainwater holding tanks: Capturing rainwater and storm runoff helps reduce the burden on local sewer systems and captures water that can be used in other ways, such as for watering, plumbing, and laundry.  A rainwater cistern and detention tank system can collect 95 percent of stormwater for recycling and reuse.           Chemical-free lighting: LED lighting (LED stands for light emitting diodes) is a semiconductor that emits light when an electric current is applied. One big advantage - it contains no hazardous chemicals like other lighting does. For instance, compact fluorescents contain mercury and incandescent bulbs have gasses that hurt the ozone layer. In addition, an LED fixture uses 80 percent less energy than a traditional incandescent light bulb and has the ability to last up to 20 years. Although LED bulbs currently are considerably more expansive, they also provide quality crisp light that shows colors in a natural palette.           Green toilets: Water-conserving toilets can boost your budget while also helping the environment and you can save 30 percent to 50 percent on your annual water bill.           Solar orientation:  Face a home or an addition in the right direction and build it with the right materials, and you'll reduce the amount of heat and cold that enter from the outside.           Geothermal heating and cooling: Rather than using a traditional furnace that heats or cools air and emits carbon monoxide during the process, geothermal pumps are filled with water and glycol and rely on the earth as a heat exchanger. In winter, the system sends warm air into rooms; in summer, it brings cool air. Though the initial cost is twice as much as a traditional heating and cooling system, the payback can be about fire years, given today's costs.           Formaldehyde-free insulation: Building products such as insulation can emit traces of the chemicals they're made with, which pollutes the air inside of homes.

Condominiums can be a nice alternative for buyers who want the benefits of ownership, without the upkeep of a single family home. But before we decide to dip our toes in the condo pool as it were, we must remember a few things to consider.

 

1. What is the status of the homeowners association? Although you aren't married to your fellow condiminium owners, bear in mind, the relationship is more close knit than in a subdivision of homeowners. Although one owns their real estate, there are common areas- such as heating systems, elevators and exterior items which are commonly owned. Try to get a look at the minutes from the last HOA meeting. Are the owners complaining about the pool that is still out of service? Has the roof repair lingered longer than it should? Is the current property management peforming?

 

2. How are the finances? This is a big, and often overlooked part of the condo purchase. How are the reserve funds? Has there been a special assessment  lately? Is a special assessment anticipated in the near future? An assessment can be assessed by a vote if there is a need to raise funds. This can be due to a need to do repairs, pay outstanding bills, etc. This is important, because assessments can run high for things such as repairing a bad roof, or painting the entire condominium complex. What if a homeowner, or group of owners, wish to sell in the future. There may be a difference of opinion in terms of repairs needed between sellers, and owners who are perfectly content with the condition of the property. When associations have vast reserves, these issues tend not to be as contentious.

 

3. What is the renter situation? Renters are good people too, we're talking finances here . As we know, financing has become challenged in the last several years, and seemingly gets more challenging every month. FHA financing still offers low down payments for buyers. But when it comes to condos, FHA typically requires that over 50% of the complex be owner occupied. And 10% of a given property can be investor purchased. 

 

4. Does the association have any legal issues? How do the bylaws of the association read? Some would advise using a real estate attorney in a condo purchase. In my opinion that is an individual decision. But I do suggest a thorough reading of the bylaws of any condo you are considering purchasing. And I would certainly suggest asking if the condominium association is facing any lawsuits. As I wrote, you aren't married to your future neighbors, but you are in business with them.

 

5. Is the insurance adequate? Get a copy of the condominium insurance policy. What does it cover, and what are you as an owner responsible for?  It's pretty hard to escape weather in this country. Tornadoes, earthquakes, hurricanes, flooding,hail, you get the picture. What does the policy read when it comes to natural disasters/weather. A good idea is to get a copy of the policy to an insurer you use or trust.

 

Buying a condominium can be a very rewarding purchase. Just remember to address these questions before getting too deep in the process.

Good afternoon all: I hope you had a nice weekend! I just finished sitting through a seminar on Fannie Mae Homepath Renovation Loans. This is another great loan product available that you should know about. Here are the details:

1) The program is designed for REO's (bank-owned) owned by Fannie Mae which need renovation.

2) It is a purchase combined with renovation where the customer will be making full payments during the construction period. This obviously is different than a construction loan where the payments are typically interest only on the balance during the construction period. The difference is that some Fannie Mae owned properties can only financed with the Fannie Mae Homepath Renovation Loan. For a list of these properties go to www.homepath.com and follow the steps.

3) This is an owner-occupied only program and renovations can only be 20% of the purchase price or $30,000 maximum. It applies to 1-4 units and manufactured housing and condo's are exempt.

4) As with anything a minimum credit score of 620 and a maximum loan-to-value of 97% is the norm.

5) There is an appliance incentive of up to 3.5% although that is due to expire at the end of June at this point.

6) Owner/builder projects are not allowed. You must choose a builder who can be approved.

These are just some of the highlights of this great program. With the preponderance of foreclosures, etc. on the market these days, I think this is a great way for either yourself or your clients (if you are a realtor) to buy a property that may need to be fixed up due to neglect. As with other loan programs, there are several options as to terms and rate.

I feel fortunate to be one of the very few lenders approved for this program. I think it's also a great way to buy and fix up real estate so it's livable now. If you have any more questions or comments about the Fannie Mae Homepath Renovation Loan Program feel free to

contact me

Have a great day!

Paul McFadden

Here's a handy list of 10 things you can do to kill your chances of getting a loan today.

1. The house just needs too much work.
This applies to REO's, foreclosures, and short sales... sure they're good deal, but the financing can be rough.  Any broken windows, bad appliances, leaking roof, water damage, obvious mold, health or safety issues, structural problems and of course any liens.

2. Low Appraisal
Appraisal used to be a "rubber stamp"... those days are long gone and best forgotten.  Today, appraisers are trying hard to "prove up" your purchase price... and standards have become tougher (good!).  If the appraiser can't, in good faith, shore up your purchase price... they're just not gonna.  Re-negotiations (post appraisal) are becoming much more common.

3. Borrower has too much debt.
Back in the day, large debt/income ratios were given a "blind eye"... no more.  35-40% debt ratios are the top end... the guidelines have become very tight... and if your buyer does qualify... make sure they don't make any large purchases just prior to closing, as many lenders are pulling credit just before closing... and if something has changed.... weee doggies, lookout!

4. Buyer is self-employed.
Lenders today are looking for 2 years of tax returns for those who are self employed.  And they look at you cross-eyed if your income is declining.  Real income will not be used (such as a Waiter who doesn't report all his tips)... they're going to be based on the income shown on your tax return.

5. Borrower has just started being paid by commission only.
In an effort to save money, some companies have switched their long term employees to commission.  Lenders will not count commissions unless they can show a history of at least 2 years.

6. Your tax return doesn't match your IRS transcript.
Oh, this is a fun one.  Used to be that you submitted a printout of your tax return, and the lenders just "believed" you.  Sometimes they would pull a copy of the return for their files, but only after closing.  Today, they are pulling transcripts prior to closing, and if they don't match up.. .(in other words, you "doctored" your printout)... that's fraud, and the deal is off, the loan is dead.  (And keep in mind that lying on a mortgage application is a federal offense, punishable by time in your local penitentiary!!)

7. You can't get PMI.
Again, PMI (Private Mortgage Insurance) used to be a "given"... no more.  There are only two or three PMI companies nationwide, and they are picky, picky, picky.  It is possible, today, to be approved for your loan, and yet denied PMI.  Your credit needs to be good... you need to have low debt, and the better your down-payment, the happier they are.

8. The condominium has issues.
Lenders are looking closer and closer at condo budgets, reserves and their general financial health.  They're concerned about any pending litigation, and upcoming special assessments.  Lenders have recently been pushing condo boards to increase their Fidelity bond... enough to cover at least 3 months of residents not paying their assessments.  And they're taking a hard look at any owners (other than the developer) who owns more than 10% of the units.

9. You haven't allowed enough time for your loan processing.
All of these tighter guidelines are causing long approval times.  The loan papers are often only good for 90 days or so... and if you get to that deadline, and have to rework the papers, that could cause a delay.  If you're purchasing a HUD property... a delay could cost you the property entirely.  Allow plenty of time for short-sale approvals, and even for standard mortgages.  Realtors need to be hands-on with the lender and loan officers.

10. You don't have all the necessary financial paperwork.
Lenders are looking for more documentation than ever.  They want to see Bank Statements, verification of large deposits or gifts, earnest money and rent checks.  They may ask for letters of explanation on credit inquiries, missed or late payments, income fluctuations.  Make sure to have all your ducks in a row.

ALAN MAY, Realtor®
Specializing in Evanston Real Estate and North Shore Real Estate
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Coldwell Banker Residential Real Estate, 2929 Central Street, Evanston, IL 60201
847.425.3779      Cell: 847.924.3313      Email: Almay@aol.com

Evanston Real Estate & North Shore Real Estate

For many years the FHA has offered a construction loan that allows a homebuyer to purchase and rehab a home all in one loan. It's called the FHA 203K loan and this year with a record number of foreclosures expected, it's back in the spotlight. Most Bank Owned Properties are sold in "as-is" condition and as a result c...onventional banks aren't interested in offering financing on a home that will require many thousands of dollars of work to bring it up to code.

The 203K Rehab loan allows the homebuyer(many of which are first-timers) to finance the purchase of the home and at the same time the construction funds are put into an escrow account and disbursed to the contractor as the work progresses.

It's a great vehicle for a homebuyer to purchase an older, undervalued home and modernize it all at the same time. Many of these homes have been vacant for some time and are in need of basic items such as roofing, windows, siding, bathroom and kitchen upgrades, and plumbing and electrical upgrades. The 203K loan is also a perfect vehicle to increase the energy efficiency of an older home, thus lowering the monthly utility bills and increasing the homes resale value.

For much more information contact us at Silex Financial Group or visit the HUD website by using this link: http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm

1. They don't ask enough questions of their lender and end up missing out on the best deal.

The home buying process really starts with the pocket book. Not only do you need to know how much you can afford to buy now, but you need to look at what the closing costs are, as well as what the long term cost of the loan is. Most lending programs available today that include some sort of special deal are geared towards 1st time buyers. Tap in.

2. They don't act quickly enough to make a decision and someone else buys the house.

Analysis by paralysis. Study long, study wrong. This is the deal: It is wise to do your studying before you do your shopping. Once you ask a seller to neglect their dinner for you to walk in and "think about it" you should be beyond the "thinking about it" stage. Be ready to make a decision at that point. Don't think about it -- you already did that last week.

3. They don't find the right agent who's willing to help them through the homebuying process.

Agents are a dime a dozen. How do you know you have a good buyer's agent? My pro opinion is they give you some basics. They explain buyer rep to you because they have it memorized and it's important. They commit to you and ask you respectfully commit to them. They listen to what you want and need, nail down your budget and set realistic expectations. They answer your phone calls and emails with tact and speed. They get to work finding you what you want. You work together like a hand in a glove.

4. They don't do enough to make their offer look appealing to a seller.

In a buyer's market with a lot of media hype, it can be challenging for buyers to make offers that will get them what they want. They think no matter what the list price is, hey, it's a buyer's market, so low ball.  This is not true. Even in a buyer's market, there is a pretty firm value the market places on each property. The value is set by willing buyers, willing sellers. What you are low balling today is what someone else is fighting for saying this is the one. So, know that you, as the buyer, are not the only factor here.

5. They don't think about resale before they buy. The average first-time buyer only stays in a home for four years.

This is where the pro steps in. You may not have any idea what contributes to resale -- all you know as a first timer is what you want. The pro really brings you a lot of value here when they tell you what you will be up against in the future when you try to resale. There is value assessed to every good and bad feature of the property. Appraisers and realtors understand what specifics give what value to what, so when they start talking resale, your ears should perk up. It's important.

Oh, and new construction is no exception. Who is selling the house doesn't matter, buyers, all that matters is there are hundreds of thousands of decisions to be made and you need a buyer rep by your side.

Source: Real Estate Checklists and Systems, www.realestatechecklists.com.