This is just one of the programs through IHFA that is helping Idaho buyers realize their dream of owning a home.  There are additional programs for first time homebuyers, rehabilitation loans and closing cost and down payment assistance programs.

A good place to start is to talk to a lender about these programs.  Here are three lenders that can help:

• Julie Gould, Prospect Mortgage:  julie.gould@prospectmtg.com 208-377-7243.  Cell:  208-484-9914
• Heidi Laursen, Guild Mortgage:  hlaursen@guildmortgage.net 208-489-2804.  Cell:  208-631-6140
• Jason Ames, Waterstone Mortgage:  jason.ames@waterstonemortgage.com 208-344-5653.  Cell:  208-869-4222

For more information about programs through Idaho Housing and Finance Association visit:

http://www.ihfa.org/

This is exciting news for many homeowners that are upside down in their mortgages.  The servicers that are participating in this settlement are developing the guidelines to implement the plan to help homeowners.  The settlement is very complex so the plan is to execute it over the next three years (timeline taken off  http://www.nationalforeclosuresettlement.com/):

TIMELINE

• Over the next 30 to 60 days, settlement negotiators will be selecting an administrator to handle the logistics of the settlement and monitor compliance.
• Over the next six to nine months, the settlement administrator, attorneys general and the mortgage servicers will work to identify homeowners eligible for the immediate cash payments, principal reductions and refinancing. Those eligible will receive letters.
• This settlement will be executed over the next three years.

More information about all of the details of the settlement can be found at:  http://www.nationalforeclosuresettlement.com/

What does that mean to Idahoans?  If you are upside down on your mortgage or struggling with your payment, there will be money set aside to help some homeowners re-finance, reduce loan principle and help with loan modifications.  It’s important to know that this relief may not be available immediately (see timeline).  It’s hard to say how many Idaho homeowners will get relief from this settlement.  The Idaho Statesman contacted the Attorney Generals Office and recently published this Q and A on how this would benefit Idahoans:

http://www.idahostatesman.com/2012/02/10/1988315/idaho-homeowners-could-benefit.html

Most of the money will go to homeowners that are struggling to make payments and are at risk of foreclosure but have no equity so have been unable to refinance their loan.  See article above from the statesman, “For about 1 million underwater homeowners, their loan principal will be reduced by an average of $20,000.  But more than 90 percent of underwater homeowners won’t be helped.  Some, however, might be eligible to refinance at a rate of 5.25%”

You can contact your bank directly to obtain more information about implementation and requirements.

I personally have contacted two of the servicers for a client and have been told by one that they will not know how they are implementing this settlement for a minimum of 90 days.  The other servicer told me that they would be implementing the settlement in 6 to 9 months.

We definitely will be keeping our ears open and relaying any information that we possibly can.

In the meantime, read up on everything you can about this settlement to see if you would be a candidate and IF you have time to wait for the implementation of the settlement.

For example, what can you get for $100,000?  And what would your payment be?  In Meridian, Kuna and Star you could purchase a 3 to 4 bedroom, 1500 sqft (approx) home.  In Boise, it varies greatly by the area you want to be in, but you can also purchase a home of this size for $100,000.

Payment Scenario for $100,000 home:

Interest rate of 3.875% Principle and Interest payment

15 year payment                              30 year payment

7.33/$1000 = $733/mo (P&I)        4.70/$1000 = $470/mo(P&I)

Adding taxes and Insurance of approx. $150/mo

$883/mo total payment                $620/mo total payment

Most people would agree that a payment of $620/mo for a 1500 sqft home is less than what you can rent for.  Plus you get the advantage of never having your rent raised and tax advantages of being a home owner.

What if you don’t have enough money for closing costs or down payment?  You should talk to a lender about various financing options.  In Kuna and Star, you can still get a Rural Developement loan that is zero down.  You may qualify for other local neighborhood housing loans or possibly VA.  A lender can look at your situation and advise you on the best options for you.  In Meridian and Boise, FHA only requires 3.5% down.

I’ve attached a link to another article titled:  ’Why Buy a Home’  that was written by REALTYTIMES:

http://realtytimes.com/printrtpages/20120125_whybuy.htm

For many potential homeowners NOW really could be the right time to purchase a home and lock in a fantastic interest rate for the life of your loan.

Please contact me for names of lenders that can give you the financing options for your situation.

Until 2007, the government taxed a homeowner on the difference between what they owe and what the home sold for in a short sale.  In some markets and some instances, this could be a significant amount that would put a taxpayer into a different tax bracket.  The government introduced Mortgage Debt Cancellation Relief as response to the rising number of foreclosures, short sales and price corrections in some markets.  This Debt Relief is valid until December 31, 2012. 

General Guidelines of the Mortgage Debt Cancellation Relief:

• Dollar limitation: No more than $2 million in mortgage debt will be eligible for the relief (If married filing separately – the amount is $1 million)
•  No income limitation: It does not matter what a borrowers income is.  All borrowers can receive relief.
• Debt Relief applies only to a borrowers principal residence.
• The debt to be forgiven must have been secured by that residence.
• Cash-outs are not available for relief.  If it’s a first mortgage that has been refinanced, a second mortgage, a home equity line of credit or other, if it was not used to rehabilitate the residence, it is not eligible.
• Eligible debt is debt used to acquire, construct or rehabilitate a residence.
  • Refinanced debt:  qualifies if it is not greater than the original amount of debt.
  • Home equity debt or second mortgage:  This qualifies if the money was used to rehabilitate or improve the home.
  • Cash Outs:  Are not treated as acquisition debt.  If the funds are not used on the home, it is not eligible.

There are additional provisions for investors, bankruptcy, insolvency, and other unique circumstances.

To learn more about this act, visit the IRS at:

http://www.irs.gov/individuals/article/0,,id=179414,00.html

Follow the link on that page for a publication with examples and detail on the Mortgage Debt Relief Act.

Will this relief be extended beyond 2012?  We don’t know.  It certainly is something as homeowners, we need to keep track of. 

For Informational Purposes Only.  Please contact your tax advisor for additional information and how this debt relief would apply to you.

In addition to this increase, FHA monthly mortgage insurance premium will be going from 1.15% to 1.25% to help offset the temporary tax extension of two months.

If you are looking at homes, now is a great time to put in an offer before some of these increases are put into place.   Contact your lender today to find out how these increases can affect you.

Let me know if you need a lender name.

“Short sale”, unfortunately, is a term that you hear quite often these days.  And while you may think you have a basic understanding of what that means, there are several “moving parts” to a short sale and without an understanding of all of them; you may not have the complete picture.

Fundamentally, short sale means to sell a property for less than what is owed to the lien holder(s) (lenders) to pay off the loan(s.)  What makes short sales complex are the number of variables often associated with a short sale transaction.  For example:

1.  How many liens (loans) are recorded against the property?  This can include 1^st and 2^nd mortgages, lines of credit, tax liens, or mechanics liens.  The fewer number of liens on the property, the more straight forward the short sale process because there are fewer lien holders (lenders) to negotiate with.
2. What types of liens are on the property? Different liens pose different challenges.   Home Equity Lines of Credit (HELOC), for instance, can create more difficult negotiations than a 2^nd mortgage lien.  Personal tax liens  and mortgage insurance can also create obstacles.
3. Who owns the lien?  Does a bank own it or a private investor like Fannie Mae or Freddie Mac?  Sometimes there are different guidelines and rules to follow based on who owns the lien.
4. Has the property received a Notice of Default (NOD)?  A Notice of Default is the official document that lets the seller know that the bank is foreclosing on the property and states the official date the property is scheduled for auction.  Whether the property has a NOD recorded is important because that can have an effect on the amount of time that is available to complete a short sale.
5. How does your financial situation look on paper? Not everyone is able to try to short sale their home.  Lenders require sellers to “qualify” for a short sale by a careful review of the seller’s financial situation and their “hardship” to determine the likelihood of the seller becoming more able to resume their payments in the near future.  The lenders will require copies of tax returns, bank statements, investment statements, pay stubs, profit and loss statements if self-employed and a detailed letter explaining the personal situation that has caused the hardship and inability to pay.

There are other variables that could affect the ability to short sale a property.  These topics, and others, will be covered in future articles.  Of the various options a homeowner has when they owe more than the market value of their home and they are struggling to pay their mortgage, a short sale is a viable way to go to try to avoid foreclosure.  The most important thing to consider if you decide to try to short sell your property is to use a real estate agent that has short sale experience.  It could mean the difference between a successful short sale and a foreclosure.

Written by:  Rebecca Standerfer, Marilyn Talbot, and Judy Trimble

Experian, one of the three leading credit reporting companies, has started using rental history incorporated into credit scores.  On-time rent payments would boost scores and bounced checks or breaking leases could potentially reduce scores.

This could be an easy way for renters to raise their credit scores and purchase a home while home prices are lower AND take advantage of the current low-interest rates.

Other credit reporting companies plan to create a new credit report and scores that add in information about rental history as well as other non traditional loans.

Some renters have struggled to show credit history because of lack of credit. Adding in rental payments could help these people.  Some people saw increases of 100 points or more.

To read the entire article visit:

http://www.nytimes.com/2012/01/08/realestate/mortgages-a-good-rental-history-can-help-borrowers.html?_r=1&partner=rss&emc=rss

How do you figure out what stays and what should go?  Start one room at a time.  Take away knick-knacks, personal photos, and bulky furniture that take up too much room.  If you are having difficulty with this, enlist the help of your REALTOR®.  They can help or they should have a resource or team member that can come over and help determine what stays and what goes.  One thing to remember is to not let it get personal.  The advice you are getting is advice to help you present your home in the best possible light and sell it at the best price in the shortest amount of time.

So what do you do if you don’t have any room to store furniture or boxes?  If you don’t have a place to store extra items that you want to save for your next house, one option is to rent a mobile storage unit.  Many companies will deliver a unit for you to load and store items in and then they will pick it up and store it until you are ready to move.  Here are a couple of companies that explain how this works:

http://www.merchantsmoving.com/smart-move

http://www.pods.com/storage.aspx

The best part about removing clutter and extra furniture is that you have begun the long process of packing.  When you pack and store items you are not using, it makes your final pack and move that much easier.

The 203K Streamlined loan follows FHA guidelines and gives potential homeowners an affordable solution to purchasing a home that requires from $1000 to $35,000 in repairs by financing the cost of the repairs.  Here is an idea of items that can be repaired with the 203k streamline loan:

• Repair gutters, and downspouts.
• Replace Roof (if it’s a tear off)
• Weatherize (insulation, windows, doors, weather-stripping)
• Interior and Exterior Painting
• Repair or Replace existing heating, ventilation and air conditioning systems
• Minor remodeling (no structural repairs)
• Repair or replace flooring
• Repair or replace plumbing and electrical systems

So if you are looking at homes that need repair, don’t rule a home out just because it needs some repairs that may be out of your budget after close.  Talk to your lender about the 203K Streamline loan.  It could be a great option for you.

If you don’t have a lender, email me!  I can give you a name.

FHA loans are utilized by many buyers because they allow a lower credit score plus a lower percent down payment compared with a conventional loan.  If you qualify for a FHA loan, you can pay as little as 3.5% down on a home.

FHA allows a score as low as 580 but because FHA doesn’t actually give out the loan themselves (they are given through approved FHA lenders), most lenders require a minimum score of 620.  Sometimes there are exceptions too.  You should talk to your lender for more information.

FHA Website:  http://www.fha.com/fha_loan_requirements.cfm

Please let me know if you need the name of a knowledgeable lender.  I have several names I could give to you.