Thursday, July 23, 2009

FHA Improvements Could Benefit You

What is FHA Mortgage Insurance?
The Federal Housing Administration (FHA) insures mortgages offered by banks, savings associations, and other financial institutions. An FHA-insured mortgage is backed by the full faith and credit of the United States government. While FHA does not make loans, it benefits the homebuyer by providing mortgage insurance which encourages financial institutions to make affordable financing available.

What Are the Benefits of an FHA Mortgage?

FHA offers low down payment options, eligibility with less than perfect credit, a loan at a reasonable cost, and help if there is ever trouble making the mortgage payment.

Because an FHA mortgage insures the lender against loss, an FHA mortgage typically has an interest rate that is competitive with the best in your market and lower than the rates charged for subprime and other non-prime

FHA is designed to help people buy a home and to help them keep it. In return for protecting lenders against loss, FHA requires financial institutions to offer assistance to borrowers experiencing difficulty making mortgage payments.

In addition to its standard Section 203(b) Mortgage Insurance Program, FHA has a number of other valuable programs designed to facilitate homeownership:
FHA Adjustable Rate Mortgage (ARM) Products
• FHA offers a standard 1-year adjustable rate mortgage (ARM) as well as 3, 5, 7, and 10-year ARM options.
• ARM products may be good options for those who plan to own the home for only a few years, expect an increase in future earnings, or expect a decrease in interest rates.

FHA’s Limited Repair Program
• FHA’s Section 203(k) Limited Repair Program is an excellent financing option for you whether buying or selling homes — especially when repairs are identified during a home inspection or appraisal—because it gives buyers the ability to make repairs after closing.
• Buyers can finance up to an additional $35,000 into their mortgage to pay for minor remodeling such as replacing flooring, installing new appliances, and painting the interior and/or exterior of the home.

Many aspects of the FHA mortgage application process have been streamlined to make the process more userfriendly and efficient. For those of you seeking to buy own a home, you may find that theFHA programs are a valuable asset.

To learn more about FHA products, visit FHA’s website at or call 1.800.CALL FHA.

Monday, July 20, 2009

The Basics to Preparing for Homeownership

1. Decide what you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.

2. Develop your home wish list. Then, prioritize the features on your list.

3. Select where you want to live. Compile a list of three or four neighborhoods you’d like to live in, taking into account items such as schools, recreational facilities, area expansion plans, and safety.

4. Start saving. Do you have enough money saved to qualify for a mortgage and cover your down payment? Ideally, you should have 20 percent of the purchase price saved as a down payment. Also, don’t forget to factor in closing costs. Closing costs — including taxes, attorney’s fee, and transfer fees — average between 2 and 7 percent of the home price.

5. Get your credit in order. Obtain a copy of your credit report to make sure it is accurate and to correct any errors immediately. A credit report provides a history of your credit, bad debts, and any late payments.

6. Determine your mortgage qualifications. How large of mortgage do you qualify for? Also, explore different loan options (such as 30-year or 15-year fixed mortgages or ARMs) and decide what’s best for you.

7. Get preapproved. Organize all the documentation a lender will need to preapprove you for a loan. You might need W-2 forms, copies of at least one pay stub, account numbers, and copies of two to four months of bank or credit union statements.

8. Weigh other sources of help with a down payment. Do you qualify for any special mortgage or down payment assistance programs? Check with your state and local government on down payment assistance programs for first-time buyers. Or, if you have an IRA account, you can use the money you’ve saved to buy your fist home without paying a penalty for early withdrawal.

9. Calculate the costs of homeownership. This should include property taxes, insurance, maintenance and utilities, and association fees, if applicable.

10. Contact a REALTOR. Find an experienced REALTOR who can help guide you through the process.

Thursday, July 16, 2009

Get Up To $15,000 When You Buy a Home!

If you haven’t owned your own home in the past 3 years, you may qualify for MaineHousing’s Gift of Green. For a limited time, MaineHousing is offering eligible borrowers who use a MaineHousing mortgage:
  • Up to $5,000 (not to exceed 4% of the mortgage amount) to help with the cash needed for closing, such as any required down payment, closing costs, and prepaids.

  • A coupon worth up to $500 for a 2-part home energy audit.

The Gift of Green is a gift, which will not be added to the loan amount, and it never has to be paid back.

Because the Gift of Green promotion is part of MaineHousing’s mortgage program, you also may be able to use the Purchase Plus Improvement Option to fund home energy improvements as part of your mortgage. MaineHousing mortgages even come with payment protection for unemployment.

Total Financial Incentives of Up To $15,000!

Add the Gift of Green grant of up to $5,500 to the federal First-Time Homebuyer Tax Credit worth up to $8,000. This, in turn, lets you invest in home energy-efficiency improvements that may qualify for additional federal tax credits worth up to $1,500.

The combination of financial incentives through the Gift of Green and federal tax credits could add up to $15,000 -- a once in a lifetime opportunity!

Wednesday, July 15, 2009

First-Time Buyers Should Hurry for $8,000 Tax Credit

A friendly reminder for you first-time home buyers out there...

In order to qualify for the government’s $8,000 gift in the form of a tax credit, your deal must close by Dec. 1, 2009.

It's not too late! You should have a purchase contract signed by early October, so you have 45 to 60 days to arrange financing and safely close the deal.

For more information on the First-Time Home Buyer $8000 Tax Credit, click here.

Tuesday, July 14, 2009

Tax Benefits of Owning a Home

Before a home owner curses the troubled housing market, he or she should take solace in the U.S. tax code, which makes buying a home a good deal for almost everyone.

Here’s why:

Mortgage interest deductions, including in some cases mortgage insurance premiums, reduce home owners’ tax liability by reducing income. The deduction includes interest paid on both a first and a second home.

Interest on home equity loans is also deductible — whether the borrower uses the money to remodel the kitchen or to take a vacation to Disney World.

Profits from selling a house are potentially a huge windfall. When a home owner sells a primary residence, any profit on the sale of the property is tax free up to $250,000 for single home owners and $500,000 for married home owners filing. Any profit above that is nearly always a long-term capital gain taxed at 15 percent — less if the seller’s tax rate is less than 20 percent.

Home owners can itemize. That opens up opportunities to deduct a host of other items that wouldn’t be deductible if the taxpayer took the standard deduction.