…after reading this, feel free to read the Top 5 Questions First Time Home Buyers Must Know!

One of the provisions of the recent housing rescue bill that was signed by President Bush is a tax credit for first time home buyers that purchase a home between April 9, 2008 and before July 1, 2009.

First Time Home Buyer Tax Credit at a Glance in Wisconsin:

• The tax credit is available for first time home buyers only.
• The maximum credit amount is $7,500.
• The credit is available for homes purchased on or after April 9, 2008 and before July 1, 2009.
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

Here is a very popular question that most people are asking:

Q: I heard that the tax credit is refundable. What does that mean?

A: The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that taxpayer qualified for the $7,500 home buyer tax credit. As a result, the taxpayer would receive a check for $6,500 ($7,500 minus the $1,000 owed).

Whether yourself or someone you know is looking to buy their first home, let them know about the tax credit that is available.

Also, here is a good website for more questions and answers about this credit.

http://www.federalhousingtaxcredit.com/index.html

A housing rescue bill has passed through the House and Congress this week. It’s next stop…President Bush. There is much talk about him signing this bill the first part of this week!

This bill will help HUNDREDS OF THOUSANDS of homeowners, facing foreclosure, refinance OUT of foreclosure! This is a very exciting program that will help many people stay in their homes.

Once the bill is signed by President Bush this week, I will follow up with more detailed information on how this can help anyone refinance out of foreclosure.

But at this point, I encourage you to contact me to get on my list of people I will call immediately, once I’m able to help with this type of refinance!

I look forward to helping you!

Veterans Administration (VA) mortgage loans in Wisconsin are becoming very popular. Mainly, because of the lack of no down payment mortgages available. Home buyers are facing the reality that qualifying for home loans are becoming more difficult. This specific government mortgage loan program provides home buyers with another option.

Just to recap, a person that is currently active in the military or is a veteran of the military, is eligible for a VA mortgage loan.

Here are the benefits for a VA mortgage loan in Wisconsin:

1. No Down Payment Is Allowed - Yes, this is a true no down payment mortgage loan that allows you to finance 100% of the purchase price.

2. No PMI (Private Mortgage Insurance)Payment - With just about any other mortgage loan, if you don’t have a 20% down payment, you are required to pay PMI as part of your total monthly payment. Combined with no down payment, not having to pay PMI allows many home buyers to qualify for a larger VA mortgage loan.

3. Not Credit Score Driven - Credit scores are normally a major factor in determining whether or not you are approved for a mortgage loan. VA mortgage loans are approved based on the ability to repay the mortgage payment. Along with this, compensating factors are used to help strengthen your loan application, which helps in getting you approved with lower credit scores. There is no particular credit score that will or will not approve your VA mortgage loan, so don’t let this hold you back.

4. Favorable Fixed Interest Rates - Now, interest rates are determined on a variety of factors, so every situation will be different. What to remember is how favorable a VA mortgage loans fixed interest rates are. These fixed interest rates can rage anywhere from only 0.25% – 1% higher than regular conforming fixed rates. So, a veteran or active military borrower will be approved for rates that are not much higher than some one that has great credit and a large down payment.

5. Multiple VA Mortgage Loans - This program is well know for first time home buyers, but what many don’t know is that this program can be used a second and sometimes a third time by the same borrower. Whether it is a refinance or the purchase of another home in the future, the VA mortgage loan in Wisconsin, can be used multiple time. This is determined by your certificate of eligibility. Once your certificate of eligibility is received, it will state if you are eligible for another VA mortgage loan in Wisconsin.

Whether you, your family, friends, or co-workers are active in the military or are a military veteran, please share this valuable information. Many people do not understand the benefits of a VA mortgage loan. Education is important when deciding what mortgage loan best fits your situation.

Here are the three options you have when looking for a true no down payment mortgage loan. I’ve also laid out some details of each program, so you can get an idea of what they are all about.

1. VA (Veterans Affairs) Mortgage Loan - Whether you or your spouse are currently in active duty or a military veteran, you can be eligible to obtain a VA mortgage loan. No down payment is required with this loan program. A VA loan has many benefits for military personal, that is should be taken advantage of. Here are the list of benefits that come with a VA mortgage loan…

- No down payment.
- Less of a PMI (private mortgage payment) payment.
- Favorable and secure 30 year fixed interest rates.
- No minimum credit score to qualify. Even if you have bad credit, a VA loan is approved based on your ability to show you can afford the mortgage payments.

You have two ways to be approved:

1. Approval through an automated underwriting engine.
2. A manual underwrite. Sometimes, the automated engine doesn’t approve your application, but that’s OK. It still allows your application to be underwritten manually by an underwriter. Basically, if you can show ability to pay the mortgage with good employment history, you will most likely be approved.

You may be able to obtain a VA loan multiple times. A form called the, Certificate of Eligibility, is required when applying for a VA loan and this determines whether or not you have enough “eligibility” left to qualify for another VA loan. Sometimes, a borrower doesn’t use all of his/her eligibility, which can be used again for a future purchase on a new home.

2. Rural Housing Mortgage Loan - If you find a home in a rural area and your adjusted annual gross income doesn’t exceed the moderate income limits for the area, you can qualify for a rural housing mortgage loan. No down payment is required with this loan program. A rural mortgage loan has many benefits for a borrower that is looking to purchase a home in a rural area. Here are the list of benefits that come with a rural mortgage loan…

- No down payment.
- No PMI. (private mortgage insurance)
- Favorable and secure 30 year fixed interest rates.
- Seller can pay up to 6% of the purchase price, to the buyer, for closing costs and prepaids. This allows the buyer to truly not have to bring money to closing, since there is no down payment.

You may finance up to 102% of the appraised value or purchase price, whichever is lower. The 2% is meant to finance the closing costs and prepaid items like the escrow account, so you truly do not have to bring money to closing.

3. FHA Mortgage Loan With A Down Payment Assistance Program - If the seller agrees to participate in a down payment assistance program, the buyer can use these funds towards his 3% down payment when applying for a FHA loan. This is how you can truly do a no down payment FHA mortgage loan. A down payment assistance program allows the seller to gift 3% of the purchase price to a 3rd party service, which in turn the buyer can use the 3rd party service and it’s funds for the down payment. Here are the list of benefits that come with a FHA loan…

- No down payment, when using a down payment assistance program.
- Less of a PMI (private mortgage insurance) payment.
- Favorable and secure 30 year fixed interest rates.
- No minimum credit score to qualify. Even if you have bad credit, a FHA loan is approved based on your ability to show you can afford the mortgage payments.

You have two ways to be approved:

1. Approval through an automated underwriting engine.
2. A manual underwrite. Sometimes, the automated engine doesn’t approve your application, but that’s OK. It still allows your application to be underwritten manually by an underwriter. Basically, if you can show ability to pay the mortgage with good employment history, you will most likely be approved.

These are the only 3 options that are available in this current lending environment. Fortunately, there are no down payment options available and I’m glad to say I specialize in working with first time home buyers to help them obtain these types of mortgage programs.

If you are not that familiar with FHA or VA mortgage loans, well, they allow approvals with borrowers that have bad credit. Now, the key to getting an approval with bad credit on a FHA loan are compensating factors. Some of the most powerful compensating factors are listed below.

So, if you are looking to buy a home or refinance your current mortgage and believe you have bad credit, consider these compensating factors that help in getting you approved.

1. The borrower has successfully demonstrated the ability to pay housing expenses equal to or greater than the proposed monthly housing expense over the last 12-24 months.

2. The borrower makes a large down payment (ten percent or more) toward the purchase of the property.

3. The borrower has demonstrated an ability to accumulate savings and a conservative attitude toward the use of credit.

4. Previous credit history shows that the borrower has the ability to devote a great portion of income to housing expenses.

5. The borrower receives documented compensation or income not reflected in the effective income, but directly affecting the ability to pay the mortgage.

6. There is only a minimal increase in the borrower’s housing expense.

7. The borrower has substantial documented cash reserves.

8. The borrower has substantial non-taxable income.

9. The borrower has a potential for increased earnings, as indicated by job training or education in the Borrower’s profession.

10. The home is being purchased as a result of relocation of the primary wage earner, and the secondary wage earner has an established history of employment, is expected to return to work, and reasonable prospects exist for securing employment in a similar occupation in the new area.

If you feel you don’t fully understand one or more of these factors, please feel free to contact me, jbucio@hmcdirect.com, and I will help you with explanation.