St. Louis Mortgage News – Housing Assistance Tax Act of 2008

Filed under: First Time Home Buyer, For Buyers, Mortgage News, Relocation Buyer

On July 30, 2008, President Bush signed into law the “Housing Assistance Tax Act of 2008” (the Housing Act).  It includes a $15.1 billion package of housing tax incentives.
 
Here are the highlights of the bill for homeowners and first time home buyers.by Chris Scheer, Cornerstone Mortgage, O’Fallon, MO

Part One

Property Tax Deductions for Non-Itemizers

The Housing Act created a new, temporary property tax deduction for non-itemizers (i.e., for taxpayers who claim the standard deduction rather than itemizing their deductions).

Highlights include:

• The provision creates a new standard deduction for state and local real property taxes paid by non-itemizers. Since most homeowners who are paying on a mortgage have enough deductions (e.g., mortgage interest and property taxes) to justify itemizing them on their return, this new provision chiefly benefits homeowners who have paid off their homes.

• The deduction is currently only available for tax years that begin in 2008.

• The amount of deduction will be as much as $500 for single filers and $1,000 for joint filers. Since this is a deduction and not a credit (i.e., a dollar-for-dollar reduction in tax liability) the actual tax benefit will not be all that substantial.  For example, it only proves a maximum of $100 to a couple in the ten percent tax bracket and $150 to a couple in the fifteen percent bracket (and only $50 and $75, respectively, to singles in those brackets).  Granted, in this economy every little bit helps.

Part Two

Credit for First-Time Homebuyers (to be continued)

 Chris Scheer can be reached at chrisscheer@stlouisrealestatevoice.com

Posted by Doug Aegerter   |   Read More   |   Your Comments Are Welcome!   |   08.04.2008

St. Louis Real Estate – Mortgage News – FHA takes the gloves off

Filed under: First Time Home Buyer, For Buyers, For Sellers

FHA Lifts 90 Waiting Period by Chris Scheer, Cornerstone Mortgage, O’Fallon, MO

In a move to help get foreclosures off the books of lenders quicker and help avoid deterioration of properties that have been foreclosed upon the Department of Housing and Urban Development has lifted their ban on writing a contract if the title has changed in the past 90 days. 

See the following article: FHA Lifts Waiting Period, Extends Insurance Coverage

For further clarification you can visit HUD’s website.

For questions or comments please contact Chris Scheer at chrisscheer@stlouisrealestatevoice.com

Posted by Doug Aegerter   |   Read More   |   Your Comments Are Welcome!   |   06.18.2008

St. Louis Real Estate – Mortgage News – Foreclosure

Filed under: First Time Home Buyer, For Buyers, Mortgage News

Summer is almost here! by Chris Scheer, Cornerstone Mortgage, O’Fallon, MO

After spending 5 of the last 7 days on the golf course, I realized (not for the first time) that my future is not in professional golf.  Thus I am resigned to continuing to help people achieve the American Dream of home ownership.  So what is going on in the real estate world you ask? 

Well we finally have the long awaited change in FHA mortgage insurance premiums coming into play. Therefore after July 14, 2008 it will be more expensive for borrowers with less than stellar credit to purchase a home.  The effect in most cases will be less than $20 per month, but when you are living paycheck to paycheck, $20 a month can be a lot of money! 

Foreclosures continue to rise!  That is to be expected, but what it has done is that over the past 10 years an appraiser could ignore a comparable sale if it was a foreclosure.  Now with the amount of foreclosures, they have to be treated as part of the marketplace.  Thus property values are declining in areas of numerous foreclosures.  The positive aspect of this is that those property owners who have been complaining about their rising real estate taxes will see a freeze on the rise and in some cases may see there property taxes come down in 2009!

For questions or comments on this post, please contact Chris Scheer at chrisscheer@stlouisrealestatevoice.com

Tags: St.+Louis+Real+Estate, Mortgage+News, First+Time+Home+Buyers, Home+Buyers, FHA, mortgage+insurance+premiums

Posted by Doug Aegerter   |   Read More   |   Your Comments Are Welcome!   |   06.16.2008

St. Louis Real Estate – Building Inspection – The Report

Filed under: Building Inspection News, First Time Home Buyer, For Buyers

UNDERSTANDING THE REPORT by Harry Morrell, Allied Building Inspection, ASHI Certified Inspector

Home inspection reports have made dramatic changes from its earliest beginnings of 25-30 years ago to now. Although there still are old time inspectors providing hand written check lists type reports, most of today’s inspectors provide comprehensive computer generated reports that include color digital pictures. Even though these newer upgraded reports look spectacular compared with the obsolete hand written check lists, a new set of problems and concerns has raised its ugly head.

There are a wide variety of home inspection computer software programs on the market that today’s home inspector’s use. Inspector’s usually purchase the shell of the program and are able to boiler plate whole paragraphs that describe certain mechanical and structural components. Additional paragraphs can be built to describe the defects or conditions for any mechanical or structural component as well. These boiler plate paragraphs can be entered into the report by a click of the mouse. This allows the inspector to provide a 25-30 page report with photos in about 30 minutes. There are also inspectors that are capable of providing on site computer generated reports similar in length, but usually formatted by a check list. The downside of this is that the boiler plate paragraph may not apply to your particular house.

Home buyers should be aware of and question any technical type verbiage that appears too vague or confusing in nature. Reports should be simple and easy to read as well as being comprehensive. For example if an inspector merely states that the roof needs further review by a qualified roofing contractor, he may be cutting the client short. This leaves an opening for the roofer to recommend a new roof when the roof may still have several years of service left. It leaves the question of what exactly is the general condition of the roof unanswered. If the inspector states that 45% of the roofing has significant deterioration, and missing and damaged shingles, then goes on to recommend a new roof, there is no need have a roofer further evaluate the roof, just replace it.

This type of reporting can apply to any structural or mechanical component as well. If you are reading a report describing the electric service panel as appears to be OK, but better have a qualified electrician further evaluate it just in case. The buyer may be getting short changed. If the inspector noted rust and corrosion within the interior of the panel, burn marks on the conductors and connections, and conductors running across the bus bar, the inspector probably did a pretty good job inspecting the service.

A good inspection report should include a summary of defects and conditions on each and every structural and mechanical component, as well as a comprehensive narrative with photos expounding on the summary. All this should not include repetitive and ambiguous statements. A verbal summary, with a photo slide show by the inspector after the inspector should give the buyer a pretty good idea of the level of competence of the inspection and of the finished report. All buyers should thoroughly read their report and then read it again. If there is anything that the buyer does not understand or feels the inspector missed, there is always only one thing to do, CALL BEFORE CLOSING!

Harry O. Morrell
ASHI Certified Inspector  

Harry can be reached at harrymorrell@stlouisrealestatevoice.com

Posted by Doug Aegerter   |   Read More   |   Your Comments Are Welcome!   |   06.06.2008

St. Louis Real Estate – Building Inspection – New Construction

Filed under: Building Inspection News, First Time Home Buyer, For Buyers

NEW CONSTRUCTION INSPECTIONS by Harry Morrell ASHI Certified Inspector, Allied Building Inspection

For those buyers that are considering a new home purchase and believe the home inspection should be waived just because it is a new home, BEWARE. There are many circumstances to consider when buying a new home relating to the inspection process in general that buyers should know.

If you are buying a home close in to the metropolitan area from a well known and reputable general contractor chances are that the home will be well built and up to code. However, consider that this well known builder uses many sub contractors who can always have that one bad day or are in a rush to get to that next job. Short cuts occur all the time even in those multi-million dollar homes. In the world of construction speed is everything and sometimes digs right into the heart of the quality and craftsmanship that all home buyers want. Your home inspector will go back over all the important and significant structural and mechanical components to make sure you are getting the quality that you are paying for. Remember code inspectors do not do a top to bottom inspection. If you are buying a home out in rural areas from a weekend/amateur home builder, I have four words for you, GET A HOME INSPECTION!

New construction inspections can be grouped into three major categories:

1. Phase Inspections
2. End of Construction Inspections
3. Warranty Inspections

Phase inspections are recommended for the buyer that is purchasing a new home in a rural area with no or little code enforcement to ensure good building quality and safety and usually includes the initial foundation pour, framing, mechanicals, and roofing.

End of construction inspections are the most common and usually are more than adequate for any purchase close in the metro area.

Warranty inspections are a great idea for builders who offer a one year top to bottom warranty.

Home owners can get their inspector to perform a top to bottom inspection before that one year warranty expires. Most common defects discovered during these type inspections are foundation wall cracks, leakage or water/moisture intrusion, concrete pad settlement, and drainage and grading issues.

Most home inspectors have a solid general background in residential home building and have looked at thousands of homes during their career. Do not get side tracked by that new home being perfect. Spend a little now for an inspection to avoid paying more for a major repair or replacement later.

Harry O. Morrell can be reached at harrymorrell@stlouisrealestatevoice.com

Tags: St.+Louis+Real+Estate, New+Construction, Home+Buyers, ASHI+Building+Inspectors

Posted by Doug Aegerter   |   Read More   |   Your Comments Are Welcome!   |   05.09.2008

St. Louis Real Estate – Home Inspection – Legalize

Filed under: Building Inspection News, First Time Home Buyer, For Buyers

THE LEGALITIES OF HOME INSPECTIONS by Harry Morrell, ASHI Certified Inspector, Allied Building Inspections

Sellers and most always buyers are somewhat confused or do not understand the legality of Real Estate transaction home inspections in the state of Missouri. First and foremost a real estate transaction inspection, whether it be a full building inspection, a termite inspection, a Radon test or a combination of all three is not mandated by state law, nor is the findings by the inspector and the written documentation resulting from the inspection mean that the owner or seller of the home or building is mandated to repair, replace, or improve defects discovered during the inspection.

Listing agents often relate to me the hard time they have explaining to the home owner why they should improve some significant defects when no state law mandates their repair or replacement. My explanation to buyers is much simpler. I advise my clients, (mostly buyers), that the main purpose of their home inspection is for them to be able to make a common sense and intelligent decision on their purchase based upon the condition of the home at the time of inspection. If there is significant structural damage and defects, some buyers may decide to move on to another home even if the seller agrees to repair and improve. Minor mechanical and structural defects and concerns can be negotiated for repair or replacement, but the buyer must realize that he or she will be dealing with three types of sellers.

1. One seller may agree to repair and replace all listed items that are defective. This would be a motivated seller who wants to move the home.

2. Another seller might acknowledge that these defects are real and significant but will tell the buyer to fix them if the buyer wants the house. The seller might not care if the house gets sold or not.

3. Still another seller might say that he will repair the plumbing if the buyer agrees to repair the electric. This is called negotiating and your Realtor will be able to be in your corner for this.

What if your inspector finds extremely high levels of Radon gas in the house, and extensive Termite damage along with a live infestation of termites in the house? Then the seller most certainly will have to make the repairs and improvements, right?? The answer is pure and simple.

ABSOLUTELY NOT!

The seller will have to disclose these items to the next potential buyer, and will certainly have a very difficult time in selling his house, but he does not have to make any repairs or improvements. All buyers should be prepared to run into difficult sellers who do not want to bargain in good faith and move on to that next home. There is a lot to choose from. It is a great buyers market, and sellers will find that they will find a great buy as well on their next home.

Home buyers should always remember and consider the alternative when difficult sellers refuse to negotiate. Just imagine if you purchased the home without an inspection and discovered thousands of dollars worth of defects a year after you moved into the home. Be sure and ask your inspector what he considers a significant or minor defect. Most veteran inspectors will have no problem giving you an estimated dollar cost guide on repairs and upgrades as well. Make sure your inspector in ASHI certified.

Harry can be contacted at harrymorrell@stlouisrealestatevoice.com

Tags: St.+Louis+Real+Estate, St.+Louis+Home+Inspection, ASHI, Home+Seller, Home+Buyer

Posted by Doug Aegerter   |   Read More   |   Your Comments Are Welcome!   |   04.01.2008

St. Louis Real Estate – Mortgage News – The NEW King

Filed under: First Time Home Buyer, For Buyers, Mortgage News

FHA is the King! The top Dog!

The new economic stimulus package has allowed HUD to raise its maximum loan amounts for FHA loans depending upon the county of the property. For those in the St. Louis, Missouri area, that means we now can do an FHA loan for up to $281,250. The previous amount was $213,750, so that is a huge jump, almost a 33% increase.

So who can take advantage of this? You could spend days Googling FHA loans to get all kinds of information about the FHA insured loan so I won’t waste you time covering everything. What I will do now is touch on the opportunities that I think will make the most amount of practical use for the clients that I see on a daily basis.

1) First time homebuyers: With the end of the conventional 100% financing (see previous post) now more than ever this will be the product of choice for first time homebuyers who have little or no money down. FHA requires a 3% down payment; however those funds can be gifted to the borrower from a relative. The gift does not have to come all from the same relative either. You can get part from one parent, part from another parent or their siblings such as an aunt or uncle and then you can get more from another relative. Thus on the $289,950 purchase price that the borrower needs $8,750 for a down payment, they can get that from various relatives or at least the part that they have not saved up on their own. They can also borrow the money for a down payment, as long as the loan is secured and has a repayment period of at least 5 years. That payment counts against their debt to income ratio, but makes borrowing against a car, a boat, a certificate of deposit or a 401K an option for coming up with all or some of the down payment.

2) Refinance to get out of an 80/20 loan. The second mortgages on these loans were priced higher than the rate on the first. Many people regretted getting them, but because of the change in Conventional guidelines, they were not able to refinance the loans since they owed over 95% of the appraised value. On an FHA loan, we can refinance them at 97% loan to value if we are paying off liens on the property. A great way to get those people out of 2 mortgage payments and into one at a FIXED rate.

3) Refinance for cash out. Both Fannie and Freddie have made it darn near impossible to get approved for conventional cash out loan over 80% loan to value. First your FICO score has to be over 720 and then good luck getting mortgage insurance on the loan. With FHA we can go to 95% loan to value and thus help get people out of the credit card debt or other challenges that are overwhelming them. It will also allow people to borrow money to improve their property, which in the near future will be a key to helping people hold their property values.

These are just a few of the ways the FHA loan can be used.

For comments or questions, please contact Chris Scheer at chrisscheer@stlouisrealestatevoice.com

Tags: St.+Louis+Real+Estate, St.+Louis+Mortgage+News, FHA, HUD, Home+Buyers

Posted by Doug Aegerter   |   Read More   |   Your Comments Are Welcome!   |   03.19.2008

St. Louis Real Estate – Mortgage News – 100%

Filed under: First Time Home Buyer, For Buyers, Mortgage News

The End of 100%!

In the ever changing landscape of lending, we had the latest and most significant change take place this past Monday. All of the Private Mortgage Insurance Companies announced that they would no longer issue mortgage insurance on any loan with a loan to value greater than 97%. On a side note I can remember when we could only do a 97% loan and then just one of the mortgage insurance companies said they would insure up to 100% and it was months before the others joined in when the LTV was going up, but now that the maximum LTV is going down, they are all are the same page and quick to make the move.

Kind of like rats jumping off a sinking ship!

But I digress! Now there are few instances that one of the companies will honor the 100% commitment but it is in such a limited scope that you have a better chance of winning tonight’s Powerball drawing than getting a 100% loan.

So why are they doing this?

First of all they are all taking a bath financially in mortgage insurance claims on loans that are in default and foreclosure due to the current mortgage crisis. Some would argue that they have been making money hand over fist for years as their losses have been limited as the housing prices grew and mortgage rates were declining or low, but keep in mind that during that time that they had to fight to keep market share and revenues as the banks created the second mortgages that would go to 100% and in the industry it was common practice to do a first mortgage for 80% and the second for the remaining amount to avoid mortgage insurance. So let’s not rush to judgment on the profits of the mortgage insurance companies over the last 7 years.

Secondly and more importantly, we are seeing house values in some areas decline. So if they did insure a loan that was a 100% loan in one of those areas and the house price has declined, they are now insuring for over 100% of the value of the house. How smart is that?
Where does this leave us? Thanks to the stimulus package that was passed we now have higher FHA loan limits and in most cases the cost of the monthly mortgage insurance will be less on an FHA loan.

Also, in the old days, before 100% financing, we did most loans using gifts, tax returns, SAVINGS, as a way to come up with the initial 3% for a down payment. Imagine that, you have to save some money to buy a house?

I will write more on the increase in the FHA loan limits and the opportunities that are presented by this later this week.

For questions or comments on this please contact Chris Scheer at chrisscheer@stlouisrealestatevoice.com

Tags: St.+Louis+Real+Estate, St.+Louis+Mortgage+News, Buyers, Sellers, FHA, LTV

Posted by Doug Aegerter   |   Read More   |   Your Comments Are Welcome!   |   03.18.2008