Lender Checklist: What You Need for a Mortgage

*W-2 forms — or business tax return forms if you're self-employed — for the last two or three years for everyperson signing the loan.
*Copies of at least one pay stub for each person signing the loan.
*Account numbers of all your credit cards and the amounts for any outstanding balances.
*Copies of two to four months of bank or credit union statements for both checking and savingsaccounts.
*Lender, loan number, and amount owed on other installment loans, such as student loans andcar loans.
*Addresses where you’ve lived for the last five to seven years, with names of landlords if appropriate.
*Copies of brokerage account statements for two to four months, as well as a list of any other major assets ofvalue, such as a boat, RV, or stocks or bonds not held in a brokerage account.
*Copies of your most recent 401(k) or other retirement account statement.
*Documentation to verify additional income, such as child support or a pension.
*Copies of personal tax forms for the last two to three years.

Expanded Tax Break Available for 2009 First-Time Homebuyers

WASHINGTON — The Internal Revenue Service announced today that taxpayers who qualify for the first-time homebuyer credit and purchase a home this year before Dec. 1 have a special option available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.
Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately.
“For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit," said IRS Commissioner Doug Shulman. “This important change gives qualifying homebuyers cash they do not have to pay back.”
The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit, on IRS.gov. The revised form incorporates provisions from the American Recovery and Reinvestment Act of 2009. The instructions to the revised Form 5405 provide additional information on who can and cannot claim the credit, income limitations and repayment of the credit.
This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.
The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.
For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse if you are married, did not own any other main home during the three-year period ending on the date of purchase.
The IRS also alerted taxpayers that the new law does not affect people who purchased a home after April 8, 2008, and on or before Dec. 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year.

Fannie Mae to Drop Four Financed Property Rule!

In August of 2008, Fannie Mae announced the implementation of a restriction on loans for rental property. Known as Fannie Mae Letter 08-22, it stated that investors would be cut off after their credit report revealed any four or more "financed properties." Lenders stopped taking applications from investors almost immediately after that announcement.
Prior to this change, Fannie had in place a "ten financed property" rule, but the lending industry often provided ways around that limit by offering portfolio loans that were underwritten to Fannie Mae standards. These portfolio loans vanished simultaneously with FNMA's announcement.
The devastating effect of this change has been to sideline almost all veteran home investors at a time when the nation's supply of bank-owned homes is strangling our real estate market. In Atlanta alone, it is estimated that there are over 8,000 bank owned homes clogging the market, making it impossible for the market to begin any type of recovery.
However, editors at the Georgia Real Estate Report have learned that internal meetings at Fannie Mae have revealed that FNMA intends to eliminate the "four financed property" restriction on lenders, and revert to the "ten property limit." According to this same source, the change will be announced "within a few weeks."
This information was revealed Thursday, February 5, but could not be confirmed by FNMA spokespersons in Atlanta.
If this change occurs, and it appears that it will, this could spell the beginning of the end for the abysmal performance of real estate during the current economic environment.
It is unknown whether or not lenders may once again offer "portfolio" loans that are underwritten to Fannie guidelines once this change occurs, but it seems logical. Remember that investor loans have always carried some premium both in rate and points, making them more attractive to lenders than traditional loans. It stands to reason that if these investor loans are "full doc" and require a reasonable down payment, they can be easily as safe as an owner-occupant loan.
© 2008 The Georgia Real Estate Report. All rights reserved.

6 Creative Ways to Afford a Home

1. Investigate local, state, and national down payment assistance programs. These programs give qualified applicants loans or grants to cover all or part of your required down payment. National programs include the Nehemiah program, http://www.getdownpayment.com/, and the American Dream Down Payment Fund from the Department of Housing and Urban Development, http://www.hud.gov/.

2. Explore seller financing. In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you would do with a mortgage.

3. Consider a shared-appreciation or shared-equity arrangement. Under this arrangement, your family, friends, or even a third-party may buy a portion of the home and share in any appreciation when the home is sold. The owner/occupant usually pays the mortgage, property taxes, and maintenance costs, but all the investors' names are usually on the mortgage. Companies are available that can help you find such an investor, if your family can’t participate.

4. Ask your family for help. Perhaps a family member will loan you money for the down payment or act as a co-signer for the mortgage. Lenders often like to have a co-signer if you have little credit history.

5. Lease with the option to buy. Renting the home for a year or more will give you the chance to save more toward your down payment. And in many cases, owners will apply some of the rental amount toward the purchase price. You usually have to pay a small, nonrefundable option fee to the owner.

6. Consider a short-term second mortgage. If you can qualify for a short-term second mortgage, this would give you money to make a larger down payment. This may be possible if you’re in good financial standing, with a strong income and little other debt.

It's Been Worse for the U.S. Housing Market

Historically, this housing decline has been a bear, but not the worst of the bear housing markets.The Winans International Real Estate Index calculates that new home prices in the United States are down 23 percent since March 31, 2007. New homes sales have fallen 71 percent and new property listings are down 34 percent in the same time period.Sounds bad, but the worst decline of new home prices in the last 150 years was the 68 percent decline from 1929 to 1932. The longest housing bear market was from 1853 to 1858."This bear market will probably not end in 2009. Past real estate bear markets ended when the average time it took to sell a new house dropped to 3 1/2 months. Currently, it is taking over 9 months for transactions to close due to tight credit conditions," says company founder Ken Winans.Source: Winans International (02/03/2009)

HELLO OBAMA!

What is Appraised Value?

Appraisals provide an objective opinion of value, but it’s not an exact science so appraisals may differ.

For buying and selling purposes, appraisals are usually based on market value — what the property could probably be sold for. Other types of value include insurance value, replacement value, and assessed value for property tax purposes.

Appraised value is not a constant number. Changes in market conditions can dramatically alter appraised value.

Appraised value doesn’t take into account special considerations, like the need to sell rapidly.
Lenders usually use either the appraised value or the sale price, whichever is less, to determine the amount of the mortgage they will offer.

Used with permission from Kim Daugherty, Real Estate Checklists and Systems, www.realestatechecklists.com