We are trying to buy a house in Tracy by December 1st to take advantage of the tax credit.

Asked by Casey Matthews, Livermore, CA Tue May 5, 2009

We don't really know where to begin. We've been told to get preapproved first and from others we've been told to just find an agent and have them find the appropriate loan options. Which is true? Also, how long of a time frame should we give ourselves? We will only have 3.5% down are these types of loans still difficult to get? Any help would be appreciated!! Thanks!

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Steven Ornel…, Agent, Fremont, CA
Wed May 13, 2009
Dunes, yes, buyers should wait to take advantage of this change. Changes to FHA guidelines are done through the release of a "Mortgagee Letter", such as the ones found here: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/

Timeline on the "ML" allowing this special treatment by FHA lenders is unknown at the present time. However, this will be required before lenders can offer the bridge loan. I'm assuming that the new “8K tax credit bridge loan” will work like the Energy Efficient Mortgage program where up to an additional $8K can be added to the base loan amount without adding to the Buyer's DTI.

Best, SteveO
1 vote
Carol Perdew, Agent, Manteca, CA
Sat Jun 25, 2011
Now is the best time to buy with affordable home prices and low mortgages. There are great opportunities in the Livermore real estate market. In today’s financial market, home loans require a minimum of 3.5% down payment. Often, the sellers will help with the buyer’s closing costs.

Contact me and I can forward you some lenders to talk to. There is value in talking to a lender to secure financing so you are looking at the price range of homes that will best fit your needs. Contact me and I can forward you some lenders to talk to. You can reach me at Carol@PerdewHomes.com.

Carol Perdew
Prudential California Realty
(209) 239-7979
DRE 985176
0 votes
Steven Ornel…, Agent, Fremont, CA
Thu May 14, 2009
Hi Hollie, you probably would qualify for an FHA loan, but not the first time home buyer credit of $8K as you have owned a primary residence within the last 3 years. You can always contact me offline if you would like to share additional information that might change your qualification. Best, Steve
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Hollie, Home Buyer, Tracy, CA
Thu May 14, 2009
Hi Steve,

We bought our primary house 5 years ago, and have invesment properties. Do we qualify for FHA if we want to buy a primary house?

Thank you.
0 votes
Voices Member, , Benton County, OR
Thu May 14, 2009
You might find taking a look here Casey ... http://www.trulia.com/voices/Home_Buying/I_ve_heard_that_the…

Might find it interesting.
0 votes
Casey Matthe…, Home Buyer, Livermore, CA
Thu May 14, 2009
Thanks Steve!

That is some very good news to hear. If you could keep us posted that would be greatly appreciated!

0 votes
Steven Ornel…, Agent, Fremont, CA
Thu May 14, 2009
Just a little more detail..

FHA will allow approved lenders and nonprofits, and state and local government agencies to issue short-term bridge loans buyers can use for down payments. Buyers would repay the loans after getting their tax refunds. There isn't much we can do until the details of the program are fully released, and accepted by lenders.
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Voices Member, , Benton County, OR
Wed May 13, 2009
This new fact about Buyers using the Tax Credit sounds great. So Casey could use it right now, or if not shouldn't many homebuyers wait for the day it's official to buy. Seems like if it's a done deal it would be foolish for many, many buyers not to wait and make use of it.

What lender is making these bridge loans?

0 votes
Steven Ornel…, Agent, Fremont, CA
Wed May 13, 2009
Casey, I have two great FHA Specialist referrals if you need them. Also, big news yesterday. Federal Housing Administration is going to permit its lenders to allow homeowners to use the $8,000 tax credit as a down payment, see below..

HUD Secretary Announces Monetization of Tax Credit at NAR Real Estate Summit

WASHINGTON D.C., May 12, 2009

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said that the Federal Housing Administration is going to permit its lenders to allow homeowners to use the $8,000 tax credit as a down payment.

Secretary Donovan said that important changes, which the National Association of Realtors® has been calling for, will help consumers purchase a home. “We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan said. According to Donovan, the FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Best, Steve
0 votes
Michael C. A…, Agent, Santa Clara, CA
Wed May 13, 2009
The best thing to do is to go to a Bank or a direct Lender that has local offices. Looks like you will be applying for an FHA loan, which only requires 3.5% Get a pre-approval letter from them. This process will take you about 3 to 4 days depending to how quick your loan officer.

Then, look for a local Realtor that can show you houses around Tracy. There are a lot of Short Sale and REO around.

Once you have your approval, that will be your ticket to get your new home.
0 votes
Steven Ornel…, Agent, Fremont, CA
Tue May 5, 2009
Hi Casey, I am a Realtor, Mortgage Broker, Certified Mortgage Planning Specialist, and have been FHA loan certified.

Where to Begin:
If you will be using an FHA loan, I would highly recommend your very first step be a "formal" FHA Pre-Approval if you desire accuracy in knowing your total costs upfront and what you can afford. There is a big difference between a Pre-Qualification and Pre-Approval. If you are looking for accuracy void of surprises you want to be Pre-Approved, not Pre-Qualified. For the differences see: http://www.Steven-Anthony.com/default.aspx?pp=39377

Via the Pre-Approval process you will know exactly what you can "technically" afford based on current interest rates, Then, it's up to you to decide how comfortable you want your payment to be by reducing your target sales price or increasing your down payment. MOST IMPORTANTLY, the Pre-Approval makes you aware of any issues that will prevent you from buying when you want to.

As part of the Pre-Approval you should also ask for a Good Faith Estimate (GFE) to identify all of the costs in purchasing your new home based on the determined Sales Price from the Pre-Approval. The GFE should include all third party costs (title, escrow, insurance, property tax, appraisal, inspections, etc.). With all of this information in hand you should then identify a Realtor who understands the nuances of how to write offers and manage a FHA loan based transaction. Purchase strategy starts well before an initial offer is made when using an FHA loan.

Time Frame:
As far as a conservative deadline for going into contract, I would say November 1st. This provides plenty of time if any issues come up, but also allows you to be in the home for the holiday season should things run smoothly via a typical 30-day escrow.

The safest plan would be to start looking as soon as your Pre-Approval is complete because rates are in a constant state of change. A Pre-Approval is a snapshot in time based on the rates available on the day the Pre-Approval is completed.

"We will only have 3.5% down are these types of loans still difficult to get?"
With a limited down payment, a FHA loan is a smart way to buy in this market. FHA loans are not difficult to get, sure, they sometimes require slightly more documentation depending on an individual's situation; however, the program's benefits far outweigh this.

Here is a list of key benefits:
1) 3.5% minimum Downpayment.
2) Up to a 6% Seller Credit allowed for buyer's closing costs and Seller concessions (non-FHA max is 3%).
3) FHA requires that identified safety/health issues be corrected.
4) FHA allows up to $8,000 in financed energy efficient upgrades without negatively affecting borrower's debt-to-income ratio.
5) Cash reserves not required.
6) Upfront Mortgage Insurance may be financed.
7) Non-occupying co-borrowers are allowed.
8) High and flexible qualifying ratios.
9) FHA loans are assumable.
10) No pre-payment penalties.
11) Will consider "compensating factors" in determining whether a loan should be granted.
12) Only a minimum credit score of 620 required.

I would be pleased to answer any further questions (no obligation on your part). I have two excellent FHA Loan Specialist referrals for your Pre-Approval if you need one as well.

Best, Steve
0 votes
Jerry Flynn, Agent, Clayton, CA
Tue May 5, 2009

Yes the first step is to get Pre-Approved for your loan. That's is a must in this market. It sounds like this is your first home, so you need a good Realtor to guide you through the process. I have 33 years experience in helping first time home buyers, like yourself, get Loan Approval, and find their Dream home.

I do belong to the M.L.S. Service in the Tracy Area, so I can help you find a home. Just give me a call, and we'll get started right away.

Thanks Casey, and you have a Great Day.

Jerry Flynn
Old West Realty Inc.
0 votes
Brian LeBars, Mortgage Broker Or Lender, Pleasanton, CA
Tue May 5, 2009
Hi Casey...

Coming from a Mortgage Brokers perspective it is most important to be pre approved first. This will help an agent narrow down properties to show you.

3.5% is the requirement for FHA financing. I would be happy to help you with the pre approval and can also help place you with an agent in Tracy depending on your needs.

Call me anytime.


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