Home Buyer Tax Credit Still Available for Military

Remind your friends and family in Austin, or anywhere in the United States that qualified veterans and other members of the military have until April 20, 2011 to take advantage of the tax credit incentive.  That’s right; members of the Foreign Service, uniformed service and other federal employees of the intelligence community serving outside of the United States have until April 30, 2011 to be under contract and will need to close by June 30, 2011. 

Individuals must have served outside of the United States on qualified official extended duty for at least 90 days between December 31, 2008 and May 1, 2010.  If married, only one spouse needed to serve during those dates to qualify.

There is an $8,000 tax credit for first time home buyers and a $6,500 tax credit for repeat home buyers.

“Qualified service member” is defined as a member of the uniformed services of the U.S military, a member of the Foreign Service of the United States, or an employee of the intelligence community.

“Official extended duty” is defined as any period of extended duty outside of the United States for duration of at least 90 days during the period beginning after December 31, 2008 and ending before May 1, 2010.

Contact your local lender for more details.

Coming soon: rate change on PMI

I learned something last week, that I need to share because it does not seem to be making the news.  On April 5th, the FHA upfront mortgage insurance premium is going to be raised from 1.75% to 2.25%.  When you are not putting 20% down on a home, and don’t want to participate in a second mortgage, you qualify for an FHA loan, which only requires a 3.5% downpayment.  The upfront mortgage insurance premium is calculated off of your loan amount.  It does not include the down payment.  On a $100,000 loan, the upfront premium would change from $1,750 to $2,250.  Understand this amount is owed ‘upfront’ at the time of closing and is separate from the monthly mortgage insurance you are still required to pay.

 

FHA loans are assigned case numbers.  So, anything under contract prior to April 5th, will not be affected, as long as the loan is approved.

 

If you have detailed questions, it is best to speak with a lender. Since, we are all more frugal than a year ago, I thought I would give you a heads up.

Buyer Closing Costs

I’ve been flooded with questions lately by both Buyers and Sellers, and I love questions, because it means you are thinking.  I would like to take a minute to share what some of my clients have been thinking about, since you might have the same questions racing through your head as well.

For Buyers, the more commonly asked question is how much money they need to buy a house.  Unfortunately, there are too many variables that make question easy to answer. A credit score, downpayment and loan program are going to be the determining factors for this.  Those factors, are not only going to determine what your costs, but they are also going to decide your buying power as well.  

A 1% variation in an interest rate can mean a 10% change in your buying power.  The debt to income ratio will also determine your buying power.  Having a great credit score means that you show a history of paying back loans, and therefore you are less of a risk to a bank of defaulting on a loan.  If you are going to buy a house or planning on moving up, your income has to reflect that you can afford to handle more debt.  If a lender thinks you are just making it, with your current debt – you are not going to get approved for more.

What I generally tell Buyers, is to plan on at least 2 percent of the sales price, not including your down payment.  Lenders escrow 3-8 months for taxes up front, which are typically the biggest portion of  closing costs. You will also need 1% of the sales price in earnest money at the time we go under contract.  In addition, you will need an inspection and title fees.  So, the short answer is 2% of the sales price, but that does not include lender fees, which, depending on your loan program, could mean another 2%.