It”s nearly impossible for the average citizen to keep track of all events directly impacting housing and mortgage markets.  Professional mortgage lenders monitor the live trading of Mortgage-Backed Securities (MBS). Government and conventional mortgage rates are directly based upon MBS. So…what exactly is a MBS?

Compliments of Wikipedia

A mortgage-backed security (MBS) is an asset-backed security or debt obligation that represents a claim on the cash flows from mortgage loans, most commonly on residential property.

First, mortgage loans are purchased from banks, mortgage companies, and other originators. Then, these loans are assembled into pools. This is done by government agencies, government-sponsored enterprises, and private entities, which may offer features to mitigate the risk of default associated with these mortgages.

Mortgage-backed securities represent claims on the principal and payments on the loans in the pool, through a process known as “securitization”. These securities are usually sold as bonds, but financial innovation has created a variety of securities that derive their ultimate value from mortgage pools.

In the United States, most MBS’s are issued by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), U.S. government-sponsored enterprises. Ginnie Mae, backed by the full faith and credit of the U.S. government, guarantees that investors receive timely payments.

Fannie Mae and Freddie Mac also provide certain guarantees and, while not backed by the full faith and credit of the U.S. government, have special authority to borrow from the U.S. Treasury. Some private institutions, such as brokerage firms, banks, and homebuilders, also securitize mortgages, known as “private-label” mortgage securities.

Residential mortgages in the United States have the option to pay more than the required monthly payment (curtailment) or to pay off the loan in its entirety (prepayment). Because curtailment and prepayment affect the remaining loan principal, the monthly cash flow of an MBS is not known in advance, and therefore presents an additional risk to MBS investors.

For information about Katy real estate, contact me directly at 713-818-2404 or via email. I have specialized in Katy real estate for over 20 years. Experience does count!

The Federal Housing Administration, FHA, has kept mortgage rates and Mortgage Insurance Premiums, MIP, lower than the market dictated for some time to encourage home buyers to shore up the economy.

MIP premiums are about to increase; the date is April 5th. On case numbers dated after April 4th, MIP premiums go from 1.75% of the total loan value to 2.25%. It’s not as dreadful as it sounds. On a $200,000 mortgage, the increase, based on today’s interest rates, is approximately $6 per month–stay out of…to read the rest of my article, see OnlyKaty.com.

Normally, I don’t write articles explaining why rates are fluctuating. If you are like me, you just want to know what the rate is today. However, a recent change will  raise rates and we will also probably see them continue to increase in the future.

Read my entire article at OnlyKaty.com.

According to CNN News, the homebuyers tax credit has been extended; the bill now goes to President Obama for signature:

“The legislation would extend the $8,000 homebuyer tax credit to contracts signed by April 30, 2010 and closed by June 30, 2010. The controversial credit, which many say has boosted home sales in recent months, was set to expire after Nov. 30.

The bill also creates a $6,500 credit for those who buy a home after living in their current house at least five years. That measure would apply to contracts signed by April 30 and closed by June 30. The current credit defines a first-time homebuyer as someone who has not owned a residence within the past three years.

The credit would be available only for the purchase of principal residences priced at $800,000 or less.

The bill would raise the adjusted gross income cap to $125,000 for single filers and $225,000 for joint filers. The amount of the credit currently begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.”

I am a Katy  Specialist having sold many houses in Katy over the last 20 years, both new construction and resale. This includes both working as a listing and selling agent. Call me for more information and for outstanding professional representation.

While at this time it is only available to Fort Bend buyers, there is a new loan program that makes financing a first home much more affordable and easier. It saves the homeowner up to $2000 off their taxes each year for the life of the loan.

The Mortgage Credit Certificate allows the lender to qualify for more home or to get approved if they have been denied in the past. The Mortgage Credit Certificate Program can be used to gross up income or ratios to enable the borrower to qualify for a mortgage loan.

The Mortgage Credit Certificate Program is available to first-time homebuyers, defined as a person who has not owned a home as a primary residence in the last three years.

One of the most exciting features of this program is that it can be combined with the current first-time homebuyer’s $8000 tax credit resulting in a credit savings of $10,000 in 2009! However, the $8,000 tax credit program expires on November 30, 2009 so it is important to buy your home prior to that date. If you act quickly, there is still time to shop for and close on a home.

The Mortgage Credit Certificate allows the homebuyer, if there is a tax liability, the benefit of a dollar-for-dollar reduction of their tax bill. The program enables the homeowner to claim a tax credit of 30% of annual  interest paid, not to exceed $2000 per-year, for the life of the loan.

This program is not for investors but for those who will purchase and occupy a home for at least nine years. If the Mortgage Credit Certificate borrower sells his house within nine years, makes a profit and if his income has greatly increased, the homeowner would have to pay back a % depending on what year he sells. The penalty decreases every year.

With low interest rates and the $8000 tax rebate program, there has never been a better time to become a home owner!

There is also a new loan program aimed at assisting teachers, police officers, firemen, EMS personnel, correction officers, school nurses, teacher’s aides, librarians, school counselors and county jailers to purchase a home. This program is not limited to Fort Bend County! For details, see an article I wrote for Only Katy.com: “Special Mortgage Loan Program Helps Teachers, Police Officers and Public Servants Purchase Homes”.

For more details on both programs and to be referred to a Mortgage Credit Certificate lender, contact me @ 713-818-2404.

For information about Katy area homes, you can search the entire Houston MLS from this blog. For questions or to tour any area homes, contact me directly at 713-818-2404 or via email. I have specialized in Katy real estate for over 20 years. Experience does count!

According to The Washington Post, “Two Dallas-area congressmen -  one a Democrat, the other a Republican – have introduced bills that not only would broaden the reach of the current housing tax credits to almost everybody, but would keep the program going until either mid-2010 or the end of that year.”

The current credit program expires on the last day of November 2009. H.R. Bill 2619, sponsored by Republican Kenny Marchant, would expand the current $8,000 federal tax credit to all homebuyers–not just first-time buyers. The bill would also extend the federal program through June 2010.

“The bill would also create an unprecedented $3,000 credit to help offset ‘qualified refinancing cots’ – closing fees, lender charges and the like -  through next June,” wrote The Washington Post.

Democrat Rep. Eddie Bernice Johnson introduced the Homebuying Credit Expansion Act (H.R. 2606). It would extend the current credit through December 31, 2010. The bill would open the tax credit to all buyers of principal residences. Unlike the Republican bill, it would not provide any new tax incentives to refinancing home owners.

According to The Washington Post, Mary Trupo, public policy director for the National Association of Realtors, said, “We say – if the credit is working for first-time homebuyers, then why not for all buyers, with no income limitations? We would like to see the expiration date extended beyond November 30, 2009. Expanding the credit is really the way to stabilize the housing market – by making it available to everybody.”

The Washington Post reported that Trupo said, “First-time homebuyers accounted for one-half of all purchasers in March – up from one-third in January – and that increase is directly attributable to the tax credit.”

In summary, The Washington Post article read, “…later this year, you can bank on it: There will be a significant push to extend the housing tax credit – and maybe even open it up to everybody.”

Personally, I have sold several first-time homebuyers as a direct result of the tax credit. I am currently working with two more.  I hope the tax credit will be expanded in scope and extended time-wise. The rebirth of our economy is tied directly to the residential real estate market.

For information about Katy area homes, you can search the entire Houston MLS from this blog. For questions or to tour any area homes, contact me directly at 713-818-2404. I have specialized in Katy real estate for over 20 years. Experience does count!

Many Katy Realtors still do not understand the process of a  Short Sale  even though there are many such properties in Katy. What does it take to get a get a Short Sale written and closed?  Acquaint yourself with the basics by reading this article and call me at 713-818-2404; I am an expert in the field of Short Sales!

Let’s start at the beginning, what is a “Short Sale”. A Short Sale is where the net proceeds from the sale of a property are less than what is owed to  mortgage companies and other lienholders. The seller receives no funds from the sale and all lienholders must agree to the transaction.

The seller’s best interest is served by having any sale approved by the mortgage company.  Although the seller’s credit is adversely affected, they do not have a foreclosure on their record.

The mortgage company tries to get the highest amount they can in order to reduce their loss on the transaction . This involves a negotiation process which can take quite some time. As a general rule, these transactions will take a minimum of 30 days to complete but,  depending on the circumstances, can take 90 days or more. All parties involved in the transaction need to be aware of the possible time frame involved.

Because the mortgage company is taking a loss on the transaction, they control a lot of the specifics of the sale, including, but not limited to, what can/can’t be included in the contract and when closing/funding must occur.

Following are the usual stipulations tied to a Katy Short Sale:

• Any contract submitted is subject to acceptance by all mortgage companies and lienholders. It is not considered executed until all approvals are received, even though the seller will sign the contract in order to submit it to the mortgage company. The Special Provisions section of the sales contract will include verbiage similar to this: “This contract is subject to acceptance of seller’s mortgage companies and lienholders.”
• All offers must include a lending pre-approval letter.
• The seller will not be able to do any repairs to the property. The sale is “as-is, where-is”. (Note: This not always true. It depends on how many offers are on the property which is usually multiple.)
• Seller is not in the position to provide Homeowner’s Association documents. If buyer requires the documents a part of evaluating the purchase of the property, buyer will need to order and pay for them.
• Mortgage companies generally will not pay for surveys, inspections, treatments or residential service contracts. Depending on the offer and the amount they will receive, the mortgage company may or may not allow some seller contributions to buyers closing costs.
• When and if the mortgage company accepts an offer, they will have a specific date for closing/funding. These dates are generally firm and while it may be possible to get an extension, there is no guaranty an extension will be granted.
• There is no guarantee that any offer submitted by a buyer will be accepted by the bank.

Want an extra $8,000? If you’re a first-time homebuyer, you’re in for a nice gift.

Last fall, the Federal Government introduced a financial incentive to prospective first-time homebuyers, an income tax credit of up to $7,500. The rules were simple: You must have been a first-time homebuyer, (as defined by not owning a home in the previous three years), and you met certain income restrictions.

The new $8,000 tax credit is available to those who buy between January 1, 2009 and December 1, 2009. It’s not a deduction, it’s an actual credit. Unlike the $7,500 first-time homebuyer tax credit introduced last summer, this does not need to be repaid.

First-timers who qualify can make no more than $75,000 in adjusted gross income if they’re single or $150,000 if filing jointly. The maximum tax credit is $8,000 or 10 percent of the sales price of the home, whichever is less. After purchase, three years residence in the property is required. As always, check with your accountant for details and be sure to submit IRS form 5405 when you file your taxes.

For information about Katy area homes, you can search the entire Houston MLS from this blog. For questions or to tour any area homes, contact me directly at 713-818-2404.I have specialized in Katy real estate for over 20 years. Experience does count!

]]> http://fuellingkaty.com/2009/03/15/1407/feed/ 1 http://fuellingkaty.com/2008/11/14/why-getting-a-pre-approval-letter-will-help-you-get-a-house/ http://fuellingkaty.com/2008/11/14/why-getting-a-pre-approval-letter-will-help-you-get-a-house/#comments Sat, 15 Nov 2008 00:27:26 +0000 Julie Q. Fuelling http://fuellingkaty.com/?p=323

Say we are working together to purchase your next home. (Thanks for your confidence in me!) What’s the very first thing you should do in the home buying process? I, like most Realtors, will tell you to get a Pre-Approval letter. You ask me, “Julie, what is that and why do I need one?”. You might say, “I already have a Pre-Certification letter. What’s the difference?”

So, what’s a Pre-Approval letter? Unlike a Pre-Certification letter, the lender will not just take your word for your financial status, the lender will verify the information you provide. Instead of receiving your letter that same day via fax, the lender will confirm your employment, check on the source of your down payment, pull your credit rating and check other elements of your financial situation. You may be asked to provide your year-end tax statement.

Verification of facts is the prime difference between a Pre-Certification letter and a true Pre-Approval letter. While it is more time consuming, it carries great weight in negotiations; it’s value cannot be underestimated when making an offer on a house, particularly in this time of tight credit. If faced with duplicate offers, the prospects with a Pre-Approval letter will most probably get the house.

Pre-Approval letters are not binding on the lender. They are always contingent upon an appraisal. They have an expiration date. If your financial situation changes, and the lender will re-verify shortly before you close on your new home, your rate and terms may be altered. (Do not make major purchases, change jobs or run up credit card debt before you buy your new home.) Your maximum mortgage rate may also be recalculated.

For information about Katy area homes, you can search the entire Houston MLS from this blog. For questions or to tour any area homes, contact me directly at 713-818-2404.  I have specialized in Katy real estate for over 19 years. Experience does count!

Mortgage loans are getting harder and harder to get. The reins have just tightened again with the government takeover of the secondary loan market known as Fannie Mae. The failure yesterday, September 29, to pass the massive bailout legislation only adds to this troubling situation in the home lending sector.

Partially Reprinted from Wikipedia

The Federal National Mortgage Association (FNMA) , commonly known as Fannie Mae, is a publicly traded government sponsored enterprise (GSE). It is a stockholder-owned corporation authorized to make loans and loan guarantees.

Fannie Mae is the leading participant in the U.S. secondary mortgage market, which serves to provide liquidity to the primary mortgage market to ensure that mortgage companies, savings and loans, commercial banks, credit unions, and state and local housing finance agencies have enough funds to lend to home buyers.

As of 2008, Fannie Mae and the Federal Home Loan Mortgage Corporation (Freddie Mac) own or guarantee about half of the U.S.’s $12 trillion mortgage market. As a result, the corporations were particularly affected by the housing market downturn and credit crunch that began in 2007.

On September 7, 2008, James Lockhart, director of the Federal Housing Finance Agency (FHFA), announced that Fannie Mae and Freddie Mac were being placed into conservatorship of the FHFA. The action is one of the most sweeping government interventions in private financial markets in decades. However, it is dwarfed by the impending $700 billion bail-out.

For information about Katy area homes, you can search the entire Houston MLS from this blog. For questions or to tour any area homes, contact me directly at 713-818-2404. I offer financial incentives to my sellers/buyers. I have specialized in Katy real estate for over 19 years. Experience does count!