The Arizona Housing Financing Authority is back at it again implementing new first-time home buyer programs to assist
with the finance arm of a first home purchase.

Based on the right situation, the Arizona Mortgage Revenue Bond, can be a great niche product to help with that certain
homeowners who is needing some financial help with purchasing a home.  Even though their bond rate (4.99%) is not as
competitive as market rate, some of the benefits do outweigh the drawbacks.  Here are some of the criteria.

AZ Mortgage Revenue Bond Highlights
Down Payment assistance available up to 5% of the purchase price.  This can be used for down payment, and or closing costs
or a combination of both.

This is probably the biggest advantage to this program.  A secondary advantage is if you buy a home in a specific target area
the income is less restrictive.

Here are some of the drawbacks.  This program cannot be used in Pima or Maricopa County.  So it is primarily a great tool
to lend in rural housing communities.  The down payment assistance is not completely forgiven in the first 5 years.  It
drops 20% each year.  Rate is not as attractive.

Here are the basic requirements:  Product is used in conjunction with an FHA, VA and RD insured 30 year fixed rate products.

*Must be a first time homebuyer, plan to occupy as primary residence and not had prior ownership in the last three years
(certain census tracts located in various counties do not require applicants to be first time homebuyers while offering
higher income and sale price limits.)
* Borrower must contribute a minimum of $1,000.00 of personal funds
* Borrower cannot get any cash back or debt consolidation paid
* Borrower required to complete a home buyer education class
* Must meet program’s purchase price and income limits
* House payment/total payment to income ratios cannot exceed 31/43%
* Credit score for all borrowers must be at a 620 or above
* Independent professional inspection to be done on the property and obtain a home warranty
*Again this product will be a niche for that certain client.  Also understand that only 22 lenders in the entire state of
Arizona is set up to offer this product.  I like to share this because so many think there are not options anymore.  I
say find a mortgage lender who understands real options and will work with them.

Gary Miljour- Mortgage Lending for Tempe Arizona

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This old adage sometimes makes you think of the chicken or the egg and which came first. Those type of philosophical debates are fun for the ages but when it comes time to figure out if renting a home is more advantegeous to owning a home, there are many personal factors involved in the decision.

I will be the first to state that NOT everyone out there should be a homeowner. Homeownshership takes a lot of responsibility, and sometimes we are just not ready to make that committment. But when the time feels right and the decision has been made that you want to explore homeownership, then at that point, you will need to know if owning a home has a bigger benefit versus renting.

Now I could show some slick charts to show you everytime that home ownership is a better place to park your housing dollar versus renting, but truly until we know your unique circumstance for me to say this is just not true.

I can give you quite a few reasons where renting makes more sense than owning.

• Not ready to take on the responsibility of a mortgage obligation.
• No permanent work location.
• Rental costs per month could be cheaper at the moment.
• No down payment for the mortgage.
• No job or income source.
• Your credit is too low.

Now if these reasons above are not your situation, then I would be the first to tell you that it would make sense to run the numbers and see how much of a mortgage payment would cost you versus renting a place.   Remember, rents have a tendancy to go up over time while a fixed rate mortgage payment will stay the same.

To figure out your break even time, I have an attached link to a real slick:   buy vs. rent calculator

Bottom line, if you plan on being in a home for five years or more, most of the equations equate in your favor to purchase.  Some equate out in as little as three years.

If you have specific questons about renting vs. homeownership, please give me a call.

Gary Miljour- Mortgage Lending for Tempe Arizona

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I am sure in no time the real estate industry will be on the evening news again and not in a good way. Consumers will again have a legitimate gripe from getting bad advice from their real estate professional.  Some real estate professionals were giving customers advice on the $8,000.00 first time home buyer tax credit.  Some agents were advising their clients that as long as they had a short sale contract signed by both the buyer and seller that this binding contract would be suffice for meeting the eligibility of the tax credit.  The last time I checked, I was not a Certified Public Accountant or worked for the Internal Revenue Service.  I made the choice to advise my clients to get a CPA opinion or call the IRS to verify for themselves this issue.

One of my clients actually took me up on my advise and called the IRS himself. My client was buying a home on a short sale.  The listing agent told my buyer straight up that he would be 100% eligible for this $8,000.00 tax credit because the seller signed the contract.  Now we did NOT have bank approval so I heard through very credible sources that the IRS was not considering this a binding contract since the banks who hold the notes for the seller have not agreed yet.  Here is the  answer my client got from the IRS.

Per IRS- “In the matter of Short Sales, pursuant to the short sale addendum, contracts are considered “not binding” unless
there is bank acceptance on or before April 30, 2010.  We suggest that banks involved with short sales have the ability to
make the contract binding prior to acceptance.  The bank would need to offer the client documentation in writing stating
the contract is a binding contract but that full acceptance is not yet available and the client would need to open escrow
on the contract”

Bottom-line, Some in our industry gave bad advice to get a short run closing to fatten their pockets.  I am very curious to see how this fiasco will play out.

Gary Miljour- Mortgage Lending for Tempe Arizona

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The new cliché in the mortgage industry is that “We are getting back to basics.”

I have heard this phrase thrown around lately, but sometimes I wonder if anyone except other lenders knows what we are talking about?

I have a theory that if you get 2 or more mortgage lenders in a room at a party and they start talking shop, others watching probably think we are speaking Klingon, or what I been calling for a long time “mortgagese.”  You see, we like to throw a lot of words and acronyms around like FICO, DTI, LTV, flipping, deals, etc.  But I think we sometimes forget that Joe homeowner or maybe even most Real Estate Professionals have no idea what we are talking about.  So in plain old English, let me share what I know about getting back to the basics with mortgage lending.

“Mortgage Lending Guidelines 101″

Cash is King: The more funds liquid in bank deposits and retirement accounts the better.

Down payment is crucial: The more funds you have for a down payment, the stronger the loan file becomes.

Credit trumps all cards: Without a decent credit score, a mortgage lender cannot even give you lending options.

Weird deals are to be avoided at all costs: 95% of the time if the deal is a little off the wall, it won’t work.

You must have a job or income: The income source must be verifiable, believable and well documented for usually 2 years.  No job, no loan…Sorry!

Equity in your existing home will have a huge impact on the new mortgage loan being approved: Today you must either choose to sell your existing home or have some pretty good equity if you expect the bank to offset the debt with rents.  Also, it must actually be rented out!  You cannot just say “we plan to rent it out.”

Appraised value matters: The home must appraise for your offer price or the lender will cut the maximum amount they are lending.

Chain of title is important: I have run into this issue lately with short sale flipping companies.

Title seasoning is a big deal: Most lenders have sources that can do this loan 1 day after transfer of title, but are limited to where the loan can be placed.  FHA has a 90 day anti-flipping policy.

Mortgage insurance companies prevail over the lenders guidelines: If the loan is going conventional for whatever reason, the mortgage insurance companies have their own lending overlays.  It gets real fun when you are in a declining market value state.

AND LASTLY,

Mortgage Rules Change Daily: This one is the most crucial.  What your mortgage lender knew in the past means nothing today.  The good lenders study up on current mortgage guidelines sometimes daily or weekly.  Even then it is almost impossible to keep up with the ever changing mortgage guidelines.

Again, when we say “we are getting back to basics” it means that common sense underwriting will usually trump with a mortgage lender.  If you have cash in the bank for a down payment on a home with some left over cash called reserves, you have a great job for over 2 years and you have decent or better credit score; you should be able to get approved.  If you do not have those 3 items, then you might run into some challenges.  There are always exceptions to these basics, but in general, that is what a mortgage lender is looking for today in a borrower.

Gary Miljour- Mortgage Lending for Tempe Arizona

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The $8,000 first time homebuyer tax credit of 2009 has been extended until April 30th, 2010. By the deadline you must be in a written binding contract, but will have until July 1^st, 2010 to actually close on a home.  A first time homebuyer is someone who has not owned a home in the last three years.

There are some changes to eligibility and limitations in this provision that were not part of the 2009 bill.   The maximum amount of the purchased home cannot exceed $800,000, where previously there was no max.  Also, the income levels have increased from $75,000 to $125,000 annual income for singles and from $150,000 to $225,000 for married couples.

The provision for the extension also included a $6,500 tax credit for current homebuyer’s purchasing a new home, that was not in the original bill.  This includes homebuyer’s who have lived in their home five consecutive years out of the last eight.  In purchasing a new home, the home does not need to cost more than the old house.  If you move from a high cost area to a lower cost area, you are still eligible.  Also, if you sold your home two years ago, and plan to buy a home between now and April 30^th 2010, you are eligible if you lived in that home for five consecutive years.

The changes made have opened the tax credit to a lot more individuals than before.  Take advantage of low home prices and this tax credit before it goes away for good!

Gary Miljour- Mortgage Lending for Tempe Arizona

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Gary Miljour- Mortgage Lending for Tempe Arizona

Proceed with Confidence

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Imagine yourself in your dream home, you’ve got everything you wanted including the white picket fence.  Now take a step back…how did you get there?  I will tell you one way of never getting into your dream home; bad credit.  Period.  The end.  If you have poor credit, you’ll never be able to carry out your dream of homeownership.  Some of you may be thinking that you have bad credit and you’ll never own a home.   Wrong.  There are steps you can take to make homeownership a reality.

So you’ve been behind on payments, creditors are reporting wrong.  I’ve heard them all.  Whatever it may be, you think the dream of homeownership has passed you by.  What you may not know is several companies exist to help repair your credit.  Some have charges up front and some charge a monthly fee, it just depends on the company.  You may think you cannot afford credit repair, but I say you can’t afford NOT to use a credit repair company.

It’s simple.  If you don’t have good credit, you can’t get your own home.  Why not take advantage of these companies and their expertise?  If you don’t know where to start, feel free to contact me with any questions or recommendations to get you closer to your dream home.

Gary Miljour- Mortgage Lending for Tempe Arizona

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The Perfect Home Buyer Storm

photo credit: Christoph Schweiger

Normally I am not one to predict the market when it comes to mortgage rates, home values, good deals, tax incentives or tax rebates, but the writing on the wall is extremely clear to me that we have entered into what I want to phrase “The Perfect Home Buyer Storm”. I have not known a better time for first time home buyers or step-up home buyers to take advantage of all the benefits that are out there right now.

Here is my list of things that have transpired to make this “The Perfect Home Buyer Storm”:

1. Home Values have dropped to the lowest levels we have seen in the last 2-3 years. I saw a HUD Home in my local market priced at around $29,000.00 dollars. Now this does not mean that some areas might dip lower, but it’s like buying a good value stock at the bottom of the market.

2. The Tax Rebates that the government is offering for first time home buyers is incredible. (Home Buyer Tax Credits Worth $7,500.00). With $7,500.00 worth of tax credits, this should give you another reason to move on these great offers.

3. Good Deals on homes are plentiful. 2-3 years ago everyone had multiple bids out there to get into a home. Today all the choices, colors, locations, prices,
amenities and sizes are available. With so many pre-foreclosures, bank foreclosures and HUD homes of your choice, there is a home to fit any household budget.

4. Uncle Sam is still offering tax deductions on mortgage interest. I know this is an old reason to buy a home, but it still makes my list of ideal reasons.

5. Interest Rates are at it’s lowest point in the last 5 years. With interest rates so low, the cost to borrower is less, which equates to very affordable mortgage payments. There are a lot of people who are currently paying more for rent than the cost of a mortgage each month.

Right Now is the time to take action and get pre-approved. This is like seeing Halley’s Comet . This is a once in a lifetime home buyer storm that might never come back this great.

Calculating your mortgage payment can be confusing.  Some mortgage lenders briefly describe your total payment just as PITI and never really share the full details of the make up of your mortgage payment.  Your mortgage payment is made up of 4 parts:  principal, interest, taxes and insurance also known as PITI. 
 
The first part, the principal is the portion of your mortgage payment that actually pays down the mortgage balance.  The second part, the interest is the cost the lender charges for borrowing the money.  To determine this figure use the Mortgage Calculator provided.
 
The third portion of your mortgage payment represents the property taxes.  The mortgage lender will calculate your monthly tax amount by taking your annual property taxes and dividing it into 12 equal payments.  This way you are only paying 1/12 of the tax each month.  The lender holds these funds in an account called an escrow account and pays the taxes when your county, city or township requires. 
 
The last portion of your mortgage payment represents the hazard insurance or better known as your homeowners insurance.  Unfortunately no lender will allow your new loan to close until you provide proof of this insurance.  This insurance protects you and your lender in partnership in case of fire, bad weather and other incidents.  The mortgage lender will calculate your monthly insurance amount by taking your hazard insurance premium and dividing it into 12 equal payments.  Again you only pay 1/12 of the insurance premium each month.  The lender will also put these funds into that escrow account and pay the annual premium on its anniversary date. 

My speciality for the last 3 years has been primarily to focus on helping 1st time home buyers make the dream of home ownership a reality. Wow what a cliche I just said.  Anyhow my question of the week from many real estate agents is:  How am I going to help buyers who having very little or nothing down?

In the past, the answer was pretty straight forward, we would look into down payment assistance. With Housing Bill HR-3221 doing away with my favorite pet, clients, lenders and real estate agents are scrambling to find good solutions to help these buyers get into homes.

So here are some solutions I came up with to help buyers with little or nothing down. Some of the cities have programs for low income housing folks and these funds if approved usually can be used for down payment and closing costs.  We have the Maricopa County Home in 5 Bond Program.  These funds come and go, but if available at the time can work out great for down payment.  HUD Homes! Hud offers all kinds of incentives to move their inventory and sometimes they will only require the buyer to put $100.00 down on a new FHA loan with a full price accepted offer.  Also do not forget that we can still use down payment assistance from family.  So Mom, Dad, Brother or Sister can help with a gift for the down payment.  Also multiple family members can gift funds so you can pool the gift funds together.  Last do not forget about those 401K funds you have set aside with your employer.  Did you know that you can borrow against your 401K to have funds for your down payment.  Finally, we may have to just start saving money like in the good old days.  If it worked for our parents and grandparents to put money down, then why can it not work for us?

Creative solutions is now the name of the game. By thinking outside the box and not turning to statements like “it cannot be done”, I can help many more homebuyers achieve homeownership.

Gary Miljour- Mortgage Lending for Tempe Arizona

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