Congress has been working over the last several months to pass a housing stimulus package that will alleviate some pain for home buyers and sellers in the DC Metro area and the rest of the US. It now appears that they are getting close to a vote on the final bill which could happen in the next day or so with the President signing it into law shortly thereafter. ***Update: President Bush signed off on the 2008 Housing Stimulus Bill on July 30, 2008! I wanted to make you all aware of a few of the major provisions of the bill that may directly affect you.

• First Time Homebuyer Tax Credit: What Congress is currently calling a tax credit of $7,500 will be available to all first time home buyers (or buyers who have not owned a home in the last 3 years) who close(d) on their new home between April 9, 2008 and July 1, 2009. The proposed credit is in essence, an interest free loan that is payable back to the government over the subsequent 15 years at $500 per year. Obviously the main beneficiaries of this provision are the first time home buyers.

• Seller Funded Down Payment Assistance Programs (ie. Zero Down, AmeriDream, “100% Financing”. Nehemiah, etc): Any down payment assistance program involving sellers or interested third parties will be terminated on October 1, 2008. This means that buyer loan approvals need to be completed on or before September 30, 2008 to be eligible for any currently existing down payment assistance programs. If you assume a 30-45 day loan approval period that means this program will only be available for sales prior to August 15^th or shortly thereafter.

• FHA Cash Down Payment Requirement: The new minimum cash down payment proposed in the bill is 3.5% raised from 3.0%. This provision will take effect immediately upon enactment of the Bill. This means that any home sale subsequent to the signing of the bill will require a minimum down payment of 3.5%.

What does all this mean? It’s time to take advantage of these programs before they’re gone. If you’re in the market to purchase a home in Northern Virginia or Washington DC, there is no sign bigger than this: “THIS IS THE TIME TO BUY!”

Contact us at 1-888-998-9455 for top-notch buyer representation on your new home purchase!

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Owning a home in Northern Virginia or Washington DC has been part of the American Dream. However, nowadays it’s becoming harder to live that dream. With the mortgage crisis, higher minimum credit scores, larger down payments, and mortgage insurance premiums (PMI) are becoming more common. Fewer home buyers are qualifying for mortgages and the up front costs of home ownership has steadily increased.

There are still programs out there for first-time home buyers that offer discounted interest rates and are more lenient on underwriting standards. The Federal Housing Administration (FHA) has a good program and it’s backed on income-verification and debt thresholds. There are also first-time home buyer credits out there. For instance, one program in Washington DC states: Taxpayers who have not recently owned a home in the District may be eligible for a one-time tax credit of up to $5,000 of the amount of the purchase price against federal income tax. In Virginia, the Home Stride program helps out first-time home buyers. Home Stride is a loan program available to first-time home buyers using a Virginia Housing Development Authority (VHDA) loan product for their first trust mortgage. Home Stride allows eligible buyers to borrow up to the lesser of 10% of the sales price or $25,000 to pay down payment and closing costs. Payments and interest are deferred for the first 3 years of the loan. After this deferment period, the interest rate of the loan is 5% for the remaining 27 years of the loan. The loan has no pre-payment penalties and can be paid in full at any time.

If you are a first time home buyer, it is recommended that you consult with a real estate agent. Buyers are generally not aware of FHA and VHDA loan programs. Who knows, these programs may help you get into the home of your dreams.

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The big news today has been the collapse of the 5th largest investment bank, Bear Stearns. Their stock plummeted last week and into this morning trading. To avoid bankruptcy, JP Morgan Chase and the Federal Reserve bailed them out…When they structured the deal over the last two days they were worth an estimated $236 Million, Friday they were estimated to be worth $3.5 Billion. So you can see the gigantic swing…Ouch!

In other news, today has actually been a good open for the mortgage market. I strongly believe that we will start to have more activity in the DC Metro area marketplace. The news in the Capital Markets on the other hand is not good; but new FHA (Federal Housing Administration) limits increasing is phenomenal news!

The conventional conforming limit has also changed with the stimulus package to $729,750 in our general MD/DC/VA area. The target pricing date of the new Fannie Mae / Freddie Mac limits are estimated to go into effect by April 1st, 2008 ~ No it’s not an April Fools joke! Now don’t get me wrong- I think this is going to create more options to take advantage of the new “Jumbo Conforming” for folks that have a large down payment and good credit…the rate is more than a full 1% better, however, there are many more restrictions on this program vs. the new FHA loan product.

For example, the minimum credit score you need for Jumbo Conforming is a 660 / If you finance more than 80% on one loan you need a 700 score. The down payment required is going to be at a minimum 15%. The reason it’s not that great is due to the “declining market” area restriction (which is basically everywhere except for some parts of MD and some parts of DC, call to inquire), So you have to reduce the Maximum allowable LTV / CLTV (Loan to Value / Combined Loan to Value) by 5%. If you are an investor trying to take advantage / or buying a second home you better think twice-the required down payment is going to be 40 - 45% into the deal! Again, “Ouch!”

In a nutshell, it’s going to be great with someone that has 20% down, good credit and buying a primary home. If this is you, you’re in great shape!

***Now the FHA loans BY FAR are going to have a greater impact for buyers in Northern Virginia and Washington DC. FHA loans will assist buyers who don’t have a lot of cash to put into the deal. It’s going to bring in a large pool of people in the coming months! You don’t have to be a first time home buyer either.

Some attractive highlights with the new FHA mortgage are as follows:

* Lower credit scores typically allowed
* There is NO “declining” market policy that they follow
* Down payment is lower than a normal conventional type loan ~ FHA only requires 3% into the transaction…
* Gift Funds are allowed, even for entire down payments!
* You can have a parent on the loan as a “non occupying” co-borrower (they don’t live in the property) to pool assets together to help with debt ratios and the overall picture
* 6% seller subsidy (seller concessions) is allowed.
* ARMs and Fixed products available

Another point to mention is that there still exists the “Nehemiah” product (I can do this type of loan and have done many in the past). Basically this is a product that assists the buyer with the 3% down payment. It comes from the seller as a seller credit. There was a motion to strike this down; however, this was unsuccessful and therefore is still available and active. So don’t think that if you don’t have the 3% down that you’re out of luck…It is St. Patty’s Day remember…get it from the seller.

Any questions? Call your lender of choice- me!

Dave Anzueto | Vice President | 703-883-9587 | Apply online www.davidloans.com

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Finally! The long awaited loan limits from the Federal Housing Administration has arrived! The new FHA limit for the Northern Virginia and Washington DC Metro area is now $729,750. This is HUGE! With the credit markets continuing to tighten and second mortgage lenders scaling back, we will now have a vehicle for those borrower’s who don’t have 10%-15%-20% down…plus the rates are better than conventional mortgages!

My eyes opened even wider last night when we learned that the new Fannie Mae/Freddie Mac ‘jumbo-conforming’ for the DC Metro real estate region was going to mirror the new FHA limit. You got it, the new temporary Fannie/Freddie second tier loan limit in the DC region is now $729,750! This number was completely out of left field, and against everything we had heard from our contacts at Fannie Mae…but who are we to argue!? Here are the guidelines that you need to know:

·Financing for owner occupied, second home and investment properties available

· Minimum down payment requirement (owner occupied) for the new “jumbo conforming” is going to be 15% (note: the guidelines state 10%, but since we are in a “declining market area” our max financing is cut by 5%)

· Credit score requirement is 700 for over 80% LTV and 660 for under 80% LTV

· Max seller concessions is 3%

Rates will be slightly higher than conforming under this new jumbo-conforming limit, but lower than current jumbo. Only three loan types will be available, 30 year fixed, 15 year fixed, and 5/1 ARM…they will be available on:

30 Year Fixed (avail 4/1/08)

5 Year Fixed (avail 4/1/08)

5/1 ARM (avail 5/1/08)

As this information is released to the public I certainly think that this will generate some excitement. If rates cooperate, thousands of buyers could really take advantage of these new offerings. While useful for some borrowers, the higher conforming limits pale in comparison to how FHA is currently structured. As it sits currently (which is subject to change), FHA is going to be far more beneficial for us than Fanniem Mae/Freddie Mac…here’s why:

1. Even with a loan amount of $729,750, borrowers still only need a minimum of a 3% down payment (FHA does not have a ‘declining market policy’)

2. Mortgage insurance payments are lower with FHA (because of the credit crisis second mortgages are become nearly extinct at higher loan-to-values)

3. Rates are significantly more attractive with FHA

4. No credit score requirement

All in all, this is all very promising, although rates have continued to go up this week, I am still very confident that the movement higher is temporary. Should you have ANY questions about these changes for the Northern Virginia or DC Metro real estate areas, I’m more than happy to answer them. I’ll post any new guideline changes that may come about, but as you may recall the current FHA guideline only requires a 3% down payment, but in many cases with a Nehemiah-type program, the down payment can come from the seller. You can look up the new FHA loan amounts in other regions of the country here.

Todd Murdock | Senior Mortgage Advisor | HomeFirst Mortgage Corp | 703.549.3400

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Yet another up and down week for us, yet I still strongly believe that rates will fall back well into the 5’s in the near future. The issue that has been plaguing us for a few weeks is that US debt just isn’t popular right now, and thus, there has been billions of dollars “jumping ship,” which is driving rates up. Rates will rise until they get to the point that they’re once again a ‘good deal’ (I believe that we’re at that point) at which time buyers will come back into the market…that will draw rates back down. It’s quite possible that the spring market will coincide nicely with rates falling. As always, time will tell.

We’ve gotten some news from Fannie Mae in regards to the ‘new conforming loan limits.’ Apparently it has been determined that the real estate in Northern Virginia and Washington DC area’s median home price is $474,000 (more than expected), if we add 25% to that, we have a new conforming loan size of $592,500. That’s the good news, the not-so good news is that instead of just raising the max conforming loan amount, they are simply creating a second tier for loan sizes between the current $417,000, and the new $592,500. This second tier will have slightly higher rates than current conforming rates, but will apparently be lower than current jumbo mortgages. We haven’t gotten any new news on the latest FHA loan limits, but I think that once again FHA will prove to also be a great option for borrowers lacking a substantial down payment.

Todd Murdock | Senior Mortgage Advisor | HomeFirst Mortgage Corp | 703.549.3400

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As part of the Stimulus Bill that has passed the House, and will most likely get signed into law in the next few days, conforming loan limits for the next 12 months (most likely starting in February) will be raised up to $729,750! The new limits will be based on the area’s median home price, plus 25% or 50%. Since this language is yet to pass we can only speculate, but ‘people in the know’ seem to think that it will give us a max conforming limit of $625,000 for the DC Metro area, including real estate in Northern Virginia, Washington DC and Southern Maryland. The measure would also permit the Federal Housing Administration (FHA) to indefinitely insure loans up to that same level. Currently, FHA loans may not exceed $362,250.

The Bill helps us immensely with spurring buyers back in the market, and letting home owners in trouble refinance. As you’re probably aware, the current conforming Fannie Mae and Freddie Mac limit is capped at $417,000. Anything above that amount is considered a Jumbo loan and comes with a significantly higher interest rate. Northern Virginia and DC real estate has priced many first time home buyers out of the market in recent years. Once this new limit takes hold, buyers will be able to finance more expensive homes with a lower interest rate.

“In high-cost states, many home buyers with good credit could save $3,000 - $5,000 each year by not being forced into the current jumbo mortgage market”, said NAR president Richard Gaylord. “Currently, only families in lower cost areas are able to qualify for these types of affordable loans. Such a move would stimulate home sales and help stem the rise in foreclosures, reducing the number of foreclosure by as much as 210,000, and increase economic activity by $44 billion. What’s more, this will come at NO cost to taxpayers– it’s a policy change that could really boost the economy,” Gaylord says.

Other NAR projections show that raising the loan limit will reduce the supply of homes on the market by 1 - 1.5 months, and increase home prices by 2 to 3 percent. As many as 500,000 jumbo loans will refinance into lower interest rates according to the analysis.

If mortgage interest rates stay at the level they are now (or lower), the DC Metro area will have a VERY active Spring/Summer market!

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