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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With the home searches and home data widely available to consumers on the internet, many homebuyers are looking for homes online.  This is a big difference from 5 years ago.  Many consumers are becoming internet savvy.  However, they are not real estate savvy.  Since the information is available to everyone on the internet, there is less chance they come in contact with a real estate agent.  Buyers in this market should think about getting a real estate agent to guide them through the home buying process, especially if you’re a first time homebuyer.  There are many things that a real estate agent can help you understand throughout the process.  They have a lot of knowledge of the market, what homes are selling for, how much people are willing to negotiate, negotiating extras, what to look for on a home inspection, and help you with securing your financing.  The thing about hiring a real estate agent is that it costs the buyer no money at all.  The reason for hiring a real estate agent is that they look out for YOUR best interest.  They are not working for the builder/seller.  No matter what the sales people or sellers may say to buyers, they want the best for themselves.  So before you think you can handle the entire home buying process by yourself, consult with a real estate agent.

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I know this happens a lot with women when it comes to shopping and that’s why I never go to the mall with them.  You women know what I’m talking about.  You will go to the mall on a mission to find a pair of shoes and you come across the perfect pair at the first store you visit.  However, it’s too good to be true, so you have to go to every store in the mall to see if there is something better.  You spend an extra 2 hours strolling the mall just to find yourself coming back to the first store to purchase that perfect pair.  Although, sometimes you’re not that lucky and that pair has been swiped up by someone else.  That person realized that was the perfect pair and didn’t need any convincing. 

The reason I bring this issue up is because it has happened with a few of my clients.  In this market there are a lot of homes to choose from.  Just because there are a lot of homes out there does not mean that they’re the best homes.  With that said, if you find a home that you like, the chances that someone else likes that home are pretty high.  If you find a home that you really like, it doesn’t hurt to put in an offer on that home.  If the seller accepts the offer at the price you want then you just got a great deal.  I know it may seem too good to be true, but waiting around will only make things more difficult.  This buyers market is not going to be here forever and when it’s gone, it will be 100 times harder to get a home you like for the price you want.    

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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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I wanted to share this article about buying a home right now from Time Magazine with you all:

Famed Money Manager is perhaps best known for his timeless wisdom that you can beat the pros by focusing on stocks of companies where you either work or shop or have some other edge. But a more relevant Lynchism today is this gem: Ignore the headlines.

That’s no easy thing. How do you tune out all the chatter and ink on recession, housing, subprime woes, the credit crunch, rogue traders, insolvent bond insurers, $100 oil and nukes in Iran? It’s enough to make you sit on your thumbs and wait before making any big moves. But what, exactly, are you waiting for?

There has rarely been a moment in history when you couldn’t scare yourself into doing nothing. And yet, as Lynch observed nearly 20 years ago, “in spite of all the great and minor calamities that have occurred … all the thousands of reasons that the world might be coming to an end–owning stocks has continued to be twice as rewarding as owning bonds.”

A top reason to not buy stocks, in Lynch’s view, is if you don’t already own a home–in which case, that should be your first investment, since an owner-occupied home is nearly always profitable. Through a spokesman, Lynch reaffirmed these views to me–housing debacle and all.

When prices are falling, few people have the discipline to buy stocks, a house, gold, art or any other asset. But those who do pull the trigger excel in the long run. As John D. Rockefeller famously said, “The way to make money is to buy when blood is running in the streets.”

And the streets are stained crimson. Start with stocks. They have been pummeled this year. GDP braked sharply last quarter, and there has been plenty of panic about a recession. The Federal Reserve is slashing short-term interest rates at the fastest clip in decades. But if you stick to your steady, diversified plan while everyone else is retreating, you will be happy years from now. For one thing, Fed rate cuts always lift the economy eventually, and the stock market typically starts responding just as headlines get gloomiest. Sure, the market could fall again before recovering. But the recession may be half over already–or we may avoid one altogether. You just never know.

As for housing, certainly some skepticism is in order. Formerly sizzling markets in Florida, Nevada, Arizona and California probably haven’t seen the worst headlines just yet, though they may well be close. And “jumbo” mortgages, those more than $417,000, are likely to remain artificially high for a few more months while banks work through their credit issues.

But let’s say you are emotionally ready to be a homeowner. You have good credit, plan to stay put for five years and have been waiting for the perfect entry point. It’s time to get serious–before an inevitable rise in interest rates wipes out your advantage. “The thing that will make home prices stop falling is the very same thing that will push mortgage rates higher,” says Jim Svinth, chief economist at mortgage firm Lending Tree. So anything you gain by a further drop in prices might be offset by rising financing costs.

Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at today’s rate of 5.5%. Monthly principal and interest come to $994.31. Let’s say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise a point, to 6.5%, your monthly payment would be $994.94 and you’d have saved nothing. Meanwhile, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you’d rather not be.

It’s more complicated if you must sell before you can buy. But that logjam won’t persist forever–and if it appears you’ll be trapped for a few years, try to refinance at today’s lower rates. Risks always seem most acute when the headlines give you ulcers. But that’s exactly when you should think long term–and get off your thumbs.

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