Down Payment Assistance is available NOW

Today Sept 12 2016 the city of Miramar has made available approximately $900,000 in housing rehabilitation funds for SHIP and CDBG and $280,000 in purchase assistance for SHIP. If you fit the income limits go to this website to download an application: CRAFLA Miramar homepage  Note that this is for down payment assistance, home repair applications need to be picked up in person and is limited to the first 100 people.

Minimum Contribution from Borrower’s Own Funds: 1% (one percent)

First Mortgage Maximum LTV (Loan to Value): 99% (ninety-nine percent)

Maximum Combined LTV (Loan to Value): 105% (one hundred five percent)

Second Mortgage Purpose: Closing costs plus down payment

Maximum Amount of Assistance: Very Low: 50% AMI or Lower - Up to $50,000 Low Income: 51% AMI to 80% AMI – Up to $40,000 Moderate Income: 81% AMI to 120% AMI - Up to $30,000

Second Mortgage Interest Rate: 0%

Second Mortgage Repayment Terms: Ten-year, 0% interest, deferred payment loan secured by a mortgage and note. The loan is forgivable in its entirety at the end of ten (10) years from the date of the closing, provided the title remains under the ownership of the original purchaser. There will be no yearly write-down of the loan. Full repayment of the loan is due if the home is sold, title is transferred or conveyed, or the home ceases to be the primary residence of the applicant during the ten (10) year occupancy period of the property. Applicants will be allowed to refinance subject to the terms and conditions of the City’s Subordination Policy, which does not permit cash out to the homeowner. If an applicant receives assistance towards the purchase of his/her home from both the City of Miramar and Broward County, a percentage of the total amount of the property’s appreciation will be recaptured by Broward County as stipulated in the County’s LHAP.

Borrower Income Limitations: Up to 120% of the area median income (AMI) based on family size.
Funding availability for income categories is subject to program requirements.

Property Eligibility: Single-family detached, condominium and townhouse units, and villas, including units in Planned Unit Developments, located in the City of Miramar.

NOTE: Pre-Construction single-family detached, condominium, and town house units, including units in Planned Unit Developments, are not covered as part of the First Time Homebuyer Purchase Assistance Program. Purchase Price for homes may not exceed $325,301 (or current 90% cap of the median area purchase price in the MSA, as established by the U.S. Treasury Department).

Filing for Homestead Exemption in Florida

If you are under contract right now, make an effort to close before the end of the year so you can take advantage of this exemption that can save you an average of $800 next year. Every person who owns and resides on real property in Florida on January 1st and makes the property his or her permanent residence is eligible to receive a homestead exemption up to $50,000. If you miss the deadline unfortunately you will have to wait till next year to get the discount.

1. The first $25,000 applies to all property taxes, including school district taxes.
2. The additional exemption up to $25,000, applies to the assessed value between $50,000 and $75,000 and only to non-school taxes.

The application for homestead exemption (Form DR-501) and other property tax forms are posted on the State of FL form page and on most property appraiser's websites. Click here for FL county property appraiser contact and website info.

- Broward County: http://www.bcpa.net/homestead.asp
- Miami-Dade County: http://www.miamidade.gov/pa/exemptions.asp
- West Palm Beach County: http://www.pbcgov.com/papa/ExemptionServices.htm
- Hillsborough County: http://www.hcpafl.org/
- Pinellas County: http://www.pcpao.org/
- Pasco County: http://www.appraiser.pascogov.com/
- Hernando County: http://www.hernandopafl.

Some county sites have quick and easy online applications.
If filing for the first time, be prepared to answer these questions:
- Whose name or names were recorded on the title on January 1?
- What is the street address of the property?
- Were you living in the dwelling on January 1?
- Do you claim homestead in another county or state?

Remember: Deadline to own a property: January 1st (note: national holiday so actually it’s Dec. 31st)

With the recent increase in interest rates; is this a good time to buy or sell?

With the recent interest rate increases over the last few months, buyers and sellers may be wondering how this will affect the housing market now and in the future.  Is this the right time to buy? Is this the right time to sell? Here is my opinion on this matter in hopes of shedding some light on the subject.

Over the last few years we have been enjoying "artificially" low interest rates thanks to the Federal Reserve (Fed). Their involvement has kept rates at record lows in hopes of stimulating and nurturing the housing recovery. In June they announced that they would begin slowly pulling out of the bond buying market starting in 2014, which will cause rates to rise even further. Predictions are in the 6-7% range by next year. While this is a dramatic increase from the 3% we have become accustomed to, it's important to remember that it would still be historically lower compared to the last 40 year average. As I said, these current rates have been "artificially" low and were not meant to last. In a large part they have done their job as the housing market has begun to recover, although, we still have a long way to go.

NOTE: I encourage seller's to read this too since buyer mentality affects your ability to sell and afterwards you may become a buyer yourself.
                             

Is this a good time to buy?

The original housing bubble was caused by loosening lending guidelines that allowed almost anyone to qualify for a home regardless of income or credit. This caused a feeding frenzy that shot home prices out of control. When the bubble burst, all lending stopped! Almost over night the entire housing landscape changed as buyers were denied loans and sellers were stuck in their homes. With buyers having no ability to buy homes anymore unless they had cash, home prices plunged. The Fed realized that the only way to get buyer's buying again would be to help get the lenders back on their feet (a controversial subject that I have no intention of touching here) and get rates low enough so that buyers could actually qualify for a mortgage in the new economy.

By making the rates so ridiculously low, it re-injected much needed interest as well as increasing buying power to qualified borrowers. The theory behind the Fed control of interest rates is that as the economy improves, jobs open up, and people start making more money; they can afford more home. This means (in theory) that they can raise rates slowly without hurting the housing recovery. All of this assumes of course that the job reports continue to show signs of improvement.

As a potential buyer in this market you should be asking yourself two questions:

1) Will rate go back down?

2) Will home prices continue to rise?

The answer to the first question is probably not. The era of artificially low rates is over. It is costing our government a tremendous amount of money to keep these rates low and our budget simply can't sustain it forever. Like it or not (pending some sort of disaster) the Fed is pulling out and the market will decide what the rates should be.

The answer to the second question is maybe. As of this writing, it is a "Sellers Market". What this means is there are more buyers then there are inventory of good homes for them to buy. This drives home prices up as demand for housing increases. Should that slow down due to higher rates then those increases could stagnate. Unfortunately,it's too early to tell what will happen to home values. But (AND IT'S A BIG BUT), it may not even matter(see the example below).

Example:
Using a home price of $150,000; let us see how these scenarios affect you:

     Price           Rate     P&I

A) $150,000    4.5%    $760.03      

    (Average Rates Today 07/2013)

B) $150,000    6.5%    $948.10       

    (Possible rates next year)

C) $140,000    6.5%    $884.90 *** 

    (Possible rates next year with price drop)

***What is interesting here is that if you wait till next year in hopes that home prices drop, after less than 5 years the home would actually cost you more to own than if you bought it now at a higher price!***

Here is why:

Yearly interest on a mortgage of 4.5% breaks down like this:

     Yr1: $6,700.50 / Yr2: $6,589.33 / Yr3: $6,473.05 / Yr4: $6,351.44 / Yr5: $6,224.24

          Total interest paid for the first 5 Years: $32,388.56

Yearly Interest on a mortgage of 6.5% breaks down like this:

     Yr1: $9,053.93 / Yr2: $8,949.13 / Yr3: $8,837.31 / Yr4: $8,718.01 / Yr5: $8,590.71

          Total interest paid for the first 5 Years: $44,149.09:

***So after only 5 years of ownership you will have paid $1,760.53 more for the property that you paid $10K less for! What's worse is that number continues to grow every month eventually costing you a whopping $54,952.21 over the 30yr term of your mortgage!***

So if you are waiting for rates to go down, don't, because they are only going up from here and if you are waiting for home prices to fall, don't, because of what I just explained above. 

The time to buy is now!

Is this a good time to sell?

There are many reasons people need to sell that have nothing to do with the market such as Divorce, Probate, Foreclosure, ect. For those sellers the decision is not always up to them and they make due with the market they are in. But what if you're not in distress and simply want to sell to upsize, downsize, or relocate? You want to maximize your home's value so you can net the highest amount of money. For you the only question is will home prices rise or fall in the near future.

No one can predict with complete certainty what will happen to home values, however, by understanding what affects home prices, we can make an educated guess. To put it simply, a home is worth what a buyer is will to pay for it. An easy enough concept to understand as long as that buyer is paying all cash for the property. However, once you add financing to the equation, it becomes a bit more complicated.

Over the last 7 years one of the biggest issues we have had in the real estate market were low appraisals. Let's say a buyer wants to buy a home on sale for $200K. He or she has been prequalified for an FHA loan for $200K and has just enough for the 3% down payment and closing costs. The buyer and seller sign the purchase agreement and inspections and financing begin. In about two weeks the lender completes their appraisal of the home and find that it only appraised for $190K. Since the lender will only lend on the lesser of the purchase price or the appraised value, the buyer would need to come up what an addition $10K that he or she may not have. So even though the buyer was willing to pay $200K for the property, the lender was not and the deal has to be re-negotiated or cancelled.

Thanks to plenty of cash buyers and investors both foreign and domestic, we have seen a steady uptick of appraisable property values again. This coupled with the artificially low rates have created a "Seller's Market" of low inventory and higher prices. What this means for you is that smartly priced homes today will sell faster and for more money.

                        

What might cause home values to go down again?

The new issue we will face with the rise of interest rates will be the decrease in a borrower’s “buying power”. Communities typically are divided by invisible lines that determine their value based on location, construction, and design.  Each area attracts buyers of a particular economic range that can afford homes in those areas. Because the rates have been so low, buyers have been able to pay more for homes (as long as they appraise) without increasing their mortgage payments to the point where they can no longer qualify for their loan. When rates rise, that buying power goes down because at the end of the day, the buyer is still making the same amount of money. The buyer has no choice but to offer less for a home in order to not exceed his/her debt-to-income ratio or pull out of the market. If sellers don’t budge on price because they are unaware of this and buyer’s withdraw from the market or look elsewhere for homes, the inventory of unsold homes may rise. When that happens, we may switch back to a buyer’s market due to the oversupply and eventually you may see a dip in home values again. I don’t believe this would be a severe or permanent dip but rather a “market correction” resulting from the artificially low rates that will balance out over time.

So do you sell now or wait?

There is no question that if you want or need to sell, now is the perfect time to do so. If you’re concerned that after you sell you don't want to have to buy in a "Seller's Market" yourself; keep in mind that in the long run, you will benefit more from the lower interest rates now rather than the higher ones later (see buyer’s section up top).

In conclusion, it's important for us to educate ourselves in the current real estate environment because I truly believe that we are on the tail end of one of the greatest times to buy or sell that we have seen since the initial bubble burst over seven years ago! No one can predict the future, but regardless of what happens, I'm confident that the real estate market and our economy as a whole will continue to improve. We will have our ups and downs but what's important is that we learn from our mistakes and emerge from them better than we were before. 

The time to take action is now!

2013 Changes to FHA's Annual MIP

To combat the dwindling reserve, FHA has made some important changes to FHA that you need to be aware of.

MIP Increase

Increased annual MIP rates are effective for case numbers assigned on or after April 1, 2013. The increases in the annual MIP apply to all mortgages insured under FHA's Single Family Mortgage Insurance Programs except:

• Streamline refinance transactions of existing FHA loans that were endorsed on or before May 31, 2009
• Title I
• Home Equity Conversion Mortgages (HECM)
• Section 247 (Hawaiian Homelands)
• Section 248 (Indian Reservations)

MIP Cancellation

For loans with FHA case numbers assigned on or after June 3, 2013, FHA will collect the annual MIP for the maximum duration permitted under statute. The changes to the duration of the annual MIP are effective for all Single Family FHA programs for which FHA charges an annual MIP except:

• Title I
• Home Equity Conversion Mortgages (HECM)

This means that the previous rule of being able to cancel your MIP after 5 years if your Loan to Value drops below 78% no longer applies. While this is unfortunate, FHA still remains the best option for most borrower looking for a flexible loan with minimal down payment.

You can find the HUD letter on the policy changes here:  http://portal.hud.gov/hudportal/documents/huddoc?id=13-04ml.pdf

What to do with the 1099-C From Your Mortgage Lender

For those who have completed short sales in the last year are now receiving a

1099-C form.  This is because the Lender decided it cannot recover what they owe on their mortgage loan and is therefore canceling or forgiving a portion of that debt. 

The part of the mortgage debt that is canceled is generally the difference between what was owed on the mortgage loan and the payoff to the bank. Prior to 2007, many financially strapped taxpayers with forgiven mortgage debt were required to pay federal taxes on it, because the IRS treated it as taxable income. Thanks to the Mortgage Forgiveness Debt Relief Act of 2007, most borrowers whose mortgage debt on their primary residence that is cancelled between Jan. 1, 2007 and the end of 2013 will not have to pay federal taxes on it.

Note that not all states follow the new federal law. Therefore, some people could still owe state taxes on canceled debt.  Lucky for us, Florida has no state income tax so federal law applies :-) 

Here are the requirements:

•     The debt must be on your primary residence, not a vacation home or rental       property.
•     The debt forgiven can be up to $2 million. But for married persons filing separate returns, the limit is $1 million.
•     Not all canceled mortgage debt qualifies. The mortgage must have been used to acquire or construct your home, or to improve it.  It can also be a mortgage that was refinanced, but only up to the amount of the old mortgage principal, just before the refinancing.  If you "cashed out" some of your home equity for purposes other than home improvements, such as buying a car, that portion of your forgiven debt is taxable. 
•     The debt forgiveness occurred on or after Jan. 1, 2007.

*As always, seek the advice of a qualified tax professional when filing taxes.