Chicago First Time Home Buyer: FHA Changes Are Here Sort Of

Well HUD officially announced changes to FHA loans which will start taking effect in April. HUD announced the following changes will effect both purchase money transactions as well as refinance transactions. Chicago first time home buyers will definitely be affected by these changes. If you are currently in the market for a new home or looking to refinance your current home you should definitely pay close attention to these changes. The changes that are being imposed on FHA loans are the following:

1. Upfront Premiums increase

The current upfront mortgage insurance premium charge is 1.75%. On a $200,000 mortgage this is currently a charge of $3500 which is added to the loan amount on an FHA loan. The change which will be in effect for FHA case numbers that are assigned on or after April 5, 2010 will increase the upfront premium to 2.25%. On a $200,000 this will mean an additional $1000 cost to the Chicago first time home buyer.

2. Updated credit score and down payment requirements

New borrowers will have to have a minimum of a 580 credit score to qualify for the FHA minimum 3.5% down payment. Borrower with less than a 580 credit score will be required to put down at least 10%. This really will not affect Chicago first time home buyers because almost every lender has raised their credit score requirements to a minimum 620 credit score. This requirement will go into effect early in the summer.

3. Reduced allowable seller concessions from 6% to 3%

Currently sellers are allowed to give the borrower a credit of up to 6% towards closing costs. With the new change the maximum seller contribution towards closing costs would be 3%. This means if a Chicago first time home buyer were to purchase a $200,000 home the maximum seller credit would go from $12,000 to $6000. This change will also go in to effect early in the summer.

4. Increase enforcement on FHA lenders

This change will not affect Chicago first time home buyers directly. HUD will be monitoring FHA lenders more closely and is looking at increasing the enforcement on FHA lenders.

There is also talk that HUD may look to increase the monthly mortgage insurance premium down the road which in turn would increase the monthly mortgage payment. While some of these changes do not take affect until the early summer Chicago first time home buyers will definitely not want to wait until April to find their new home.  With the changes that take affect in April and early in the Summer Chicago first time home buyers could potentially lose $7000 on the purchase of a $200,000 home. That sure is a whole lot of money to throw out the window.

Chicago First Time Home Buyer: First Time Home Buyer Tax Credit Update

Well it appears that the first time home buyer tax credit has run into some delays. If a Chicago first time home buyer purchased a home after November 6th then you should not expect your tax credit for a while.

Prior to November 6th if you bought a home after closing you could file amended taxes and expect to receive your refund. Everything changed after November 6th.  November 6th was when the first time home buyer credit was extended and expanded. As of November 6th the IRA has not allowed anyone to file. For those Chicago first time home buyers who had closed on the purchase of a home prior to November 6th they could file a form 5405 to claim the credit right away with no additional documentation. For those first time home buyers closing after November 6th unfortunately there was no form until today.

With the previous first time home buyer tax credit program other than filing the 5405 form there was no other documentation required. Now move up buyers will have to prove that they have lived in their current home five of the prior eight years. First time home buyers will have to provide a signed copy of the settlement statement (HUD-1) attached to their tax return. Since there is no way of sending along the settlement statement with an E-File first time home buyers will have to file a paper return. Yes your heard that right you will now have to file a paper return rather than electronically filing. What does this mean for Chicago first time home buyers? Having to file a paper return means that first time home buyers and move up buyers may be looking at another three months before they get their returns.

Unfortunately, honest first time home buyers and move up buyers will suffer due to people claiming the credit who had not purchased a home. One tax preparer was convicted of falsely claiming the tax credit for 15 of his clients.

Here is a link to the actual tax updated tax form and the instructions:

First time home buyer tax credit form

Instructions for completing the form

For questions regarding the tax credit or new home financing feel free to complete the form below

Chicago First Time Home Buyer: Tax Credit Time Running Out

A Chicago first time home buyer client of mine called today to let me know they were going to take a break from looking at homes. In their own words they had plenty of time to find a home and just did not think that there were enough good deals out there. Besides they said, “I am sure the government will extend the first time home buyer tax credit anyways.” After picking myself up off the floor I advised my client that they should not rely on the government extending the first time home buyer tax credit.

After asking some additional questions it appears my client has been looking at homes in the $300,000 range  and offering $250,000 or less. They were just amazed that no one was accepting their offers. I gave their Realtor a call and he said he had advised them that their offers were too low but the buyers insisted on the realtor submitting their offers.

Lets face it right now is a great time to buy as i have said before. There are some great deals to be found on homes which combined with low rates and the first time home buyers tax credit make this a great opportunity for the Chicago first time home buyer. While there are good deals people are not going to give their homes away. If you find a home that you like and can afford then consult with your Realtor about making a realistic offer. Time is running out on the first time home buyer tax credit, Chicago first time home buyers should not let this opportunity pass them by.

For information regarding new home financing or refinancing please complete the contact form below.

Naperville Real Estate: Riverbrook West Townhomes

Ken Tracy is a Realtor that I work with who specializes in Naperville real estate. One of Ken’s New Years resolutions was to make 31 posts about the Naperville real estate market  as well as the surrounding areas by January 31st. In and of itself this goal of 31 communities in 31 days is pretty aggressive for anyone especially for a Realtor that is as busy as Ken is. As many of you know a large percentage of my business involves working with Chicago first time home buyers. The more I thought about it the more I figured that my first time home buyers could definitely benefit from these community reports that Ken would be doing. So over the next few weeks I will include some of the Naperville real estate reports that Ken does. I will try to keep the communities to ones that would be of interest to Chicago first time home buyers. If you see a community that interests you be sure to follow up with Ken at his site www.kensfeaturedhomes.com .Please let Ken know Roy sent you.

Ken Tracy

Mobile:
630-697-0536

Fax:
630-778-9640

The first community we will look is the Riverbrook West Townhomes.

Naperville Real Estate: Riverbrook West Townhomes Market Report

The Riverbrook West townhomes in Naperville, located just off of North Aurora Road east of Route 59, is a model of effieciency…

The homes in Riverbrook West come in two and three bedroom models with basements.  The rooms are nicely sized.  This quiet neighborhood is in Naperville’s 204 School District…

The sun peeks through the clouds over Riverbrook West townhomes in Naperville..

This nice sized townhome features a two car garage in North Naperville..

Homes Sold in 2009:  4

Average Sales Price in 2009:  $218,000

Homes Currently for sale:  4

Average Asking Price:  $235,225

Are you interested in buying or selling a home in Naperville?  Call me anytime at 630-697-0536, or go to my website at www.KensFeaturedHomes.com. Remember to call Ken who is an expert with Naperville real estate.

This is a property that is listed by a Realtor friend of mine which I thought might be of interest to Chicago first time home buyers. This townhome is located in Aurora and is at a great price point for the Chicago first time home buyer. This town home is located in the Harbor Springs subdivision in Aurora and has almost completely rehabbed. Here are some photos of this town home for those interested in Naperville real estate.

Here is some additional info on this home for those interested in Naperville real estate.

Chicago First Time Home Buyer: Where are rates headed in 2010?

Today was my first day in the office for 2010 and I was asked this question by two different Chicago first time home buyers. Both clients have been out looking for a home for the past couple of months and have been unable to find a home that fits them. There is really no easy answer to this question. What we do know is that rates have seen a run up in the last two weeks of 2010 and many experts are predicting higher rates for 2010.  Fed Chairman Ben Bernanke stated in a speech that “another real estate bubble may be averted through higher interest rates.” Many experts say that once the Fed stops buying mortgage backed securities in March of this year rates have nowhere to go but up. The reason being that the Fed has been buying up mortgage backed securities to keep rates artificially low. Interest rates have been very volatile of late and it appears there will be more of the same in the near future.

For those Chicago first time home buyers that are sitting on the fence waiting for rates to drop you should not bank on lower rates. If the current rate you are being quoted gives you a payment that is acceptable then do not try to play timing game with interest rates. Trying to time the right interest rates is much like trying to time a stock price. Unless you are willing to put in the time to research what affects mortgage rates while also keeping an eye on the day to day fluctuations of mortgage rates the rate game is not one you want to play. I have seen many clients decide that they were going to hold out for an extra .125% lower rate only to wind up getting a rate that was higher. In some cases buyers have been priced out of buying a home due to a sudden run up in interest rates. The Chicago first time home buyer should find a payment that they are comfortable with and lock their rate once that payment can be reached.

In answer to where are rates headed for 2010 the consensus by most experts is higher. How much higher no one can truly say. Could we see rates heading lower? Sure but the odds are not in your favor. Find a rate and payment you are comfortable with, lock your rate and sleep easy all the way until closing.