Welcome Home Heroes Financing Package

Launched to honor those who sacrifice to safeguard our freedom, Welcome Home Heroes is open to all qualified Illinois veterans, active military personnel, reservists and Illinois National Guard members.

The Welcome Home Heroes homebuyer financing package includes:

• a $10,000 forgiveable loan over two years for down payment and closing cost assistance
• a 30-year fixed rate mortgage that has an affordable interest rate
• an optional mortgage credit certificate to reduce federal income tax liability

Who is Eligible?

• Veterans (who do not need to be homeowners)
• Active military personnel, reservists and Illinois National Guard members (must be first-time homebuyers)
• Buyers must qualify based on income and purchase price limits

How to apply?

Interested buyers must apply through a lender in their area. The program only applies to 1-2 unit residential properties in the State of Illinois purchased as a primary residence. The new home loan builds on the existing affordable home, SmartMove, also available through Illinois Housing Development Authority's (IHDA) lenders.

How does the tax credit work?

A mortgage credit certificate (MCC) enhances the benefit of the federal homeowner mortgage interest deduction. Homeowners with the credit are allowed to use 20 percent of their annual mortgage interest as a direct federal tax credit, resulting in a dollar-for-dollar reduction of their annual federal income tax liability. The remaining 80 percent of their annual mortgage interest will continue to qualify as an itemized tax deduction. To see a chart, visit IDHA.

 

The above information was taken from the Illinois Housing Development Authority website. If you have questions regarding this program, please visit IHDA's frequently asked questions.

A smile or a poke goes a long way....

Holding a door open for someone,  letting someone "cut" in-line, posting a "like" or a "poke" on Facebook all have a lot in common.  The thread that runs thru all of the above is two fold.  They are all a form of customer service and they all generate a smile from the recipient.  

The days of customer service are not dead....they just need to be found and spread.  The Real Estate/Mortgage business has evolved dramatically.  The one thing that has stayed constant is those that really care for the client and do not treat them as a "transaction" remain successful.  Much to the dismay of the reports you may hear.....there are loans to be had.  There are houses to sell...and there are homeowners to make happy.  The Real Estate professionals I deal with are saying this is one of the busiest years they have seen.  The phones are ringing and the doors are being unlocked.  If your sales professional takes their time with you, guides you in the right direction and consults with you as opposed to sell to you....you can be a homeowner.

The best feeling in the world is when I am at a closing for one of my mortgage clients...the papers are signed...the sweat is wiped from the brow...and that magic package slides across the table...in that manilla envelope are the keys to a new home and a garage door opener.  The look on the new homeowners face is priceless...that look is one of thanks for a great job well done and superior customer service.

Take a minute today to hold open a door......say thank you...or Poke on Facebook.  The return you get will make your day!

Shopping for Your Loan

Here is an additional video that was developed by the U.S. Department of Housing and Urban Development (HUD) on Shopping for Your Loan. Lots of products are available but how do you honestly choose the one that is right for you? Watch this quick 12-minute video. At the end you'll be able to determine if the interest rate is floating or locked, identify and compare loan terms and compare the charges associated with getting the loan from multiple lenders.

 

 

Living the American Dream

With the economy and the housing market making a slow recovery, prospective homeowners have been hesitant in their attempt to be part of the American Dream.

That doesn't mean you should give up hope because there are programs available. Take the Illinois Housing Development Authority (IHDA) as an example. IHDA is offering affordable interest rates and down payment assistance for borrowers of low to moderate incomes with its SmartMove Mortgage Products. Features of the SmartMove Mortgage Products include:

• Offers up to $6,000 in down payment and closing cost assistance as a 10-year, 0-percent forgivable loan
• Maximum LTVs from 96.5 to 100 percent
• Conventional/FHA/USDA insured products available
• Fixed rate with terms up to 30 years
• Reduced mortgage insurance requirements on conventional program

Qualifications include:

• A minimum credit score (620 on FHA and USDA loans and 660 on conventional loans)
• Maximum total debt ( back end) ratio of 45 percent
• Buyer must contribute 1 percent or $1,000 of the purchase price, whichever is greater
• First-time homebuyer or qualified exemption
• Household income and purchase price limits apply
• Homeowners counseling is required

It is imperative for anyone hoping to own a home to look into as many programs as they can to keep their dream alive. Visit www.ihda.gov or call 312-836-5200 to speak with Homeownership Originations Department.

Shopping for Your Home

  This video was just unveiled through the National Association of REALTORS and Housing and Urban Development on shopping for your home. Nicely done video that gives some good and credible information (which sometimes is difficult to find on the internet)! Some topics it addresses are: How much can you afford to spend on a home and how much of a mortgage can you afford? Check it out and let me know your thoughts!

 

   

FHA Launches Program to Help Underwater Homeowners

Homeowners who are "underwater" on their mortgages and facing foreclosure may qualify for assistance under the new Federal Housing Administration (FHA) Short Refinance Option. For the full release, please visit http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-173

Launched earlier this month, the program is designed to help homeowners who are current on their mortgages, but are experiencing financial hardship because property values in their community have declined.

The Short Refinance Option offers non-FHA borrowers the opportunity to refinance into a safer, more secure mortgage product.

To qualify, borrowers must be current on their existing mortgage, owe more than their home is worth, and have a minimum credit score of 500. Additionally, their lender must agree to write off at least 10 percent of the unpaid principal balance of the first mortgage.

With many mortgages underwater nationwide, the program is designed to prevent "strategic defaults" and stop homeowners from falling further into negative equity.

To determine if you are eligible, contact your lender.

Tax Credits at Closing???

As a real estate attorney in the Chicago area, I find this to normally be the hardest issue for clients to understand in a real estate transaction. Taxes in Illinois are paid a year behind or in arrears. For example, homeowners are paying 2009 taxes in 2010 and 2010 taxes in 2011. Taxes in Illinois are also due and payable twice a year. In many Illinois counties like DuPage and Will, with the exception of Cook County, annual taxes are paid in two equal installments that are due in June and September. The first installment of Real Estate Taxes in Cook County is due on March 1st and the second installment is due around September (usually between August and December). The exact date is uncertain.

A property with a $4000 annual tax bill located in Dupage, Will or Kane County, for example, will be paid in two equal installments of $2000. In Cook County, the first installment is 55% of the previous year’s tax bill. For example, if the 2008 tax bill was $5000 (which would have been due in 2009), the first tax installment due in 2010 (for 2009 taxes) will be $2750. The second installment in Cook County is unknown until the actual issuance of the second installment tax bill (they basically figure out what the taxes will be and subtract the first installment to come up with the second installment amount).

That all being said lets take a look at an example:
Buyer purchases and closes on a DuPage County property on March 15th, 2010. It is mutually agreed upon by the parties to prorate taxes based on 105% of the previous year’s tax bill. On March 15th, 2010, the sellers should have paid the 2008 taxes and the 2009 taxes would not have come out yet (the bill comes out in May and is due in June and September). So how does the Seller pay for the taxes for the days that they owned the property, if they won't be owning the property when the tax bill becomes due?  Furthermore, what about the taxes for the days the Seller owned the property in '10?  Those taxes will not be due until 2011, and the seller will be long gone by then. This is where tax proration comes in.

In our example, 2008 is the last fully attainable year, so for the example lets say the 2008 taxes were $5000. Since the 2009 taxes are not out yet in our example, the Seller will tender a credit to the buyer at closing for the 2009 & 2010 taxes. The credit will be based on 105% (this percentage is generally agreed upon in the contract) of the last year's full ascertainable tax bill or 2008 taxes.
-$5000 X 1.05 = $5250
-2009 tax credit: $5250
-2010 tax credit: $5250/365 (number of days in the year) = $14.38 per day tax rate
-March 15th, 2010, is the 74th day of the year so , 14.38 X 74 = $1064.38(tax credit for 2010)

Total tax credits = $5250 + $1064.38= $6314.38

This number reflects the amount of the 2009 & 2010 tax bill for which the seller is responsible. Any day thereafter becomes the responsibility of the buyer since he/she now legally owns the property. The Buyer will now pay the real estate taxes when they become due because they have been compensated by the Seller for them.

This amount will be reflected as a credit to the buyer on the final settlement statement (RESPA, HUD).

Hope that wasn't too confusing.

As always this should not be construed as legal advice for your specific situation.  Particularly in this case where the tax proration change given the county, the time of the year, and there can always be issues with 105% being appropriate given if the property was improved within the last year, is new construction, etc.  Always consult with an attorney about your specific situation.

Sales Climb 32 Percent in First Half of 2010

Wow! What a great first six months of 2010!

Homes in the 120-community area covered by the Mainstreet Organization of REALTORS jumped more than 32 percent in the first half of 2010, compared with the same period last year. Many communities in Cook and DuPage Counties showed impressive gains, including Palos Park (146 percent increase from 2009), Countryside (150 percent), and North Aurora (167 percent).

In addition, June marked the 10th straight month of home sales gains in Illinois overall. Total home sales rose 18 percent, and the median home price increased 2.5 percent compared with June 2009.

We know the federal tax credit for first-time and move-up buyers generated movement, and we'll still see the effects of that for the next couple of months. But even though the tax credit has expired, home buyers still have plenty of reason to celebrate -- they can take advantage of the lowest interest rates in decades!

Interest rates have dropped substantially in recent months, and are currently under 5 percent for a conventional 30-year mortgage. Lower interest rates actually offer more long-term financial benefit for consumers than tax credits. For example, if a home buyer was purchasing a $300,000 home, the difference between 5.5 percent and 4.5 percent interest rate could be worth about $2,000 a year.

Low interest rates combined with today's affordable housing prices make this a great time to buy a home.

Underwater Mortgages

A few months ago a special aired regarding homeowners walking away from their mortgages because they were what is called "underwater". The homeowners in the special were NOT in financial hardship. The term underwater is referring to owing more on your house than what it is worth. The special was downright disturbing, especially since I am one of those "underwater" homeowners that bought when the market was hot. I have never had an inclination to walk away. I love my house, my kids love it and we are in it for the long haul! If nothing else, that special reaffirmed my belief to continue to pay down our mortgage.

With that said, I found this article on Houselogic, a website developed by the National Association of REALTORS, which I think gives some very useful and hopeful facts!

Most Think Walking Away From Underwater Mortgage is Wrong

If you rely solely on the headlines, you might be tempted to think that most people who owe more on their home than its current market value were walking away from their mortgages and allowing property to go into foreclosure.

Turns out, that's not the case, according to the National Foundation for Credit Counseling's 2010 Financial Literacy Survey.

The survey also asked under what circumstances, if any, it's okay to default on a mortgage. Only 23% of respondents answered that foreclosure is justifiable if the property is now worth less than what is owed on it. Further, 15% replied that there is no justifiable circumstance under which it would be acceptable to default on a mortgage.

The survey also found the overwhelming majority of consumers, even those in financial distress, still consider their mortgage payment a priority. When asked if they were unable to meet all of their financial obligations, would they be more likely to keep their mortgage current, or their credit cards current, 91% of respondents said they would pay their mortgage first.

"Taken together, the NFCC survey data brings us some encouraging news: Consumers still place a priority on making their mortgage payment, less than one-fourth think that defaulting on a mortgage is justifiable simply because the property is underwater, and a significant number take mortgage obligations so seriously that they find no acceptable reason to default on a home loan, "said Gail Cunningham, spokesperson for the NFCC. "Americans continue to prioritize their obligation to service their mortgage loan, and this is indeed good news for homeowners, mortgage lenders, and the housing market overall."

The 2010 Financial Literacy survey was conducted by telephone within the United States by Harris Interactive on behalf of the NFCC between March 4 and March 8, 2010 among 2,028 adults ages 18+. Results were weighted for age, sex, geographic region, and race where necessary to align them with their actual proportions in the population.

Illinois Housing Market Sees 8th Straight Month of Gains

The Illinois housing market has seen it's 8th straight month of positive indicators.  Closed sales were up 34.4% for April 2010 over April 2009.  The median prices across the state were up 5.9% over April 2009.  These positive indicators were the result of the rush to beat the first time buyers tax rebate deadline of April 30, 2010.   Almost record low mortgage interest rates, consumer confidence and some job stability were also contributing factors.

These factors improved the market not only statewide but in the local communities Mainstreet Organization of Realtors (MORe) serves.  MORe's April Trends for contracts pending were up 81.2% for Attached Housing. The leading communities were Woodridge 533%, Bensenville 600%, Glendale Heights 264%, and Hazel Crest at 500%. Single Family Detached Housing showed a 79.4% increase in contracts pending for April 2010 over April 2009. Communities with large increases were Blue Island 214%, Carol Stream 350%, Homer Lockport 235%, Kenwood 333%, and Leyden Township at 466%. The biggest gain by far was at Lake Holiday in the Sandwich/Somonauk area of LaSalle County at a whopping 1300%.

As we head into the summer months these trends should continue as the mortgage interest rates remain low at near record levels. The average sales prices have seen positive gains over the last several months with April 2010 showing a 3.6% increase over April 2009.  We should see a gain of 3-5% over the next several months.

All the indicators seem to be heading in the right direction so now is a good time to buy!