Time Period Required Before Buying Again When You have Short-Selled or Foreclosed

If you have decided to short sell your home or have gone through foreclosure, your credit score is not the only thing that gets affected.  You will also not be able to get a loan for a certain time period.  Keep in mind that these are current rules and can change at any time.

This should also be a part of your financial assessment when you determine to short sell.

If you have been foreclosed upon:

  • Conventional: Cannot qualify for a mortgage for 5 years
  • FHA: Cannot qualify for a mortgage for 3 years

If you have decided to short sell:

  • Conventional: Cannot get a loan for 2 years
  • FHA: Cannot get a loan for 3 years
Published in:  on February 23, 2010 at 8:02 pm Comments (2)

5% Down Payment, Conventional Loan is BACK (temporarily)!

A 5% down payment conventional loan is available again!  There are some heavy restrictions, so please read the following stipulations:

  • Conforming loan ONLY (Maximum loan amount: $417,000)
  • Purchase only (no refinances)
  • Single-family home or detached PUDs only (no condos or attached PUDs)
  • Must be your primary residence
  • 760 minimum FICO (the middle FICO of all borrowers)
  • 41% maximum Debt-to-Income ratio

Please note this is for California real estate.  If you do not fit into these guidelines, then FHA is most likely the way to go, which is more flexible with credit and qualifying requirements, although more expensive than a conventional loan.

I do not know how long this will last, but 5% down has not been available for a year.

Published in:  on February 16, 2010 at 3:34 pm Comments (2)

Claiming Your First Time Homebuyer Tax Credit on Your Tax Returns

If you were a first time homebuyer in 2009 and you fell within the IRS tax credit rules, you can claim that $8000 tax credit on your ‘09 returns.  The IRS has very specific rules on how to claim the credit though, and you will want to make sure you do it right.  Your tax accountant will be able to guide you, but if you file your own taxes, be aware of the following:

  • You will not be eligible to e-file your returns
  • You must complete and include Form 5405
  • You must include supporting documentation along with Form 5405 (this is the reason you cannot e-file).  The documentation is:
    • A copy of your HUD-1 Settlement Statement with both parties’ signatures (yours and the sellers).

If you are eligible to claim the “long time resident” homebuyer tax credit of $6500, you will need to provide the following documentation:

  • A copy of your HUD-1 Settlement Statement with both buyer and seller signatures

In addition to the HUD-1, you also will need to prove that you were indeed a homeowner for any 5 consecutive years in the previous 8-year period by providing one of the following:

  • Form 1098 (your Mortgage Interest Statement)
  • Property Tax Records
  • Homeowner’s Insurance Records

I am not a tax advisor, so this information is only intended to guide you.  Please speak with your CPA and/or carefully review IRS instructions for how to properly file for your tax credit.

Published in:  on February 10, 2010 at 3:49 pm Leave a Comment

Down Payment Requirements for Conventional Loans

Down payment requirements on conventional loans are dependent on several factors: Loan Amount, Property Type, FICO score and qualifying ratio.   The FICO score and qualifying ratio come into play primarily when you have less than 20% down and because we have to layer Mortgage Insurance company rules with normal lender rules.  20% down will get you the better interest rate, and it will also eliminate the need for Private Mortgage Insurance.

SFR: Single Family Residence (standing on its own; not a part of a development)

PUD: Planned Unit Development (generally known as a townhouse). It is rare to find a detached PUD, but do speak to your real estate agent about this.

DOWN PAYMENT REQUIREMENTS IN CALIFORNIA:

Up to $417k Loan Amount (Conforming Loan):

SFR/Detached PUD: 10% down minimum

Attached PUD/Condo: 15% down minimum

$417k – $729,750 Loan Amount (High-Balance Loan):

SFR/Detached PUD: 10% down payment

Attached PUD/Condo: 15% down payment

Above $729,750 (Jumbo Loan):

Please call me for this scenario.  The down payment requirement in the Jumbo Loan range tends to fluctuate; in addition, few lenders are participating in this loan level, so it depends on investor involvement and their portfolio at the time.

Published in:  on February 1, 2010 at 3:11 pm Leave a Comment