The supply of newly-built homes for sales plummeted in April, a positive indicator for the Raleigh housing market as we head into the summer months.

It’s no wonder that homebuilders are breaking new ground at the fastest clip in 2 years.

At the current sales pace, the nation’s complete supply of new homes would be sold in just 5 month’s time.  That’s more than double the pace of a year ago.

Also, as more good news, in terms of total housing units, the government reports that New Home Sales topped one half-million homes sold for the first time since May 2008.

It’s a similar spike as within the Existing Home Sales data released earlier this week.

But before we declare the housing market “repaired in full”, we have to consider a few of the reasons why home sales are charting so strongly.

The first reason is the federal homebuyer tax credit’s April 30 expiration. In order to claim up to $8,000 in tax credits, home buyers must have been in mutual contract for a property before May 1. There is no doubt this contributed to a run-up in sales, especially among first-time home buyers.

The second reason is that mortgage rates have remained exceptionally low, defying expert predictions.  Low rates don’t sell homes, but they do make monthly payments easier to manage for households torn between renting or buying.

And, lastly, March and April’s new home sales may have been buoyed by aggressive discounting on behalf of homebuilders.  As compared to February 2010, April’s average new home sale price was lower by 13 percent.  That’s a sharp drop in a short period of time.

For now, though, homes are selling, supplies are dropping, and buyer interest is high. It’s no wonder builder confidence is soaring.

If you are considering a New Home Purchase in Raleigh, NC – please contact us to get pre-qualified!  We offer VERY competitive pricing, and in North Carolina Predatory Lending Laws require the Builder to allow you to use the Mortgage Company OF YOUR CHOICE. Steve and Eleanor Thorne, FFSi, 919-649-5058

On an FHA Streamline Refinance (we’re doing a ton of these right now!) we found some new (to us) information:

Note: Headquarter Decision allows Streamline Transactions at the 2008 Economic Stimulus Loan Limits for streamline refinances without an appraisal. FHA will permit loans originated under the 2008 loan limits to be refinanced at mortgage amounts that exceed the current 2009 (and future) geographic loan limits. For streamlines with appraisals or full refinances, the mortgage amount may exceed the current geographic limit so long as:

• The new loan amount (without MIP) does not exceed the prior case loan amount and
• The new appraised value supports the loan amount and the LTV is not greater that 97.95%

 If you are considering an FHA Streamline Refinance in Raleigh or CaryNC, and you need to see if your qualify – Call Steve and Eleanor Thorne, 919-649-5058.  We have the Lowest Mortgage Rates!

Here’s a list of Frequently Asked Questions recently published:

The Obama Administration unveiled the final details of its “Making Home Affordable Program,” which is designed to help up to 9 million American families refinance or modify their loans to a payment that is affordable now and into the future.

One of the initiatives in this program is aimed at helping struggling homeowners “modify” their loans to avoid foreclosure. Here are some common Questions and Answers about the Modification Initiative in the program.

MODIFICATION INITIATIVE

Who is eligible?

To apply for a Home Affordable Modification, you must:

• Own and currently occupy a one- to four-unit home.
• Have an unpaid principal balance that is equal to or less than $729,750 (for one unit properties).
• Have a loan that was originated before January 1, 2009.
• Have a mortgage payment (including taxes, insurance, and home owners association dues) that is more than 31% of your gross (pre-tax) monthly income.
• And, have a mortgage payment that is no longer affordable, perhaps because of a significant change in income or expenses.

If you answered YES to all of these questions, you may be eligible for the Modification Initiative.

Am I eligible if I missed some mortgage payments?

Yes. If you missed two or more mortgage payments and answered “yes” to the Modification Initiative requirements above, you may be eligible for a loan modification.

Do I need to be behind on my mortgage payments to be eligible for a Home Affordable Modification?

No. Responsible borrowers who are struggling to remain current on their mortgage payments are eligible if they are at risk of imminent default. Examples of being “at risk” include facing a significant increase in your mortgage payment or a reduction in your income. Contact me to discuss your specific situation.

I have a second mortgage. Am I still eligible?

Yes, but only the first mortgage is eligible for a modification.

I have an FHA loan. Can it be modified under this program? Are all loans eligible?

Most conventional loans including prime, subprime, and adjustable loans; loans owned by Fannie Mae and Freddie Mac as well as private lenders; and loans in mortgage backed securities are eligible for a modification. Contact me to discuss your specific situation.

I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?

Yes. Mortgages on two, three and four unit properties are eligible as long as you live in one unit as your primary residence.

What does the Modification Initiative do?

If you are eligible for this plan and are approved, you will be put on a trial modification for three months at a new interest rate and payment.

If you successfully make the payments and are current at the end of the three-month trial period, your servicer will execute a permanent modification agreement that will lower your interest rate to a fixed rate for five years.

What happens after five years?

Beginning in year six, the rate may increase no more than one percentage point per year until it reaches the “rate cap” in your modification agreement, which is basically the market interest rate on the date the modification is finalized.

That means your rate can never be higher than the market rate on the day your loan is modified. This is great news because rates are currently at historic lows… and you can lock in now.

How low can my interest rate go?

Treasury is providing incentives to your investor to write the interest down as low as 2%, if necessary to get to a payment that you can afford based on your income.

What happens if that is not enough to get to an affordable payment?

If a 2% interest rate is not enough to bring your payment down to 31% of your gross monthly income, your servicer can extend your payment term–for example, give you a 40-year loan rather than a 30-year.

If that is still not sufficient your servicer will defer repayment on a portion of the amount you owe until a later time. This is called a principal forbearance. A portion of the debt could also be forgiven. This is optional on the part of the investor. There is no requirement for principal forgiveness.

Are there any other benefits to this program?

Yes. For every month you make a payment on time, Treasury will pay an incentive that reduces the principal balance on your loan. Over five years the total principal reduction could add up to $5,000.

How much will a modification cost me?

There is no cost to borrowers for a Home Affordable Modification. You will not be asked for any money.

If there are costs associated with the modification–such as payment of back taxes–your servicer will add those costs on to the amount you owe. Your servicer will also forgive any late fees.

Is housing counseling required under this program?

Borrowers are strongly encouraged to contact a HUD-approved housing counselor to help them understand all of their financial options and to create a workable budget plan.

However, housing counseling is only required for borrowers whose total monthly debts are very high in relation to their incomes (55% of your gross monthly income).

If you would like to speak to a housing counselor, call 1-888-995-HOPE (4673).

How do I apply for the Modification Initiative?

If you meet the general eligibility criteria for the program, you should gather the following information:

• Recent pay stubs to help determine your gross (before tax) household income.
• Your most recent income tax return.
• Information about your assets.
• Information about any second mortgage on your house.
• Account balances and minimum monthly payments due on all of your credit cards.
• Account balances and monthly payments on all other debts, such as student loans and car loans.
• A letter describing the circumstances that caused your income to be reduced or expenses to be increased (for example: job loss, divorce, illness, etc.).

Once you have this information, call your mortgage servicer and ask to be considered for a Home Affordable Modification. The number is on your monthly mortgage bill or coupon book.

My loan is scheduled for foreclosure soon. What should I do?

If your mortgage has been scheduled for foreclosure or if you have missed one or more mortgage payments, you should contact your servicer immediately.

You may also want contact a HUD-approved housing counselor by calling 1-888-995-HOPE (4673).

We do not “normally” suggest that people work with a modification company – however, if you are considering this type of transaction, we can recommend some guys that have a good track record!

Call us.  Steve and Eleanor Thorne at  First Financial Services in Cary, NC 919-649-5058

The technical explination of “cash out refinance” is when more than the balance of the mortgage and closing costs are included in the new loan amount. This could be in the form of cash to the borrower, or payment of secondary liens against the property, or the payment of any other borrower indebtness (like credit cards).

This is a significant change from the current 95% maximum loan to value for a cash out refinance. Borrowers have until March 31 to start their application if they would like to receive more than 85% loan to value.

If you have questions about this program, please call Steve and Eleanor Thorne with First Financial Services in Cary, NC  at 919-649-5058.

It’s a great program for making up to $35,000 of improvements to the home.  Many time, foreclosed property has what Realtors refer to as “Deferred Maintenance.”  This means that people who could not afford to make their house payment – also could not afford to have the termite / wood rot repaired, or the stove fixed, or the carpet replaced… So this loan is PERFECT for those kinds of updates!

What items can you update – and which ones can you NOT do with this loan?  Here are some basic guidelines:

Eligible Improvements/Work

• Repair/Replacement of roofs, gutters and downspouts
• Repair/Replacement/upgrade of existing HVAC systems
• Repair/Replacement/upgrade of plumbing and electrical systems
• Repair/Replacement of flooring
• Minor Remodeling, such as kitchens, which does not involve structural repairs
• Painting, both exterior and interior
• Weatherization, including storm windows and doors, insulation, weather
• stripping, etc.
• Purchase and installation of appliances, including free-standing ranges,
• refrigerators, washers/dryers, dishwashers and microwave ovens
• Accessibility improvements for persons with disabilities
• Repair/Replace/add exterior decks, patios, porches
• Basement finishing and remodeling, which does not involve structural repairs
• Basement waterproofing, including mold removal
• Window and door replacements and exterior wall re-siding
• Septic system and/or well repair or replacement
• Connection to public water or sewage system

Ineligible Improvements/Work

• Major rehabilitation or major remodeling, such as the relocation of a wall
• New construction (including room additions)
• Repair of structural damage
• Repairs requiring detailed drawings, plans or architectural exhibits
• Landscaping or similar site amenity improvements, including fence
• Lead-based paint stabilization or abatement of lead-based paint hazards
• Any repair or improvement requiring a work schedule longer than three (3) months; or Rehabilitation activities that require more than two (2) draws/payments.
• Any work requiring a plan reviewer
• Result in work not starting within 30 days after loan closing; or cause the borrower to be displaced from the property for more than 30 days during the time the rehabilitation work is being conducted (FHA anticipates that, in a typical case, the borrower would be able to occupy the property after the mortgage closing.

REMEMBER!  If you are a First Time HomeBuyer, you might qualify for a $8000 tax credit (that you don’t have to pay back!)!  Click Here for more details!

Many loan officers do not offer this program, and are not familiar with the process.  Please call Steve and Eleanor Thorne, First Financial Services in Cary, NC for details!  919-649-5058

When the Great Depression hit in 1929, millions of Americans began to loose their homes to foreclosure. Short term mortgages (3-5 years) and balloon payments were common. The banking crisis during the 1930s forced banks to call in loans, and there were no refinancing options for the average homeowner.

As a result the federal banking system was restructured and in 1934 The National Housing Act was passed. This legislation created the Federal Housing Administration (FHA) with the intent to regulate interest rates and mortgage terms on the loans that it insured. The agency purchased mortgages and insured them, allowing banks to turn around and make another loan without putting out substantial capital of its own.

Today, we have some of the same problems they had during The Great Depression, and that’s one of the reasons the Obama administration is looking at new ways to use FHA mortgage loans to help with the current crisis!  With these changes, many “vague” statements on the Internet about FHA mortgage loans could be wrong… so if you are considering purchasing a home in Raleigh, or refinancing in Cary, NC - please call Steve and Eleanor Thorne at First Financial Services, Inc to get the most up todate information! 919-649-5058

Well, it’s pretty funny… because everyone has a difference perspective!

If you believe you have some equity in your home, and you would like to take cash out, FHA might be your best bet! Not on a home like the one above (of course), the maximum FHA loan in Wake County is now $271,050… but FHA now allows you to cash out up to 95% of the value of the home!

FHA allows you to use this money for investments, to take a vacation, pay off bills, home improvements… almost anything you need!  Some folks think rates will be at 4.5%!  To find out how to get your 4.5% mortgage - click here!

Call us for details, and the current interest rates! Steve and Eleanor Thorne, First Financial Services, 919-649-5058.

FOUND MONEY!

Do you know what that means?  It refers to that $20 you “found” in your bluejeans that you had forgotten about!  It’s about the extra money you make when you do the laundry, or the refund check for $17.81 that we recently got back from an overpayment to the IRS!  Money you hadn’t “earmarked” for anything else. My Grandmother use to call it “Hallelujah” money!

I talked to a really sweet girl tonight who has an Interest Only 80% first mortgage at 6.5% with a second mortgage that’s adjusted to 10.325%.  She’d been turned down by 2 other lenders when she called me… but by the end of the call she was CRYING (seriously) with JOY!

So… here’s what happened.  She can refinance today and save over $200 a month.  She will be paying down her balance and creating real equity in her home!!  (which is the REAL goal!)!

Why did she get turned down?  She had over 700 credit scores, and I had her ratios of income to debt at less than 40%!  Because of the way she presented information to the mortgage lender, and the way THEY didn’t ask more questions!

She said, “my husband has two jobs.  His income is $31,055.”  I asked her if it was commissioned, bonused or did that include Overtime?  “No,” she said, “but he has only had one since June.  He worked there before, but they were sold.”  I went on to ask her if they were past due on any of their debt, had they been past due this year or last, her answers were firmly no.  I asked about her debt, and her goals for refinancing.

Two things happened… when she was talking to the other companies, and the folks wanted to know about her payments, she was telling them what she was paying – not the actual payment on the credit card… they other loan officers also didn’t ask more questions about her husbands job that changed in June, and they were not counting that income.

As it turns out, her husband works 30 hours a week as a landscaper, and has done this for 7 years with the same group of people.  The company was SOLD in June, so he now works, doing the same thing, with the same guys, making the same money – only the name of the company changed.  That income is fully allowable, she completely qualifies for this refinance!

If you’ve been told that mortgage lending has changed, and you can’t qualify… it’s true, you might be beat… but there’s a chance that you are just talking to a loan officer who is not asking the right questions.  No matter where you are, I’ll be glad to talk to you (call me!), and I’ll ask questions, and I’ll give you honest feedback – and maybe we’ll find some “Hallelujah” money!!

Because our median sales price is lower – our FHA loan limit will go to $271,050 on January 1, 2009.  This means that at the end of the year, the maximum loan in Wake County, Franklin, Harnett or Johnston is $271,050 – down from the current maximum loan of $295,000.  These calculations are based on the Housing Bill that passed Congress in August.  Orange, Person and Durham Counties stay at their current limit of over $336,000!

UPDATE:  In February of 2009 – the FHA raised the limits back to the $295,000 limit!  Talk about CONFUSING!

The downpayment requirements for FHA also change at the end of the year, and if you’re buying that means you will be putting 3.5% starting on January 1st.

If you have questions about qualifying for a mortgage loan, or you want to check rates and see if we can beat what your loan officer is quoting you – call us!

Unless the next Congress makes a major change, Downpayment Assistance Programs are a thing of the past.  We have been looking for Alternatives, and found this program that started in May of 2006 by the Rainy Day Foundation.

How does the Punctual Payment Program work?

The program is designed to help strengthen “Loan Borrowing Potential,” the website says they are providing a “Worry Free Loan.”

FHA loans now require a 3% down payment, at the beginning of 2009, it goes to 3.5%.  If the client does not have the funds for a down payment, FHA allows a gift from “Family or Friends.” 

With the recent economic downturn, Family and Friends might not be willing (or able frankly) to just “Gift” the downpayment for a home.

The Punctual Payment Program allows you to enroll in their re-imbursement program, for a fee of $499, and it will repay your ”Giftor” back in 4-6 months.

How the Program Works

• The Borrower is rewarded for On Time Payments. 
• The Seller can contribute up to 3%.
• The seller’s contribution to be reimbursed will go into an Escrow account maintained by the Rainy Day Foundation.
• Seller or borrower can pay for the $499 fee (just like Down Payment Assistance Programs of the past)
   

The Advantages of the program

• 1 yr job loss coverage (benefit of $499 fee) – Event of loss job, coverage will be up to $1,800 per month for up to 6 months.
• Pre-Purchase counseling
• Post-Purchase Counseling
• Missed Payment Protection – For as long as the borrower is enrolled the program will pay the loan servicer ANY MISSED payments.
• The SELLER can contribute up to 3%!

One of the reasons Down Payment Assistance Programs “went away,” was because HUD said the borrowers were going into default at an alarming rate.  With this program, there have been ZERO payment defaults in the first 12 months of ownership - ever!

If you are interested in this program, please call us!