Joe's Blog

Last week the President signed in to law the Housing and Economic Recovery Act.  A few pertinent items in the bill as it relates to purchasing are as follows: First of all, new buyers will receive a $7500.00 tax credit for purchasing for the tax year that they purchase.  The credit is then paid back over a fifteen year period at 500 dollars per year.  Basically, it is an interest free loan for fifteen years.  In addition, FHA, is doing away with 100 percent financing as of September 30th.  Many borrowers with the help of non profits and loan officers, have been able to finance 100 percent of the sales price with the seller crediting back the down payment to the buyer via a 501C non profit corporation.  Well, that is all but gone.  So if you want to take advantage of 100 percent, it has to be done by September 30th of this year.  Lastly, it appears that the mortgage insurance premium that FHA charges the borrower to secure an FHA loan will increase.  Overall, the fee that most borrowers pay for the upfront mortgage insurance premium is between 1.25 and 1.5.  In the near future, that premium looks like it will go up to a flat 3 percent.  There will be more to come regarding this legislation.  There are 796 pages to the legislation so we will keep you posted as time goes on.

Joe Engle