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FHA Imposes Floor for 3.5 Percent Down

FHA Imposes Floor for 3.5 Percent Down

The Federal Housing Administration (FHA) announced major underwriting changes to strengthen its reserves while maintaining the agency's critical position in the mortgage market at a time when its federally backed loans comprise about 40 percent of the market. Among the changes: an increase in the up-front mortgage insurance premium by 50 bps to 2.25 percent; a FICO credit score floor of 580 for borrowers to qualify for the agency's 3.5 percent minimum down payment (other borrowers must put down a 10 percent minimum); and a reduction in seller concessions from 6 percent to 3 percent of the mortgage amount. For further details, access NAR's brief on the FHA changes.

Tax Credit chart with explanations also for current home owners

Congress has extended and expanded the homebuyer tax credit. The modifications in the column labeled

“December 1 – April 30, 2010” become effective when President Obama signs the bill. All changes made

to the current credit become effective on that date, as well.

Download Government_affairs_tax_credit_ext_chart_110409

Attn: Homeowners of 5 yearsTake Advantage of the Extended Tax Credit!

President Obama has signed into law the Unemployment Compensation Extension Act (H.R. 3548) that included, as an amendment, the extension and expansion of the Homebuyer Tax Credit.

The bill provides a new incentive for existing homeowners who have owned their current homes at least five years, making them eligible for tax credits of up to $6,500 when they purchase a new home. I believe this provision benefitting existing home owners, combined with historically low interest rates, will help engage a large number of qualified move-up buyers who have been sitting on the sidelines hesitant to list their current homes… if they act now!

The bill also extends the previous incentive for first time homebuyers – or anyone who hasn’t owned a home in the last three years. Those buyers will still get up to an $8,000 refundable tax credit.

The legislation includes other qualification provisions. For example, the credit is available only for the purchase of principal homes (no second or vacation homes) costing $800,000 or less and the credit is scaled back and gradually eliminated for individuals with annual incomes above $125,000 or couples with incomes above $225,000.

To qualify under either provision, buyers must sign a purchase agreement by April 30, 2010 and close by June 30. This is likely to be the last tax credit that the government will offer to first time and move-up buyers. The window of time is shorter than it may seem, especially for potential buyers who need to list and sell their existing homes. We must do everything we can to help them take complete advantage of it.

We're likely to see here in New Jersey a shallower ... correction in home prices

"We're likely to see here in New Jersey a shallower ... correction in home prices, less of a decline, and an earlier start to recovery because of a number of factors here which favor New Jersey housing,"  said Jeffrey Otteau.
for the full story

Goodbye, McMansions

With future demographic trends pointing to an aging population, smaller families and a growing preference for returning to the city centers, condos located in urban areas that haven't been overbuilt could return to health as early as 2010, he said.

With most real estate sectors  expected to return to basic fundamentals for most of the 2010-20 years, one  star of the housing boom -- the exurban McMansion built on the far fringes of metropolitan centers -- could likely become its most visible victims of the bust.

Featuring large lots at the expense of a long commute and few public transit options, some industry observers think these McMansion will eventually be subdivided and become affordable housing -- which, ironically, is exactly what happened to buildings in various downtown areas as a car-crazy populace moved out to the new suburbs during the mid-20th century.

These MCMansions could have considerable trouble finding buyers in the years ahead as larger economic, political and cultural forces change the way Americans live and view residential real estate as an investment class.

Picture bustling downtowns with twentysomethings and empty-nesters living in high-rise condos, suburban villages with light-rail lines, and quaint shopping districts. This is the future trend and it is already starting. Look at Hoboken, Jersey City, South Amboy,and Red bank to name a few.

As I REALTOR, I am clearing seeing this trend. All want to be close to transportation with the train being the first option, then bus and last the feryy in our area.

So Good bye McMansion hello condos, lofts,townhouses, single family houses and great walkable downtown areas like Red Bank, Little Silver, Matawan and the up and coming New Long Branch Broadway area.

Fannie, Freddie to buy bigger loans which means means lower rates on many mortgages up to $729,750

Fannie Mae and Freddie Mac are once again getting ready to begin buying "super-conforming" mortgage loans of up to $729,750, which should bring rates down for borrowers with good credit seeking loans previously classified as jumbo.

Currently, loans more than the $417,000 conforming limit in "normal" Fannie mae housing markets -- or the super-conforming limit of up to $625,500 in high-cost markets -- are considered jumbo loans.

Jumbo loans carry higher rates because they are not eligible to be purchased or guaranteed by Fannie Mae and Freddie Mac. Jumbo loan rates are  at least 1 percent to 1.5 percent higher than regular loans of less than $417,000.

Then there are the so-called super-conforming loans that exceed the $417,000 conforming loan limit, and are eligible for purchase or guarantee by Fannie and Freddie.

Super-conforming loans also carry slightly higher interest rates than regular conforming loans -- about .25% to .30%.

On Jan. 1, the upper limit for super-conforming loans was rolled back from $729,750 to $625,500. With the economic stimulus bill signed into law Feb. 17,it restored the higher limit for single-family homes in high-cost markets that was in place for much of 2008.

The following week, the Federal Housing Finance Agency published lookup tables for the new Fannie and Freddie limits in high-cost markets -- 250 counties nationwide.

However the eligibility requirements for the new limits from Fannie MAe were not issued until March 30. Freddie Mac published its guidelines on April 16.

Starting May 4 both companies will begin buying super conforming loans of up to $729,750 from lenders, which is great news for Rumson buyers as the average closed price is $786,250 and for Monmouth County average closed price $541,355.

With this new policy this could mean  lower rates for some borrowers seeking loans that were previously classified as jumbo.

Buyers will need a FICO scores of at least 700 to obtain fixed-rate super-conforming mortgages, and provide at least a 10 percent down payment.

Freddie Mac will require down payments of at least 20 percent for loans above $625,500.

For the buyers that are putting down less than 20% on loans larger that $625,000 Fannie and Freddie Mac will require Appraisal Reviews.

The secondary market for loans not backed by Fannie and Freddie pretty much dried up and lenders have been charging more for jumbo loans, because they must hold them on their books.

Last year, Congress temporarily raised the $417,000 loan limit, but only in high-cost housing areas. The new rules allowed Fannie and Freddie to buy or guarantee loans of up to 125 percent of the median home price in high-cost areas, with an upper limit of $729,750.

This year's stimulus bill, H.R. 1, the American Recovery and Reinvestment Act, restored the super-conforming loan limits in place for high-cost housing markets during much of 2008.

The bill also restored the Federal Housing Administration's ability to guarantee loans of up to 125 percent of the median home price in high-cost markets, up to a maximum of $729,750 for one-unit properties.

FHA's  loan limits in normal markets remains $271,050 for one-unit properties.

There are 73 counties at the $729,750 FHA ceiling, and 666 counties where loan limits are between the $271,050 floor and the $729,750 ceiling for one-unit properties.

A Department of Housing and Urban Development Web search page for New Jersey counties provides current FHA mortgage limits.

Encore of First-Time Home Buyer Tax Credit Webinar

Encore of First-Time Home Buyer Tax Credit Webinar – April 27

Due to popular demand, NJAR® will be hosting a second free webinar for members and the public on Monday, April 27 at 2:00 p.m. titled Get the REAL StorySM on the First Time Home Buyer Tax Credit.

Linda Goold, director of federal tax programs for the NATIONAL ASSOCIATION OF REALTORS® (NAR), will discuss how home buyers can take advantage of the federal first-time home buyer tax credit, how it functions, and how purchasers can claim it.

NJAR® will begin the webinar with information on the newly redesigned website,, along with details on the revamped Get the Real StorySM public education campaign focusing on the benefits of New Jersey's real estate market.

Reserve your space for the encore presentation of Get the REAL StorySM on the First Time Home Buyer Tax Credit today. The address for viewing the webinar will be

Great News for Homeowners and Realtors Marketing their homes in Ocenport

Oceanport Approves New Sign Ordinance!

After hearing concerns that the Borough of Oceanport did not allow the placement of open-house directional signs, REALTORS® from the Monmouth County Association of REALTORS® (MCAR) and NJAR® began working with the Mayor and Council in Oceanport to request a change in their sign ordinance.

On April 16, 2009, the Oceanport Borough Council approved an ordinance permitting the placement of two temporary, directional signs in the public right-of-way advertising an open house. In addition, as was the case under the previous ordinance, one temporary sign is allowed on the property being sold. Under the new ordinance, no sign can block a site triangle or have any attachments such as balloons that can obstruct a driver's view.

This is great new for homeowners and Realtors where the houses were more inland and not of the main road this way people driving by can find the house even if they did not see the ads.

Great News regardign NJ Property Tax Proposal

I recieved a letter from Senator Kean stating THANKS TO ALL OF US opposing the tax property proposal the Governor has withdrawn his proposal. To view the complete letter click on this link Download Taxstateltr.

Fannie Mae Issues Guidelines for Loan Limits in High Cost Areas

Fannie Mae Issues Guidelines for Loan Limits in High Cost Areas

On March 20, 2009 Fannie Mae Issued Announcement 09-08, implementing the 2009 conforming loan limits for high cost areas (known as high-balance loans), like New Jersey. Through the American Recovery and Reinvestment Act of 2009 (ARRA), loan limits on mortgages secured by Fannie Mae were increased. Loan limits from Fannie Mae are limited to $417,000 to $729,750, depending on the county where the home is located and the loan program. The guidelines instituted in the announcement apply to loans delivered to Fannie Mae starting May 1, 2009.

  • Loan must be conventional, first-lien mortgages only.
  • One to four unit properties are eligible.
  • Loans must be fixed-rate or adjustable rate loans (no balloons).
  • Loans must meet loan-to-value (LTV) and minimum credit score requirements. For one unit properties with a fixed rate mortgage, the maximum LTV is 90 percent. The minimum credit score is 700 for LTVs above 75 percent and 660 for LTVs at or below 75 percent. For one unit properties with an adjustable rate mortgage, the maximum LTV is 75 percent and the minimum credit score is 680. For second homes and investment properties, the maximum LTV is 65 percent and the minimum credit score is 740. Other rules apply to other categories.
See HUD's website for details on local loan limits and get more information regarding the Federal Housing Administration (FHA) on our FHA page.