The Senate voted this evening to extend the first time home buyer tax credit of $8000 to April 30, 2010.  And, the income limits are increased from the current $75K for individuals, $150K for couples to $125K for individuals, $250K for couples.  Good news for first time home buyers, and good news for the real estate industry.

The expansion of the credit is to home owners who currently own their own home, and have been in the same home for at least 5 years.  Those buyers will receive a $6500 tax credit.

This time around, however, the end date is not a race to the finish line, as the November 30 deadline was.  The new April 30, 2010 deadline is the date by which one needs to be under contract.  They then have 60 days, to the end of June, 2010, to close and still receive the tax credit.

So, good news for the housing industry.  Now, let’s take advantage.  No more excuses.  Let’s go spread the word and move some homes!

Well, almost.  They are still around, but much harder to get and you will leave a lot more equity in your home than in years past.

Home equity lines of credit (HELOCs) were the easiest and most common ways to tap into the equity in your home; and going to 90-100% of the home’s value was not uncommon.  Now, it’s unheard of.  Most banks will still offer a home equity line of credit, but only to 75% of your home’s value.  The reason: as home values fall, the HELOC is in second position to the first mortgage, so in case of default, the second mortgage holder gets little or nothing of their principle back.  And banks don’t like to lose.

Take a look at this chart, showing the falling equity in our homes, then let’s talk about the options for a cash out refinance.

But if you are looking to do a cash out refinance of your home, the best options are

1. A conventional loan – and you can borrow up to 80% of the value of the home.  Why not higher?  Well, because over 80% LTV you would need Mortgage Insurance, or PMI.  And no MI companies will insure a cash out refinance.  So you’re capped at 80%.
2. An FHA Loan – Which is probably your best option.  You can do a cash out refinance up to 85% of the value of your home.  And in Atlanta, that means a max loan of $346,250.  And at 85% LTV, that would put your home value at about $407K.

This morning Bloomberg ran a story saying that the $8000 tax credit for first time home buyers will be extended through April 1, then phased out over the next three quarters.

Baucus and Reid made a proposal last week to Senate Republicans that would extend the homebuyer credit through 2010, Lachapelle said. First-time homebuyers who close before April 1 would get the full $8,000, and the credit’s value would be reduced by $2,000 in each successive quarter until expiring at the end of the year.

It is still being debated, so anything could happen.  But it does appear to be some good news for Atlanta first time home buyers.  Stay tuned.

The typical way to present a mortgage to a borrower buying a home around Atlanta is to quote the “par” rate of the day, with one origination fee (i.e. 1% of the loan amount as profit for the mortgage company), and the normal closing costs, but with no points, which are a percentage of the loan amount paid up front to permanently buy down the interest rate.

However, there are other ways to quote and therefore to get a mortgage loan.  This video will explain the differences.

Good news for those looking for a home to purchase, and a mortgage on that home.

The Federal Reserve released the minutes from their last meeting today, and discussed the importance of EXPANDING asset purchases should outlook worsen.  GOOD news for us, since the Fed’s purchasing of Mortgage Backed Securities is the ONLY thing keeping mortgage rates as low as they are right now.

So hang on! This ride out of the housing slump is speeding up.

With so much talk in the news about the ‘credit crisis’ and the mortgage meltdown, I understandably am asked frequently, “How can anyone qualify for a loan nowadays?” And, most folks asking would like to buy a home, but just figure that they cannot qualify.

So, let’s look at what it takes to qualify for a home today. It’s not as daunting as you would think. Oh, and in this case I am going to focus on FHA loans. Much of the same applies to other mortgage types, with some differences.  You will need:

• A minimum 620 credit score.  That is your middle credit score, ignoring both the high and the low scores. Hint:  If you don’t have a 620 currently, raising a credit score is often very quick and painless.
• No unpaid Judgments.  Generally, those need to be paid.
• A relatively clean credit history for the past 12 months.  Few or no late payments, and no collections.  The most common exception to that rule involves medical collections.
• Chapter 7 bankruptcies must be discharged for 2 years, with some very difficult to qualify for exceptions.
• Chapter 13 bankruptcies must have been paid on for at least 1 year, and you will need court approval to buy a home.
• And, three years past a foreclosure.

This is a fun, just a little extreme…but not too far off the mark, either.

Mortgage interest rates for Atlanta home loans are terrific, we all know. As of this writing, 30 year fixed rates are in the 4’s. Great!

But, mortgage rates are that low because of artificial forces – the Fed – forcing them down. And that card is just about played. So, rates will go up; and as you can see in this video, probably fairly dramatically.

Getting approved for an FHA loan around Atlanta is easy, for now. Buy your home now, and you get 8,000 free smacks from the Government. And, Atlanta real estate is on sale.
Now is a great time to buy. But FHA lending guidelines could get much tighter in a hurry. Here’s why:

1. A bill has been introduced in Congress that would increase the minimum down payment for an FHA loan from 3.5% to 5%. And a precedent has been set for making FHA lending more restrictive.  Last year Congress raised the required down payment from 3% to 3.5%. Just think what that proposed increase would mean to you. That $200,000 home in Suwanee would increase your down payment from $7,000 to $10,000. Can you scrape together an extra three grand?
2. Another reason to act quickly and buy your Atlanta area home with an FHA mortgage is a little more difficult to pinpoint. You see, a LOT of news is filling media outlets about the losses – or threat of losses, that the FHA program and HUD are likely to face. So, Congress reacts with regulation and tightening.  For example, this article appeared today on Bloomberg, saying FHA potentially will need a $54 billion bailout withing 24 to 36 months. Changes are afoot. Act decisively and secure the best FHA home loan for your Atlanta home.
3. And, the news that you as a reader of this blog know already – the $8000 tax credit for first time home buyers will expire on November 30. There is talk of extending the tax credit beyondNov. 30, but thus far that is only talk. And with the political tide turning against bailouts and subsidies and spending, it may not be extended.

Three reasons to move quickly, if you are considering becoming an Atlanta first time home buyer.

I saw this post on Drudge this morning, one solitary post surrounded by a peppering of headlines about the World Bank running out of money and California being the first state to fail, etc.

All the other posts could be pointing to the catalysts for inflation coming our way, as I have written about here before.  Whether that comes to pass or not, only time will tell.  In the meantime, we are in one of the best buyers markets we have seen in a long, long time.

As noted in Ms. Beck’s article, especially big items - like cars and homes – are on sale right now.  We have not seen the likes of this in decades.

Just one example among many that I could list: Today I have a buyer closing on a town home that they are buying for $66,000.  It sold two years ago for $149,000, and is in move-in, very nice condition.  That’s a 56% discount.  Couple that with low FHA and conventional mortgage rates in Georgia, and if you have the means and income to buy, then the “Affordability Index” is the highest it’s been since that index began tracking, in 1970.

And I am seeing deals like that across every price point.  A 30-60% discount is one I would jump on, especially when you can finance the home with an Atlanta FHA loan.  Maybe you should, too?