| The mortgage and real estate market just got a very | | | | Economic Stimulus package. |
| powerful weapon to help home owners and new | | | | These loans are perfectly suited to the unique needs |
| home buyers. Have you considered how you will | | | | of the military service member. If you are servicing a |
| market these new opportunities? | | | | military market, post, or base you need to educate |
| Many of the emergency provisions of the Economic | | | | yourself on these loans and add them to your market |
| Stimulus package have now become permanent. | | | | program. |
| Carefully consider how you will explain and highlight | | | | Homebuyer Tax Credit |
| these key elements of Housing and Economic | | | | The Homebuyer Tax Credit essentially offers an |
| Recovery Act that will help your clients. | | | | interest free $7500 loan (repayable in 15 years) to |
| GSE Loan Limits | | | | assist new home buyers in purchasing a home |
| The Government Sponsored Enterprises (GSE), | | | | between April 8, 2008 and June 30, 2009. |
| agencies like Fannie Mae, Freddie Mac, and the 12 | | | | This offers a great incentive for your clients to take |
| Federal Home Loan Banks (FHLB), will make | | | | advantage of declining home values to buy a great |
| permanent conforming loan limits up to the greater of | | | | value and get government assistance with the down |
| $417,000 or 115% of the local area median home price, | | | | payment. |
| capped at $625,500. | | | | FHA Foreclosure Rescue |
| These increased limits will allow home owners and | | | | If you have clients in risk of foreclosure this is your |
| buyers to qualify for non-jumbo (large loan amounts | | | | opportunity to help in a very stressful and scary time. |
| are considered riskier and therefore typically have | | | | The FHA Foreclosure Rescue program is an |
| higher interest rates) interest rates even in high-cost | | | | opportunity for borrowers in problematic subprime |
| real estate markets. Markets such as California, New | | | | loans to save their homes and refinance into more |
| York, Florida, and numerous metropolitan areas. | | | | reasonable terms. |
| FHA Loan Limits | | | | Lenders, at their option, can write down qualified |
| The Federal Housing Administration (FHA), an agency | | | | mortgages upt to 85% of the current appraised value |
| started during the Great Depression to assist | | | | and refinance into a new FHA 30 year fixed mortgage |
| Americans buy homes, will also make permanent their | | | | at 90% of the appraised value. In exchange the |
| increased loan limits. The FHA loan limits have been | | | | borrowers agree to share 50% of any future home |
| raised to the greater of $271,050 or 115% of local area | | | | value appreciation with the FHA. The loan limit for this |
| median home price, capped at $625,500. | | | | program is $550,440. |
| The FHA program is designed to assist home buyers | | | | Risk-based Pricing |
| with low down payments and potentially high loan to | | | | The pricing of mortgage loans based on the potential |
| value (LTV) ratios (i.e., lower down payment or less | | | | or statistical risk of default by the borrower is a |
| equity). These characteristics make these mortgages | | | | standard practice in the lending industry. This means |
| attractive for first time home buyers or home owners | | | | things like low credit scores, large loan amounts, lower |
| in high cost subprime or jumbo loans. FHA loans can | | | | down payments, and less equity will cause you to pay |
| also assist people in declining value markets with | | | | a higher interest rate (and typically a higher monthly |
| adjustable rate or negative amortization loans that are | | | | payment). However, with the latest Housing and |
| about to adjust, but don't have sufficient equity for a | | | | Economic Recovery Act the FHA will place a one |
| conventional mortgage refinance. | | | | year moratorium on this practice. This presents |
| VA Loan Limits | | | | another excellent opportunity for low cost financing on |
| The Veterans Administration (VA), an agency that | | | | new home purchases and refinancing into more |
| assists military veterans, are temporarily increasing | | | | affordable terms. |
| their loan limits to the same level as the current Federal | | | | |