Buyer’s Choice Realty blog

The U.S. Department of Housing and Urban Development (HUD) recently updated their helpful Settlement Cost Booklet, a publication aimed at helping consumers shop for a home loan. This resource also provides basic tips about the entire home buying process.

In the ‘Shopping for a House’ section, a necessary update has finally happened: HUD mentions the importance of hiring a real estate agent who actually works for you.

“It is your responsibility to search for an agent who will represent your interests in the real estate transaction. If you want someone to represent only your interests, consider hiring an “exclusive buyer’s agent”, who will be working for you. “

Please visit the National Association of Exclusive Buyer Agents (NAEBA) press release to learn more about why this is such an important step for the government to take, and see a few reasons why consumers will realize and experience tremendous benefits if they hire an EBA to represent them in any real estate transaction.

Click here to download a free copy of Shopping for Your Home Loan - HUD’s Settlement Cost Booklet

Governor Deval Patrick held a press conference in Springfield, MA today and provided a list of lenders that are participating in this program. If you are a first-time home buyer and are eligible for the $8000 tax credit, you may be able to utilize the credit as part of your down payment. Previously, it was very difficult to find a lender who would do this, but the state of Massachusetts has been working hard to help potential buyers realize their dream of home ownership.

Here is the list of lenders that are participating in this program:

The U.S. Department of Housing and Urban Development recently announced that eligible borrowers who intend to purchase an FHA-insured home may elect to ‘monetize’ the first-time homebuyer tax credit and apply those funds toward their down payment or closing costs. Previously, buyers could only receive the credit (up to $8000) by amending their 2008 income tax return or waiting until they file their 2009 return.

Read more about this new program:

HUD news release (opens as a Word document)

IRS tax credit answers

Hud Secretary’s announcement of new plan

Here are a few of the rules involved (per HUD’s letter) in order to be able to use this credit before you actually purchase your home:

• The tax credit advance, when combined with the FHA-insured first mortgage may not result in cash back to the borrower.
• The second lien may not exceed the total amount needed for the down payment, closing costs, and prepaid expenses.
• Secondary financing may be “soft” (silent) or require a monthly repayment.
• If payments are required, they must be included within the qualifying ratios and, when combined with the first mortgage, cannot exceed the borrower’s reasonable ability to pay.
• Payments must be deferred for at least 36 months to not be included in the qualifying ratios.
• If the tax credit advance loan has a short term for repayment, it must also provide that if the borrower fails to repay by the designated deadline, principal and interest payments begin automatically or the loan converts to a “soft” second.
• The secondary financing may not require a balloon payment before ten years.

So, you have 3.5% of the purchase price saved up to use as your down payment on your FHA loan and you want to use the tax credit you qualify for in order to not have to pay closing costs out-of-pocket. What’s the next step? Get your lender to participate in this program. However, most, if not all, lenders are not participating.

You will have a hard time actually using this new program and getting your tax credit up front. As of today, it is near impossible. Why? Lenders want to be able to have borrowers sign a document that would allow the credit to be disbursed directly to the lender when the borrower files their 2009 income taxes, but they are not allowed to do this because the government feels it would not protect the consumer.

As a result, lenders have little to no protection or guarantee that the borrower will send the credit to them next year and have no desire to have these short-term loans convert to secondary liens on homes. If this does not change, it will be yet another example of good idea, bad implementation.

*The above material should be used for information only. Please consult your lender and tax professional with any questions. Maybe your lender will allow you to do this. If so, please share your success with me. And, if you are looking to cash in on the tax credit in Massachusetts, let me know and I will provide you with all the information you need. At Buyer’s Choice Realty, we only work for buyers and have saved thousands of buyers millions of dollars.

The Federal Open Market Committee (FOMC), a component of the Federal Reserve, announced today that they are lowering rates yet again. Without getting bogged down in the minutiae, this is great news for potential Massachusetts real estate buyers.

Why? Property values continue to fall in Massachusetts as a whole as well as the Boston area, but it is very possible, and indeed likely, that Boston area real estate market values will reach a bottom over the course of the next year.

How will this happen? With the help of today’s FOMC decision, key interest rates will soon reach their lowest levels on record. The cost of capital will be almost nil, and as a result banks will undoubtedly lower mortgage interest rates. Lower rates mean that more folks that are undecided whether to purchase a home will lean towards buying.

Think how much money you could ’save’ by paying 4.5% over 30 years versus paying 5%. This thought, combined with the ever-volatile equity and bond markets, means that real estate will be your best investment (and most stable).

To learn how buying real estate in Massachusetts will be great for your investment portfolio, feel free to contact me at 1.800.25.BUYER (ask for John) or email me

The Federal Reserve announced today that over the next year (18 months at most), they will be buying up mortgage-backed securities to the tune of $500 billion.

This is what the Fed had to say in a statement, per a Bankrate.com article,

“This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally.”

What a nice Thanksgiving-week treat! Rates have immediately dropped today, and are likely to drop slightly over the next few weeks barring any unforeseen financial collapses or other major news. If you are currently in the market for a home loan, experts suggest you lock in your rate to take advantage of the recent drop. 30-year mortgage rates are back below 6%.

If you are interested in purchasing real estate in Massachusetts, feel free to contact me to discuss what this will mean for your prospects. While I am not in the mortgage industry, I can assist you in shopping for loans and finding an advantageous rate with few or no junk fees, and I know the questions to ask any potential lender. At Buyer’s Choice Realty, we are on the buyer’s side 100% of the time.

call 800.25.BUYER (ask for John) or email me