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There is a relatively new, little known mortgage program called. Purchase Reverse Mortgage.

Most people have heard of  the Reverse Mortgage which allows someone over 62  years old to stay in there home without a mortgage payment. Upon death of the longest living borrower, permanent move out, or sale of the home, the borrowed money plus interest will need to be satisfied. Because there are no payments, lenders don’t look at credit, income, or assets. The money they get is based on their age and the value of there current residence.

The Purchase Reverse Program is very much the same. The only difference is you can actually purchase a home, without verifying income, assets, or credit.  Depending on the age and the purchase price of the home a lender can lend up to 50% of the purchase price. Same with the Reverse Mortgage, after death or permanent move out the mortgage and interest will be do.

HUD will also guarantee that the property will never be less then what it was originally purchased for. This is great for the heir’s as they wont suddenly acquire a property that is up side down.

Now Seniors can get out of a property that no longer fits their needs and move on to the next stage of their lives WITHOUT needing to liquidate their retirement accounts and be victimized by the equity they have lost in their current home.

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Cons

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Here is another loan available just for veterans. Some highlights include:

100% financing.

Easier to get a loan because of more liberal VA Underwriters that are more understanding of credit challenges.

No Reserve Requirements, meaning you don’t need to have any savings to buy a home.

The seller can pay closing costs so you don’t have to come up with that money either.

There is no VA Funding fee required in certain circumstances (mortgage insurance.)

The VA is devoted to making sure the veteran isn’t overpaying through their strict valuation process  and checking the condition on the property.

The VA also offers Residual Income. Basically it is a budget for the Veteran adding up all of their expenses such as heat, income taxes, food, clothes, and electricity. They also do adjustments based on the number of kids for food cost.

As long as the Vet has $1 in Residual Income, the VA underwriter can approve the loan!

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Remember the old tax credit that expired a few weeks ago?  If you are a Veteran who has served overseas in the last 12 months or a Federal Government employee, the $8000 first time home buyer and the repeat home buyer credit of $6500 has been extended for another year and will end April 30Th 2011. Just another way the government is saying “THANK YOU” to our wonderful troops that keep this country great! Come back Monday when I talk about the VA mortgage thats also available to Veterans.

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The Home Affordable Modification Program is designed to help about 3 to 4 million financially struggling homeowners avoid foreclosure by modifying loans to a level that is affordable for borrowers now, and sustainable over the long term. The program provides clear and consistent loan modification guidelines that the entire mortgage industry can use.

Borrowers eligibility is based on meeting specific criteria including:
1) Borrower is delinquent on their mortgage or faces imminent risk of default
2) Property is occupied as borrower’s primary residence
3) Mortgage was originated on or before Jan. 1, 2009 and unpaid principal balance must be no greater than $729,750 for one-unit properties.

After determining a borrower’s eligibility, the lender will take a series of steps to adjust the monthly mortgage payment to 31% of a borrower’s total pretax monthly income:

• First, reduce the interest rate to as low as 2%,
• Next, if necessary, extend the loan term to 40 years,
• Finally, if necessary, defer a portion of the principal until the loan is paid off and waive interest on the deferred amount.

If you have gone through the HAMP process or are HAMP eligible and can’t afford to stay in your home then stay tuned for tomorrows blog, I will go over the Home Affordable Foreclosure Alternatives Program. This program  provide additional options to help avoid foreclosure by offering incentives to borrowers, lenders and investors who utilize a Short Sale or Deed in Lieu. Deed in Lieu is where the homeowner willfully gives the home to the bank instead of the bank taking it. This option has almost the same credit consequences as a short sale.

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You heard it right, California has just come out with a new tax credit.

The credit is worth up to $10,000, spread over three years. The credit is available to anyone who buys a newly built home or to first-time home buyers who buy a newly built or existing home as your principle residence .

A first-time buyer is defined as an individual, or an individual’s spouse, who had no ownership interest in a principal residence for three years before the date of purchase.

People who are not first-time buyers can get the credit if they buy a newly built home, but not an existing one.

In both cases, the home must be a single-family residence, attached or unattached, and be used as the buyer’s principal residence for at least two years.

The credit is equal to 5 percent of the purchase price or $10,000, whichever is less.

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Recently new FHA requirements were released. And for some it makes it a little harder to get a loan.

New requirements:

If you have less then a 580 fico score your down payment goes up to 10% instead of 3.5%

Sellers can now only put 3% towards closing costs instead of the old 6%

Higher insurance premiums of 2.25% Which is moot because that amount can be rolled into the loan causing minimal impact to borrowers.

Since FHA now backs 3 in every 10 mortgages and the agency’s  funds deteriorating,  FHA Commissioner David Stevens was forced to tighten up lending requirements to keep borderline credits off the books.

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A USDA Guaranteed loan is government insured up to 100% of the appraised value of the home. These loans are only offered in rural areas and serviced by direct lenders that meet federal guidelines. This loan has a $290.000 loan limit.

To be eligible for this loan you must have an adequate and dependable income, be a U.S. citizen, qualified alien, or be legally admitted to the U.S.

This loan will cover new and existing homes however the existing home must be in good form.

This loan can’t be used for income producing property.

A rural area is defined by an area  with a population of 10,000 or less and under certain conditions town and cites with between 10,000 and 25,000 residents.  No down payment required, loans are offered for 30 year fixed rate at market interest rates.

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President Obama has approved the extension of the $8000 first time home buyer tax credit as well as a $6500 credit for repeat or move-up home buyers who have lived in their primary residence for five years or more. The credits will now end on may 1st.

There are a few stipulations to both credits but with low interest rates it is still a great time to buy property.

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