I want to share some notes from Eric Trailer of Absolute Mortgage regarding how you might benefit from the stimulous package – in some cases even if you already own real estate and are not in financial difficulty. Here is what Eric says:
Eric Trailer, Absolute Mortgage Bank
I couldn’t wait to write my weekly post as there’s simply too many important tidbits that you and your clients may find very beneficial as we full-throttle into the Spring Market this weekend.
Did you know that some clients who currently own real estate may still qualify for the $8k tax credit this year (see summary of the stimulus by clicking here)? That’s right, according to the IRS, if your clients have not owned their “main home” within the last three years, they may be eligible. For example, if your client currently owns an investment property or second home, and income requirements are met, he/she/they should qualify to receive the appropriate tax credit for buying their primary residence before December 1, 2009. And remember, the income limitations are based on Adjusted Gross Income; thus, self-employed buyers, alimony payers, HSA contributors, tuition payers, etc. all may qualify even if they think their income is too high. Again, the income limitation is $75k annually single; $150k annually joint. Please confirm any tax situation with a reputable CPA to ensure applicability.
Finally, it’s official that the $729,750 conforming loan limit will return to the BAY Area!! Direct from the ASF, “The American Securitization Forum (ASF) clarified that GSE and FHA loans originated in 2009 in amounts between $625,500 and $729,750, pursuant to the increases in loan limits enacted by the stimulus package, will be eligible for delivery into the TBA market subject to the existing de-minimis limits for superconforming loans to borrowers in high-cost areas.” Don’t you just love the way that the ASF writes their statements? Before we all start submitting loans, however, the systems do need to be updated and pricing needs to be established. This process will likely take at least a month, and manual underwriting will likely be required for loans between $625,500 and $729,750, as this allowance expires at the end of 2009. Stay tuned!
The GREAT news on the jumbo front is the fact that decent pricing has finally returned for 80% financing on a $1.25mm purchase!!!! And for those of you with clients buying in that $3mm range and want 75% financing, there are some great options with rates in the low-6% range:
- 75% financing is normally offered up to $2mm, so it’s just a matter of having an exception granted for loan amount at $2.25mm
- we have obtained exceptions in this case, as loan amount exceptions are the easiest to obtain with strong borrowers
- Seller financing at $250,000 will place the first loan amount at $2mm, easily meeting guidelines
- This is the best way to go as it optimizes the borrower’s terms and provides the seller with a great investment
Now, the not-so-great news on the jumbo front is that The Administration wants to give bankruptcy judges discretion to modify a borrower’s loan terms without the consent of the institution that granted the loan. Anyone looking to buy jumbo paper will see this as a huge deterrent since yield is questionable; therefore, alternative investment opportunities will be sought. Stay tuned as we monitor this and update you weekly.
Have a great weekend, and please call us at 650.493.3600 with anything, as Jeff is the partner on-call to serve you and your clients!
Kindest regards,
Eric
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Eric T. Trailer, Principal
Absolute Mortgage Banking
555 College Avenue
2nd Floor
Palo Alto, CA 94306
(p) 650.543.8001
(f) 866.568.6849
