| Although the new market for housing in the Bay | | | | NO MONEY out of your pocket if you are able to |
| Area has been hurt in some ways, there is room for | | | | obtain a gift for the down payment. |
| optimism as markets shift to add value and offer | | | | RATES ARE GOING DOWN AGAIN! |
| deals to help Americans buy homes. FHA is a | | | | I have seen interest rates at 5.75 percent! Interest |
| program that offers many great benefits and | | | | rates can vary based on lenders, points (money you |
| affordable interest rates and, quite frankly, our news | | | | pay at closing to lower the interest rate) and other |
| media probably has not gone on record about how | | | | factors. |
| this financing program is helping people in great | | | | Example of the total monthly payment of principal, |
| numbers today. I have been working with clients | | | | interest, taxes, fire insurance and MMI based on the |
| recently in Antioch showing homes priced from | | | | above scenario with an interest rate of 5.75 % , and |
| $99,000 to $199,000. These are newer, beautiful 3 | | | | a 30-year, fixed rate loan. |
| bedroom, 2 bathroom houses in great neighborhoods. | | | | Principal and Interest - $1,155.47 |
| I am excited to tell the Bay Area home buyers about | | | | Property Tax - 208.33 |
| the new FHA (Federal Housing Administration) | | | | Fire Insurance - 58.33 |
| financing. For today's consumer it means that in spite | | | | MMI Insurance - 100.00 |
| of all that is going on in the real estate market this | | | | Total per month - $1,522.13 |
| loan is a very straightforward, superb and easy to | | | | INTEREST AND TAX'S ARE TAX DEDUCTIBLE! |
| get loan program. This loan will help today's buyer get | | | | If that payment concerns you, let's go one step |
| into a home and keep it. So, no matter what the | | | | further. When we buy a house it now becomes a |
| media says about getting loans being a challenge ... I | | | | tax deduction, and one of the largest that you can |
| say it just isn't so! | | | | use most times! If you are in a 28% tax bracket |
| Let me delve right in and share some of the benefits | | | | (Which you probably are if you qualify for this loan. |
| with you. | | | | However, your own tax accountant will need to give |
| First of all ... down payment for this loan is easy. FHA | | | | you the exact amount of the deduction. This |
| requires a 3.5% down payment. This can be a gift | | | | explanation is for the theory of deductible interest |
| from a family member, too. No income limits! | | | | and effective after-taxes house payment, and is not |
| The seller can credit you 6% of the purchase price | | | | to be misconstrued as tax advice), you can deduct |
| towards your closing costs. | | | | approximately $350 per month or $4,200 per year. |
| The initial mortgage insurance premium (MMI or PMI) | | | | Total payment per month $1,522.13 |
| can be financed in the loan, then you pay towards | | | | Tax deduction: 350.00 |
| the next year monthly. | | | | Payment after tax 1,172.13 |
| The FICO scores for this loan can be as low as 580 | | | | Now you can change your W-2 to reflect the tax |
| and I have heard several lenders say that they have | | | | deduction and start bringing that money home |
| been able to do loans with a 560 credit score (There | | | | monthly. So the money that you are currently paying |
| were offsetting circumstances, like very little debt). | | | | without buying a home, you now use to help you |
| In the Bay Area (check with the lender for your | | | | make the payment (or go to the movies) instead of |
| area) you can go as high as a $625,000 purchase | | | | paying it to the IRS (we call it "urse" at our house!!). |
| price if you qualify for a monthly payment. | | | | Then, at the end of the year, you break even with |
| The ratio of income to debt (money coming in to | | | | the IRS. You neither owe money to the IRS nor get |
| money going out) is flexible based on the lender's | | | | money back. You break even with your tax debt. |
| guidelines and your individual income, debt and credit | | | | The beauty of the deduction is that you can go to |
| history. | | | | your tax accountant after you have been |
| Example: | | | | pre-approved. Tell him you are going to buy a home |
| $200,000 purchase price | | | | at $200,000 and you want him to figure out the |
| $6,500 down payment | | | | deduction for you. If you feel OK with the $1,522.13 |
| $193,500 loan amount | | | | payment, then you just get to get more money |
| $198,000 loan amount if you finance MMI (This is an | | | | back from the IRS at the end of the year. |
| example, as MMI rates vary) | | | | This is a historical time to buy homes! Many of you |
| $12,000 seller credit towards closing costs | | | | reading this may have thought you would never be |
| With this scenario you can buy with VERY LITTLE or | | | | able to buy a home! Don't let this time pass you by! |