Archive for the ‘FHA Home Loans’ Category

Fannie Mae and Freddie Mac: How Do They Impact Brooklyn Real Estate?

Wednesday, January 25th, 2012

Fannie Mae and Freddie Mac have been in the news quite a bit over the last year, so it’s a good time to do a refresher on who they are and what role they play in the Brooklyn real estate market.

Who are Fannie Mae and Freddie Mac?

Fannie Mae is the Federal National Mortgage Association. Freddie Mac is the Federal Home Loan Mortgage Corporation. They were originally created to raise homeownership levels and increase the availability of affordable housing.

Fannie and Freddie don’t sell mortgages directly to homeowners. They buy mortgages from lenders, so the lenders can use the money to issue new home mortgages.

In 2008, due to mismanagement resulting in billions of dollars of losses, Fannie and Freddie were taken over by the government.

How do Fannie and Freddie impact Brooklyn real estate?

  • They contributed to the financial crisis and real estate downturn, by loosening underwriting standards, buying and guaranteeing risky loans and increasing purchases of mortgage-backed securities.
  • They are key players in the government’s Making Home Affordable foreclosure-prevention program. If your mortgage is owned by Fannie Mae or Freddie Mac, you may be able to refinance your loan and take advantage of lower interest rates.
  • They influence mortgage interest rates and the availability of home loans. Freddie, Fannie and the Federal Housing Administration together now guarantee about 90 percent of all new mortgages, far above their historic level.

What’s going to happen to Fannie and Freddie?

Fannie and Freddie’s future is uncertain. The House Republicans and the Obama administration agree that the pair should be done away with. But this will not happen soon, if at all. Congress must agree on a plan, which could take years, and then the market’s dependence on the companies and the financial backing they provide must be reduced.

If you have questions about Brooklyn real estate or how national or international events impact Brooklyn real estate, please give  Charles D’Alessandro Your Brooklyn real estate agent with Fillmore Real Estate a call at 718/253-9600 ext 206 or email me at charles@brooklynrealestatesales.com I’m happy to help.

What Do Buyers of Brooklyn Homes Want in a Neighborhood?

Tuesday, January 3rd, 2012

What Do Buyers of Brooklyn Homes Want in a Neighborhood?

What Do Buyers of Brooklyn Homes Want in a Neighborhood? So, what do they want? Based on the data just in from the 2011 National Association of REALTORS® Profile of Home Buyers and Sellers, here are what buyers want in a neighborhood in order of importance:

67 percent favor a quality neighborhood

  1. 49 percent of buyers said they want convenience to jobs
  2. 45 percent look at the overall affordability of Brooklyn homes in the neighborhood
  3. 39 percent prefer to live close to family and friends
  4. 28 percent of buyers are interested in having shopping close by
  5. 27 percent want a quality school district
  6. 22 percent ask for a neighborhood that is convenient to schools
  7. 21 percent like to live close to entertainment or leisure activities

Assess your neighborhood. Which of the attributes most desired by buyers does your neighborhood have? Showcase those features in the marketing materials for your home:

Mention the schools, shopping, entertainment and leisure activities that are close to your home.

  • Give statistics on the quality of your school district.
  • Take photos of your neighborhood that flaunt its quality.

Need help marketing your home? I am a Realtor® that specializes  in selling Brooklyn homes in your neighborhood. If you’re ready to sell your home, let me market your neighborhood and home to get it sold now. Please  call me today Charles D’Alessandro Your Brooklyn real estate agent with Fillmore Real Estate a call at 718/253-9600 ext 206 or email me at charles@brooklynrealestatesales.com for more information.

How to Avoid Paying Private Mortgage Insurance on Your Brooklyn Real Estate

Friday, November 11th, 2011

If you get a mortgage for more than 80% of your Brooklyn real estate’s fair market value, your lender will require that you pay Private Mortgage Insurance (PMI). PMI payments are expensive at about 0.5% to 1% of the entire loan amount on an annual basis.

Obviously, it would be a good thing if you didn’t have to pay PMI. To help you achieve that goal, here are several tips to avoid paying PMI on your Brooklyn  real estate:

Save for a big down payment: The easiest way to avoid PMI is to have a down payment of at least 20% of the value of the home you want to purchase.

  • Borrow to get 20% down: Check with friends and family for down payment assistance. You can offer repayment with interest and still never pay as much as you would have to for PMI.
  • Get a Second Mortgage: Getting a second mortgage to cover the difference between your down payment on your first mortgage and the 20% threshold for your PMI can make a substantial difference in your monthly payments. Talk to a qualified mortgage professional to discuss your options.
  • Pay More Interest: Some lenders will waive PMI if you agree to a higher interest rate. Again, discuss your options with a mortgage professional.
  • Consider a Less Expensive Home: This goes back to being able to hit that 20% threshold. As we’ve all seen in this tough economy, stretching beyond your means can have dire consequences if your circumstances change. Consider if you really need that extra bedroom and extra expense. If you haven’t saved enough to afford an expensive home, downsize your expectations and buy within your means.

If you’d like a referral to an outstanding mortgage professional or need help finding Brooklyn real estate that fits your budget, give Charles D’Alessandro Your Brooklyn real estate agent with Fillmore Real Estate at 718/253-9600 ext 206 or email me at charles@brooklynrealestatesales.com,


What You Need to Know About Private Mortgage Insurance When Purchasing Brooklyn Real Estate

Monday, November 7th, 2011

If you are on the verge of buying Brooklyn real estate, you’ve probably heard the term Private Mortgage Insurance (PMI). Mortgage professionals talk about it a great deal, but you may be asking, “What is it exactly? And why should I care?”

Private Mortgage Insurance Defined

PMI is required by lenders if the down payment of a purchase is less than 20 percent of the home’s value. It protects the lender if the borrower defaults on the loan. It also makes the lender more apt to loan, even if the down payment is as low as 3%, because in the long run, the lender’s investment is protected.

You Pay For It

Unlike other types of insurance which you pay to protect your interest in an asset, you pay Private Mortgage Insurance to the mortgage company to protect its interest in your new Brooklyn real estate. (Note that PMI is not usually tax deductible. Check with a tax professional for details. )

Make It Go Away: PMI Can Be Terminated Once You’ve Paid Down Your Loan

Once you pay down your mortgage to the point where it hits the magical 80% of the original purchase price or appraised value, whichever is less, you can request cancellation of PMI. The Homeowners Protection Act requires that loans made after 1999 include notifications to the borrower when you arrive at this point in your payments.

Your PMI payments must be automatically canceled once you pay down your loan to 78%. At closing, and on a yearly basis, you should receive information from your lender about when you can request cancellation.

Whether you’re ready to buy Brooklyn real estate or need more information before taking the plunge, I can help. Give me a call today Charles D’Alessandro Your Brooklyn real estate agent with Fillmore Real Estate at 718/253-9600 ext 206 or email me at charles@brooklynrealestatesales.com,

4 Questions to Ask Before Lending Money to Your Child to Buy Brooklyn Real Estate

Sunday, September 4th, 2011

Questions and Answers from Charles The Realtor®

You’ve reviewed your finances and have decided you can afford to and want to help your child buy Brooklyn real estate.  Is lending the money to your offspring your best option?  Here are some questions to consider when making this decision.

  1. 1. Will you need the money later?

If there’s a chance that you might need the money to live on at some point, lending the money to your child is a better option than giving it to them.  You can always forgive part of the loan later on, if you find you don’t need the money to live on.

  1. 2. How much should you lend?

Depending on your financial situation, you can lend part or all of the down payment or part or all of the purchase price of the Brooklyn real estate.

If you have enough money to lend the entire mortgage amount, consult with your financial planner to determine if this is the best option for you. Lending the entire amount often offers you more interest than you’d get from a bank and gives your child an even lower interest rate than he or she would get with a traditional mortgage.  It also allows your child to deduct the mortgage interest because the loan is secured by the property.

  1. 3. Who will receive the mortgage payments?

Decide if you want to receive the monthly mortgage payments or if you’d prefer to have a third party service the mortgage.  If you want to know more about employing a third party to draw up the mortgage contract and accept the monthly payments, look into companies that handle intra-family loans.

  1. 4. How much interest should you charge?

As part of the loan agreement, you’ll want to charge an interest rate equal to the IRS-approved Applicable Federal Rates (AFRs). The AFR is the lowest interest rate you can charge without causing any unwanted tax complications.  Work with your financial and legal experts to ensure the loan agreement is in the best interests of both you and your child.

Let me help you find the Brooklyn real estate that meets the needs of you and your child – and get it at a great price!  Call call Charles D’Alessandro your Brooklyn real estate agent with Fillmore Real Estate at 718/253-9600 ext 206 or email me at charles@brooklynrealestatesales.com,

Emergency Homeowners Loan Program May Provide Relief For Brooklyn

Wednesday, June 22nd, 2011
Top stocks

Emergency Homeowners Loan Program for Brooklyn Homeowners

$1 billion in new help to flailing homeowners

Only about 30,000 are expected to get these interest-free loans, which can eventually be forgiven by the Emergency Homeowners’ Loan Program.

This post comes from Marilyn Lewis at MSN Money.

Homeowners have until July 22 to get pre-screened for a new, interest-free government loan intended to help delinquent homeowners stave off foreclosure. In fact, for those who play by the rules, the loan isn’t really a loan — it’s a gift.

No reason is offered for the short deadline, only that the next four weeks are for “pre-screening” applicants. After that, presumably, selected homeowners will be allowed to apply.

The $1 billion in aid — money provided in the Dodd-Frank Wall Street Reform and Consumer Protection Act (.pdf file) — was announced this week.

“The program, known as the Emergency Homeowners’ Loan Program, is expected to help up to 30,000 distressed borrowers, according to HUD,” says The Washington Post.

That’s about $34,000 apiece, on average. Sounds great, but of course there are plenty of caveats and qualifications.

Who’s eligible?

Apply if:

  • You’re (involuntarily) unemployed or underemployed after losing a job or because of a serious medical condition.
  • You’re 90 days delinquent on your mortgage payments on your primary home.
  • You’ve received a notice of foreclosure.
  • Your income has dropped by at least 15%.
  • You’re likely to be able to resume home payments within two years.
  • You meet the income eligibility criteria. Roughly, that’s if your household income in 2009 was at or below $75,000 a year or 120% of the area median income for a household size of four.

These loans can become gifts

These “bridge loans” of up to $50,000 are “forgivable,” says HUD. They appear to be carefully constructed to reduce the incentive for underwater homeowners to walk away from their homes.

Here’s how the program works:

  • Lucky approved homeowners will get one-time help to become current on overdue mortgage costs and make monthly (first lien) mortgage payments (including principal, interest, taxes, and insurance) for a maximum of two years or $50,000.
  • The loan becomes a junior lien against the borrower’s home. No payments on the loan are due for five years if the borrower stays current on mortgage payments and meets other requirements. After that, the loan balance is reduced by 20% a year until nothing is owed and the junior lien is eliminated.

The loans are available only in 32 states and Puerto Rico. Participating states: Alaska, Arkansas, Colorado, Connecticut, Delaware, Hawaii, Idaho, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Mexico, New York, North Dakota, Oklahoma, Pennsylvania, South Dakota, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.

Tips:

Watch for fraud

Beware of fraudsters, who are bound to crop up like toadstools after a rain. ConsumerAffairs.com says that legitimate agencies won’t phone you. You’ll have to call them.

The rules require that you personally apply for the loan. In other words, if someone calls you, asks for advance payment and promises to apply on your behalf, you’ve hooked a con artist and you’d be a dope to participate.

On the other hand, ConsumerAffairs says, the actual, legitimate government program itself can sound a little fishy:

It may sound like a classic foreclosure rescue scam: a limited-time offer for a free government loan to save your home. But this time the offer is legitimate.

The rest of the states

You may be wondering: Why only some states?

The answer: Homeowners in the other states already are getting billions of dollars in help from the Hardest Hit FundPost continues after this video about Florida’s Hardest Hit Fund.

5 Steps to Selling Your Brooklyn New York as a Home Short Sale

Wednesday, June 15th, 2011


Short Sale vs. Foreclosure on your Brooklyn Home

Although selling your Brooklyn New York home as a short sale probably isn’t what you’d prefer, it may be the best option for you.  The good news is that short sales are becoming the preferred option for lenders hampered by the huge number of  Brooklyn foreclosures.

To get you started on your short sale journey, here’s the condensed version of how to sell your Brooklyn home as a short sale:

  1. Hire an experienced real estate professional. Find a real estate attorney and/or agent who have successfully closed a lot of short sales.  Additionally, REALTORS® with the Certified Distressed Property Expert (CDPE) designation have a thorough understanding of how to assist their clients in foreclosure avoidance options. Having experienced professionals guide you through the process is crucial to your success.  You want them working for you as soon as possible because they’ll be communicating and negotiating with your lender.
  2. Start now. As soon as you know you can no longer afford your home, hire your real estate professionals and get started.  The longer you wait to get the short sale process started, the harder it’s going to be.  Like everything in life, the more options you have the better off you are.  Don’t wait until foreclosure is your only option.
  3. Prove to your lender that you’re truly a financial hardship case. If you just want to stop paying your mortgage, you won’t be able to sell your home as a short sale.  You must prove you honestly cannot afford your home by giving your lender a:
    1. Detailed financial worksheet documenting your expenses and income.
    2. Copy of your income tax returns for at least the last two years.
    3. Hardship letter providing details about why you cannot pay your mortgage.
  4. Submit Letter of Authorization.  Write a letter to your lender giving him permission to talk with your real estate professionals about your loan.  Include the names of all the borrowers and their social security numbers, your real estate professionals’ names and contact information, your home’s address and loan reference number.
  5. Take the advice of your real estate professionals. You hired them for their expertise.  Now, take their advice and allow the pros to guide you the rest of the way through this process.

Whether you have questions about short sales, foreclosures or traditional Brooklyn New York  home sales, I can help.  Please give Charles D’Alessandro Your Brooklyn Realtor® with Fillmore Real Estate a call today at (718) 253-9600 ext 206 or email me at charles@brooklynrealestatesales.com.  I’ll give you a free home price  analysis to determine how much your home is worth in today’s market.

100 Answers to Questions When Buying A Brooklyn Home !

Thursday, June 2nd, 2011

Charles D'Alessandro Your Brooklyn Realtor®

91. HOW CAN I RECEIVE A DISCOUNT ON THE FHA INITIAL MORTGAGE INSURANCE PREMIUM?

Ask your Brooklyn real estate agent or lender for information on the HELP program from the FHA. HELP – Homebuyer Education Learning Program – is structured to help people like you begin the homebuying process. It covers such topics as budgeting, finding a home, getting a loan, and home maintenance. In most cases, completion of this program may entitle you to a reduction in the initial FHA mortgage insurance premium from 2.25% to 1.75% of the purchase price of your new home.

92. WHAT IS PMI?

PMI stands for Private Mortgage Insurance or Insurer. These are privately-owned companies that provide mortgage insurance. They offer both standard and special affordable programs for borrowers. These companies provide guidelines to lenders that detail the types of loans they will insure. Lenders use these guidelines to determine borrower eligibility. PMI’s usually have stricter qualifying ratios and larger down payment requirements than the FHA, but their premiums are often lower and they insure loans that exceed the FHA limit.

FHA PRODUCTS

93. WHAT IS A 203(b) LOAN?

This is the most commonly used FHA program. It offers a low down payment, flexible qualifying guidelines, limited lender’s fees, and a maximum loan amount.

94. WHAT IS A 203(k) LOAN?

This is a loan that enables the homebuyer to finance both the purchase and rehabilitation of a home through a single mortgage. A portion of the loan is used to pay off the seller’s existing mortgage and the remainder is placed in an escrow account and released as rehabilitation is completed. Basic guidelines for 203(k) loans are as follows:

 - The home must be at least one year old.
 - The cost of rehabilitation must be at least $5,000, but the total property value – including the cost of repairs – must fall within the FHA maximum mortgage limit.
 - The 203(k) loan must follow many of the 203(b) eligibility requirements.
 - Talk to your lender about specific improvement, energy efficiency, and structural guidelines.

95. WHAT IS AN ENERGY EFFICIENT MORTGAGE (EEM)?

The Energy Efficient Mortgage allows a homebuyer to save future money on utility bills. This is done by financing the cost of adding energy-efficiency features to a new or existing home as part of an FHA-insured home purchase. The EEM can be used with both 203(b) and 203(k) loans. Basic guidelines for EEMs are as follows:

 - The cost of improvements must be determined by a Home Energy Rating System or by an energy consultant. This cost must be less than the anticipated savings from the improvements.
 - One- and two-unit new or existing homes are eligible; condos are not.
 - The improvements financed may be 5% of property value or $4,000, whichever is greater. The total must fall within the FHA loan limit.

96. DELETED.

97. WHAT IS A TITLE I LOAN?

Given by a Lender and insured by the FHA, a Title I loan is used to make non-luxury renovations and repairs to a home. It offers a manageable interest rate and repayment schedule. Loans are limited to between $5,000 and 20,000. If the loan amount is under 7,500, no lien is required against your home. Ask your lender for details.

98. WHAT OTHER LOAN PRODUCTS OR PROGRAMS DOES THE FHA OFFER?

The FHA also insures loans for the purchase or rehabilitation of manufactured housing, condominiums, and cooperatives. It also has special programs for urban areas, disaster victims, and members of the armed forces. Insurance for ARMS is also available from the FHA.

99. HOW CAN I OBTAIN AN FHA-INSURED LOAN?

Contact an FHA-approved lender such as a participating mortgage company, bank, savings and loan association, or thrift. For more information on the FHA and how you can obtain an FHA loan, visit the HUD web site at http://www.hud.gov or call a HUD-approved counseling agency at 1-800-569-4287 or TDD: 1-800-877-8339.

100. HOW CAN I CONTACT HUD?

Visit the web site at http://www.hud.gov or look in the phone book “blue pages” for a listing of the HUD office near you.

If you would like to follow this series of questions and answers about buying your New Brooklyn Home Check it out here

If you’re looking for an experienced, energetic, resourceful  Brooklyn real estate agent or just have a few questions, give me Charles D’Alessandro your Brooklyn Realtor® with Fillmore Real Estate a call at (718) 253-9600 ext.206 or email me at charles@brooklynrealestatesales.com

Brooklyn Real Estate: Answers to Your Short Sale Questions

Friday, May 20th, 2011


There’s a lot of confusion surrounding short sales, so I thought I’d answer some of the questions I’ve received from clients, owners of Brooklyn real estate and blog readers.

Q:  What is a short sale?

A:  A short sale is when a lender agrees to accept less than what is owed on a home.  For example, you owe $300,000 on your home loan, but your lender will allow you to sell your home for $250,000.

Q:  Who makes up the difference between the short sale price and the amount owed?

A:  In the past, the owner of the Brooklyn real estate would receive a 1099 income statement at tax time.  The “forgiven amount” would then be counted as income subject to income tax.  This left homeowners in debt to the federal government for the tax owed on that amount.  Now, with the passing of the Mortgage Forgiveness Debt Relief Act and Debt Cancellation, the short fall on a primary residence is not counted as income.  This eases the financial hardship of those who are already struggling.

Q:  Does a short sale impact your credit the same way as a foreclosure?

A:  No, the impact of a short sale is milder on your credit than a foreclosure.  Short Sales usually reduce your score by about 80 to 250 points and only stay on your record for around 5 years.  Compare that to foreclosures which reduce your score approximately 250 to 400 points and remains on your record for 10 years.

Q: How do I qualify for a short sale on my Brooklyn real estate?

A:  Contact your lender as soon as you know you are in financial trouble.  Government programs, particularly the Home Affordable Foreclosure Alternatives (HAFA), are designed to make short sales more attractive to lenders by giving them incentives for allowing a short sale over a foreclosure.  However, if you allow your loan to become delinquent (more than 60 days), lenders are less likely to grant a short sale.

Q:  Can I sell my home as a FSBO and still qualify for a short sale?

A:  No.  Lenders rely on “broker opinion” as to what the home is worth at this time.  You need to hire a real estate professional that has experience with short sales.  Short sales take longer to close and properly handling the sale can make a difference in getting an offer accepted by your lender.

If you are facing the possibility of foreclosure and  looking for an experienced, energetic, resourceful  Brooklyn real estate agent , let me help you discover the options that are available to you. Give me Charles D’Alessandro your Brooklyn Realtor® with Fillmore Real Estate a call at (718) 253-9600 ext.206 or email me at charles@brooklynrealestatesales.com

Answers to Questions When Buying A Brooklyn Home ! Page 7

Saturday, May 14th, 2011

73. WHAT ARE THE STEPS INVOLVED IN THE FHA LOAN PROCESS?

With the exception of a few additional forms, the FHA loan application process is similar to that of a conventional loan (see Question 47). With new automation measures, FHA loans may be originated more quickly than before. And, if you don’t prefer a face-to-face meeting, you can apply for an FHA loan via mail, telephone, the Internet, or video conference.

74. HOW MUCH INCOME DO I NEED TO HAVE TO QUALIFY FOR AN FHA LOAN?

There is no minimum income requirement. But you must prove steady income for at least three years, and demonstrate that you’ve consistently paid your bills on time.

75. WHAT QUALIFIES AS AN INCOME SOURCE FOR THE FHA?

Seasonal pay, child support, retirement pension payments, unemployment compensation, VA benefits, military pay, Social Security income, alimony, and rent paid by family all qualify as income sources. Part-time pay, overtime, and bonus pay also count as long as they are steady. Special savings plans-such as those set up by a church or community association – qualify, too. Income type is not as important as income steadiness with the FHA.

76. CAN I CARRY DEBT AND STILL QUALIFY FOR FHA LOANS?

Yes. Short-term debt doesn’t count as long as it can be paid off within 10 months. And some regular expenses, like child care costs, are not considered debt. Talk to your lender or real estate agent about meeting the FHA debt-to-income ratio.

77. WHAT IS THE DEBT-TO-INCOME RATIO FOR FHA LOANS?

The FHA allows you to use 29% of your income towards housing costs and 41% towards housing expenses and other long-term debt. With a conventional loan, this qualifying ratio allows only 28% toward housing and 36% towards housing and other debt

78. CAN I EXCEED THIS RATIO?

You may qualify to exceed if you have:

 - a large down payment
 - a demonstrated ability to pay more toward your housing expenses
 - substantial cash reserves
 - net worth enough to repay the mortgage regardless of income
 - evidence of acceptable credit history or limited credit use
 - less-than-maximum mortgage terms
 - funds provided by an organization
 - a decrease in monthly housing expenses

79. HOW LARGE A DOWN PAYMENT DO I NEED WITH AN FHA LOAN?

You must have a down payment of at least 3% of the purchase price of the home. Most affordable loan programs offered by private lenders require between a 3%-5% down payment, with a minimum of 3% coming directly from the borrower’s own funds.

80. WHAT CAN I USE TO PAY THE DOWN PAYMENT AND CLOSING COSTS OF AN FHA LOAN?

Besides your own funds, you may use cash gifts or money from a private savings club. If you can do certain repairs and improvements yourself, your labor may be used as part of a down 8 payment (called -sweat equity”). If you are doing a lease purchase, paying extra rent to the seller may also be considered the same as accumulating cash.

If you would like to follow this series of questions and answers about buying your New Brooklyn Home Check it out here

If you’re looking for an experienced, energetic, resourceful  Brooklyn real estate agent or just have a few questions, give me Charles D’Alessandro your Brooklyn Realtor® with Fillmore Real Estate a call at (718) 253-9600 ext.206 or email me at charles@brooklynrealestatesales.com