It was nice to have a three day weekend, especially after last month. The government extended the first time home buyers tax credit here is what the IRS has to say regarding the new deadline:
“You must have bought – or entered into a binding contract to buy – a principal residence on or before April 30, 2010
If you entered into a binding contract by April 30, 2010, you must close (go to settlement) on the home on or before Sept. 30 2010 (recent legislation extended the June 30 deadline previously in effect”

We are happy that the government extended the deadline; it would have made everyone’s life easier if they had not waited for the 11th hour and 59th minute. That’s why June was a terrible month. Getting loans through the pipeline was like a packed AT&T Park emptying out through one turnstile. Pandemonium and chaos reigned supreme through June 30th. To top things off turnaround times slowed to a crawl. It wasn’t fun and everyone was cranky. OK we are over it now, will the government wait till the last minute again, probably so.

It Is Worth Repeating!
 

This issue comes up frequently and it is worth repeating. If a borrower currently owns a primary residence and is purchasing a new primary residence and intends to rent out their existing home we will be able to offset the mortgage payment with the rent, provided their current LTV is 70% if applying for a new conventional loan and 75% if applying for a new FHA loan. Of course we need the rental agreement and proof that the security deposit check has cleared the renters account. We may also need to confirm the value of their current home with some abbreviated appraisal.
If the LTV of the existing home is higher than the required amount, then we cannot give any credit for the rent and the borrower must be able to carry the current PITI and the new PITI in their ratios.

Second Homes
 

Something we rarely talk about is second homes. If you are purchasing a second home and the loan amount is in the conforming range up to 417,000 the minimum down payment is 20%. If the loan amount is greater than 417,000 but less than 729,750* (agency jumbo) the down payment is 35% and requires a 740 credit score.  *Max loan amount varies by county.

 

We received lots of good feedback on our Chase piece. Please feel free to forward this newsletter to any clients or associates that you think would benefit from this information. It’s short, sweat to the point and written from our hearts and mind, not some recycled hash that everyone puts their name on and probably doesn’t even read.
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