Now, we are not selling anything, let’s get that out of the way. Instead, we are inviting you to take advantage of programs that could be the key to you owning your very own home. This clip that was KARE11 mentions that there are over 50 different down payment assistance programs and closing cost assistance programs available to first time home buyers.

Are you thinking about your first home? We invite you to view the recent story that aired on KARE 11 and then check out the City Living program that the homeowner in the clip used.

Down Payment Assistance

The experts are on air this morning and every Saturday morning from 11-12N live and local to the Twin Cities Area on News Talk 100.3FM broadcasting The Minnesota Real Estate Show.   We’ve been on air for 6 years talking about all things Real Estate and Mortgage in Minnesota.  

Real estate radio programs are all over the airwaves today.  Our show is truly designed to educate you about what you need to know in today’s mortgage and real estate market in the Twin Cities and answer questions about your own real estate and mortgage needs, and, it’s brought to you by experts.

Join Scott Wollmering, Ryan O’Neill, a member of The Minnesota Home Loan Partners (Nichole Fredrickson, Rob Bonahoom or Carrie Guarrero) of Cornerstone Mortgage, and our Host Kelly Guest each Saturday and you will undoubtedly come away with sound information and resources that are trustworthy in today’s mortgage and real estate market in Minnesota. 

Many of our listeners in the Twin Cities tune in each week to listen to our current market update on real estate lisitings, sales and inventory in the Twin Cities Real Estate Market as compared to last year.   The last few weeks home sale numbers are up year-over-year in a substantial way.  That’s excellent news for our Twin Cities real estate market!  We also cover current mortgage market news, interest rates and Minnesota Housing First Time Home Buyer interest rates on a weekly basis.  

Whether you’re thinking about listing your home, selling your home, buying a new home or you’re a first time home buyer who is interested in getting pre-approved and learning about first time home buyer programs that may be available to you with down payment assistance, this radio show is always full of helpful information for those looking to buy or sell real estate in Minnesota.  

The Minnesota Real Estate Show is packed with expert advice and expert resources for every real estate related need you may have.  Over the past 6 years, we have assembled a team of trustworthy resources  to help you with everything from real estate tax and legal advice and helping you out of a challenging situation with your mortgage or finances to who we trust to recommend for handyman projects or cleaning your carpets.   To view a list of our trusted resource, click here.

We are experts, giving expert advice and connecting you to people we have learned to trust throughout our careers in real estate and mortgage lending.  Ryan and Scott are Minnesota Real Estate experts and together sold in excess of 800 homes last year.  This year, their teams are on pace to exceed 1,000 home sales.  If you’re looking for expert wisdom in the Twin Cities market for Real Estate and Mortgage, listing to this show is a great place to start.  

If you are interested in starting the pre-approval process or learning more about mortgage programs in the Twin Cities, click here to get the process started now.   We work with a variety of programs for the avid real estate investor to the first time homebuyer who needs options for down payment assistance.

As I mentioned at the top, our goal is to educate buyers and sellers in Minnesota and give them expert real estate and mortgage advice.   We are a no-hassle, no-pressure group of people and we sincerely desire to educate.   We put on seminars on a monthly basis covering real estate and mortgage topics that may interest you as an Investor or First Time Home Buyer interested in down payment assistance.  These are very low-key seminars meant to arm you with the information you need in today’s market as a first time home buyer or investor in real estate.  Click Here for a list of our seminars and the investment and first time home buyer seminar schedule.

Don’t forget  – you can always call in today – 800-396-0406 is our show number or, you can always reach us directly throughout the week at 952-808-2810.  No matter where you’re at in your home buying experience, we are here to help!

Now, there is a seriously intensive list of qualification guidelines, but as most of these homeowners that will benefit may already know…. once you get behind on your mortgage, any resolution is paper intensive. But for a possible $50,000 of potentially FORGIVEABLE assistance, the process could be walking over red-hot coals, and people would consider it.

YOU HAVE TO HURRY if you want to apply for the Emergency Help for Minnesota Homeowners program. Applications will only be accepted until July 22nd.

The Dodd-Frank Act is parenting the EHLP program that the Minnesota Housing Finance Agency is administering. Now we should mention that if you end up in touch with someone who wants you to PAY for help in applying for the EHLP program, DON’T! There is no fee to apply and anyone who asks you to pay for it is attempting to scam you.

Are you wondering if you are eligible for EHLP?

• Must be unemployed/underemployed
• Property must be owner-occupied
• Us Citizens or Qualified Aliens
• Before unemployment/underemployment, the max gross income for all persons on the mortgage must have been less than $75,000 or 120% of the Area Median Income
• Current household income must be at least 15% less than your annual household income from 2009 due to economy or medical condition
• Mortgage must have been paid on time before the unemployment/underemployment
• As of June 1, 2011, the mortgage was at least 3 months behind in payment
• Unable to afford full monthly mortgage payment
• No more than 2 liens on the property and no federal tax liens
• Must be current on all federal debts, which includes income taxes

If the points above all apply to you, you should apply for Emergency Help for Minnesota Homeowners. YOU MUST HAVE YOUR APPLICATION IN BEFORE JULY 22, 2011! To see if you qualify, click here to check eligibility.

Completed applications will be entered into a lottery. If your application is incomplete or you do not meet all the criteria, you will not be entered into the lottery. Then in early August, homeowners who are picked in the lottery will be notified by telephone. From there, you will have 5 days to provide documentation supporting your application.

If you are chosen, you will be responsible for 31% of your current monthly income or minimum of $150, whichever is greater. EHLP will cover the past due payments plus portions of your next 24 months of payments with a maximum of $50,000.

Need a simple version? Here is a video highlighting the program: http://youtu.be/qtQ2NBlxYFE

To apply, please visit www.ehlpminnesota.com or call 651-659-9336 for more information on EHLP.

If you are having trouble with your mortgage payments but don’t meet the Emergency Homeowners Loan Program perimeters, don’t give up. Contact the folks at Minnesota Home Ownership Center. Its important to know what your options are.

Today, home buyers receive two different disclosures that explain what their mortgage terms are, they are the recently overhauled Good Faith Estimate and the often confusing Truth In Lending form. The new Good Faith Estimate was implemented through federal regulation to make it simpler for consumers to understand their loan details. Now, this is just my opinion, but the form has failed its purpose. The prospect of a new form is very exciting!

We would love to hear your opinion! There are two choices for you to look at. Option A comes from the fictitious Ficus Bank whil Option B comes from fictitious Pecan Bank. The loan programs are the same so the numbers don’t change, only the way they are presented on the proposed disclosure forms.

To cast your vote, click here and choose Option A (Ficus Bank) or Option B (Pecan Bank).

I think all of us can agree that an increased cost to the consumer is not beneficial to our economy as a whole and further credit tightening will do harm to an already slowly recovering housing market. 

All that said, it’s not over until it’s over.  As with all legislative changes, there is a process here and it’s not done yet.   Some basic things you need to understand:

• QRM – Qualified Residential Mortgage legislation is part of Dodd-Frank Act
• The definition of QRM is not yet fully defined and your comments are important
•  Legislation says that banks need to retain 5% of their non-QRM loans 
• GNMA loans have been excluded from the requirements.  This includes loans insured by the Federal Government, FHA, VA and USDA Loans.  All available with 0-3.5% down payment. 
• Loans with terms outside of Fixed Rate are highly likely to be included in the final retention rule.  i.e.  Interest-only, negative amortization, short-term Adjustable Rate Mortgages.
• Currently to be a QRM would include requirements to keep debt-to-income ratios at traditional ratios.  Housing at 28% of gross income. 

The challenges in this legislation are many and the beliefs of further negative pressure on consumers and our economy are even greater.  The belief is that further flight to FHA Loans will cause congress (who set guidelines for FHA) to increase down payment requirements and set higher credit standards for FHA loans.   

All that said, what do you do?  Contact your local Congressman.  CLICK HERE. Tell them that you believe the requirements of QRM within Dodd-Frank are too restrictive and that you believe that they will further negatively impact the consumer.  The reality is, stating that credit guidelines have already tightened substantially is a severe understatement.  The loans we are making today are not the loans that were a part of the meltdown.  The changes that have been made within the lending industry over the past three years have been plentiful and further wide-sweeping changes such as these will have a negative impact on the consumer and the economy as a whole.  

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 If you are a first time home buyer and are buying a home in Dakota County, Scott County or anywhere in the 11 county metro area for less than $298,125, you may be able to you may be able to utilize these programs! To find out if you qualify, complete this quick and painless online pre-qualification worksheet.

If you are a first time home buyer looking for down payment assistance, you may qualify to use the CASA program through MHFA, which in most cases will net you$4,500 down payment assistance and a 4.75% rate*!

 *Please contact Carrie Guarrero to see if you qualify for one of the Minnesota Housing programs or any of the other first time home buyer programs offering down payment and/or closing cost assistance. 

You may be eligible for a Minnesota Housing mortgage if you:

• Are buying your first home, or have not owned a home in the last 3 years.
• Are able to provide copies of your federal tax returns for the last 3 years
• Have acceptable credit
• Make annual income within the program guidelines, in the 11 County Twin Cities Metro area, that equates to less than $84,000 for a family with 1-4 members.
• Buy a qualifying home in the 11 County Twin Cities Metro Area  for less than $298,125 . Purchase price limits on the balance of the state is $237,031

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There are points of maximum risk and maximum opportunity when purchasing in any investment. Naturally, you will want to sell at the point of maximum risk (sell high) and buy at the point of maximum opportunity (buy low). The  tough part becomes how to determine when we have hit bottom if you are a purchaser. The only time you can guarantee a bottom is to see it in the rear view mirror, as the price and costs start rising again. Here is something to consider: There is more and more evidence that the COST of a home has in fact hit bottom. That’s right, the COST. For most if us who don’t have the resources to pay cash and must finance real estate, its imperative that we consider cost as much as price. Consider the expense of financing a property to best determine the true cost of purchasing the home. Interest rates have increased over the last quarter; and the rise in rates has cancelled out the effect of any fall in housing prices.

Here is an example: Sales price of $200,000. You go with a 30-year-fixed-rate mortgage, the time is November of 2010. Interest rates back in November were 4.17% (as per Freddie Mac). Your principle and interest payment would have come to $974.54. The most recent report from Case Shiller house prices fell 3.9% in the 4th quarter of 2010. The most recent report from the Federal Housing Finance Agency shows a 0.8% fall in prices. For argument’s sake, we will use the larger percentage decrease: 3.9%.  Jump back to present day, say you can get the same house with a $192,000 mortgage (4% discount from November price). Interest rates are now 4.95% (as per Freddie Mac). Your principle and interest payment would now be $1,024.84. Right off the bat, you have an increased payment of  $50.30 for the same property. Now, if you wait to make an offer until on or after April 18th for that same property, for the same sales price of $192,000, your payment goes up from the present cost of mortgage insurance of $144 to the new monthly mortgage insurance premium of $184 a month. That’s an additional increase of $40 a month to add to your principle and interest payment that has already increased $50.30. Cost of buying after April 18th rather than buying in November is an additional $90.30 a month! Moral of the story, stop waiting and take advantage of the lower MI rates and lower interest rates be fore the both rise.

By waiting to pay less for the PRICE of the house, the COST increased over $90 a month. That adds up to more than $1,080 a year and over $32,400 over the life of the loan. When watching for the point of maximum opportunity, this example speaks volumes to the fact there is more to consider than PRICE (ex. the mortgage tax deduction, FHA increase in Annual Mortgage Insurance premiums, etc.).

The point of the example above is not to strike fear in the hearts of those who are considering real estate purchases, but to help solidify the importance of considering COST instead of focusing only on PRICE.

Bottom Line If you want to buy low, buy now. It appears COST has hit its lowest point.

Don’t miss the boat on your opportunity to buy low!

The reasoning behind this scheduled increase is to help pad the capital reserves and strengthen the Federal Housing Administration (FHA). FHA feels this is an integral part of helping to return private capital to the housing market. The other part of the equation is that Congress is forcing FHA to have a 2% reserve threshold and without increasing the MIP, FHA would not be able to sustain that requirement. FHA wants to keep on being viable as an option for borrowers to still secure mortgages with lower down-payments, this increase will help protect that.

While the annual MIP premium is being raised from .9% to 1.15%, it is important to note that the upfront mortgage insurance premium (UFMIP) amount will remain unchanged at this point and stay at the current rate of 1.0% of the loan amount.

What does this mean for those who are looking to buy a home and finance it using an FHA mortgage? First of all, you have to remember that FHA is the reason that homeowners can get into a home with as little as 3.5% down payment. So it will remain a good option for those who don’t have a padded bank account to get into a home. Second, FHA mortgage interest rates are STILL historically low.

On the other hand, if you take the nationwide FHA average purchase price of $163,000, the home buyer will now see an increase of $33 a month in their payment. Anytime you are increasing factors besides the purchase price of a home (such as interest rate, homeowners insurance premiums, or property taxes), it will DECREASE the purchase price  amount you qualify for. If you have been prequalified to purchase a home and have not yet found the right one, take another look. After April 18th, you will need to update your prequalification to reflect these new MIP monthly premiums.

The best way to avoid paying more every month of the life of your mortgage is to purchase now.

Greg Nelson, CPA with Olsen Thielen, CPAs offered our readers the following Top 10 Tax Thoughts for Homeowners and Landlords.

The newly passed 2010 Tax Relief Act signed into law on December 17 includes several provisions (besides others) that will affect taxpayers filing their taxes for 2010 and going forward.  Below are the top ten tax thoughts not listed in any particular order.   

1. $1,500 Personal Energy Property Credit for 2010 is now $500 for 2011.
2. Residential Energy Credit of 30% still exists through 2016 for Solar, fuel cells, small Wind, Geothermal applications.
3. First Time Homebuyer Credit still exists for Military personnel. Military personnel that are ordered on “official extended duty” have extended due dates for purposes of the tax credit.  They are eligible to receive the credit if they enter into a binding sales contract by April 30, 2011 and close by June 30, 2011.
4. Did you qualify for the First Time Homebuyer Credit in 2008? If so, its time to pay it back starting in 2010…$500 per year (accelerated if you sold the property).
5. Selling a Rental Property? Capital gain rate of 15% extended through 2012 (Depreciation Recapture still 25%).
6. Purchase a home late in the year and don’t’ have enough to itemize deductions? Elect to amortize the Points paid instead of losing the deduction.
7. New Homeowner in 2010? Don’t forget to see if you qualify for a MN Property Tax Refund Claim (Form M-1PR).
8. Rental owners- 100% bonus depreciation for business property acquired after September 8, 2010, before January 1, 2012, and placed in service before January 1, 2012 (or before January 1, 2013, in the case of certain property). Includes the 6,000 lb. SUV!
9. 3.8% Medicare Surtax begins in 2013.  This could possibly affect landlords looking to sell their property in 2013.  Accelerate the sale before 2013?
10. 10.  The deduction for mortgage insurance premiums for acquisition indebtedness on a qualified residence has been extended for 2011. NOTE: For those who use standard deduction;  the real estate tax deduction is no longer allowed for 2010.

For more tax tips, visit www.otcpas.com/blog.

Circular 230 Notice: IRS regulations require us to advise you that, unless otherwise specifically noted, any federal tax advice in this communication (including any attachments, enclosures, or other accompanying materials) was not intended or written to be used, by any taxpayer for the purpose of avoiding tax-related penalties imposed under the U.S. Internal Revenue Code or any other applicable state or local tax law provision; furthermore, this communication was not intended or written to support the promoting, marketing or recommending of any of the transactions or matters it addresses.