Top five recommendations for qualified homeowners, buyers and sellersGibran NicholasCMPS Institute, homeowners, home buyers, certification, stimulus package, downpayment
"There are five distinct strategies that can help homeowners,
buyers, and sellers successfully navigate today's turbulent
mortgage and housing markets," said Gibran Nicholas, chairman of
the CMPS Institute, an organization that certifies mortgage bankers
and brokers.
Number 1: Understand and utilize the new tax
credits
Many home owners are not aware that the latest government stimulus
package gives them a special tax credit of up to $1,500 for making
certain home improvements. Also, if you are buying a primary home
and you have not owned a primary residence in the last three years,
you may qualify for the new $8,000 first-time-homebuyer tax credit.
"Although you cannot use the credit to help with your downpayment,
the credit can be claimed on your 2008 tax returns if you buy the
home in 2009," Nicholas said. "This means that even if you buy the
home after you file your taxes on April 15, you can simply file an
amended 2008 tax return and the IRS will send you a refund check
for $8,000."
Number 2: Consider paying points for your mortgage
transaction
Mortgage "points" are upfront fees that you pay in order to lower
your mortgage interest rate. One point is equal to one percent of
the loan amount. "In the past, it almost never made sense to pay
points in most situations where you were refinancing your
mortgage," Nicholas said. "However, enormous changes have taken
place in the mortgage securitization process. Wall Street investors
are demanding higher upfront fees for borrowers with credit scores
below 740, and mortgage lenders dont have as much flexibility when
pricing loans. This means that the interest rate savings can be
very significant when you pay upfront points."
Visit the following link for a sample chart comparing points
versus no points for a typical situation involving a homeowner
refinancing a $200,000 mortgage, click
here.
"If you are buying a home, negotiate into your purchase contract
for the seller to pay points on your behalf," Nicholas said. "In
addition to the significant interest and payment savings you will
enjoy, you will also receive a tax deduction this year for points
paid by the seller on your behalf. If you are selling a home, offer
to pay points for potential buyers as part of your marketing
efforts. This will make your home more affordable for potential
buyers and help your listing stand out from the glut of available
inventory in today's market."
Number 3: Carefully structure your real estate short
sale transaction
A real estate short sale is when a home owner sells their property
for less than what they owe on the mortgage, and the lender gives
their permission to do this by forgiving the difference and/or
releasing the mortgage lien on the property. "Short sales are very
common in many markets because of negative home owner equity due to
the steep decline in house values," Nicholas said.
"If you are selling your home as part of a short sale
transaction, make sure to negotiate for a release AND full
satisfaction of the mortgage from your lender. Depending on the
laws of your state and your individual circumstances, lenders may
be able to wait a year or two for you to improve your financial
situation, and then file a deficiency judgment against you to try
and recover the money that you still owe them. The only way for you
to avoid this risk is to have the lender not only release the
mortgage lien, but also agree in writing to a full satisfaction of
the mortgage."
If you are a buying a home as part of a short sale, Nicholas
advises you to take steps to make sure the deal is closeable. "It
is estimated that approx. 30 percent of short sale listings are not
closeable deals because the lender simply won't approve it. In most
of these cases that aren't closeable, the first or second mortgage
lender is expecting home sellers that have money to contribute
something to the deal. One way to avoid getting caught up in the
middle of this is to have your Realtor verify the status of the
seller's hardship package with their lender."
Number 4: Utilize the special options available for
seniors age 62 or older
"If you are 62 or older, you could use a reverse mortgage to buy a
new home without making any monthly mortgage payments," Nicholas
said. "This is a fantastic opportunity if you are contemplating a
move but are worried about trying to sell your current home into a
down market. Additionally, reverse mortgages can be used to
supplement your retirement income that may be declining due to
unfavorable economic or financial market conditions."
Number 5: Carefully interview your mortgage
professional
With all the noise, confusion, fear and misinformation in today's
market, it is more important than ever for you to work with a
Certified Mortgage Planning Specialist (CMPS) who has the training
and experience to guide you through the home buying or refinancing
process. The largest financial transaction of your life is far too
important to place into the hands of someone who is not capable of
advising you properly and troubleshooting the issues that may arise
along the way. Here is a link
to four simple questions your lender absolutely must be able to
answer correctly.
For more information on these and other related topics, tune to
Fox 2 Detroit for the Lunch Money Show featuring Gibran Nicholas
along with news anchor Murray Feldman and other financial experts.
The one hour show will air live on TV and online at noon eastern
time. Click here
for more information.
For more information, visit www.CMPSInstitute.org or gibrannicholas.com.
