Those Who Wait Will Pay Thousands More This Spring

Waiting a few extra days or weeks to purchase a home this spring could cost buyers thousands of extra dollars as the office of Housing and Urban Development (HUD) implements several changes for loans guaranteed by the Federal Housing Authority (FHA).

Coming just weeks before the April 30 deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board's mortgage backed securities purchase program (which has kept home loan rates artificially low for over a year), these FHA changes make it even more important to act now if you are planning on buying a home.

Here are a few reasons why:

On April 5th, the cost of required up-front mortgage insurance for loans guaranteed by the FHA will increase from 1.75% to 2.25%. For a borrower purchasing a $200,000 home with a $7,000 down payment, the up-front mortgage insurance will increase by $965. Up-front mortgage insurance is typically financed in the final loan amount so the impact to a monthly payment will be minimal but overall, the increase is still borne by the borrower both upfront and monthly.

Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these "seller concessions" can increase the amount of cash a buyer will be required to pay at closing by $6,000 for a home purchase of $200,000.

The short answer is this: The only one way to avoid being affected by all of these costly changes that lie ahead – (after you have found a home to purchase) you must apply for your FHA mortgage before April 1st, 2010.

Looks like it's going to happen... HOORAY!!!

It's (almost) official... and it's about time!!! The senate has finally reached a consensus on the first-time homebuyer tax credit and it looks like they may expand the benefits to include other homebuyers. It also looks like they are going to expand the income restrictions as well.

This is great news for all of us. Everytime someone buys a house they make a trip to Walmart, K-Mart, HomeDepot, Bed, Bath & Beyond, etc. They also hire contractors, landscapers, painters, and so on. All of this helps strengthen our economy.

Check out the full report from this mornings Wall Street Journal.

Who’s Really Responsible for…The Crushing Burden of Debt in America

As a Realtor, I maintain a special checking account and credit card just for real estate-related expenses. This past week, I sat down to pay bills and got a huge surprise (and it wasn’t a good one). When I pulled up my AMEX bill online, something didn’t look right. For some odd reason there was a $172 finance charge on my bill. (While I’m not proud to admit this, out of necessity I sometimes carry a balance on my business credit card.) What I couldn’t figure out was, why was the previous month’s charge only $32?

Here’s what I found out…

I paid May’s American Express bill 4 days late. My payment was due on the Friday preceding the Memorial Day weekend; I paid it on Tuesday of the following week. Other than this instance, I don’t think I’ve ever had a late payment. Because my payment was 4 days late, they readjusted my interest rate from 4.99% to over 27%! After I called AMEX complaining and threatening to cancel my card, they immediately readjusted my interest rate back to 4.99% and they are reimbursing me for the overcharged interest of $142.

That same afternoon, I looked at my electronic bank statement from Bank of America and for the past 2 months they had charged me $9.95 per month for the privilege of keeping money in their bank. When I called them about it, I was told, “Oops… you’re a good customer; we didn’t mean to do that.” They removed the charges immediately.

So, being the good dad that I am, I figured I better send an email to my grown children to tell them to beware. Here are their replies…

Reply from Christi: Dad, mine jumped from 10.65% in April to 17.90% in May. Should I switch credit cards? I think I've only been late on a payment like once... I don't even look at that stuff.

Reply from Rocco: Hmm, I just checked this and my Discover Card went from 6.99% last month to 12.99% this month!!! I called to find out why and they said it was a "business decision" across all accounts and was not because of any late payments or anything on my credit record. It sounds like they're all piling on the increases during this 9-month grace period before the new credit card legislation goes into effect.

Wow…

Apparently, in the American credit markets, the word “fiduciary” has been conveniently replaced by “caveat emptor – buyer beware!” Unfortunately nobody told the consumer! Unbridled greed on all sides is not only eroding our economy but it is tilting our moral compass way out of whack. I guess it’s just not enough to pay your bills on time anymore, now you have to look over your shoulder when you do it! It’s just not right.

If you want to protect yourself from out of control interest rates, here’s a link to info on how to opt out of future increases: about.com.

*crushing debt image courtesy of American Consumer News LLC.

How 'bout an Old-Fashioned Summer Vacation on Cape Cod

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I say, forget the Caribbean... Europe will wait... save Mexico for next year. If you've ever craved an old-fashioned, laid-back, lazy summer vacation, then look no further. Susan and I and our 3 kids and my brother-in-law, sister-in-law, and their 3 kids, and my other brother-in-law... well, basically our whole family have been enjoying summer vacations on the Cape for over 25 years.

The natural beauty of Cape Cod is unmatched, offering a wide variety of outdoor activities. There's lots to do... kayaking, surfing, tennis, golf, sailing, fishing, sight-seeing, bird watching, and so much more. Most of the time we just hang out at one of the wonderful beaches or freshwater lakes in Eastham. And every 4th of July we have a huge family bonfire at the National Seashore.

Don't get sucked in by consumerism this summer. Money is too tight. Spend some quality time with your family and get to know them... again. You'll be glad you did!

If you're looking for a place to stay, we highly recommend The REACH, and why wouldn't we-- it's our home away from home.

HUD Announces New Details on First-Time Home Buyer Tax Credit

On May 29, 2009, U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan announced that the Federal Housing Administration (FHA) will allow home buyers to apply the Obama Administration's new $8,000 first-time home buyer tax credit toward the purchase costs of a FHA-insured home. Donovan said that this will help stabilize the nation's housing market by stimulating home sales across the country.

The announcement detailed FHA's rules allowing state Housing Finance Agencies and certain non-profits to "monetize" up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate. [Source: NJ Association of Realtors]

First-Time Buyers Seminar This Week

MERCERVILLE - I am delighted to be working with Michael Stewart and other local business professionals to provide a FREE informational session for area first-time homebuyers. The purpose of this seminar is to help buyers understand the full benefit of the recent economic stimulus package as it pertains to their individual situation. There’s up to $8,000 waiting out there for many first-time homebuyers, but using this money can be somewhat complicated and not everyone will qualify.

We are bringing together a number of seasoned local professionals to assist us with this event, including the Hamilton accounting firm of Nowak and Gehan along with Prosperity Mortgage Loan Officer, Matthew O’Connell and Michael J. Stewart, a Certified Financial Planner. Our ultimate goal is to help people determine their eligibility to take part in this program. We will talk about accessing low interest and low down payment mortgage programs offered through the FHA and we’ll make suggestions on how to use these funds to receive the maximum benefit.

The seminar will take place on Tuesday, March 31st at 6:30 pm at Our Lady of Sorrows Church in Mercerville. For details and directions please contact me directly at 609-731-4687 or via email at rockybalsamo@gmail.com.

No pre-registration is required.

Long & Foster President Tapped to Head FHA

President Obama is likely to announce this week that Long and Foster Real Estate President and COO, Dave Stevens shall be appointed to head the Federal Housing Administration in Washington, DC.

While I am certain my colleagues and I join Wes Foster in celebrating this wonderful achievement of Dave’s success, I’m also saddened by the fact that Dave will be leaving our ranks. During his short tenure at Long & Foster, his recent business leadership has created an unprecendented benchmark of excellence. It is my hope that we will strive to replace Dave with someone of equal business character, experience, and ethic. I believe Dave’s appointment was and is a testimony to our good decision-making as an organization and his exemplary qualifications as a leader. Good luck and Godspeed to Dave and to Wes in choosing a worthy successor.

Read more about Dave’s pending appointment…