Many people are unaware that there is still 100% financing available. There are definitely eligibility requirements for the property and the borrower. To find out if you are eligible, this website is an excellent resource: http://www.eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

As an example, the whole island of Kauai is considered rural. This does not mean that every property on Kauai is eligible for this loan, but does broaden the liklihood that a property would be eligible. Condos are also eligible as long as they are already on an approved government list, such as VA or FHA.

Income eligibility is a key piece as well. The income guidelines are generous. I recently closed a USDA/RH loan for a single borrower that makes just under $50,000 per year.

For more information, or if you have any questions, please contact me.

Related posts:

1. USDA Offers 100% Financing on Rural Maui Homes
2. New USDA Loan Program Helps Hawaii Homebuyers
3. Finally! Some Common Sense in This Sea of Foreclosure Paperwork and Confusion!

Let’s face it, there are many homes on the market in Hawaii that need improvements or updating, especially bank owned properties (previously foreclosures)! Now there is a conventional loan offered by several lenders using different loan names. To avoid confusion, ask for a Conventional Renovation Loan and the loan officer will know exactly what you want, unless they do not offer this type of loan.

Included below is a list of three lenders that I know and trust, and who offer this Conventional Renovation Loan. Not all lenders are created equal. When hunting for a loan consultant on your own, be sure to compare the points they charge against these listed lenders. Points can amount to thousands of dollars out-of-pocket at closing, and may NOT be necessary.

This loan is simple to process. It takes away some of the stress of moving by allowing you to update your new home to move-in-ready condition right after closing. Who wants to go through the added stress of purchasing a home, knowing additional borrowing will be needed down the road, PLUS you could be living in a demolition-like war-zone for the next 6 months? It has been proven that living in a home that is being renovated could take up to three times longer to finish!

There are several advantages to this loan as compared to the FHA 203K Renovation Loan. An attractive advantage is that you will NOT NEED TO DEAL WITH all the red tape infused in the FHA 203K loan! THIS IS HUGE! In addition, you can put down 20% and you are not required to pay the PMI, unlike the FHA 203K loan. This can save you hundreds of dollars on your monthly mortgage payment.

Choose a loan officer, or a loan consultant below to find out more details! (Some banks or mortgage lenders may vary in their offerings.)

Here are a few more facts:

1. These renovation mortgage loans provide a convenient way for improvements, totaling up to 50 percent of the as-completed value of a property with a first mortgage, rather than a second mortgage, home equity line of credit, or other more costly financing methods.
2. The funds can be used for any repairs or renovations that are permanently affixed and add value to the property.
3. Eligible borrowers include individual home buyers, investors, nonprofit organizations, and local government agencies.
4. Lenders must be approved by Fannie Mae to offer this product.

Here are three loan consultants that our company has worked with previously. Call them now to be pre-approved for this all-encompassing loan:

1. Craig Haueisen
Loan Officer
Prospect Mortgage
ISLAND WIDE
Cell: 808.298.7549
Craig.Haueisen@prospectmtg.com

________________________

2. Renee P. Kaiama
Home Mortgage Consultant
Wells Fargo Home Mortgage
70 East Kaahumanu Ave. Ste A-12
Office: 808.873.3713
Renee.Kaiama@wellsfargo.com

_______________________

3. Edgar Tesoro
Home Mortgage Consultant
Wells Fargo Home Mortgage
70 East Kaahumanu Ave. Ste A-12
Office: 808.873.3719
edgar.q.tesoro@wellsfargo.com

Connect with my blogs on foreclosure properties (and more) and how to find the best value for your property purchase, which includes a step-by-step process on “How To” purchase your bank owned property.

Our offices are working upwards of 30 pre-foreclosures (properties not listed in the MLS) at any given time. To protect homeowners and tenants currently still living in bank owned properties, and because of MLS rules, we are unable to give out addresses of our unlisted pre-foreclosures.

As bank owned properties are able to be listed on the MLS, and if you answer a few questions below, we will contact you when a property of your dreams is about to be listed. Also, be sure to check out my blog series on foreclosures.

Please call with or send the information below:

1. Assets you desire in a property (i.e. acreage with a house and cottage, condo, 3 bed/2 bath, swimming pool, vacation rental on the golf course, etc.)
2. Pre-approval letter or proof of cash. I would be happy to send you names of loan officers, so that you can be pre-approved and ready to make an offer
3. Preferred location (i.e. W. Maui, S. Maui, or an actual town such as Haiku, Kapalua, Kihei, Wailea, or a zip code)
4. Phone number, name, and email address

Kathleen Wilson, SSCP – Short Sale Certified Professional – Five Star Institute, RECP – REO Certified Professional – Five Star Institute and SFR – Short Sale Foreclosure Resource

Related posts:

1. Bank of America Loan Modification Representatives Now In Hawaii
2. Buying a Home in Hawaii with a VA Loan – VA Mortgage Basics
3. Applying For A Hawaii Home Loan

Many of our local banks are giving exceptional interest rates and terms. Some programs offer exceptional products for conventional fixed rates, conventional adjustable rates, and non-conforming or portfolio loans. 

Interest rates are near zero and the Feds announced last week they will continue to keep interest rates low for the next two years. There is a lot one can read into their announcement, but I am not a financial adviser or a lender, and do not want to speculate on what the Fed is going to do—I’ll leave it up to others.

With the low interest rates and significantly lower home prices, this is a great time buy. I encourage you to take that first step, talk with a lender, and get on track. Bank of Hawaii and Guild Mortgage are two local companies that have FTHB programs.

What a difference an interest rate can make:

*Monthly principle and interest payment (with 20% down)

The payments reflected in the above chart are principle and interest payments only. They are based on a 30-year amortization and 20% down payment. Mortgage insurance, insurance, and taxes are not included. Check with your lender for more information.

Credit Worthiness

Take responsibility for your fiscal health. Check you FICO score, if you do not know what your FICO score is, you will need to do that now. To check your FICO score now, click here. If you have discrepancies with the report, you have the right to dispute the error and bring up your score. The higher the score, the lower your rate will be.    

Next, you will need to figure out your debt-to-income ratio and what you truly can afford. Talk to a lender at a savings and loan, credit union, commercial, or mortgage bank and get pre-qualified. They will help you understand your credit worthiness and the products you may qualify for. 

Rural Housing (USDA)

Rural Housing is a government sponsored program that allows for true 100% financing in designated rural areas. The United States Department of Agriculture (USDA) government sponsored loan, which only lends in a rural area, is very popular in rural areas, making this a perfect product for buyers who are looking at upcountry Maui.

Features:

• No down payment required
• No mortgage insurance requirements
• The property must be located in a designated rural area
• Income restrictions apply
• No reserve requirements
• Seller contributions allowed

VA Financing and the VA Programs

The VA is a government sponsored program that allows U.S. Veterans the ability to finance up to 100% of the purchase price on a new home. If you are a Veteran, this is an exceptional opportunity the government provides to those who have served our country.

Features:

• No down payment required
• No reserve requirements
• Seller contributions allowed
• Borrower must be Active Military or a Veteran
• Cash out available to 90% LTV

The bad news could be if you do not take advantage of this market time today. 

Related posts:

1. Applying For A Hawaii Home Loan
2. Applying For A Home Loan – Basic Steps
3. Preparing For A Hawaii Mortgage Loan

Real Estate Newsflash – Washington D.C. to Maui

Fortunately, I did get to enjoy a little recreation time in D.C.; here I am posing with FDR (President Roosevelt) on one of my bike rides around town

A sense of urgency that I have not seen in over ten visits to Washington D.C. prevailed this week within our membership at the National Association of REALTORS® (NAR) in our annual meetings with Hawaii legislators.

The week ended with a large dues increase for all members of our association to help our organization be competitive with interests that could be in line with our values of promoting real estate and home ownership in the United States. The urgency comes in the form of five main issues that were presented to Congress members Colleen Hanabusa and Maize Hirono, and Senators Daniel Akaka and Daniel Inouye.

Our Hawaii Association of REALTORS® members presented key points on the following issues:

1. Affordable and Available Flood Insurance

Last year, after the expiration of the short term extension of the National Flood Insurance Program (NFIP), 47,000 transactions were not able to close. The present program expires Sept. 30, 2011. House Bill H.R. 1309 has been introduced that will extend the program for five years. NAR supports this program that has been self-sustaining and does not cost tax payers money. With more accurate flood maps, more properties now require flood insurance to obtain financing. Without flood insurance available, more properties in flood areas will become further distressed, and these areas will decline in value and they may not be able to be sold for lack of financing.

National awareness of floods and the affects on home ownership exists, especially with the devastating tsunamis that we have seen in the recent past. Here are two blogs that I wrote about my personal experiences with the most recent Maui tsunamis; Maui Tsunami Warning at Maliko Bay and later that day I experienced this Maui Tsunami Update – Kahului Harbor Gets a Wash Down

2. The Future of the Secondary Mortgage Market

Presently, Fannie Mae and Freddie Mac (The GSEs) constitute about 65% of the secondary mortgage market in the United States. Two bills presently in the House H.R. 1182 and the Senate S.693 both propose shutting down support by the federal government of these two entities without offering a replacement, or phasing in of alternative secondary market options. Private money has all but evaporated from the secondary markets and without the GSEs, FHA, and VA loans, there would be almost no loans available to buyers.

With no loans, inventory will not move and we will see further declines in value across the country to an already distressed market. NAR opposes both of the proposed bills, and seeks extension of the present programs and incentives to promote development of a private secondary mortgage market to keep money available for mortgages. Because of the stringent regulations on mortgages, we are seeing a lot more cash buyers in the Maui marketplace. Read one of Jeremy’s recent blogs on this subject, Cash is King in Maui Real Estate Market

3. Access to Affordable Mortgage Products

Presently, there is a proposal in the Senate S.693 and House H.R. 1182 that would drop the GSE loan limits to $417,000. A proposed rule would require a 20% down payment for a Qualified Residential Mortgage (QRM). NAR message to our legislators is to keep the present loan limits due to the high average sales prices in Hawaii and to keep affordable, lower down payment programs available to qualified buyers. The higher loan limits expire Sept. 30, 2011.

It is important for us to have affordable loan products like this, so our hard working citizens, like my daughter Brianna Stice, who is a first year Maui police officer in Kihei, can purchase their first homes. The Stice Team is in the process of assisting Brianna with a purchase of a REO/bank owned/foreclosed condo in Kihei and she is utilizing a Homepath loan that allows her to purchase the property with 3% down payment, and her closing costs are lower because there is no appraisal fee.

4. Preserving Home Ownership Tax Benefits

Although no specific bills have been introduced that would change the current tax deductions for mortgage interest deductions, this is an area of great scrutiny, particularly for mortgages over $500,000 and second homes. NAR will continue to remind Congress that any change in the tax rules that apply to home ownership would disrupt the market and cause home values to plummet further.

5. Short Sales

A bill has been introduced in the House H.R. 1498 - Prompt Decision for Qualification for Short Sale Act of 2011, that would require a lender to reply to a short sale request within 45 days of submittal. This bill has yet to be heard. If this bill comes to a hearing, it will allow NAR to testify on the present problems presented to most buyers and sellers with short sales.

As it is now, huge amounts of time are being spent on short sales that ultimately end up in foreclosure, or the seller filing bankruptcy. Buyers shy away from short sales as a result because there is no process to ensure that their commitment to the process will bring forth the result the desire – the purchase of the property.

On a local note here in Maui, we have seen some financial institutions vastly improve the short sale process and recently, my son and business partner Jeremy, just closed his first short sale transaction and has another set to close in 2 weeks. Read about his client’s success story, Deal – Kahana Ridge Short Sale Success Story.

The Stice Team has a renewed sense of confidence in short sales and is now starting to promote them as some of our best buys. Read about one of these short sale best buys, Deal – Fantastic Kaanapali Foreclosure and Short Sale.

What does this mean to Hawaii and Maui buyers?

It is extremely important that we keep our Hawaii loan limits where they are at. It is vital that the secondary loan market remain in place, and it is imperative that the government continue to allow mortgage deductions on both primary residences and second homes. Although the short sale process has greatly improved, it still needs a lot of work and I firmly believe that this is the best interest of the homeowner, the banks, and market as a whole.

Please feel free to contact me if you would like more detailed information on this, and/or if you have any questions.

Report by Tracy S. Stice, Realtor
NAR Director for Hawaii 2011
President, Hawaii Association of Realtors 2010

Related posts:

1. A Message from the President of the Hawaii Association of Realtors
2. Hawaii Life Real Estate Brokers Katie Minkus is New Vice President of Hawaii Association of Realtors
3. Act 48 – Hawaii Real Estate Values to Decline

I am often asked the question, “Are lenders still loaning money and are people getting loans?” The simply answer is this, yes and yes. With this being said, the current real estate financial lending process and regulations far differ from those in the peak of the market in 2006.

People actually need to qualify for their loans in order to receive them – this means that lenders are being extremely careful, and often times nit-picky in the documentation and lending ratios that they utilize to qualify individuals for loans. What effect has this had on the overall market in terms of the way properties are sold and the price levels?

Here are The Stice Team’s Deals of the Month gallery, including the above pictured oceanfront home on Front Street in Lahaina.

Prices are continuing to drop as Cash is King in the Maui real estate market. So far, this year on Maui, 64% of all condos, 28% of all homes, and 82% of all land transactions have been cash transactions. That means, collectively, over 51% of all sales on Maui have been paid for without the use of a lending institution.

Until the lending environment becomes somewhat “normalized” again, I believe that price growth will be limited. With this being said, I would also share that we have likely hit the proverbial bottom of the market in some segments of the market, including the entry to mid level of the residential market, and the entry level of the resort condominium market.

There is just too much activity in these segments to suggest anything other than this. Often times, buyers are faced with competitive buyer situations and these aggressively priced properties do sell for over the original asking price. I do believe that we will continue to see price corrections in the higher price echelons of the market.

Enjoy views like these from this Kapalua condo foreclosure and check out our gallery of the Best Foreclosure Deals on Maui.

There are strong signs that the Maui market has made some strides in recovering in the sense that transactional volume is way up year to year, mainly due the sale of many REO and short sale properties.

In comparing the year end stats of 2010 versus the year stats for 2009, you will see what I am referring to:

1. Residential unit sales rose (+17%), average sold price = $747,891 (+5%), median price= $460,000 (-8%), and total dollar volume sold = $608,783,134 (+23%).
2. Condo unit sales increased (39%), average sold price = $648,043 (-10%), median price = $377,500(-16%), and total condo dollar volume sold = $743,305,403 (+25%).
3. Land lot sales – NOTE: Land Lot sales are such a small sampling that statistics in this property class are not necessarily reliable indicators. Land lot sales increased (+14%), average sold price = $513,571 (-53%), median price = $405,000 (-19%), and total dollar volume = $56,223,494 (-47%).

There was some thought entering our winter season that we would be seeing an increase in sales volume. There are a couple of factors favoring improved volume, including strong exchange rates for international buyers, higher visitor numbers, and some improvements in the overall economy. I heard on the news the other day that the 1st quarter visitor numbers and spending were the strongest that they have ever been.

We are seeing a very strong influx of Canadian buyers dominate the market place right now and they almost always invest via all cash transactions. Their economy has remained relatively strong, their currency is stronger than the U.S. dollar right now, and they realize that now is the time to take advantage of these tremendous opportunities in the Maui market place.

The first quarter numbers look like this, comparing January-March 2011 to January-March 2010:

1. Residential unit sales rose (+14%), average sold price = $681,682 (+1%), median price = $450,000 (-4%), and total dollar volume sold = $135,654,619 (+16%).
2. Condo unit sales increased (+5%), average sold price = $491,522 (-35%), median price = $320,000 (-25%), and total condo dollar volume sold = $151,880,159 (-32%).
3. Land lot sales – NOTE: Land lot sales are such a small sampling that statistics in this property class are not necessarily reliable indicators. Land lot sales decreased (-13%), average sold price = $849,919 (+54%), median price = $310,000 (-38%), and total dollar volume = $22,947,826 (+34%).

This month brought the Stice Team some new challenges:

• Tracy assisted a local Maui commercial real estate broker with a very complex purchase of an old home in Wailuku that required a FHA rehabilitation loan – this was an arduous process, but Tracy, the buyer, and Kara Beltran (the mortgage broker) demonstrated fantastic collaboration and got the property closed.
• I assisted a young couple with a successful closing of a Kahana Ridge property – Jeremy’s first successful short sale closing. Read here for the details in a previous blog. We could not be happier for these clients, and all the other people we have been fortunate enough to assist in their dreams and endeavors.

Maui’s general economic forecast for the 1st quarter of 2011 was also quite promising and several economists have stated that we are basically okay, neither booming or busting. Some of the positives have been very strong tourism numbers, and consumer spending in the first quarter as well as strong business and tax revenue.

The challenges that we are facing are rising fuel costs with prices floating around $5.00 per gallon, stagnating real estate prices, and the aftermath of the natural disasters in Japan. More here in a recent article in the Maui news.

Here are the best deals in the market. Your time is now, contact me – pick up the phone, or write me an email, and I will help you make it happen.

• Our April Deals of the Month
• Our Top Maui Foreclosure Picks
• All Maui Foreclosed Homes
• All Maui Foreclosed Condos
• All Maui Foreclosed Vacant Land

Please reach out directly to me at my below contact information, or feel free to create your own HawaiiLife.com account, where you can view all properties on the MLS and save your favorites. Just click here and you will see the tab at the very top right of the page that says Sign Up, which you can then click on and follow the steps—it is easy and rewarding.

Aloha,

Jeremy Stice, R(S)
Hawaii Life Real Estate Brokers
808.281.2178
Stice@HawaiiLife.com

Related posts:

1. Maui Real Estate – December 2009 & Year End Statistics
2. Maui Real Estate Year-To Date (January-June 2009)
3. Newsflash – Maui Real Estate is Affordable

As part of my ongoing commitment to serving my clients, I frequently attend seminars from the distressed property experts, like Alex Charfen, who created the Distressed Property Institute in Austin, Texas.

This week, Alex had a casual conversation with Rick Sharga, VP of Realtytrac. Realtytrac is generally regarded as the nation’s expert on foreclosures and their database of public record information tracks millions of properties in foreclosure throughout America.

According to this presentation, prices are still going down nationally. The bottom has pretty much fallen out of market. The market is likely to sawtooth up and down. National experts predict prices will probably be down 5%-7% for the year of 2011, nationally, according to RealtyTrac VP Rick Sharga. Right now, there is an opportunity to buy now and make money. Home sales are still basically too weak to absorb the foreclosure inventory.

Last year, 28% of the sales were distressed properties. Here on Kauai, and on the other neighbor islands (Maui and Big Island), that number is 35% and higher. What I’m saying is that out of all the real estate transactions in 2010 on Kauai, 35% were either short sales or bank-owned (REO) properties. In a normal market, this number would be around 5%. Even the banks are spooked now.

Volume of home sales too weak to keep pace with foreclosure inventories

One statistic Rick Sharga presented was quite unusual. Only 18% of the people in foreclosure seek an agent. People are under a lot of stress, they go into hiding. People are not well educated enough.

Sharga made a comment that Freddie Mac said, “5 years ago, 67% of their homeowners in foreclosure did not know they had another option, and now, after three plus years of distressed market, foreclosure, national media, and press galore, 60% of Freddie Mac’s customers don’t know there are options to avoid foreclosure.” People abandon the homes in the middle of the night because they do not know what to do. That is simply amazing to me.

As a country, we need the volume of distressed sales to increase, so we can deplete the distressed inventory. We may never have deflated prices and low interest rates again like this in our lifetime. Rental properties are a good investment.

Another topic covered on the webinar were luxury homes. Luxury component of the distressed market is still increasing. 700% increase in foreclosures in 90210, that’s Beverly Hills, by the way. Banks have been slow to foreclosure on luxury properties, but when they do, they liquidate at fire sale prices. Between investors and second homebuyers, 40% of the purchases nationally.

Overall, buying activity has fallen off the cliff, while investor purchasing has increased and investors represent a larger piece of the pie. When you see large hedge funds buying real estate, buying single family homes, they are buying for cap rate and appreciation. This is happening now at an increasing pace.

If you are in a position to place some of your assets into real estate, now is an extraordinarily unique time. Whatever your price range, I can help you find where the finest values are. I’ll be updating my website soon, so you can search all the RealtyTrac foreclosures there.

Related posts:

1. Kauai Distressed Properties are Driving the Market
2. Hawaii Short Sales – Their Time Has Finally Arrived
3. Distressed Property Seminars Offered By Hawaii Life Kauai

This Kahala home (MLS# 1100002) is currently available for $2,675,000

From National Association Realtors weekly report:

February existing home sales decline following sustained gains. Mr. Lawarence Yun, NAR, chief economist, experts an uneven recovery. He said, “Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers.”

This is Hawaii Loa Ridge (MLS# 1103625) is currently available for $1,638,000

Under current “tight credit” conditions, buyers should look into loan availability as soon as they decide they want to buy. Despite very affordable mortgage interest rates, credit remains a challenge. Buyers should check their personal credit and mortgage availability in their area.

This is Hawaii Loa Ridge home (MLS# 1015065) is currently available for $3,875,000.00

The following tips are for buyers, especially first time buyers, for preparing to buy home:

1. Paycheck—Buyer’s purchase price ranges are determined in part by their income.
2. Two months’ bank account statements—Buyer’s lenders require proof of regular income and proof that the down payment money is your own.
3. Two years of W-2 forms or tax returns—Banks want to see a stable, long-term income for the amount on which you pay taxes (attention: all business owners!)
4. Update everything—Things change and because the time period between the first loan application and closing can be many months—even years (special in short sale) on today’s market. During the time between contract and closing, it’s not at all unusual for underwriters to demand buyers apply updated mortgage statements, checks stabs, and so on. It’s quite common for them to call your office the day before closing to request a last minute verification of employment.
5. Gift letters—Buyers using gift money toward their own payment. The bank wants to be sure the gift came from a relative, and is their own money to give. They also want the relative to confirm in writing that it’s a gift, not a loan—a loan would need to be factored into your debt load.

Need more information of purchasing a home? Contact me, I’ll go through every detail of the purchasing process with you.

从来自美国经纪人协会一周的房产报告中，报道有关连续三个月美国房产销售增长一直到二月份房产销售下滑来看，主要的原因: 一是房贷紧缩，二是，买卖双方所讨论定下的价格，银行估价不予确认，因此，买卖不能成交。

所以在这种借贷状况下，如果决定买房，买方就应当尽快找到贷款，虽然银行的利率是相当的低，但是，个人信用是关键。买方一定要查验自己的信用度和找到本地的贷款银行。

以下是几项要点对买房者，特别是对第一次购房者有所帮助：

1.工资单：贷款方根据你的月收入来计算你的部分贷款额。

2.两个月的银行存款单：贷款方需要证明你通常的收入和你的首付是你自己的。

3.两年的W-2 或者税单：贷款方想看到你有非常稳定的，长期的收入。调查你在税单上的所有的收入来源（特别注意：对有公司的业主）。

4.所有提供的单据都要不断的更新：因为，现在房产买卖市场已不是以前的，从你申请贷款到交易结束是好几个月，有的甚至是一年（尤其是short sale)，所以对贷款方的决策人来说，在交易即将结束之前，他还会让你提供最新的上述文件，甚至会给你公司打电话，确认你是否被雇佣。

6.亲戚或父母赠送的款项：作为首付的赠送款项，贷款方需要赠送方确认这笔钱是赠送方自己的钱，给予购房者，而不是私人贷款。因为贷款也要计算到购房人的支付能力上的。

如有更多有关买方的事宜的问题，请予我联系，我一定帮助你们顺利完成每一个购房步骤。

Related posts:

1. First Time Hawaii Home Buyers – What is Fiscal Health?
2. $8,000 Tax Credit Can Be Used Towards Hawaii Home Down Payment
3. Talking Tax Credit with Cindy Stone, Home Loan Consultant

For years now, I have worked in this industry and there are always great loan programs out there and when Tracy Evje of Island Lending Group, who I have worked with quite a bit, sent me this flyer, I immediately asked her if I could share it. So, here ya go!

What is a Mortgage Credit Certificate?

The Mortgage Credit Certificate Program was authorized by Congress in the 1984 Tax Reform Act as a means of providing housing assistance to families of low and moderate income. The Hawaii Housing Finance and Development Corporation (HHFDC) is an issuer of Mortgage Credit Certificates.

The Mortgage Credit Certificate (MCC) reduces the amount of federal income tax you pay, thus giving you more available income to qualify for a mortgage loan and assist you with house payments. The MCC is available to homebuyers who meet household income and home purchase price limits established for the MCC Program as well as federal eligibility regulations.

How will a Mortgage Credit Certificate assist my home purchase?

The federal government allows each homeowner to claim an itemized income tax deduction for the amount of interest paid each year on a mortgage loan. For a homeowner with a MCC, this benefit is even better: 20% of your annual mortgage interest will be a direct federal tax credit, resulting in a dollar-for-dollar reduction of your annual federal income tax liability.

The remaining 80% of your annual mortgage interest will continue to qualify as an itemized tax deduction. The amount of your mortgage credit depends on the amount of interest you pay on your mortgage loan. However, the amount of your mortgage credit cannot exceed the amount of your annual federal income tax liability. Unused mortgage credit can be carried forward for three years to offset future income tax liability.

Here’s an example of how a MCC can make buying a home affordable for you: You obtain a mortgage loan of $250,000 at 6.00% for 30 years with monthly principal and interest payments of $1,499 and a MCC credit rate of 20%. In the first year, you pay a total of $14,916 of interest on your mortgage loan. Because you have a MCC, you could receive a federal income tax credit of $2,983 (20% of $14,916). If your income tax liability is $2,983 or greater, you will receive the full benefit of the MCC tax credit. If the amount of your tax credit exceeds the amount of your tax liability, the unused portion can be carried forward (up to three years) to offset future income tax liability.

The remaining 80% of mortgage interest, or $11,933, qualifies as an itemized income tax deduction. To receive the immediate benefit of your MCC tax credit, you would file a revised W-4 withholding form with your employer to reduce the amount of federal income tax withheld from your wages and increase your take home pay by $249 per month ($2,983 divided by 12). By applying the increase in your take home pay of $249 towards your monthly mortgage payment of $1,499, your effective monthly payment would be $1,250 ($1,499 minus $249).

What are the loan terms?

You are free to seek financing from any lender. However, MCC’s are available only through participating lenders. The lender providing the financing is allowed to establish the interest rate, loan term, down payment requirements, credit and underwriting criteria, loan type, mortgage insurance requirement, fees, points, closing costs, and all other loan terms. A MCC can be used in conjunction with a conventional fixed-rate loan, variable rate loan, FHA loan, VA loan, or privately insured loan. However, an MCC cannot be used with a Hula Mae loan.

How long does the Mortgage Credit Certificate last?

The MCC will remain in effect for the life of your mortgage loan, so long as the home remains your principal residence. The amount of your annual mortgage credit will be calculated on the basis of 20% of the total interest paid on your mortgage loan for that year.

What are the requirements?

They include the following: The home you buy must be used as your principal residence after you obtain your mortgage. If it stops being your principal residence, your MCC will be automatically revoked and you will no longer be entitled to claim the mortgage credit. You cannot have had an ownership interest in a principal residence at any time in the last three years. The mortgage loan must be a new loan. You cannot be issued a MCC for the acquisition, replacement, or refinancing of an existing mortgage loan.

However, you may (on a case-by-case basis) be issued a MCC for the replacement of construction period loans, bridge loans, or similar financing of a temporary nature with a term of twenty-four months or less. The federal government considers the MCC tax credit to be a subsidy. As such, you may be subject to federal “recapture tax” if:

1. you sell your home within nine years of purchase
2. you sell your home at a gain
3. your income increases above a specified level

What are the income and purchase price limits?

The purchase price limits vary by county and type of residence, while the income limits vary by county and family size.

Income limits:

• Families of 2 or less: Honolulu $95,160, Maui $90,480, Kauai $84,720, Hawaii $78,120
• Families of 3 or more: Honolulu $111,020, Maui $105,560, Kauai $98,840, Hawaii $91,140
• The income limits may be increased or decreased by the HHFDC pursuant to Internal Revenue Service guidelines

Purchase price limits:

County Newly Constructed Residences or Existing Residences: Honolulu $770,631, Maui $766,990, Kauai $751,213, Hawaii $600,728.

These limits apply only to fee simple fully completed units. Leasehold residences and uncompleted units are subject to certain adjustments in determining their “acquisition cost” as defined by the Internal Revenue Service. The purchase price limits may be:

1. increased by HCDCH for mortgage loans in targeted area residences
2. increased or decreased by the HHFDC pursuant to Internal Revenue Service guidelines.

NOTE: If you choose to refinance an existing MCC-assisted mortgage, your original MCC becomes null and void. You must obtain a reissuance of the original MCC in order to continue to qualify for the tax credit. (For more details on the reissuance of a MCC and related processing fees, please contact a participating lender.)

Where can I get a Mortgage Credit Certificate?

An application for a MCC usually occurs at the same time a loan application is made. Upon approval and closing of your loan, a fee of $400 will be charged from the processing of your MCC.

Information provided by Tracy Evje ~ Owner of Island Lending Group ~

Related posts:

1. First-Time Homebuyer Credit Extended for Members of the Military and Certain Federal Employees
2. Talking Tax Credit with Cindy Stone, Home Loan Consultant
3. Veteran’s Benefits – Purchase Real Estate with VA Certificate of Eligibility in Hawaii

Haven’t you heard the term before that says, “cash is King?”

I’ve often bought into that theory and do have to agree there’s nothing like doing a cash transaction with a quick closing. We all know that financing these days is not what it used to be. Banks are more stringent on their underwriting. It’s also hard to get comps in slower markets.

I had an interesting discussion with our Kauai Broker in Charge, Anthea Adair, a few months ago. She was asking what percentage of transactions on Oahu are cash. I knew that certain products such as vacant land, construction loans, and condotels were a borrower’s worst nightmare as banks don’t want to touch them with a 10 foot pole. I wasn’t sure off the top of my head, however, had to do a little digging.

As we wrapped up 2010, here are the latest numbers of cash sales on Oahu:

• 12% (369 out of 3,050) of single family home sales sold for cash
• 33% (1,293 out of 3,936) of condo sales sold for cash
• 70% (71 out of 102) of vacant land sales sold for cash

What does this say? It confirms my belief in that vacant land is still hard to finance, however, when I ran this search a few months back, the number came out at 78% of land sales were cash. Buyers are either starting to get loans, or sellers are considering seller financing.

These numbers are also telling me that 88% of home buyers on Oahu are still obtaining some sort of financing for their purchases. It will be interesting to see if the banks ease up in 2011, or will cash remain “King?”

Related posts:

1. Cash is King in Maui Real Estate Market
2. Kona August Real Estate Report
3. Hawaii Luxury Real Estate on the Move!

USDA loans aren’t just for farmers anymore.

How long it will take you to save for a 5%, 10%, or even a 20% down payment to purchase a home? Well, you might not need to wait anymore. There is a program out there that helps many buyers realize that their dream of owning a home could be sooner rather than later, and it’s called the USDA loan. This is a guaranteed loan from the government.

Since this program rolled out, many buyers are utilizing this little to zero down payment loan program. If you meet the eligibility standards that determine if you qualify for a USDA loan, and your home is in the selected rural county/zip code, you might be eligible.

There are income limits, loan limits, and other guidelines for qualifying. It’s important to work with a lender that understands the USDA program, and a Realtor that knows which areas qualify.

For referrals to USDA lenders, or to find out qualifying properties contact me Tara Kelly, RS, for more information at (808) 542-6014.

View my favorite Big Island Foreclosures →

Related posts:

1. Applying For A Hawaii Home Loan
2. USDA Offers 100% Financing on Rural Maui Homes
3. Applying For A Home Loan – Basic Steps