Already, effective from April 5th, the upfront Mortgage Insurance Premium was increased from 1.75% to 2.25%, (a 29% increase).

Now, in a further attack on the 1st Time Buyer, this misguided lady proposes a 300% increase on the ongoing monthly Mortgage Insurance payment.

To understand the impact of this consider a new $300,000 purchase with a 30 year fixed FHA loan.at 5.5% interest rate. The monthly payment will go from $1,804 up to $2,051. An increase of 12%.

Put another way; If the maximum you could qualify for was $300,000 before, it would now be only $270,000.

At one fell stroke this bill would eliminate an enormous number of willing buyers at the bottom end of the market.

When you consider that each 1st Time Buyer potentially creates a move up Buyer we can’t afford  this kind of interference in this very fragile recovery.

1. Buyer Only Brokers.

2. Buyer Rebate (Kick Back) Brokers.

3. Virtual Office Brokers. No physical location.

4. Reduced Commision Brokers.

5. Fixed Price Brokers.

6. Transaction Facilitation Brokers.

Etc, etc.etc ad infinitum.

All of these and many more are proof that we have a lot of competition in our business, and that the Consumer (Buyer or Seller) has lots of choices.

I won’t try to explain the pro’s and con’s of any of these options, but will strongly suggest that whichever of them you choose you  strongly consider working with a REALTOR.

My reason for this specific advice is as follows:

1. There are more than Half a Million Licensed Real Estate Agents in California. This is the minimum required qualification for the job.

2. Only 165,000 of them are REALTORS who have voluntarily agreed to subscribe to a strict Code of Ethics, and are paying members of their Local, State, and National Associations of Realtors.

Amongst many other services Realtors provide to the public is the web site Realtor.com. the most popular of all on-line Real Estate sites. Check out http://www.realtor.com/.

35%- Payment History. Late payments of bills such as Mortgage, Credit Cards, Car loans etc will lower a person’s FICO score . Paying bills as agreed over time will improve the score.

30% – Credit Utilization. The ratio of current revolving debt (Credit Card and Charge Account balances) to the total available credit (Credit Limits). Consumers can improve their FICO scores by paying off debt and reducing balances to less than 50% of the available credit. Closing existing revolving charge accounts can have a negative effect on this ratio, and lower your score. Before closing accounts be sure to do some more research, or get qualified advice.

15% – Length of Credit History. Time improves FICO scores without any action other than paying all bills on time.

10% – Types of Credit Used. FICO scores are improved by having a good history of managing multiple types of credit (Installment, Revolving, Consumer finance etc).

10% – Recent Credit Applications. Multiple requests to obtain new credit over a short period of time can hurt an individual’s FICO score. However, individuals shopping for the best rate for a Mortgage or Auto Loan over a short period will not see any negative impact on a FICO score.

For more detail on this and other Credit Related questions the following link is a Gold Mine of factual information.

http://www.myfico.com/CreditEducation/

1. Purchased their homes on or after November 7, 2009,

OR

2. Will claim the housing tax credit on their 2009 tax returns, regardless of when the property was purchased.

The new form was due to be published last December. The old form (currently the only one available on the IRS website) will not be accepted for claiming the tax credit under the extended rules.

NOTE: At this time the IRS requires that owners claiming this tax credit 0n their 2009 tax returns must file on paper. Be sure to check this beforehand if planning to file electronically. It may have changed by then.

1. Most Realtors think this is a slow time and choose to take more time off. RESULT; less competition.

2. There are fewer Listings and fewer Buyers, but those who are active  are serious. RESULT; more productive use of time.

But this year things are very different. There will still be fewer Agents working and fewer Buyers looking, BUT there will be many more Listings to choose from.

WHY? Because we will still have all the normal Sellers who are serious, PLUS a large number of REO Properties which are not affected by the holidays. Banks know that each day they own a property costs them a lot of money so they will be putting them on the market as soon as they can regardless of the time of year.

So why be a Buyer now? Because you will have less competition but more properties to choose from. (Not to mention the extended and improved Tax Credit Program).

1. Extension of the credit is a done deal and will possibly even increase the amount to $15,000.

2. It will be changed to apply to deals that are in escrow before the current Nov 31st deadline and close within 60 days more.

3. It’s dead as of Nov 31st.

4. Etc, etc,etc.

The best site i’ve found for intelligent discussion of this is http://www.californiateachersandemployeeshomeloanprograms.com/update-8000-homebuyer-tax-credit-extension-october-2009/

Scott is a very diligent researcher and reporter on this and more generally 1st time buyer programs.

A multiplicity of State, County, and City programs are available and in many cases can be used simultaneously to make housing much more affordable than you would ever know. Even the I.R.S. has got into the game.

Some of these programs provide for an 80% first mortgage, while others provide a wide range of down payment assistance for the remaining 20%. These cover a wide range of strategies from equity sharing to straight cash grants. Often more than one of these will be used to provide the 100% needed.

It is important to use a mortgage broker familiar with all of these programs as the process needs to be co-ordinated with several different agencies.

Rather than try to summarize them all here are links to as many web sites as I am aware of, so do a little homework and contact me with specific questions:

STATE PROGRAMS

0 CALHFA. CALifornia Housing Finance Agency. http://www.calhfa.ca.gov/ This State Agency is the most common provider of the 80% base loan as they partner with most of the City and County programs.

CITY PROGRAMS

0 SAN JOSE. http://www.sjhousing.org/program/homebuyer.html has info on great programs for school district teachers, plus faculty and staff of San Jose State University, and down payment assistance on 16 new construction developments. http://www.sjhousing.org/program/HBList.html.

0 Santa Clara City. http://santaclaraca.gov/plan_inspection/first_time_buyer.html for info specifically for first time buyers. Also http://santaclaraca.gov/pdf/collateral/Santa-Clara-Model.pdf for a presentation about the Citys BMP (Below Market Price program). You will find the description beginning on page 10 of the presentation slides.

FEDERAL PROGRAMS

0 FHA http://www.fha.com/. A huge web site dealing with the best loans available today for buyers who do not meet the specific requirements for the first time programs. 3% down and flexible qualifying make this the first choice. For a snapshot see http://mccordrealtyservices.com/2008/06/08/fha-the-new-mortgage-of-choice/

0 MCC (Mortgage Credit Certificates). http://www.sccgov.org/SCC/docs/Affordable%20Housing%20Office%20of%20(DEP)/attachments/MCC_Brochure_2008.pdf. This is a dollar for dollar reduction of Federal Income Tax in an amount equal to 15% of the total mortgage interest paid each year.