HOME START 30-YEAR FIXED RATE LOAN is FHA insured and available at rates below the 30-year fixed market rate

HOME START DOWN PAYMENT ASSISTANCE LOAN is a 0%, 10-yr forgivable loan that provides 3% of the purchase price (up to $6000) to assist with the down payment.  This is perfect for buyers who don’t have down payment money, but will be able to pay back the loan immediately after receiving the $8000 tax credit check.

How to apply:  An IHDA-approved mortgage lender will review your monthly income, expenses, employment history and credit report to determine if you are eligible.  The lender network can be found at www.ihda.org
REQUIREMENTS:

INCOME & PURCHASE PRICE LIMITS

                                                     Maximum Income             Maximum purchase price

http://money.cnn.com/2009/11/24/real_estate/home_prices_third/index.htm

Home prices climb for 2nd straight quarter

S&P/Case-Shiller index shows prices up 3.1% from 3 months earlier, but down nearly 9% from a year ago.
By Les Christie, CNNMoney.com staff writer
November 24, 2009: 9:51 AM ET
NEW YORK (CNNMoney.com) — Home prices rose for the second consecutive quarter but remained nearly 9% lower than a year earlier, according to a housing market report issued Tuesday.

Prices nationwide rose 3.1% in the three months ended Sept. 30, according to the S&P/Case-Shiller Home Price Index, a closely watched gauge of housing market direction. That followed a similar 3.1% rise during the second quarter of the year.

Prices were still below a year ago, however, down 8.9% compared with the third quarter of 2008. Nevertheless, that’s an improvement from the double-digit price decreases the index had been reporting; the second quarter year-over-year decline was 14.7%. Prices had dropped 19% year-over-year during the first quarter of 2009.

“We have seen broad improvement in home prices for most of the past six months,” says David Blitzer, Chairman of the Index Committee at Standard & Poor’s.

The Case-Shiller 20-City Composite index posted its fifth monthly increase in a row in September, rising 0.3% from August levels.

The worst performing market continued to be Las Vegas, where prices have dropped for 37 consecutive months. They’re now 55.4% off their highs.

Midwestern cities staged a comeback in September, with Minneapolis and Detroit prices each gaining 1.8%, the most of any of the 20-cities covered. Chicago prices jumped 1.2%; San Francisco climbed 1.3%; and Los Angeles and Phoenix both rose 0.8%.

Stopping the home price slide is an important factor in any economic recovery. Falling prices increase the number of “underwater” homeowners, those who owe more on their mortgage balances than their homes are worth.

Underwater mortgage borrowers are much more likely to lose their homes to foreclosure. Indeed, it’s a crucial factor in whether people lose their homes or not, as Mark Goldman, a San Diego State University real estate professor pointed out.

“If they have a home worth $300,000 and they owe $250,000 and can’t pay their mortgage, they’ll just sell the house,” he said.

It’s when they have a house worth $200,000 and they owe $250,000 that these people default, because the sale of the house would not pay their whole debt.

A report from First American CoreLogic released Tuesday, revealed that nearly a quarter of all mortgage borrowers are underwater. That, as well as the ongoing foreclosure problem, has contributed to doubt about the staying power of the recent price trend.

“I think it’s temporary,” said Pat Newport, a real estate analyst with IHS Global Insight.”I can’t see home prices stabilizing as long as we have that problem.”

According to Newport, foreclosures could worsen over the next several months as many toxic loans go through resets, making them much less affordable for their borrowers.

A significant contributor to the improvements in the housing markets have been programs such as the tax credit for first-time homebuyers, according to Bob Walters, the chief economist for Quicken Loans.

“[But] the real driver in all of this — from home sales to home pricing appreciation — has been the protracted run of favorable mortgage rates,” he said. “It will be interesting to see how home prices react when we see rates begin to increase, as they are sure to do over time.”

including a self assesment tool to see if you are able to qualify for this program

www.Makinghomeaffordable.gov

Now Zillow is launching a mortgage marketplace that allows consumers to anonymously receive custom loan quotes and rate their lenders.  On its website, you can fill out a detailed loan request form, which doesn’t ask for any identifiable information.  Registered lenders can respond with quotes and rates, which will make comparisons easier.  You then have the option to contact lenders about their quotes.

 It might be a good idea for anyone who is just thinking about buying and doesn’t want to be hassled by a lender.  Click here for more information.

OR.. if you are looking for a recommendation, Deborah and I strongly encourage you to contact Sam Fazio with Guranteed Rate…sam.fazio@guaranteedrate.com or 773-398-1273.

In recent years, subprime loans have dramatically increased their share of the overall mortgage market. In 2006, subprimes made up 20 percent of the $3 trillion mortgage market, according to Inside Mortgage Finance.

Minorities are more likely to get subprime loans. The chart above shows the percent of refinances that are subprime for certain ethnicities.”

NPR.org, March 23, 2007 · Lawmakers on Capitol Hill are demanding answers from regulators and lenders about subprime mortgages. Many worry that rising mortgage defaults and lender failures could hurt America’s overall banking system. Already, the subprime crisis has been blamed for steep declines in the stock market. But just what is a subprime loan — and why should you care?

Here, a primer:

What’s a subprime loan?

Generally, subprime loans are mortgages given to borrowers with credit scores of 620 or below. Such low scores result from a history of paying debts late or not paying debts at all.

Because subprime borrowers are seen as “higher risk,” their loans carry interest rates that are at least 2 percentage points higher than those offered to borrowers with better credit. So, for example, while a credit-worthy borrower could get a mortgage at 5 percent interest, the same mortgage would cost a subprime customer 7 percent interest or more.

About 20 percent of U.S. consumers have credit scores of 620 or below, on a 300-850 scale. But of that group, only 13 percent have mortgages, according to Experian, a credit reporting bureau.

What kinds of loans do subprime borrowers get?

The vast majority — about 80 percent — have adjustable-rate mortgages, or ARMs, says Susan Wachter, a professor at the University of Pennsylvania’s Wharton School who specializes in real estate. (It’s worth noting, however, that not all ARMs are subprime loans.)

ARMs typically start out with an interest rate that’s lower than the rate on a comparable fixed-rate mortgage. But after the introductory period — often two or three years for subprime borrowers — is over, the interest rate goes up, which can result in payments that increase by hundreds of dollars each month.

Who are these borrowers?

“A typical subprime borrower is not someone buying a house, but someone refinancing,” says Mary Moore, a spokeswoman from the Center for Responsible Lending, a nonprofit that advocates curbs on predatory lending. “A typical subprime borrower is someone who has a lot of credit-card debt, and is refinancing to pay some of it off.”

Studies have found that subprime borrowers tend to live in low-income neighborhoods. They’re less likely to have a college education and more likely to be a minority, especially black or Hispanic. According to Freddie Mac, about 10 percent of subprime borrowers could have qualified for a prime loan.

Where do they live?

“Historically, they have been in declining cities, the weak cities of the Rust Belt — Philadelphia, Baltimore, Detroit,” Wachter says.

She says those subprime borrowers were concentrated in distressed neighborhoods, where banks felt defaults were too high. That’s why lenders chose to expand to places they thought would be better risks: rural areas and small cities in the West and Southwest, she says. But now, subprime borrowers in these areas are also finding themselves in trouble.

Why do they go into default?

Most subprime borrowers take out a loan to pay off creditors, but it may not be enough to solve their financial problems. Some loans were given to people who just couldn’t afford the payments — even before their rates increased — but weren’t savvy enough to turn them down.

“Some of these loans require an accounting degree to understand,” Wachter says.

Others’ financial situations may have changed since they took out the loan — they lost a job or got divorced, for example.

Why did lenders make loans that borrowers couldn’t repay?

It can make sense for a bank to underwrite an ARM for a couple with modest incomes who are moving up the corporate ladder. The expectation is that, by the time the interest rate readjusts, the borrowers will have a higher income. However, some ARMs were sold to people on fixed incomes — retirees and those on disability.

“It’s legal. Right now, nothing prevents them from doing that,” Moore said. “[Lenders] know that increase is coming, yet they’re underwriting the loan at the start rate.” She says lenders shouldn’t approve borrowers unless they can afford their loans at the higher interest rate that’s to come, not the low “teaser” rate.

But oversight of such loans has been patchy — “if it exists at all,” adds Wachter.

Mortgage brokers are paid for writing loans, and aren’t docked if those loans fail. Finance companies bundled subprime loans and sold some of them off to investors in other financial markets. But these firms miscalculated the likelihood of defaults in a housing downturn; they’re now holding a bunch of bad loans that no one wants to buy.

Why are foreclosures and defaults growing among subprime borrowers?

“It’s because the overall [real-estate] market has turned,” Wachter says. When prices are flat, or down, borrowers can’t refinance to lower their payments, because they don’t have enough equity. They also can’t sell to get out from under, because the house is worth less than they paid for it. The only option left is to bring in more income, or to miss payments.

Nationwide, more than 13 percent of subprime borrowers were late on payments in the fourth quarter of 2006, according to the Mortgage Bankers Association.

What does it all mean for the housing market?

If all the subprime loans currently in default were to go all the way to foreclosure, that would still be a small part of the overall mortgage market.

Even in states with the most foreclosures — Ohio, Michigan and Indiana — those foreclosures still represent just 0.5 percent of all mortgages. In regions with the most subprime lending that also have struggling local economies, foreclosures may rise to 1.5 percent or 2 percent of all mortgages, Wachter predicts.

But with lending standards now tightened, fewer borrowers will qualify for loans. That’s a double whammy for housing — more homes on the market and fewer buyers. For example, in markets where home prices might have fallen 3 percent because of the general housing downturn, the presence of a lot of subprime borrowers in trouble could magnify that to a 6 percent price drop, Wachter says.

“Six percent of a $200,000 home may not sound like a whole lot,” Wachter says, and it’s not for a lot of people.

But for those who bought recently, and who need to move quickly, they’re going to be in trouble, she says.