Helping Families Save Their Homes Act and the Fraud Enforcement and Recovery Act was signed by President Obama on May 20, 2009. This will make it easier and more affordable for homeowners to refinance. These loans are available on your primary residence with a loan-to-value ratio of 70% and a FICO score above 720. President Obama encourages homeowners to refiance to a more affordable mortgage. To learn more click on this website http://makinghomeaffordable.gov/about.html

One way to determine if prices are headed up or down is to watch the supply of inventory.  A balance market has five to six months of supply.  Monthly supply is determined by the number of homes sold in a given month divided by the number of homes on the market.  For example, if there are 1000 homes on the market in your area and 200 sold in a month there would be 5 months of inventory.  Based on this finding, prices would be holding steady. 

If there was less then 5-6 months of inventory you would be in a seller’s market and prices would climb.  With a low supply of available homes, buyers would have to outbid each other to get the home.  This is what drives inflation.

It there was more then 6 months of inventory you would be in a buyer’s market and prices would drop.  With an abundance of homes available, seller’s would have to compete with each other causing prices to fall.

Economical factors can also play into which direction home prices go.  According to Realtor.org, ”Traditionally, the national average sales price of a home is two-and-a-half times the average household income.”  During the boom in the real estate market this reached four times the average income.  With unemployment rising, prices may drop more to get us closer to the traditional average.  But the good news is we are getting closer to the two-and-a-half time average.

Fannie Mae wants to continue to provide financing for high-credit quality (minimum of 720 credit score) investors because experienced investors bring stability, liquidity and affordability to the housing system. Which in turn plays a key role in helping the housing market recover.

Fannie Mae is making changes again to their policy about multiple mortgages to the same borrower. Before the housing boom, borrowers could have 10 (ten) financed properties which they held individual or joint ownership interest and the mortgage was delivered and backed by Fannie Mae.   In 2008 this was changed to 4 (four) financed properties.  The new modifications will allow investors and second home borrowers to own five to ten financed properties if they meet certain eligibility and underwriting and delivery requirements.

Underwriting guidelines for the borrower:
1. No history of bankruptcy or foreclosure within the last seven years.
2. No delinquencies (30-day or greater) within the last 12 months on any mortgage loans.
3. Rental income on the subject investment property must be fully documented.
4. Rental income from other properties owned must be supported by two years’ federal income tax returns.
5. Complete and sign Form 4506  Request for Copy of Tax Return or 4506-T Request for Transcript of Tax Return.  This allows the lender permission to request copies of federal income tax returns directly from the IRS.   The lender then must validate the accuracy of those tax returns provided by the borrower prior to the loan closing.
6. Reserves on hand varies depending on whether the subject property is a second home or investment property, and on the number of other financed properties the borrower currently
a. When the borrower will own one to four financed properties (including the subject property) the reserve requirements are:
 Two months of reserves on the subject property if it is a second home,
 Six months of reserves on the subject property if it is an investment property, and
 Two months of reserves on each other financed second home or investment property.
b. When the borrower will own five to ten financed properties (including the subject property) the reserve requirements are:
 Two months of reserves on the subject property if it is a second home,
 Six months of reserves on the subject property if it is an investment property, and
 Six months of reserves on each other financed second home or investment properties

Reserves are those liquid or near liquid assets that are available to a borrower after the mortgage loan closes. Reserves are most often measured by the number of months of principal, interest, taxes, and insurance (PITI) that a borrower could pay using his or her financial assets.
Fannie Mae is expanding the definition of reserves to include all components of the monthly housing expense (PITIA), including:
• principal and interest,
• hazard, flood, and mortgage insurance premiums (as applicable),
• real estate taxes,
• ground rent,
• special assessments,
• any owners’ association dues (excluding any utility charges that apply to the individual
unit),
• any monthly cooperative corporation fee (less the pro rata share of the master utility charges
for servicing individual units that is attributable to the borrower’s unit), and
• any subordinate financing payments on mortgages secured by the subject property.

1. Have a plan and write it down. Ask yourself where you would like to be in five years. Have an idea of where you money is going. Write down everything you spend and what you save.

2. Maximize your 401k plan.

3. Check on your Social Security benefits at www.ssa.gov

4. Power down your debt. Eliminate credit cards, car payments, personal loans. Start with paying off the highest interest rates first.

5. Find out what is on your credit report. Take your name off of the list that generates the pre-approved credit card offer. Contact each of the credit bureaus: www.equifax.com, www.experian.com, www.transunion.com

6. Compound your interest and watch it grow! If you put just $2,000 a year into a Roth IRA or a 401k from the age of 21, you can expect to retire at 65 with almost TWO MILLION dollars in the bank! If you are over 50, you can play “catch up” by contributing at least $3,000 a year. It is never too late to start a retirement plan! Take advantage of tax deferred college savings programs as well. And make sure you are aware of changes in the tax laws.

7. Diversify! Have three to six months of your living expenses readily available by investing in mutal funds or a money market account.