The U.S. Treasury has allocated nearly $700 million to CalHFA to help low-and moderate-income borrowers who have been impacted by unemployment and declining home values.  CalHFA now must submit a proposal by April 16 to the Treasury outlining innovative programs focused on foreclosure prevention and housing market stability.  The Treasury will review each proposal for compliance with program objectives and other requirements. The Treasury expects that CalHFA may begin drawing down funds within four to six weeks following submission of proposals, or mid-year.
 
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Homeowners wanting to pay off their mortgage earlier than planned can do so by making extra principal payments.  One extra full principal and interest payment a year will reduce a 30-year loan to about 17 years, and adding the following month’s principal payment to the current one will cut the loan almost in half.  It is important that borrowers tell their lender the extra money is to be credited to principal.  Homeowners should keep records of their payments and review it once a year to be certain the lender has followed directions.

Private mortgage insurance (PMI) generally is required for home buyers whose down payment is less than 20 percent.  PMI may be added to the mortgage payment each month to protect the lender should the borrower default.  By law, PMI generally must be canceled automatically when the loan balance reaches 78 percent of the home’s original value.  However, lenders also may agree to cancel this coverage upon a borrower’s request when the balance declines to 80 percent of the current value, if certain conditions are met. Borrowers who have made their payments on time each month for five years should contact their lender or loan servicer to obtain all the details on cancelling the coverage.

- Mick Orton

From CNN Money- The combination of affordable home prices, low interest rates, and the federal tax credit for home buyers have created an opportune time for many buyers to purchase a home.  Many real estate analysts also believe that most housing markets have stabilized, but that some markets may decline further.

MAKING SENSE OF THE STORY FOR CONSUMERS

• Buyers should keep in mind that housing markets are local and can vary greatly from one neighborhood to the next.  Working with a REALTOR® familiar with the area in which the buyer is searching can help the buyer select a house that best suits their needs.
• California’s housing market has shown signs of stabilization since early last year.  Sales of existing, single-family homes bottomed out in August 2007, and the median home price reached its trough in February 2009.  In January, California’s median home price was 17.2 percent above the low for the current cycle.
• The federal tax credit for home buyers was extended and expanded late last year.  Qualified first-time buyers may be eligible to receive a tax credit of up to $8,000 on homes purchased before April 30, 2010.  Repeat buyers may be eligible for a tax credit of up to $6,500.  Visit http://takeaction.realtoractioncenter.com/ct/HpLiI8s1zreC/ for more information about the federal tax credit for home buyers, including eligibility requirements.
• The Federal Reserve has helped maintain low interest rates, which, in turn, has assisted home buyers.  However, the agency plans to stop purchasing mortgage-backed securities at the end of this month, which likely will increase rates on 30-year fixed mortgages.  Buyers may be able to lock in a low interest rate by working with their lender.

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Note: How can this be when California is BROKE?

More than 20,000 California homebuyers could get state tax credits of up to $10,000 this year under a new stimulus proposed Wednesday by Gov. Arnold Schwarzenegger.

The governor’s plan to allocate $200 million in credits to buyers of new or existing homes is part of a job creation strategy. It goes now to state lawmakers for consideration.

“This is about helping eliminate extra housing to get construction back on tap,” said Victoria Bradshaw, Schwarzenegger’s secretary of labor and workforce development, in a call with reporters.

It’s unclear how fast legislators might act. But last year, they handily approved $100 million in tax credits for buyers of new, unoccupied homes. The credits, claimed by 10,600 buyers from March through June, proved popular and ran out faster than expected.

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The tax credit will be extended through April 30, 2010, with a 6-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to receive a tax credit of up to $8,000, while existing homeowners will receive a credit of up to $6,500.

CNN Money – Propelled by the first-time home buyer’s tax credit, nearly half of home sales now are being made by first-time purchasers, according to an industry report released Friday.

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Wall Street Journal – During the housing boom, critics increasingly complained that the government devoted too many resources to homeownership and too few to more affordable options, such as renting.  Now, during the bust, the government’s commitment to ownership has grown even larger, according to a new report from the Congressional Budget Office.

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San Jose Mercury News - Just one in 20 Americans say they plan to buy a home within the next year, and they’re most likely going to be 34 years old or younger and living in the South or West, according to a new survey.

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The percentage of households that could afford to buy an entry-level home in California stood at 64 percent in the third quarter of 2009, compared with 55 percent for the same period a year ago, according to a report released last week by C.A.R.  The Index is the most fundamental measure of housing well-being for first-time buyers in the state.

The minimum household income needed to purchase an entry-level home at $247,150 in California in the third quarter of 2009 was $43,500, based on an adjustable interest rate of 4.79 percent and assuming a 10 percent down payment. First-time buyers typically purchase a home equal to 85 percent of the prevailing median price. The monthly payment including taxes and insurance was $1,450 for the third quarter of 2009.

At 85 percent, the High Desert region was the most affordable area in the state. The San Luis Obispo County region was the least affordable in the state at 47 percent, followed by the San Francisco Bay region at 49 percent.

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An index comparing similarly sized 2,200 square foot, four-bedroom, two-and-a-half bathroom homes in college markets revealed that in addition to the economic stability associated with higher education, homes in these areas also are affordable.  The Coldwell Banker College Home Price Comparison Index (HPCI) revealed that home buyers can find a typical four-bedroom home for less than $250,000 in 62 percent of the 72 college markets surveyed.

According to the report, empty nesters and families are attracted to these markets because of the health care systems, culture, and overall quality of life offered in college towns.

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