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What Is A.P.R.?

What is the difference between the interest rate and the A.P.R.?

You will see an interest rate and an Annual Percentage Rate (A.P.R.) for each mortgage loan you see advertised. The easy answer to "why" is that federal law requires the lender to tell you both. The A.P.R. is a tool for comparing different loans, which will include different interest rates but also different points and other terms.

The A.P.R. is designed to represent the "true cost of a loan" to the borrower, expressed in the form of a yearly rate. This way, lenders cannot "hide" fees and upfront costs behind low advertised rates.

While it's designed to make it easier to compare loans, it's sometimes confusing because the A.P.R. includes some, but not all, of the various 3rd party fees, title fees, and insurance premiums that accompany a mortgage. And since the federal law that requires lenders to disclose the A.P.R. does not clearly define what goes into the calculation, A.P.R.s can vary from lender to lender, loan to loan, amounts change acording to what month property tax’s are due for payment and even prepaid interest for days remaining in the given month funding occurs.

The A.P.R. on a loan tied to a market index, like a 5/1 ARM, assumes the market index will never change. But ARMs were invented because the market index changes and makes fixed rate loans cheaper or more expensive to make -- that's why they're variable rate in the first placed!

So, A.P.R.s are at best inexact. The lesson is, that A.P.R. can be a guide, but you need a mortgage professional to help you find the truly best loan for you. Note when you are browsing for loan terms that the A.P.R. will not tell you about balloon payments or prepayment penalties, or how long your rate is locked. In addition, you will see that A.P.R.s on 15-year loans will carry a higher relative rate due to the fact that points are amortized over a shorter period of time.

You Caught Me!

Now there are two dates I want you to keep in mind because there’s a time limit and we want to make sure that you make it.
1. You have to be under contract to buy the new home by April 30th and
2. You have to close before June 30th.
That might sound like a long time off. But you need to go out and start looking right now because it will be here before you know it. Again, the credit is for first time home buyers and now for those of you that already own a home. If you’ve had a house for five of the last eight years you get a $6,500 credit when you buy a house. Very cool stuff. We’ll put a link right here on this page so that you can get the details for more information.My question to you today is what would you do with the $8,000 or the $6,500 depending upon which group you fall in? What would you do with that extra money when it came to you?

http://www.federalhousingtaxcredit.com

$8,000 Homebuyers Tax Credit Extended

$8,000 homebuyers tax credit extended

President Obama reups popular tax credit through June 2010 and expands it to include people with higher incomes and some who want to trade up into new homes.
By Les Christie, CNNMoney.com staff writer
November 6, 2009: 3:18 PM ET
NEW YORK (CNNMoney.com) -- President Obama signed an extension and expansion of the first-time homebuyers tax credit on Friday.
The $8,000 credit was scheduled to lapse on Dec. 1 but will now be in effect through the end of June. Homebuyers must sign a contract before April 30 and close by June 30. The income limits were also raised: Single buyers can now earn up to $125,000 and still get the full credit while a married couple can earn $225,000.
The bill also made more homeowners eligible to claim the credit on their taxes. First-time buyers -- those who have not owned a home in the past three years -- still qualify for an $8,000 rebate. But now people who want to trade up can also qualify. Those who have owned and occupied a residence for at least five years out of the past eight can claim a $6,500 tax credit if they close on a purchase by the end of June.
"The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules," said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers.
Who qualifies?
Nicholas provided four scenarios illustrating how the tax credit rules for existing homebuyers will apply:
• Harry owned a home in 2001 and 2002 but sold it to relocate for a job. He would qualify for the $8,000 first-time-buyer credit because he has not owned a home in the past three years.
• Sue purchased a home in 2004 and has lived there since. If she decides to buy a new home, she would qualify for the $6,500 tax credit because she has lived in the same residence for five consecutive years in the past eight.
• Jane purchased her home in 2002, lived there for five consecutive years before she rented it out in 2007. She would qualify because she was an owner/occupier for at least five consecutive years in the past eight.
• Mark purchased a home in 2006 and lived there for the past three years. He would not qualify because he is neither a first-time homebuyer nor someone who lived in the same primary residence for five consecutive years out of the past eight.
How it helps the economy
Legislators and industry experts expect that the credit will encourage buyers such as Jane and Sue to move up their purchase plans.
"This bill will shift demand from the second half of 2010 into the first half," said Pat Newport, a real estate analyst with IHS Global Research. "As a result, home sales and prices will get a boost in the first half of 2010, with payback in the second."
That's not a bad thing, according to Bill Kilmer, vice president of advocacy for the National Association of Home Builders. It's important to stabilize real estate markets quickly to help bring the economy out of its tailspin.
The original $8,000 tax credit appears to have helped accomplish that goal: Home prices have inched up the past few months, according to the S&P/Case-Shiller Home Price Index.
Would it have happened anyway?
But critics still see the program as being ineffectual because it rewards buyers who would have purchased a home anyway. Newport estimates that fewer than 400,000 of the 2 million who have claimed the original credit made their purchases solely because of the tax advantages.
Furthermore, buyers do not, in reality, receive the entire benefit. "The credit helped prices stabilize," said Newport. "So the credit has been split between seller and buyer. The sellers are getting higher prices and buyers paying more than they would have without it."
The housing industry, however, is pleased with the extension, although the credit has not been quite as effective as they hoped.
The industry thought the credit would provide a ripple effect, with sales to first timers triggering as many three additional "move-up" sales.
That did not happen, according to Lawrence Yun, NAR's chief economist.
"It did not have the chain reaction impact it was supposed to," he said. "Instead, many first-timers turned to vacant, foreclosed or other distressed properties the sellers of which were unlikely to be move-up buyers."
So, the tax credit helped prop up the low end of the market without having much impact on the rest of the spectrum. Expanding the benefit to existing homeowners should boost those segments. That should produce additional benefits, according to Yun.
"Preventing further price decline or even nudging prices up a bit stabilizes housing wealth, which makes homeowners more comfortable in their spending," said Yun. "They're more likely to go out to the stores or buy a new car. That provides a boost to the overall economy."

Hot off the AP Wire - Tax Credit Making its way...

By JIM ABRAMS, Associated Press Writer Jim Abrams, Associated Press Writer – 15 mins ago

WASHINGTON – Congress took further steps to right the staggering economy by expanding a popular tax credit for homebuyers and extending unemployment checks for the growing legions of people running out of benefits with few job prospects.
The White House said the legislation builds on its efforts to spur job creation and President Barack Obama would sign it into law Friday morning.
The House passed the bill on a 403-12 vote Thursday, a day after the Senate ended a monthlong stalemate with a 98-0 vote. With some 7,000 people exhausting unemployment benefits every day and the $8,000 tax credit for first-time homebuyers set to expire at the end of November, there was a sense of urgency in getting it to Obama's desk.
The $24 billion package also contains tax credits aimed at struggling businesses.
The IRS says some 1.4 million people applied for the homebuyers credit through August, helping enliven the moribund housing market. The legislation would extend the program through June of next year, as long as the buyer signs a contract by the end of April. It also offers a $6,500 tax credit to those who have lived in their current residence at least five years.
The measure doubles the income ceiling for eligible individuals to $125,000. Homes must cost less than $800,000 to qualify.
The nearly 2 million who have exhausted their unemployment benefits or face termination of benefits, usually about $300 a week, before the end of the year would receive 14 weeks of additional benefits under the bill. The unemployed in those states where the jobless rate tops 8.5 percent would get six weeks on top of that.
House Majority Leader Steny Hoyer said the bill would also help the economy because the unemployed quickly spend their checks on living necessities. "We help people in very bad straits and we help our economy and help us all."
All but 12 Republicans voted for the bill, although several took the opportunity to swipe at the Obama administration's efforts to produce new jobs. "Make no mistake, the unemployment benefits are no substitute for a good job,"said Rep. Kevin Brady, R-Texas.
The extension would be the fourth since June of last year and the first since the $787 billion stimulus package was enacted last February. The unemployed in the hardest-hit states could, once the bill becomes law, receive a maximum of 99 weeks of benefits, well above the previous record of 65 weeks in the 1970s.
Lawmakers said aggressive measures are needed because the unemployment rate, now at 9.8 percent, is expected to hover around 10 percent into next year and more than one-third of the 15 million unemployed have been looking for work for at least six months, a record.
The nation has lost 8 million jobs since the "great recession" began at the end of 2007, said Rep. Jim McDermott, D-Wash., a chief sponsor of the legislation. Even with the recession winding down, "we know it will take considerable time to restore those lost jobs."
"A stunning 600,000 workers ran out of jobless benefits in the past two months alone, and thousands more are projected to by the end of the year," said Christine Owens, executive director of the National Employment Law Project. "Workers need this extension, the economy needs this extension."
The bill only applies to those running out of benefits before the end of the year, and McDermott reminded his colleagues that Congress may have to revisit the issue before it adjourns for the year.
The bill would also allow businesses that have incurred losses in 2008 and 2009 to seek refunds for taxes paid on profits over the past five years.
The two tax credits, each costing more than $10 billion over 10 years, are paid for by delaying enactment of a law giving international companies more leeway in how they allocate interest expenses between U.S. and foreign sources in determining tax liabilities.
The $2.4 billion cost of extending unemployment benefits is offset by extending through June 2011 the federal unemployment tax that employers pay for each employee.
The three measures would add $43 billion to the 2010 deficit and then be repaid over time.

How to Purchase a Home with a FHA Loan with Almost Zero Down

For a limited time, up to 99.5 % financing is being offered to increase home ownership opportunities to individuals and families in California. You can purchase a home with a FHA Loan for as little as .5% down payment. Yes! That’s right! As little as a 1/2% down payment.


Call our office at (916) 960-5900 to learn more about the details of this program.


CHF has negotiated with FHA to allow a second mortgage to cover 3% of the 3.5% required down payment by using the CHF Access down payment assistance loan.

Eligibility Guidelines:
Not Limited to just first time home buyers.
3% 2nd loan can be used for down payment or to pay closing costs.
FICO under 600 ok on case by case basis.
No Sales price limits.
No minimum borrower contribution.
No pre-pay penalties.
Gift funds are allowed from family members.
Seller contributions allowed, up to 6%.
Income limits are 120% of HUD AMI.
2nd loan (CHF Access) is 15 year fixed @ 8.5%.
No recapture tax / penalty if home is sold later on.

Call (916) 960-5900 to learn how you can qualify for this program.