Government Loans

I attended a government loan seminar yesterday and picked up some interesting information I thought I would share…

Advantages of an FHA Mortgage
– No reserves are required to qualify
– Lower monthly mortgage insurance
– Lower closing costs and no “junk” fees allowed
– Gift money is allowed for your entire downpayment
– Generous debt to income ratios are allowed (sometimes up to 49%)
– Lower credit scores considered (a FICO score as low as 605 was accepted by this broker)
– No first time buyer requirement
– No income limits
– No purchase price limits
– Non-occupant co-borrowers are allowed
– Sellers can contribute up to 6% of the closing costs

Disadvantages of an FHA Mortgage
– Upfront mortgage insurance premium
– No restriction on points charged

Advantages of a VA Mortgage
– Lower credit scores considered (a FICO score as low as 605 was accepted by this broker)
– No reserves are required to qualify
– Gift money is allowed for your entire downpayment
– No montly mortgage insurance premium
– No first time buyer requirement
– 100% financing available, typically up to $240,000 (however, the broker had seen 100% financing accepted up to $417,000)
– No income limits

Disadvantages of a VA Mortgage
– There is a funding fee which varies based on the downpayment
– Cannot have unmarried co-borrowers

Advantages of a CHFA Mortgage
– Lower interest rates than conventional mortgages (rates are set weekly)
– Lower closing costs (1% of the mortgage amount)
– 100% financing available

Disadvantages of a CHFA Mortgage
– Only available to first time buyers, unless you have not owned in 3 years, or are buying in a targeted area
– More paperwork
– Purchase price limits
– No non-occupant co-signers allowed
– Potential for a recapture tax
The recapture tax would be either 50% of your home sale profit or 6% of the sale price, whichever is lower. All 3 of these things must happen in order for the recapture tax to be invoked- you sell your house within 9 years, and your income increases dramatically, and you make a profit on the sale of your house.

With each of these mortgages, the property you are purchasing must be owner occupied. These government loans cannot be used for investment properties.

West Hartford Electronics Recycling Day- May 5

From the Hartford Courant on April 12, 2007…

West Hartford town officials announced an electronics recycling day on Saturday, May 5. Residents who have old household electronic equipment they want to dispose of can recycle the items at no charge.

Recycling will take place at the town’s public works facility at 25 Brixton St. from 9:00am to noon.

Residents can recycle the following items: computers, monitors, printers, cell phones, televisions, video-cassette recorders, copiers, fax machines, radios, stereos, and rechargeable nickel-cadium batteries.

No commercial electronics will be accepted. Proof of residency will be required.

If you would like more information, visit the vendor’s website at We Recycle.

Chicken Little…

No Chicken Little, the sky is NOT falling…

Home Prices Fall

Nationwide, home prices are expected to drop 0.7% and the national media is all riled up. That’s what happens to asset values. They go up, then they go down, then they go up again. Just like stocks. Just like mutual funds. Over the long term any asset will appreciate if it is valuable (and well maintained in the case of a house). Prices don’t matter if you are not looking to sell (unless you really need to pull some equity out of your home). Overall, people should think about homeownership over the long-term, not the quarterly fluctuations that may or may not be happening in your local market.

If you are planning on selling your current home in order to buy a new house, this still should not be a huge issue. Getting less on your sale means that you are probably going to pay less on your buy. So again, the long-term view should win out.

Affordable Housing in CT

Last week I talked about property taxes in West Hartford making housing unaffordable for some folks. This week it seems that we might want to look at affordable housing in CT in general. The Courant ran an interesting article a few days ago…

A Home They Can Buy…

Here’s a link to the official HOMEConnecticut site if you’d like to learn more…

HOMEConnecticut

Personally, when I moved here 3 years ago, I was surprised at how affordable housing actually was compared to other areas where I previously lived; Vermont, Boston and the DC area. However, I also live in Hartford, a town that often gets overlooked during home searches. I believe there are good buys out there if people are willing to keep an open mind.

West Hartford Taxes

This past Thursday evening I attended the Town Council budget hearing at town hall. The hot topic was the recent property revaluation and new mill rate. It was well attended, I would say over 60 people showed up, even though it was Holy Thursday and Passover.

By my observation, the majority of people were long time West Hartford residents, living in the town anywhere from 25-50 years. Several of the residents that spoke were from multi-generational families of WH. You could sense their great pride for the town, however there was an overwhelming sense of disgust due to the potentially huge increases most are facing with their new tax bills. Many of the attendees were either retired or nearing retirement. It’s not clear to them how they will be able to continue living in WH on fixed incomes. Younger attendees expressed frustration that they were getting priced out of the town because housing prices and tax rates continue to rise. Their jobs simply aren’t paying enough for them to afford living in WH.

Most of the suggestions for reducing the budget revolved around minimizing pay and fringe benefit increases for town employees. Additionally, there were requests to lower the school budget, but no real concrete solutions on how to actually reduce the education budget. Clearly, one of the main draws to WH is it’s school system. It’s a double edge sword to make significant cuts to the school budget, but then continue to expect curriculum, after school activities, and special programs to remain robust.

My belief of what will happen in the next 1-2 years is that WH will see a migration of its Seniors to neighboring communities such as Bloomfield, Farmington, Avon, and Simsbury. These towns have lower taxes, but many of the same services, so Seniors will flock there. House prices in WH will most likely fall because there will be more houses on the market than there will be buyers. Younger buyers that typically would have bought the houses in WH will no longer be able to afford them because of the high tax burden. WH will need to make a decision on if they change the way they tax commercial properties in town. Will Blue Back Square be able to shoulder more of the burden? Will there be enough residents to economically support Blue Back?

The next few years will be an interesting economic experiment for WH. What are your thoughts?