Am I eligible for a mortgage tax credit?

If you are purchasing in NH an you are a first time buyer (haven't owned in the past 3 years) or are buying in a targeted area (those in bold font below) and you meet the income requirements, you may qualify for up to $2000/year for the next four years (up to $8000) in tax credits.   Ask your lender about this.  The MCC (mortgage credit certificate) program is the best kept secret.   If you have not been informed about this, then ask!  

Home Start Homebuyer Tax Credit

INCOME LIMITS

Belknap County
Laconia $96,600 income for a 1-2 person household;  $112,700 for 3+ person household
All other communities $80,500 for a 1-2 person household  $ 92,500 for 3+ person household

Carroll County
All Communities $80,500income for a 1-2 person household; $ 92,500 for 3+ person household

Cheshire
All Communities $80,500 income for a 1-2 person household; $ 92,500 for 3+ person household

Coos
Berlin, Lancaster, Whitefield $96,600 income for a 1-2 person household; $112,700 for 3+ persons
All other Communities $80,500 income for a 1-2 person household; $ 92,500 for 3+ persons

Grafton
Littleton $96,600 income for a 1-2 person household; $112,700 for 3+ person household
All other Communities $80,500 income for a 1-2 person household; $ 92,500 for 3+ persons

Hillsborough
Goffstown, Manchester $96,600 income for a 1-2 person household; $112,700 for 3+ persons
All other Communities $80,500 income for a 1-2 person household; $ 92,500 for 3+ persons

Merrimack
Concord, Pittsfield $96,600 income for a 1-2 person household; $112,700 for 3+ person household
All other Communities $80,500 income for a 1-2 person household; $ 92,500 for 3+ persons

Rockingham
Newmarket, Portsmouth $96,600 income for a 1-2 person household; $112,700 for 3+ persons
All other Communities $80,500 income for a 1-2 person household; $ 92,500 for 3+ persons

Strafford
Dover, Rochester, Somersworth $96,600 income for a 1-2 persons; $112,700 for 3+ persons
All other Communities $80,500 income for a 1-2 person household; $ 92,500 for 3+ persons

Sullivan
Claremont $96,600 $112,700 income for a 1-2 person household; for 3+ person household
All other Communities $80,500 income for a 1-2 person household; $ 92,500 for 3+ persons

PLEASE NOTE:
Targeted Communities are in bold: first-time home buyer requirement does not apply.

For more info on this and other mortgage types visit: www.NHmortgages.com

Author: Renee Duval – A Certified Mortgage Professional (CMP) with the NH Mortgage Bankers & Brokers Association.  NMLS# 97937.  Merrimack Mortgage Company is an Equal Housing Lender, Licensed by Massachusetts and the NH Banking Department . Mass Lender MC2561-119

What if the house needs repair?

Thinking of  purchasing a distressed property in need of repair?  Do you already own a home that needs repair and you don't have the cash?  You may be able to use a rehab loan to get cash to fix it up after closing.   These options include FHA 203K and FHA 203Ks programs.   For purchases in eligible areas (more rural areas) RD/USDA also has provisions for a minor amount of rehab money (under $10K).  State housing agencies like NH Housing, also often have rehab programs (in NH it is possible to get up to $40K in rehab funds thru NH Housing Finance Authority).
Generally the buyer or owner of the home must have contractors look at the project and give a written proposal to do the work.  The contractor must be appropriately licensed (or use licensed subcontractors) and insured. Much paperwork does apply!
The rehab loan process is more complex than obtaining a regular loan but it doesn't have to be too difficult if your lender has the knowledge and experience to guide you through it.   I prefer not to accept an application for a rehab loan from the buyer or owner until they have the contractor's bid(s) in hand.   It is imperative to get the contractors out to the property as soon as possible to get those bids.   Sometimes they will determine the cost is less or more than you thought and this can really influence your decision on financing (and/or your ability to qualify).  It is normally recommended that you have 3 contractors bid on any project.  Doing so will really help you to see the project more clearly.  As you meet with each contractor, each will have ideas which will enlighten you.   So you need to be prepared to spend many hours within the first ten days of your offer being accepted, meeting with contractors and making important decisions on what you want to include in your rehab.   Carpeting allowances, appliance allowances, etc are really important.  If your contractor gives you $500 for flooring and the flooring you want is $1500 then you may end up having a problem down the road.   So if you are considering a rehab loan, consider the upfront time necessary to do it right and surround yourself with good people who know what they are doing!
Author: Renee Duval -- a top ten loan officer for NH Housing loans and a Certified Mortgage Professional (CMP) with the NH Mortgage Bankers & Brokers Association.  NMLS# 97937.  Merrimack Mortgage Company is an Equal Housing Lender, Licensed by Massachusetts and the NH Banking Department . Mass Lender MC2561-119

3% grant available thru NH Housing

NH Housing will provide a cash assistance grant equal to a maximum of 3% of the loan amount to help borrowers defray the cost of down payment, closing costs, and prepaid escrow expenses associated with purchasing a home. Borrowers must contribute a minimum of 1% (based on purchase price) using their own funds (excluding gifts). Seller can help with closing costs (as long as the borrower has their required 1% into the transaction). No cash back is allowed at closing. 
Income limits and all other NH Housing guidelines apply. Borrowers do not need to be first time homebuyers but you cannot own other real estate (ok to sell and buy on the same day). 
There is no monthly payment on the cash assistance grant portion. If the homeowner stays in the house then after 48 months, the full amount of the grant is forgiven.
For more information, go to www.nhmortgages.com   I am happy to provide you with an estimate of what financing would look like using this program if you have a particular home or price range in mind!  
NH Housing loans can be used in combination with FHA or RD (aka Rural Development or USDA), FHA 203Ks, RD rehab or VA.   
Author:   Renee Duval -- I am a top ten loan officer for NH Housing loans and I am a Certified Mortgage Professional (CMP) with the NH Mortgage Bankers & Brokers Association.  I am licensed to originate loans in both NH and Massachusetts.  NMLS# 97937

Mortgage Loan Types & Terms

If you are thinking of purchasing a home or refinancing, I have described mortgage options in terms of terms and types in this article. For more interesting mortgage info, please check out my website at www.NHmortgages.com or feel free to email me at Renee@NHmortgages.com

TERMS  – the term of a mortgage is the number of years to repay the loan 

30 Year Fixed Rate Mortgage 

 This loan program is fixed for 30 years; your interest rate will not change during the term of the loan. This is ideal for people who plan to stay at their present property for a long period of time or just simply want the lower payment or need the lower payment to qualify for the mortgage.

20 Year Fixed Rate Mortgage

 Fixed for 20 years. Your payment will be higher than 30 year fixed loan because your loan term is only for 20 years. The interest rate will not change during the term of the loan.

15 Year Fixed Rate Mortgage

 15 year fixed loan has a loan term of 15 years and will not change during this period. Your monthly payment on this loan program will be much higher than 20 years fixed or 30 years fixed but you will pay your loan balance down much more quickly. The interest rate will not change during the term of this loan. If you can afford the higher payment and you plan to sell your home in 5-8 years, this may be a great option for you. The interest rate will not change during the term of the loan.

Comparison of different terms

 For a $100,000 loan, at a rate of 4%: P&I Payment on 30 yr term = $518.83;   P&I Payment on 20 yr term = $658.55;  P&I Payment on 15 yr term = $803.86
 P&I = principal & interest (the amount required to repay the loan over the given term)

 LOAN TYPES

The type of mortgage you get will probably be based on what is best for you and your situation in terms of down payment, qualifying criteria, etc

 Conventional 

A conventional loan is also known as a conforming loan and is generally a loan underwritten to the guidelines of Fannie Mae or Freddie Mac. Conventional loans do not have income limits and are generally available through all mortgage companies, brokers and banks who give mortgages. Conventional loans are used for the purchase of primary residences, second homes and investment properties. Conventional loans are available on single family homes and 2-4 unit properties and condos. The required down payment ranges from 3% to 25% depending the purpose of the loan and the type of property being financed. Generally a minimum credit score of 620 is required but conventional loan rates, generally, will be higher for people with lower credit scores and a little lower for people with higher scores (740 or above). The loan limits for conventional loans start at $417,000 for a One-Family (single family homes) $417,000; Two-Family $533,850; Three-Family $645,300 and Four-Family $801,950.

 FHA

 Federal Housing Administration - an FHA loan is not limited to first time home buyers and can be obtained by people who already own another property. There are no income limits but loan limits apply (county by county). Check out the loan limits. FHA loans are readily available through mortgage companies, brokers and banks who give mortgages. FHA loans are available for owner occupied properties only and for single family homes, 2-4 unit properties and condos that are prior approved by FHA. One of the features that makes FHA loans so attractive is that they require only a 3.5% down payment for all property types. Generally a 640 credit score is required but the loan rate will be higher for people with scores below 680. FHA does allow non-occupying co-signers allowed for purchases of single family properties. FHA 203K and 203Ks – FHA has provisions to allow a borrower to purchase a home and receive funds to complete repairs after closing. The amount and type of renovation needed will dictate if the loan is a full 203K rehab loan or a streamlined rehab loan (203Ks). Basically the streamlined product is for repairs needed under $35,000 that don’t involve structural work. For renovations exceeding $35,000 or that include structural repairs then the full 203K loan is applicable.

 RD - Rural Development

These loans have both income limits and geographical limits. As the name implies they are not available in cities but are for more rural areas. Check RD’s property eligibility website to see if any particular town you are interested in is eligible for RD financing. RD financing is available for owner occupied single family properties and approved condos only. RD cannot be used to finance 2-4 family homes or homes with in-law apartments. Although buyers using an RD loan do not have to be first time buyers, they cannot own other real estate at the time of closing. It is ok to sell a house and buy another using an RD loan as long as the closing for the sale of the first home happens before the closing on the new home (can be same day). The beauty of RD is that it allows for no money down and the seller can pay the borrower’s reasonable closing costs! This is an excellent way to finance a home located in an eligible area.

 VA – Veteran’s Administration

If you have served in the armed forces then you may be eligible for a VA loan. This type of loan allows the Veteran to purchase a home with no down payment and the seller can pay all the closing costs. There are no income limits but there are some loan limitations. For a no down payment VA loan the max loan is $417,000 but higher loan limits may be available with a down payment.

 ARM (Adjustable Rate Mortgage) 

 ARM Loans are fixed for a certain period of time, then become an adjustable loan. The most common ARM products are 1/1, 3/1, 5/1, 7/1 and 10/1 ARMS. 1/1 means the interest rate is only fixed for the first year then the loan will adjust every year thereafter. 10/1 means the interest rate is fixed for 10 years then the loan will adjust every year thereafter. Theoretically, the lowest starting rate should be found with a 1/1 ARM. Typically the rates on ARMS are lower than the current fixed rates. However, ARMS are often used to finance borrowers and/or properties that do fit into the guidelines of conventional loans. In these scenarios, the ARM rates may be higher than the going fixed rate. Each ARM Loan Program has these features 1) Index: this is an agreed upon starting point to base future changes on. Common indexes used in ARM products are the 1-yr constant-maturity treasury security(CMT), the cost of fund index (COFI) or the London Interbank Offered Rate (LIBOR) 2) Margin: a fixed amount that will be added to the index to determine the new rate when the ARM adjusts. 3) Caps: the loan will usually have two caps; the amount the rate can change (up or down) at any given change and the amount the loan can change during the life of the loan. When it is time for an ARM to adjust, the margin will be added to the applicable index to determine the new rate. If that rate is higher than the cap then the rate will be adjusted only to the cap. ARMs are available in conventional loans, FHA, VA and nonconforming loans. For more info on ARMs check out this website: http://files.consumerfinance.gov/f/201204_CFPB_ARMs-brochure.pdf

 Author 

The author of this article is Renee Duval from Merrimack Mortgage Company, NMLS # 97958. Renee has been a mortgage originator since 1987. She is licensed in New Hampshire and Massachusetts. She is a Certified Mortgage Professional – a designation given by the NH Bankers & Brokers Association. She is a top 10 originator for NH Housing. She is a top producer with Merrimack Mortgage Company and branch manager of their Concord, NH branch. Merrimack Mortgage Company is an equal opportunity lender.   Find me at www.NHmortgages.com