In most cases, to qualify for Utah Housing’s programs, you must be a first time homebuyer, defined as “someone who has not lived in a personal residence they owned” in the last three years. In other words, if you owned and lived in a home in the past but have either sold it or converted it to a rental property at least 3 years ago, you should be eligible.

Note: If you buy a house within specific “Targeted Areas”, you do not have to be a first time homebuyer. (See UHC’s website for maps of these areas: Utah Housing’s Website.)

Utah Housing uses an FHA underwritten (Federal Housing Administration) fixed rate first mortgage combined with a small second mortgage to make it possible to buy a house with no down payment. Here’s an example:

Home Price: $210,000 (the current approximate median priced home in Salt Lake County)
First Mortgage: $202,650 (96.5% of the price, this is the maximum allowed by FHA)

Second Mortgage: $7,350 (3.5% of the price). You actually have the option to borrow more than this to help cover your closing costs. The maximum amount you could borrow in this example would be $12,159, which is 6% of the first mortgage loan amount. This would give you $4,809 for closing costs. The other option to help with closing costs is to negotiate with the sellers of the house to have them pay some or all of your costs. Normally you will end up paying a higher price for the house if you go this way. I can work with you and your Real Estate Agent to figure out the most advantageous, lowest cost way to structure your transaction.

Here’s what payments would look like on the above example: (based on today’s Utah Housing rates of 4.89% on the first mortgage and 7.0% on the second mortgage)

First Mortgage: $1,093.08/month

Second Mortgage: $80.89 (Assuming you borrowed the maximum amount.)

Adding mortgage insurance, taxes and insurance estimated payments of $92.88, $114 and $40 respectively and your total house payment would be about: $1,421 per month.

There are no prepayment penalties on Utah Housing loans which means you can pay them off at any time without penalty. They do have a “re-capture” tax provision that rarely applies that you’ll want to know about; but in practice, you can pay off Utah Housing loans without having to pay any early payoff penalties.

What a lot of buyers are currently doing is using their $8,000 tax credit to pay off (or at least pay down) the second mortgage as soon as they get their fat check from the IRS! This is Utah Housing’s Equity Now program.

Qualifying for a Utah Housing Mortgage:

To qualify you must meet FHA underwriting guidelines plus meet the following Utah Housing requirements:

* Minimum 660 Qualifying Credit Score

* There are household income limitations that depend on what county you are buying a house in. For example, in Salt Lake County, households with 1-2 family members cannot make more than $67,500 per year and households with 3+ family members cannot make more than $77,500.

For more information on the Utah Housing Corporation loan programs, you can visit Utah Housing’s Website. And, as always, feel free to call me or send me a message for personalized service and recommendations.

Fewer homes went under contract in January as the housing market continues to limp through the winter months.

According to the National Association of Realtors®, the Pending Home Sales Index fell to its lowest level in 3 quarters this January. By contrast, in October 2009, the index had touched a 3-year high.

The Pending Home Sales Index measures the number of homes that have gone under contract to sell, but have yet to close nationwide. It’s compiled using data from more than 100 regional listing services and 60-plus brokerages  — the sample set encompasses 20 percent of all home resales in a given month.

Economists have come to rely on the Pending Home Sales Index because of its high correlation to actual home sales. 80% of all home marked “pending” close within 60 days. Many of the rest close within 120.

Therefore, when we see Pending Home Sales show weakness like it did in January, we can infer that home resales will remain weak through the spring.

But will they really?

1. Fewer sales should drag down home prices, bringing more buyers into the market
2. Mortgage rates are still very low, but are poised to rise in just a few weeks
3. The home buyer tax credit requires buyers to be in contract by April 30, 2010

In other words, there’s a confluence of factors that could lead to a rush of sales in Huntington Beach and around the country over the next two months, reversing the housing market’s recent momentum.