My Financial Healthcheck

As of now the refinance boom of this year is done..and don’t let anyone tell you that rates at historic lows..in the past that would have been true except for the now looming Fannie Mae grids which make a very good credit score and LTV (Loan to Value) in the past a crime if they are now not 741 and 75% LTV.  A week ago I read that the 10 Year bond could hit 3.75% (it was in the mid 2’s in March)..they hit briefly 4% today. I have said it over and over if in this fragile economy rates continue to rise they will kill the housing market recovery. Last week mortgage applications sunk 16.2%…mortgage volume has been 75% lower at some institutions since their peak in March.  Up until a couple weeks ago the Federal Reserve had been successful in keeping mortgage rates low by their bond buy back  program.  All the recent home sale increases will slow due to these higher mortgage rates. With less home sales, the value of homes will continue to fall and foreclosure will not slowdown.  Last week mortgage rates rose to 5.65% for a average 30 year fixed mortgage (based on a loan closed with .8 of a point), which are now the high for the year.
In FHA news concerning the First-Time –Home-Buyer program, the following changes have been made:

1. The IRS tax tax refund can be made only to the taxpayer and not to a third party..
2. Government agencies may offer tax credit advances with second liens.
3. The buyer cannot get cash back through the tax credit advance.
4. The 2nd lien may not exceed the down payment, closing costs, and prepaid expenses.
5. The 2nd lien may be “soft” or require payments.
6. Payments on 2nd liens must be included in ratios unless deferred for at least 36 months.
7. Balloon payments on 2nd liens may not be before 10 years.
8. FHA approved lenders and FHA approved non-profits may purchase the tax credit.
9. Tax credit purchases may not charge more than 2.5% of the tax credit as a fee.
10.  IRS may deduct from the tax credit: unpaid student loans, tax liens, and garnishments.