We hope that you are all doing well and enjoying the first week of October.
Initially, the news outlets were reporting that FHA-backed mortgages would be halted during the shutdown. However, HUD announced that mortgage applications would continue to be processed.
Loans backed by the FHA and the Veteran’s Administration, as well as rural development loans backed by the United States Department of Agriculture, accounted for 45% of all mortgages used to purchase homes issued in 2012, according to the Federal Reserve. The FHA alone insures about 60,000 loans a month.
Fannie Mae and Freddie Mac have already stated that their operations would be unaffected by a shutdown because they pay for their operations out of the fees collected from the lenders.
“There will be a limited number of exempted FHA staff available to underwrite and approve single family home loans,” said Jereon Brown, Deputy Assistant Secretary for Public Affairs. “The underwriting and approval process will definitely be slower than normal.”
Claim Lost Down Payment as a Capital Loss?
Fox Business had an interesting question & answer on whether a down payment on a business property could be written off as a capital loss.
Turns out it can’t but, it could be written off on your personal income taxes.
Even though you never closed on the business property, the Internal Revenue Service will allow you to treat the loss in the same manner as if you had.
You can claim this $15,000 loss on your Form 1040 using Form 4797, Sales of Business Property, specifically on Page 1, Part II, line 10.
7 Loans You Thought Had Disappeared
Yahoo Finance published an article on seven mortgages that have gone extinct and then offered commentary from mortgage officers on why that might be so.
- Stated income mortgages are primarily used by self-employed as to what they expect their income to be. These loans were widely blamed for enabling many borrowers to get into mortgages they couldn’t afford. They’re called stated income because no proof of the borrower’s income is required.
- No money down mortgages are almost impossible for most people to get. However, they’re not completely gone. You can still get one through the VA if you’re a qualifying veteran or active-duty member of the military. Also, borrowers with low-to-moderate incomes may be able to get a USDA Rural Development loan with no money down to buy a modest home in a rural area or small community.
- Interest only loans started drying up when property values started dropping thus preventing people from refinancing. They’re still used today with new construction.
- Negative amortization loans would allow you to get even deeper in debt paying less than the interest amount. These have definitely gone the way of the dodo bird.
- ARMs are actually one of the most traditional mortgages around. In fact, in many countries they’re the main type of home loan. They’re called “adjustable rate” because they start out at one interest rate for a certain period of time, say 5 to 7 years, then adjust to a new rate based on current market conditions. They dried up because fixed rate mortgage interest rates dropped below 4%.
- Teaser rates were a lot like ARMs but would start at a very low rate and then quickly jump to a much higher rate. With falling property values and fixed interest rates, these loans aren’t useful for bringing in new business.
- Balloon mortgages tend to offer lower rates than comparable fixed-rate mortgages and for the same reason – the lender doesn’t have to worry about being saddled with a low-rate mortgage long-term if rates rise in the future. They’ve also fallen out of popularity for the same reason as ARMs but are still available.
If you have questions about new loans or refinancing, contact a reputable loan officer and they will be able to explain in detail what is best for your particular situation.