Network Funding, LP

What We Need to Do to Jumpstart the Economy

2011-08-23T14:38:00.000-05:00

August 23, 2011 by Mark Dotzour

Have you heard anyone talk about specific plans to encourage job growth in America? I haven’t either. I hear lots of talk about how job growth is “sluggish” and that hiring is not rebounding as it should at this stage of the economic cycle. Our leaders in Washington appear to be bankrupt of ideas for promoting job growth in America. So everyone can complain and point fingers at others and try to blame them, but none are willing to come out and say what America needs to resume its normal path of business expansion.

Here is what I hear directly from business owners when I’m on the road. There are several reasons why they don’t want to hire people right now. Here they are in a nutshell:

■Complete uncertainty regarding the future cost of health care for business owners

■Two thousand pages of bank regulation that has yet to be enacted

■Regulation of health care and health insurance

■Regulation of off-shore oil drilling

■Regulation of oil-shale deposits

■Complete uncertainty about future income tax rates

■Complete uncertainty about future capital gains tax rates

When business owners are unsure about their future, what do they do? Nothing! They just try to survive until the storm is over. They also hoard cash, like almost $2 trillion at this point. Our economy is not going to recover until businessmen and women regain confidence in the future opportunities in our country.

So how can our leaders in Washington encourage businesses to start to hire again? First, they need to let businesses know that they are not the enemy. Businesses need to be encouraged and know that government is working with them, not against them.

We are creating such a hostile environment for businesses that we could be in for a long period of economic stagnation in America. What would a business-friendly agenda look like? Well here it is.

Imagine if the President and Congress came out with a bi-partisan plan to:

1.Repeal the health-care nightmare.

2.Repeal Dodd-Frank, and come up with 15 pages of meaningful bank reforms.

3.Tell China to stop manipulating their currency and buy something produced by Americans.

4.Roll back EPA regulations to 1999 levels.

5.Roll back all other business regulations to 1999 levels.

6.Announce an airtight plan to reduce the deficit to zero in seven years.

7.Lower corporate tax rates to stop companies from fleeing America.

8.Foreclose on four million homes and sell them to private sector investors.

You may think that this sounds like Alice in Wonderland. But actually these are the issues that are killing economic opportunity in our great country. Either we address them, or we look more and more like Japan every day. Let’s do it! Now.

Source: Real Estate Center

S&P Downgrade What Does This Mean To You?

2011-08-11T12:51:00.000-05:00

On Friday, August 5, credit rating agency Standard & Poor's (S&P) downgraded the United States' credit rating one notch from AAA to AA+. Though this was an historic decision, as the United States had held it's AAA rating from S&P since 1941, it wasn't a surprising one. S&P had previously said it would lower the rating if Congress did not reduce the federal deficit by $4 Trillion over 10 years (the Debt Ceiling/Deficit Reduction Bill passed on August 2 only called for a deficit reduction of $2.4 Trillion over the next 10 years). In addition, S&P also downgraded certain entities linked to US debt, including Fannie Mae and Freddie Mac.

So what does this mean...both for our economy and home loan rates?

Maintaining our AAA credit rating reinforces the United States' role as the reserve currency of the world or a place where investors will place their money as the ultra safe haven. This is a key factor for our continued economic recovery.

But it's important to keep in mind that S&P is currently the only credit rating agency that has downgraded the United States. Both credit rating agencies Moody's and Fitch have maintained the United States' AAA rating. Also, with the ongoing credit crisis in Greece and other parts of Europe, most of the world still sees the United States as a safe place to invest their money. This bodes well for our economy and also our Bond Market, including Mortgage Bonds, to which home loan rates are tied.

The bottom line is that home loan rates remain near their historic best levels, but about the only thing that is certain in the markets right now is the volatility. If you've been thinking about buying or refinancing a home, give me a call or send me an email to see if you could benefit from this situation.

How Purchase Loans Are Made

2011-06-23T13:02:00.000-05:00

A Step-By-Step Walkthrough

1. Pre-approval - Get pre-approved for a mortgage and know in advance exactly how much house you can afford. Completing this step will also increase your negotiating power since you'll be viewed as a "cash buyer".

2. Loan Search - Put yourself in the hands of an experienced mortgage professional, someone who will help you to determine which financing options best suit your needs today and in the future.

3. Loan Application - It's crucial to supply the lender with as much information as possible, as accurately as possible. All outstanding debts as well as assets and income should be included.

4. Documentation - Paperwork supporting the application must also be submitted. Information commonly sought includes pay stubs, two years' tax returns, and account statements verifying the source of the down payment, funds to close and reserves.

5. The Hunt - Begin shopping for a house. Once you find the right one, the terms of the sale will be negotiated, including the price and potentially the terms of the loan being sought.

6. Appraisal - Lenders require an appraisal on all home sales. By knowing the true value of the home, the borrower is protected from overpaying.

7. Title Search - This is the time when any liens against the property are discovered. A lien may have been placed on a property to ensure payment of outstanding debts by the owner. All liens must be cleared before a transaction can be completed.

8. Termite Inspection - While most purchase loans do not require a formal inspection for termite and water damage, some loans (especially government loans) allow for the possibility. If problems are found, repairs may be necessary.

9. Processor's Review - All pertinent information will be packaged by your mortgage professional and sent to the lending underwriter, including any explanations that may be needed, such as reasons for derogatory credit.

10. Underwriter's Review - Based on the information put together by the loan professional, the underwriter makes the final decision regarding whether a loan is approved.

11. Mortgage Insurance - Many lenders require private mortgage insurance when borrowers put down less than 20 percent on a loan.

12. Approval, Denial or Counter Offer - In order to approve a loan, the lender may ask the borrowers to put more money down to improve the debt-to-income ratio. The borrower may also need a bigger down payment if the property appraises for less than the purchase price.

13. Insurance - Lenders require fire and hazard insurance on the replacement value of the structure. Flood insurance will also be required if the property is located in a flood zone. In California, some lenders require earthquake insurance on condominiums.

14. Signing - During this step, final loan and escrow documents are signed.

15. Funding - At this point, the lender will send a wire or check for the amount of the loan to the title company.

16. Confirmation of Funding - The lender authorizes the disbursement of loan proceeds.

17. Closing - Documents transferring title will now be officially recorded by the County Recorder.

18. Congratulations, you are now a homeowner!

If you'd like to learn more, please give me a call. I'd be happy to speak with you!

Various Ways to Hold Title to Real Property in Texas

2011-06-23T11:51:00.000-05:00

Title is the legal documentation that bestows ownership of real property. This is to be indicated in Part II of the 1003 Uniform Residential Loan Application as "manner in which title will be held."

The decision of how the title will be held should not be put off until the last minute since it has a great impact on future tax planning, the financial future of the borrower(s) and their respective heirs, and the choice of the lender.

It is most important for the mortgage consultant to work hand-in-hand with the borrower's financial planner or tax consultant to assist their mutual client in order to make decisions that work best for their particular scenario.

For example, most married couples would consider holding title with Joint Tenancy. But if one spouse has a good credit history while the other has damaged credit that may prevent funding of the loan, it would be advantageous to place title in the name of the spouse with the good credit rating.

Common ways to hold title are broken down into options that fall under the categories of sole ownership or co-ownership. Many states permit the holding of title in a living trust, but some lenders do not accept those terms. There are ways around this, but this is where the financial planner and the mortgage planner can make a tremendous difference by working together.

Fannie ups incentives on foreclosures

2011-06-15T09:02:00.001-05:00

Washington Business Journal - by Jeff Clabaugh

Date: Tuesday, June 14, 2011

Fannie Mae is expanding buyer incentives it began offering in 2010 to buyers who close on one of the foreclosed houses in its portfolio.

It is also reviving incentives to real estate agents who bring a buyer to the table.

For sales of Fannie Mae-held properties that close on or before Oct. 31, Fannie May will give qualified homebuyers up to 3.5 percent of the final sales price to put toward closing costs. Selling agents representing can get bonuses of up to $1,200.

The offers are not good to investors nor buyers who do not intend to live in the houses.

Fannie Mae's foreclosed properties listed for sale through its HomePath program can be seen by region, including Houston., Woodlands, Spring and Katy. http://www.homepath.com/

My Credit Score Just Dropped, What Happened?

2011-05-03T12:36:00.000-05:00

You've been working really hard to increase your credit score. You've done everything you thought you were supposed to do to present yourself as a creditworthy individual. So, why did your score suddenly drop? What happened?

Unfortunately, this is a common occurrence with many consumers today, a situation that likely could've been avoided if you had only been working with a qualified credit improvement specialist from the beginning. Remember, there's no shame in seeking help with your credit. Credit scoring models are based on a number of factors that, when combined, add up to a formula that might not seem logical to those who don't deal with these kinds of issues on a daily basis.

The following are just a few examples of seemingly innocent actions that could cause your score to suddenly and dramatically drop.

I paid off my biggest credit card debt and closed the account, but my score dropped anyway. This is one of the most frustrating situations for many borrowers. You would think that paying off your biggest debt and closing your account would be a good thing - and it is. But, because of the five factors of credit we discussed in a previous article, this action could reflect poorly on your credit score because you chose to close the account. Depending on your situation, the account you closed could've been your oldest credit account with the highest credit limit, two major factors in calculating your score.

I maxed out my card, and even though I paid it off completely when I got my statement, my score still dropped. By maxing out your card, your overall credit ratios were adjusted. And even though you paid it off, your statement reflects your current status. In other words, your credit report shows that your account is maxed out, even if you pay it off the next day. The best thing you could've done here was to pay your bill before your statement arrived.

I was only one day late on my payment but I still received a 30-day late on my credit report. Unfortunately, your creditors do not distinguish the difference between one day and 30 days late. You must pay your monthly bills on time every time to avoid this penalty. Depending on which credit cards you have, you could suffer an additional penalty for being late on your credit card payments, even just one time. It's called the universal default clause, which could increase your interest rates on all your credit cards up to 28-30%, even if you're in good standing with your other accounts!

I paid off an old collection and my score dropped significantly. While it might seem illogical or even unfair, sometimes paying off a collection account can actually cause more harm than good. Remember, credit scoring models typically lend more weight to your recent activity than to the mistakes you might've made in the past. By paying off this old account, you may have inadvertently added more weight to this mistake from the past by making this item current.

Don't be shy about asking for help when it comes to your credit score. Remember, your credit is the most valuable financial tool you have at your disposal, and having an expert on your side is always smarter than learning the hard way on your own.

If you or anyone you know has questions about credit. Give us a call at your convenience. We'll be glad to review your credit and see what, if anything, needs to be done to help you meet your financial goals and needs.

Stay tuned for more great credit tips!

Fannie Mae Offering Special 3.5% Buyer Incentive on HomePath Properties in Texas

2011-04-21T15:22:00.000-05:00

Fannie Mae Offering Special 3.5% Buyer Incentive on HomePath homes in Houston. with offers submitted on or after April 11th...Fannie Mae is currently offering buyers up to 3.5% in closing cost assistance through June 30, 2011. The HomePath property buyer must meet the following qualifications to be eligible: Buyers and/or selling agents (the agent representing the buyer) must request the incentive upon submission of initial offer in order to be eligible. The initial offer must be submitted on or after April 11, 2011 and close by June 30, 2011. If an initial offer was made prior to the effective date, the offer is not eligible for the incentive. The sale must close on or before June 30, 2011. No exceptions will be made to this deadline. Only buyers purchasing a HomePath property in Houston as their primary residence may receive up to 3.5% in closing cost assistance. Second homes and investment properties are excluded from the incentive. Buyer must sign the Owner Occupant Certification Rider to the Real Estate Purchase Addendum. If a buyer's total closing costs are under 3.5%, the difference will not be available as a credit to the buyer."

How the First Earth Day Came About

2011-04-16T10:51:00.000-05:00

What was the purpose of Earth Day? How did it start? These are the questions I am most frequently asked.

Actually, the idea for Earth Day evolved over a period of seven years starting in 1962. For several years, it had been troubling me that the state of our environment was simply a non-issue in the politics of the country. Finally, in November 1962, an idea occurred to me that was, I thought, a virtual cinch to put the environment into the political "limelight" once and for all. The idea was to persuade President Kennedy to give visibility to this issue by going on a national conservation tour. I flew to Washington to discuss the proposal with Attorney General Robert Kennedy, who liked the idea. So did the President. The President began his five-day, eleven-state conservation tour in September 1963. For many reasons the tour did not succeed in putting the issue onto the national political agenda. However, it was the germ of the idea that ultimately flowered into Earth Day.

I continued to speak on environmental issues to a variety of audiences in some twenty-five states. All across the country, evidence of environmental degradation was appearing everywhere, and everyone noticed except the political establishment. The environmental issue simply was not to be found on the nation's political agenda. The people were concerned, but the politicians were not.

After President Kennedy's tour, I still hoped for some idea that would thrust the environment into the political mainstream. Six years would pass before the idea that became Earth Day occurred to me while on a conservation speaking tour out West in the summer of 1969. At the time, anti-Vietnam War demonstrations, called "teach-ins," had spread to college campuses all across the nation. Suddenly, the idea occurred to me - why not organize a huge grassroots protest over what was happening to our environment?

I was satisfied that if we could tap into the environmental concerns of the general public and infuse the student anti-war energy into the environmental cause, we could generate a demonstration that would force this issue onto the political agenda. It was a big gamble, but worth a try.

At a conference in Seattle in September 1969, I announced that in the spring of 1970 there would be a nationwide grassroots demonstration on behalf of the environment and invited everyone to participate. The wire services carried the story from coast to coast. The response was electric. It took off like gangbusters. Telegrams, letters, and telephone inquiries poured in from all across the country. The American people finally had a forum to express its concern about what was happening to the land, rivers, lakes, and air - and they did so with spectacular exuberance. For the next four months, two members of my Senate staff, Linda Billings and John Heritage, managed Earth Day affairs out of my Senate office.

Five months before Earth Day, on Sunday, November 30, 1969, The New York Times carried a lengthy article by Gladwin Hill reporting on the astonishing proliferation of environmental events:

"Rising concern about the environmental crisis is sweeping the nation's campuses with an intensity that may be on its way to eclipsing student discontent over the war in Vietnam...a national day of observance of environmental problems...is being planned for next spring...when a nationwide environmental 'teach-in'...coordinated from the office of Senator Gaylord Nelson is planned...."

It was obvious that we were headed for a spectacular success on Earth Day. It was also obvious that grassroots activities had ballooned beyond the capacity of my U.S. Senate office staff to keep up with the telephone calls, paper work, inquiries, etc. In mid-January, three months before Earth Day, John Gardner, Founder of Common Cause, provided temporary space for a Washington, D.C. headquarters. I staffed the office with college students and selected Denis Hayes as coordinator of activities.

Earth Day worked because of the spontaneous response at the grassroots level. We had neither the time nor resources to organize 20 million demonstrators and the thousands of schools and local communities that participated. That was the remarkable thing about Earth Day. It organized itself.

By Senator Gaylord Nelson, Founder of Earth Day

Texas Outperforms Nation in Job Growth

2011-04-04T09:25:00.000-05:00

COLLEGE STATION, Tex. (Real Estate Center) — When it came to creating jobs, Texas outperformed the rest of the country from February 2010 to February 2011.

According to the latest Monthly Review of the Texas Economy published by the Real Estate Center at Texas A&M University, Texas gained 230,000 jobs during those 12 months. That’s an annual growth rate of 2.3 percent. Over the same period, U.S. nonfarm employment rose 1 percent.

The state’s private sector posted an annual employment growth rate of 2.5 percent compared with 1.5 percent for the U.S. private sector.

The state’s seasonally adjusted unemployment rate was 8.2 percent in February 2011, unchanged from a year earlier. Meanwhile, the nation’s rate decreased from 9.7 to 8.9 percent.

All Texas industries except financial activities and information industries had more jobs, and all Texas metro areas had more jobs. Petroplexes Odessa and Midland ranked first and second, respectively, in job creation followed by Longview and Dallas-Plano-Irving.

The state’s actual unemployment rate was 8.2 percent. Midland had the lowest unemployment rate followed by Amarillo, Lubbock, College Station-Bryan and San Angelo.

Despite job growth, existing Texas single-family home sales in February were down 10 percent from a year ago.

Just over 12,000 homes were sold this past February according to the latest Multiple Listing Services (MLS) data compiled by the Center.

The median home price was up 3 percent from the previous year, at $145,800. There was a 7.2-month inventory.

By Bryan Pope, Associate Editor, Real Estate Center

2011-03-26T13:01:00.000-05:00

Spring Maintenance for Seasonal Home Sales

2011-03-26T09:34:00.000-05:00

In many areas across the country, home sales lag when the cold dark winter comes to call. But with the warmer temperatures of spring upon us, it is time to put some thought into preparing your home before you prepare to sell it this season. Depending on the climate in your area, it’s possible that your home or yard have sustained some kind of damage from the cold, stormy winter weather that could prevent you from getting that easy sell that you’re looking for.

There are issues that you can look for yourself, both outside and inside your home; but don’t be afraid to enlist the help of a home inspector if you aren’t sure about what you find though. A home inspector will be able to point out any maintenance issues that could possibly cause problems with potential buyers.

Most problems that you will be looking for when you do your spring inspection will be related to water or wind damage, depending on your climate.

•Check for standing water in your yard that could indicate failed drainage lines. Improper yard drainage can also lead to flooding in your home, so take time to check for moisture in your basement or crawlspace.

•Another area that can need some upkeep after winter damage is plants. If the weather in your area has been particularly harsh you may need to spend some time replacing or pruning trees and shrubs in your yard. Heavy snows can damage trees and create an ugly hazard with broken branches or other damage; talk to an expert if you are unsure how to rectify the problem best for the particular type of trees that you have.

•Though it’s unlikely that your home would suffer roof damage during the winter that you wouldn’t notice until the spring, sometimes a particularly stormy, wet spring can cause damage to your roof and result in water damage inside your home. It is a good idea to clean up any leafy debris from your roof and gutters so that rain can drain off your roof unimpeded; standing water on a roof can seep into your home and cause serious damage. Take the time to check out your attic, if you have one, to ensure that there is no water seepage.

When you’re trying to sell your home, the more proactive that you can be about finding and making repairs before putting your home on the market, the easier you can sell it. Get ready for the prime real estate seasons by making your home inviting for buyers!

Fico Score: What is it Good For?

2011-03-23T15:15:00.000-05:00

The Elements of a Credit Score

A credit score is an extremely important financial tool. It provides access to the financing you need in order to buy a car, a home, or pay for college tuition, among other things. Since higher scores equate to lower costs and vice versa, it's vital to understand the factors involved in calculating your score. Here are the five elements that make up a credit score, in order of importance:

Payment History: 35% impact. Paying debt on time has a positive impact. Late payments, judgments, and charge-offs have a negative impact. Delinquencies that have occurred in the last two years carry more weight than older items.

When applying for a mortgage, every point in your credit score can make a big difference. So don't make any major financial or credit decisions - even paying off an old debt or delinquency - without first discussing it with your mortgage professional.

Outstanding Credit Balances: 30% impact. This factor marks the ratio between the outstanding balance and available credit. Ideally, consumers should make an effort to keep balances as close to zero as possible, and definitely below 30% of the available credit limit when planning to enter into a loan transaction within 3-6 months.

Credit History: 15% impact. This marks the length of time since a particular credit line was established. A seasoned borrower is stronger in this area.

Type of Credit: 10% impact. A mix of auto loans, credit cards, and mortgages is more positive than a concentration of debt from credit cards alone.

Inquiries: 10% impact. This quantifies the number of inquiries (or requests for credit) that have been made on a consumer's credit history within a 6-12 month period. Each individual inquiry - up to 10 - can hurt your credit score by as much as 5 to 30 points. Any additional inquiries thereafter will not affect your credit score.

In other words, don't start the loan process until you're ready to act. Otherwise each individual credit inquiry could cost you. However, scoring models have now been adjusted to count multiple "hard" inquiries within a 45-day period as a single request. So, when you're ready, your credit will be too.

If you or anyone you know has any questions about credit scores or what can be done to repair them, please don't hesitate to call

Higher Down Payments May Be the New Norm.... Permanently

2011-03-23T10:52:00.000-05:00

At the height of the mortgage boom, required down payments were at an all time low. In June of 2006, the average down payment percentage on the purchase of a single family residence was 4%. If you had good credit and a heartbeat, there were lenders who would provide you with a 100% loan with no documentation outside of your name, address, and Social Security Number. Now, all of that is about to change. Serious talk is being floated around Washington D.C. that the return of the days of a minimum of 10% and an average down payment of 20% is swiftly approaching.

The Obama Administration has called for 10% minimums on Fannie/Freddie loans. Sheila Bair, Chairwoman of the FDIC has stated that she flat out wants 20% down payments. Many banks are already there. An analysis of major metropolitan areas reveals that the current average down payment is at 22%. Much of this is driven by the large commercial banks pushing for higher down payments to stem their losses and discourage delinquencies with borrowers having “more skin in the game.” In addition, this is also a form of pre-emptive planning as housing prices continue to fall. The thought is that lower leverage equals lower risk. This conventional wisdom holds true in the majority of cases as most property owners are less likely to walk away from a property in which they have made a significant investment. However, what happens to the individual who wants the “American dream” but no capital? Their option will most likely be a government agency.

As previously mentioned, Fannie/Freddie will require 10%. That’s half of the new norm, but depending on who you are and your price maximum, that’s still a lot of money. Then, there is the FHA and the VA. They have seen a lot of action over the last 2.5 years. In 2009/2010, 50% of all mortgages originated were made with FHA guaranteed funds. The caveat is that FHA funds have various financial handcuffs, e.g. tax impounds, forced insurance, upfront MIP fees, and higher interest rates. If a borrower puts down 20% or more on a non-government backed loan, the rates are usually lower, impounds aren’t required, and mortgage insurance is illegal. Essentially, a new “sub-prime” market is being created whereby those without sufficient down payments are forced to pay extra fees and incur higher rates, or continue renting.

These actions have resulted in the financial world of two extremes: those with a 20% down payment who get all of the perks, and those without the capital who get all of the fees. I foresee a great demand for something in the middle to be created. It may take some time to materialize as the methods of filling the void in the past have faltered. Mezzanine financing above 80% CLTV is currently non-existent. Currently, cities are broke so the availability of the Housing Finance Agency’s “silent seconds” is scarce. The private market hasn’t been incentivized to fill the gap, so the void with the need to be filled will remain, and hard money is too expensive. I believe that if the American public was aware and takes a close look at this new reality, protests will ensue, lobbying will occur and something will be done, as the “charges for some, but not for all” mantra can’t continue for too long. Eventually, a product or solution will be produced, as the margin between 3.5% and 20% is too wide, the demand is heavy and the pending increases in Fannie/Freddie costs are too real.

By: Preston Howard

Tips For First-Time Home Buyers

2011-03-22T09:51:00.000-05:00

There are many things to think about prior to starting the home-buying experience. Here are seven tips that will assist you build a plan.

1. If you are not really planning on staying in the same place for at least a few years, then this most likely isn't a good time for you to invest in a home. The transaction costs involved in the transfer of property are certainly not cheap, therefore the less time you own your home, the greater you risk losing profits should you sell. This may happen even during a rising market, and is a lot more real in a regressing market.

2. Before you start shopping for residences, get pre-approved. That will keep you from considering residences you can't afford, and definately will put you in a situation to be able to take action once you discover a house this really is perfect for you. Do not confuse pre-approval with pre-qualification, as this is mainly based on a less-thorough look at your circumstances. A loan provider pre-approves you determined by your real income, financial debt and credit. Your own mortgage company will also be able to help you with the following 4 guidelines listed below.

3. Check out your credit at least three months prior to being ready to shop for a home. Your lender will pull your credit report as part of the pre-approval procedure discussed already, and often can work with you to advise considerations that may help you fix any kind of problems that you find. This is the reason it's a good plan to complete your initial pre-approval many weeks ahead of when you believe you'll be ready to move.

4. Only shop for properties which you can truly afford. Right after your loan provider pre-approves you, he or she will explain the absolute maximum price for which you can obtain financing. But that's not always the most useful piece of information. A great loan merchant will always ask you how much money you are comfortable paying on a monthly basis, and then work that into the equation. It truly doesn't make any difference if your mortgage lender can pre-approve you to spend $500,000 when the most that you are comfortable having to pay each month is equivalent to the monthly payment on a $300,000 home. And, certainly, you're going to need to make that payment ever month.

5. The old popular 20-percent down payment is not necessarily the normal anymore. It's true, the more cash you put down on a residence, the less you will be paying monthly. But there are many different mortgage programs now that require less down, including FHA mortgages, which simply need 3.5%. Your loan provider can tell you all about the diverse programs and help you select which one is ideal for you.

6. When choosing home financing, you can usually determine if you would like to pay discount points in return for a lower rate of interest. This is also called "buying down the rate." If you're going to remain in the house for some time (commonly not less than 3-5 years), it's usually wise to pay the points. The cheaper monthly interest could save you cash over the lifetime of the mortgage.

7. Work with a specialist. Even though technology makes it a breeze to search for properties on the net, nearly all purchasers are better off using a real estate agent. A lot of people merely purchase one or two properties in their entire life, and also the home-buying process tends to be complex. A good real estate agent will be involved in the sale of one or two homes per month. She or he definately will advise you and negotiate for you throughout the exchange. And, your real estate agent's commission payment is paid by the seller, via the listing real estate agent.

By R. Michaels

Daylight Saving Time 2011: Why and When Does It Begin?

2011-03-12T09:33:00.000-06:00

Why spring forward? Should daylight savings be stopped? Get the facts.

With daylight saving time (also called daylight savings) about to begin again, clock confusion is once again ticking away: When exactly does daylight saving time end? Why do we spring forward? Does it really save energy? Is it bad for your health? Get expert answers below.

When Does Daylight Savings Begin in 2011?

For most Americans, daylight saving time 2011 starts at 2 a.m. on Sunday, March 13, when most states spring forward an hour. Time will fall back to standard time again on Sunday, November 6, 2011, when daylight saving time ends.

The federal government doesn't require U.S. states or territories to observe daylight saving time, which is why residents of Arizona, Hawaii, Puerto Rico, the Virgin Islands, American Samoa, Guam, and the Northern Marianas Islands won't need to change their clocks this weekend.

Where it is observed, daylight savings has been known to cause some problems.

National surveys by Rasmussen Reports, for example, show that 83 percent of respondents knew when to move their clocks ahead in spring 2010. Twenty-seven percent, though, admitted they'd been an hour early or late at least once in their lives because they hadn't changed their clocks correctly.

It's enough to make you wonder—why do we do use daylight saving time in the first place?

How and When Did Daylight Saving Time Start?

Ben Franklin—of "early to bed and early to rise" fame—was apparently the first person to suggest the concept of daylight savings, according to computer scientist David Prerau, author of the book Seize the Daylight: The Curious and Contentious Story of Daylight Saving Time.

While serving as U.S. ambassador to France in Paris, Franklin wrote of being awakened at 6 a.m. and realizing, to his surprise, that the sun would rise far earlier than he usually did. Imagine the resources that might be saved if he and others rose before noon and burned less midnight oil, Franklin, tongue half in cheek, wrote to a newspaper.

"Franklin seriously realized it would be beneficial to make better use of daylight but he didn't really know how to implement it," Prerau said.

It wasn't until World War I that daylight savings were realized on a grand scale. Germany was the first state to adopt the time changes, to reduce artificial lighting and thereby save coal for the war effort. Friends and foes soon followed suit.

In the U.S. a federal law standardized the yearly start and end of daylight saving time in 1918—for the states that chose to observe it.

During World War II the U.S. made daylight saving time mandatory for the whole country, as a way to save wartime resources. Between February 9, 1942, and September 30, 1945, the government took it a step further. During this period daylight saving time was observed year-round, essentially making it the new standard time, if only for a few years.

Since the end of World War II, though, daylight saving time has always been optional for U.S. states. But its beginning and end have shifted—and occasionally disappeared.

During the 1973-74 Arab oil embargo, the U.S. once again extended daylight saving time through the winter, resulting in a one percent decrease in the country's electrical load, according to federal studies cited by Prerau.

Thirty years later the Energy Policy Act of 2005 was enacted, mandating a controversial monthlong extension of daylight saving time, starting in 2007.

But does daylight saving time really save any energy?

Daylight Saving Time: Energy Saver or Just Time Suck?

In recent years several studies have suggested that daylight saving time doesn't actually save energy—and might even result in a net loss.

Environmental economist Hendrik Wolff, of the University of Washington, co-authored a paper that studied Australian power-use data when parts of the country extended daylight saving time for the 2000 Sydney Olympics and others did not. The researchers found that the practice reduced lighting and electricity consumption in the evening but increased energy use in the now dark mornings—wiping out the evening gains.

Likewise, Matthew Kotchen, an economist at the University of California, saw in Indiana a situation ripe for study.

Prior to 2006 only 15 of the state's 92 counties observed daylight saving time. So when the whole state adopted daylight saving time, it became possible to compare before-and-after energy use. While use of artificial lights dropped, increased air-conditioning use more than offset any energy gains, according to the daylight saving time research Kotchen led for the National Bureau of Economic Research [PDF] in 2008.

That's because the extra hour that daylight saving time adds in the evening is a hotter hour. "So if people get home an hour earlier in a warmer house, they turn on their air conditioning," the University of Washington's Wolff said.

In fact, Hoosier consumers paid more on their electric bills than before they made the annual switch to daylight saving time, the study found.

(Related: "Extended Daylight Saving Time Not an Energy Saver?")

But other studies do show energy gains.

In an October 2008 daylight saving time report to Congress (PDF), mandated by the same 2005 energy act that extended daylight saving time, the U.S. Department of Energy asserted that springing forward does save energy.

Extended daylight saving time—still in practice in 2011—saved 1.3 terawatt hours of electricity. That figure suggests that daylight saving time reduces annual U.S. electricity consumption by 0.03 percent and overall energy consumption by 0.02 percent.

While those percentages seem small, they could represent significant savings because of the nation's enormous total energy use.

What's more, savings in some regions are apparently greater than in others.

California, for instance, appears to benefit most from daylight saving time—perhaps because its relatively mild weather encourages people to stay outdoors later. The Energy Department report found that daylight saving time resulted in an energy savings of one percent daily in the state.

But Wolff, one of many scholars who contributed to the federal report, suggested that the numbers were subject to statistical variability and shouldn't be taken as hard facts.

And daylight savings' energy gains in the U.S. largely depend on your location in relation to the Mason-Dixon Line, Wolff said.

"The North might be a slight winner, because the North doesn't have as much air conditioning," he said. "But the South is a definite loser in terms of energy consumption. The South has more energy consumption under daylight saving."

(See in-depth energy coverage from National Geographic News.)

Daylight Saving Time: Healthy or Harmful?

For decades advocates of daylight savings have argued that, energy savings or no, daylight saving time boosts health by encouraging active lifestyles—a claim Wolff and colleagues are currently putting to the test.

"In a nationwide American time-use study, we're clearly seeing that, at the time of daylight saving time extension in the spring, television watching is substantially reduced and outdoor behaviors like jogging, walking, or going to the park are substantially increased," Wolff said. "That's remarkable, because of course the total amount of daylight in a given day is the same."

But others warn of ill effects.

Till Roenneberg, a chronobiologist at Ludwig-Maximilians University in Munich, Germany, said his studies show that our circadian body clocks—set by light and darkness—never adjust to gaining an "extra" hour of sunlight to the end of the day during daylight saving time.

"The consequence of that is that the majority of the population has drastically decreased productivity, decreased quality of life, increasing susceptibility to illness, and is just plain tired," Roenneberg said.

One reason so many people in the developed world are chronically overtired, he said, is that they suffer from "social jet lag." In other words, their optimal circadian sleep periods are out of whack with their actual sleep schedules.

Shifting daylight from morning to evening only increases this lag, he said.

"Light doesn't do the same things to the body in the morning and the evening. More light in the morning would advance the body clock, and that would be good. But more light in the evening would even further delay the body clock."

Other research hints at even more serious health risks.

A 2008 study in the New England Journal of Medicine concluded that, at least in Sweden, heart attack risks go up in the days just after the spring time change. "The most likely explanation to our findings are disturbed sleep and disruption of biological rhythms," lead author Imre Janszky, of the Karolinska Institute's Department of Public Health Sciences in Stockholm, told National Geographic News via email.

(Related: "Leap Year: How the World Makes Up for Lost Time.")

Daylight Savings Lovers, Haters

With verdicts on the benefits, or costs, of daylight savings so split, it may be no surprise that the yearly time changes inspire polarized reactions.

In the U.K., for instance, the Lighter Later movement—part of 10:10, a group advocating cutting carbon emissions—argues for a sort of extreme daylight savings. First, they say, move standard time forward an hour, then keep observing daylight saving time as usual—adding two hours of evening daylight to what we currently consider standard time.

The folks behind Standardtime.com, on the other hand, want to abolish daylight saving time altogether. Calling energy-efficiency claims "unproven," they write: "If we are saving energy let's go year round with Daylight Saving Time. If we are not saving energy let's drop Daylight Saving Time!"

But don't most people enjoy that extra evening sun every summer? Even that remains in doubt.

National telephone surveys by Rasmussen Reports from spring 2010 and fall 2009 deliver the same answer. Most people just "don't think the time change is worth the hassle." Forty-seven percent agreed with that statement, while only 40 percent disagreed.

But Seize the Daylight author David Prerau said his research on daylight saving time suggests most people are fond of it.

"I think the first day of daylight saving time is really like the first day of spring for a lot of people," Prerau said. "It's the first time that they have some time after work to make use of the springtime weather.

"I think if you ask most people if they enjoy having an extra hour of daylight in the evening eight months a year, the response would be pretty positive."

By: Brian Handwerk for National Geographic News
Updated March 10, 2011

Negotiating for a New Home: 3 Tips to Get the Most Out of the Deal

2011-03-11T09:58:00.000-06:00

New construction seems cut and dry. You walk into the home, you fill out paperwork, you pick out a floor plan, write a check and the builders start work. The prices are advertised on the paperwork and website, and buying a new home feels a lot like buying a new car. Every extra feature comes with a price tag, and since you’re picking from a menu of options, the prices are firm. Or are they?

If you’re hoping to get the most out of your deal with a builder, you’ll need to be proactive. Everything is negotiable in a sluggish real estate market – so take advantage of this one.

Get an Agent

Your first step before even looking at homes in a builder’s neighborhood is to get a real estate agent. As the buyer, you pay nothing to the agent, and the agent gets money from the builder. Having an agent is this case is essentially free for you, and you benefit from the considerable knowledge that real estate agent brings with her. Seek out an agent familiar with the area before proceeding with any discussions with builders.

Once you have a Realtor on your side, let him or her handle as much of the discussion as possible. Builders like to deal with naïve couples. Real estate agents know how to handle the builders on your behalf and if there’s wiggle room, the agent will help you find it.

Research the Market

If you absolutely love a particular house plan from a certain builder, by all means get excited about it – on the inside. Just like buying a car is a game, buying a home is a game, too. Look around at the comparable properties from other builders. How much are they selling for? Why is the one you want priced the way it is? What bonuses are being offered with your builder of choice and with the competition?

Builders want your business in this market, especially if you’re a solid buyer with good credit and a down payment. They are much more willing to play ball if you can show them you know the house is overpriced for the market. Or you may be able to negotiate a bigger upgrade bonus if the competition is offering one. You can only really negotiate if the seller doesn’t know you’re practically salivating to sign paperwork, so play it cool. Act like you’re unsure of which builder to work with (or let your agent play this game) and see what sort of offers you can land.

Buy the Spec Homes

Many builders are scaling back on spec homes, or homes built on speculation of a sale. These homes are gambles for builders who are hoping the right buyer might come along. Why not become that buyer? The home is already built and sitting on the market, and it’s costing the builder money every month to hold it, just like a traditional seller. Step in and grab it after negotiating a price, just like you would on an existing home. You get a negotiated price and still get your brand new home.

You may not have made the choices in the home, but features and colors will likely be neutral. As an added benefit, the builder who sells homes on spec may be willing to add extra upgrades as part of the deal, even with a lower price. The only trick here is you’ll need to be willing to compromise on floor plans since you’re not able to pick the one you love the best – you may have to pick the one the builders chose six months earlier.

Source: Houston Real Estate Observer

FHA: Monthly Mortgage Insurance Premiums to Rise April 18th, 2011

2011-03-09T10:00:00.000-06:00

For the third time in 12 months, the FHA is changing its mortgage insurance costs.

Effective for all FHA case numbers assigned on, or after, April 18th, 2011 annual mortgage insurance premiums (MIP) will increase 25 bases points.

Current FHA borrowers are unaffected.

To understand FHA is to understand why premiums are rising.

As an institution the federal Housing Administration plays a much larger role in U.S. housing market today than it did in the past 5 years.

Rapid growth has strained the FHA capital. The FHA states that the MIP increases will strengthen its reserves. By law it must maintain a certain level of reserves.

FHA Mortgage insurance varies by, loan term, and by loan–to-value. Beginning April 18th, 2011 the new insurance premiums are as follows:

• 15 – year loan term, loan-to-value > 90% : 0.05% per year

• 15 – year loan term, loan-to-value < = 90% : 0.25% per year

• 30 – year loan term, loan-to-value > 95% : 1.15% per year

• 30- year loan term, loan-to-value < = 95% : 1.10% per year

To calculate your monthly mortgage insurance premium, multiply your starting loan size, by your insurance premium and divide by 12.

There is no change to the 1% upfront mortgage insurance premium charged by the FHA.

For Buyers:The Financial Opportunity of a Lifetime?

2011-03-08T09:23:00.005-06:00

We often point out that a buyer should be more concerned about the COST of a home rather than the PRICE. Price obviously is a component of cost. However, unless you buy all-cash, you must also be concerned about the financing of the purchase. The price and the financing together determine the cost of a home. Today, we want to look at only the financing piece.

An opportunity exists today because of recent government involvement; an opportunity that may never again be available in our lifetimes. There has been much discussion about what role the federal government should have in supporting homeownership. We will leave our opinions on the debate for another time. However, we want to alert you to two advantages available to a purchaser today that may disappear in the future:

Historically low interest rates

The ability to lock in these rates for thirty years

Interest Rates

Because of the financial crisis, the government stepped in and instituted a series of programs which pushed mortgage interest rates to historic lows. If we look at 30 year mortgage interest rates before and after government intervention we see the impact these programs had (see chart below).

According to Freddie Mac, from 2006 to the start of the financial crisis (the fall of 2008), the average rate was 6.29%. Since then, the average rate has been 4.92%.

A purchaser can still get a 30 year-fixed-rate-mortgage at approximately 5%. However, interest rates this low may soon disappear. The government has questioned its role in supporting homeownership. In the administration’s REFORMING AMERICA’S HOUSING FINANCE MARKET: A REPORT TO CONGRESS [4], they are very strong in voicing their thoughts on this issue:

…our plan also dramatically transforms the role of government in the housing market. In the past, the government’s financial and tax policies encouraged housing purchases and real estate investment over other sectors of our economy, and ultimately left taxpayers responsible for much of the risk incurred by a poorly supervised housing finance market.

Going forward, the government’s primary role should be limited to robust oversight and consumer protection, targeted assistance for low- and moderate-income homeowners and renters, and carefully designed support for market stability and crisis response…

Under our plan, private markets … will be the primary source of mortgage credit and bear the burden for losses.

What are the probable results of this decision?

The Royal Bank of Scotland [5]:

“The (government) currently provides 95% of housing finance in the U.S.; any reductions of their involvement in supporting mortgages mean interest rates will have to go up to induce private lending.”

AnnaMaria Andriotis [6], writer for SmartMoney:

“In the proposals were changes that will mean more expensive mortgages, with higher fees and, probably, higher interest rates, larger down payments and, in the near term, fewer lenders to choose from.”

The day of a 5% rate seem to be coming to an end.

Locking in a rate for thirty years

We must also realize that having the ability to lock-in a rate for 30 years may soon be a thing of the past.

There are a growing number of people who think that our mortgage industry should imitate those of other industrial countries around the world. If we do start limiting government support for the mortgage process, the 30-year-fixed-rate mortgage may disappear. Other countries, like Canada, only allow a purchaser to lock in a rate for a five year term. After that, the borrower must renegotiate a new mortgage at current rates. Could that happen here?

Mark Zandi, Chief Economist of Moody’s Economics.com addressing the administration’s recent report:

“A private system would likely mean the end of the 30-year fixed-rate mortgage as a mainstay of U.S. housing finance. A privatized U.S. market would come to resemble overseas markets, primarily offering adjustable-rate mortgages. Based on the experience overseas, the fixed-rate share in the U.S. would decline to an average of between 10% and 20% of the mortgage market compared with a historical average of closer to 75%.”

Bottom Line

The COST of a home is dramatically impacted by the mortgage component. Today, we can get a 5% mortgage and lock it in at 5% for the next thirty years!! Both of these opportunities may disappear in the future. You should take this into consideration if you’re looking to purchase a home.

Source: The KCM Crew On March 2, 2011

DO’S & DON’TS WHEN APPLYING FOR A MORTGAGE

2011-02-28T13:15:00.000-06:00

There are several things that can negatively affect your ability to close your loan. Keep these in mind as we proceed.

• DON'T change jobs without inquiring about the impact this change could have on the approval/approvability of your mortgage loan.

• DON'T make major purchases during or prior to closing (i.e., new car, furniture, appliances, electronics) because this might impact your qualification ratios. Please call me to calculate what your ratios would be with any additional debts.

• DON'T obtain and/or deposit sums of money over $500. FNMA/HUD guidelines require documentation as to the source of these funds (i.e., copy of bonus check, copy of tax refund, copy of insurance settlement, gift letter with copy of check and deposit slips, etc.).

• DON'T close/open or transfer any asset accounts without inquiring about the proper documentation required for our loan file (i.e., if you transfer all the funds in your stock account to your savings account, documentation is required).

• DON'T open or increase any liabilities, including credit cards, signature loans, etc., during the loan process. This could have a major impact on your credit score.

So what should you do?

• DO keep originals of all pay stubs, bank statements, and other important financial documentation. We are required to update any documents that are over 30 days old prior to the closing of your mortgage loan (this is required even if your loan is approved).

• DO provide all documentation for the sale of your current home (i.e., sales contract, closing statement, employer relocation/buyout program).

• DO notify me if you plan to receive gift funds.

• DO notify me of any employment changes (i.e., change of employer; recent raise/promotion; change of pay status, such as salary to commission, etc.).

When closing time comes, anyone who is going to be listed on title (even if they are not on the loan) must attend the loan closing. You will be required to show identification so bring a copy of your driver’s license with you.

Any funds required to close must be in the form of a cashier’s check made out to the title company. You should know the exact amount for the check a few days before closing.

If there is any doubt in your mind regarding what to do, please call my office. Let my experience work for you. Thanks for placing your trust in me and I look forward to serving you and your friends.

What's The Difference Between Pre-Qualification and Pre-Approval

2011-02-21T16:13:00.000-06:00

Pre-qualification is the first step in obtaining mortgage financing in Houston. A potential borrower answers a few questions to provide the loan consultant with a quick snapshot of the borrower's income, existing debt, accumulated savings and whether or not there is a co-borrower. Signature(s) allow the loan consultant to run a credit report and begin to determine what loans are good candidates for this particular client. However, there are literally thousands of loan programs available. It is important for the loan professional to know the long-term financial objectives of the prospective homeowner.

Pre-approval is a written documentation that proves the borrower has full support of a lender. It means the form 1003 Uniform Residential Loan Application has been completed and reviewed by an underwriter. Based on the borrower's income, debt ratio and savings, the underwriter will provide a dollar amount this borrower is eligible for. Now the borrower has the convenience of shopping for a home in the price range agreed upon by the lender.

Pre-approval allows potential homeowners to shop as cash buyers, and that means negotiating power. Sellers will take an offer from a pre-approved shopper much more seriously and may even accept a lower bid because they know the financing is in place and the deal is secure.

What Does the Fed's Quantitative Easing Mean to the Economy and Home Loan Rates?

2011-02-17T17:45:00.000-06:00

In the statement released after its November meeting, the Federal Reserve announced that it will purchase a further $600 Billion of longer-term Treasury securities by the end of the second quarter of 2011, in what is known as another round of Quantitative Easing (or QE2).

To help you understand what this means to the economy and to you, let's break down the details, starting with what Quantitative Easing is and the reasons behind this move by the Fed.

What is Quantitative Easing?

Quantitative Easing is the concept of the Fed becoming a heavy buyer of Treasuries and Bonds. This is done to artificially cause those security prices to move higher under the increased demand. That demand should, in turn, cause interest rates to move lower with the hope of stimulating the economy.

What other impacts might it have?

QE2 will almost assuredly hurt the US Dollar, which helps make US exports more affordable abroad as well as make imports appear relatively more expensive. Such a shift helps large multi-national companies, which have a large influence on the economy and the major Stock market indices.

Of course, the Fed can't outright say it is trying to weaken the currency. After all, haven't many members of Congress and the Administration been bashing China for currency manipulation?

But the point is, even if QE2 doesn't have a direct impact, the drop in currency value can be very beneficial to corporations and Stocks.

How can QE2 impact home loan rates?

While Stocks should benefit from another round of Quantitative Easing, Bonds may have a different reaction. And that brings us to the heart of what you need to know: What does QE2 mean to Bonds and home loan rates?

With another round of Quantitative Easing, Bond prices should initially improve because QE2 includes large Bond purchases.

But...the key word is "initially." That's because, even if Bonds show signs of initially improving, the eventual softening of the Dollar, rising commodity prices, and rise in Stock prices could become a drag on Bonds, which would negatively impact home loan rates.

The bottom line is, QE2 and a weaker US Dollar may make our exports more attractive to foreign buyers, but it may ultimately drive rates higher. That's an important point to consider if you're thinking about refinancing or purchasing a new home. The reality is, home loan rates are still near historic lows, but won't be forever.

If you know anyone who is looking to buy, sell or refinance a home, please forward their name and telephone number to us.

Pros and Cons of a 10 Year Mortgage

2011-02-15T15:53:00.000-06:00

A 10 year mortgage presents attractive benefits to homeowners and homebuyers in a market with very low mortgage interest rates. This product allows the homeowner to shorten the time in which they can pay off their home loan with principal and interest payments completed in 120 months.

The overall benefit of a 10 year mortgage is that it typically reduces the amount of interest paid on a home loan, resulting in significant savings on interest expenses compared to longer amortizing 30 year fixed rate mortgages or even a 15 year fixed rate loans.

These potential savings in interest expenses on a 10 year mortgage come at a price of higher monthly mortgage payments. Compared to a 30 year fixed rate loan, the homeowner is paying off the loan in one third the time and, in order to do that, they have to pay more money in that time-frame.

If a 10 year mortgage is not a realistic option due to the higher monthly payments, then there are some alternative scenarios that may provide similar results on a relative scale. For instance, if a homebuyer can afford the payments on a 15 year fixed rate loan with some cushion built in, then they may be able to make additional principal reduction payments every month, quarter or whenever possible. This scenario may help a consumer payoff their loan more rapidly. This mortgage scenario allows for the lower monthly payments of the 15 year loan with some flexibility to pay off the loan in a shorter amount of time with less interest paid overall.

Making a decision between a 10 year mortgage, a 30 year fixed, a 15 or 20 year fixed rate loan, and an adjustable rate mortgage requires a full home budget analysis and long term projection for your earnings and expenses.

It's important to consult with a licensed mortgage and tax professional before making any major financial decision. A licensed mortgage expert can help make suggestions as to what kind of mortgage product best suits your budget and financial portfolio. Your loan officer likely has access to a number of available mortgage programs as well as the current mortgage rates to help you understand the implications of your choice of home loans.

Ask your mortgage professional about the possibility of a 10 year mortgage for your refinance or next home purchase. When the monthly payments are calculated based on current mortgage rates, you should be able to project whether or not this is a viable option for you.

FHA-announces-another-increase-in-monthly-mortgage-insurance

2011-02-14T17:21:00.000-06:00

As part of ongoing efforts to strengthen the Federal Housing Administration’s (FHA) capital reserves, FHA Commissioner David H. Stevens today announced a new premium structure for FHA-insured mortgage loans increasing its annual mortgage insurance premium (MIP) by a quarter of a percentage point (.25) on all 30- and 15-year loans. The upfront MIP will remain unchanged at 1.0 percent. This premium change will impact new loans insured by FHA on or after April 18, 2011.

Additionally for 15 year terms mortgage insurance will be increased. For 15 year loans under 90% LTV FHA is adding mortgage insurance premium. Previously these loans did not require annual mortgage insurance

REALTORS® Praise FHFA for Proposed Rule to Prohibit Private Transfer Fees

2011-02-07T10:36:00.000-06:00

RISMEDIA, February 7, 2011—The National Association of REALTORS® applauds the Federal Housing Finance Agency for moving ahead with a proposed rule to restrict government-sponsored enterprises Fannie Mae and Freddie Mac and the 12 Federal Home Loan Banks from investing in mortgages encumbered by private transfer fee covenants.

NAR has long been vocal in its opposition to private transfer fees, which are often attached to a property by developers and require payment of fees back to the developer each time the property is resold; the covenants can be difficult to reverse and may be attached to a deed for up to 99 years.

“As the leading advocate for homeownership, we commend FHFA for the proposed rule to ban private transfer fees, which we believe often decrease affordability, negatively impact equity and provide little benefit to property purchasers,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “FHFA is taking the necessary steps to ensure that these fees are no longer used to simply generate revenue for investors and private developers.”

The proposed rule would exclude private transfer fees paid to some homeowner, condominiums, and cooperative associations. “We understand that FHFA believes that some private transfer fees have a legitimate place in real estate markets, and support their decision to exempt certain organizations from the proposed ruling where there may be a direct benefit to the homeowner; however, FHFA must ensure that the fees paid are reasonable and fully disclosed to home buyers well in advance of closing,” said Phipps.

According to FHFA, the proposed rule would only apply to private transfer fee covenants created on or after the date of publication of the rule.

Since there is virtually no oversight on where or how private transfer fee proceeds can be spent, on how long a private transfer fee may be imposed, or on how the fees should be disclosed to home buyers, as many as 19 states have banned or restricted private transfer fees. The Federal Housing Administration has also restricted private transfer fees through its home loan programs.

A Quick Guide to Canceling Private Mortgaeg Insurance

2011-02-04T15:00:00.000-06:00

The federal Homeowners Protection Act requires that private mortgage insurance be canceled once borrowers have met specific requirements. The law also requires lenders to notify borrowers of their right to cancel coverage.

What borrowers need to do and other considerations that could affect MI cancellation are outlined
below.

STEPS FOR BORROWERS
Here are the steps a borrower should take to initiate MI cancellation.

1. Determine eligibility by answering the following questions:

• Have I paid down my mortgage to 80% LTV?
• Have I made structural improvements that will increase the value of my home?
• Have homes in my neighborhood appreciated significantly?

If the answer to any of these questions "yes" the borrower may be qualified to cancel mortgage insurance.

2. Contact the servicer to find out more about the lender's cancellation policy requirements, and have the following information on hand:

• Social Security number.
• Property address.
• Loan number.

3. Follow the servicer’s instructions, such as supplying additional information about the home or loan, or having the servicer arrange for an appraisal.

4. Make a written request for MI cancellation. The servicer will notify the borrower regarding the status of the request.

OTHER CONSIDERATIONS

Several factors may affect a borrower’s ability to cancel MI:

• Loan payments are not current.
• The borrower has a history of late or missed payments (a payment more than 30 days late in the past year, or more than 60 days late in the past two years).
• The property has declined in value.
• The appraisal doesn’t show an appreciation in equity of 20% or more.
• The borrower have insufficient equity
• The property has an existing second mortgage or home-equity loan.
• The loan closed before July 29, 1999 (different rules may apply).
• The loan is exempt from cancellation laws (for example, FHA loans and some VA loans).
• The MI is lender-paid, rather than borrower-paid.

Note: The above information is not intended to be comprehensive. Other restrictions, including state laws, may apply. Lenders should advise borrowers regarding loan-specific issues.

What Important Documents You Need to Keep From Your Closing

2011-02-04T14:56:00.000-06:00

• The Real Estate Settlement Procedures Act (RESPA) statement. This form, sometimes called a HUD 1 statement, itemizes all the costs associated with the closing. You’ll need this for income tax purposes and when you sell the home.

• The Truth in Lending Statement summarizes the terms of your mortgage loan.

• The mortgage and the note (two pieces of paper) spell out the legal terms of your mortgage obligation and the agreed-upon repayment terms.

• The deed transfers ownership of the property to you.

• Affidavits swearing to various statements by either party. For example, the sellers will often sign an affidavit stating that they have not incurred any liens on the property.

• Riders are amendments to the sales contract that affect your rights. For example, if you buy a condominium, you may have a rider outline the condo association’s rules and restrictions.

• Insurance policies provide a record and proof of your coverage

Reprinted from REALTOR® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS®

How do I know if it’s a Condo?

2011-01-12T15:14:00.001-06:00

Because of the recent changes to the condominium approval/review processes it is absolutely imperative that you understand what type of property you are dealing with BEFORE you move forward with listing or selling a property. Condominiums present financing challenges better addressed at the beginning of the transaction, as opposed to later. For example: There’s no point writing up an offer at midnight for a buyer when this project isn’t on an approved list and the project wouldn’t qualify even if it was submitted for review.

Condominium defined: A form of ownership where units are owned by individuals but the land and common areas are owned jointly with all owners.

So what should you do?

1. Do not accept MLS information or verbal information. Get a copy of the legal description.

Blindly accepting what you read on the MLS listing or what the current owner says isn’t smart. Very few agents or owners have actually READ the legal description.

2. Do NOT rely on the project name for determination.

Many projects have misleading names. The developer names the project “Shady Pines Townhomes” so people assume that because the word “Condominium” isn’t mentioned that it’s not a condo and doesn’t require project approval.

3. READ the legal description – Does the legal description of the unit include the lot?

If not you probably have a condominium form of ownership. Check the project documents.

Texas Leads the Way in Recovery

2011-01-08T16:55:00.000-06:00

COLLEGE STATION (Real Estate Center) – The Texas economy continues to outperform the U.S. economy in the current recovery, according to the Real Estate Center’s latest monthly economic review.

The state’s economy gained 194,400 jobs from November 2009 to November 2010, an annual growth rate of 1.9 percent, compared with the nation’s 842,000 jobs, an annual growth rate of 0.6 percent.

Texas’ private sector continues to play a key role in job creation. The state’s private sector posted an annual employment growth rate of 2.2 percent compared with 1 percent for the U.S. private sector from November 2009 to November 2010.

The state’s seasonally adjusted unemployment rate was 8.2 percent in November 2010, the same as in November 2009, while the nation’s rate decreased from 10.0 to 9.3 percent over the same period.

All Texas industries except the trade and information industries had more jobs in November 2010 than in November 2009. The state’s mining and logging industry ranked first in job creation followed by professional and business services, education and health services and manufacturing.

All Texas metro areas had more jobs in November 2010 than in November 2009. McAllen-Edinburg-Mission ranked first in job creation followed by Brownsville-Harlingen and Austin-Round Rock-San Marcos.

The state’s actual unemployment rate in November 2010 was 8.3 percent. Midland had the lowest unemployment rate followed by Amarillo, Lubbock, College Station-Bryan and Abilene.

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Rental Property Tax Changes (Form 1099) and Foriegn Bank Accounts and Assets Disclosure Requirements

2011-01-08T15:45:00.000-06:00

Two new tax changes were implemented in recent legislation that may affect a number of tax payers filing 2010 returns in 2011. One affects landlords who now need to disclose all payments made above $600. The other affects people with certain assets outside the US, who now have to formally disclose foreign holdings (like bank accounts) via Form 90-22.1.

Rental Property: If you own any rental property in 2011, you need to issue 1099 form (Miscellaneous Income) to service providers for all payments made by you above $600. Landlords will need to file these forms with the IRS at the year end. These requirements mean you need to keep careful records and take details like person/corporation name, address, SSN, EIN etc of service providers to whom you make payments above $600 (use form W-9 to capture these details)

This provision will only apply to payments made after Dec. 31, 2010, and will cover, for example, payments made to plumbers, painters or accountants in the course of earning the rental income. While rental property owners will not actually issue the required 1099s until early 2012, they need to start keeping adequate records of payments starting Jan. 1, 2011, so they will be prepared to issue correct 1099s.

Foreign Bank and Financial Accounts (FBAR) – Worldwide financial assets (like bank accounts, stocks, fixed deposits) reporting has been made mandatory by IRS during the 2011 tax filing season. This requirement excludes real estate property. Form 90-22.1, should be used to disclose accounts and holdings where the tax payer has a financial interest in, signature authority, or other authority over one or more financial accounts in foreign countries where the aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.

No report is required if the aggregate value of the accounts did not exceed $10,000. Penalties for not filing this form is starting from $10000, up to $50000. Form 90-211.1 is not filed as part of your tax return, but sent separately to the IRS and is due to by June 30th. Sources : Journal of Accountancy, IRS

What is Tax Deductible in the Loan Process?

2010-12-29T17:01:00.001-06:00

1. Home acquisition mortgage loan fees. If you bought your primary or secondary home in 2010, you probably obtained a mortgage to finance the purchase. That mortgage is called an “acquisition mortgage” because it enabled purchase of the residence. If you paid a loan fee to obtain that acquisition mortgage, usually called “points”, that loan fee qualifies as an itemized interest deduction. Each point paid equals 1% of the amount borrowed.

2. Home improvement loan fees. Similarly, if you paid a loan fee to obtain a home improvement loan, that loan fee is fully deductible in the tax year it was paid.

3. Loan fees paid to refinance a home loan (or borrow against other real estate). If you refinance your existing home loan in 2010, or borrowed against other real estate such as an apartment building, any loan fee you paid must be deducted over the life of the mortgage.

4. When refinancing, deduct any loan fees that have not already been claimed. Thanks to low mortgage interest rates, many homeowners refinanced again in 2010, or borrowed against other real estate such as an apartment building. Any loan fee you paid must be deducted over the life of the mortgage.

5. If you bought or sold property in 2010 remember to deduct prorated real estate taxes. A major tax deduction many real estate buyers and sellers overlook is the prorated property tax they paid at the close of escrow. Even if the other party remitted the payment to the tax collector, but you were charged a prorated portion of the tax bill, be sure to deduct your share on your 2010 return.

6. Deduct prorated mortgage interest in the year of property purchase or sale. Similarly, if bought a residence and took over an existing mortgage, don’t forget to deduct your prorated interest share for the month of the sale. Your closing settlement statement shows your prorated share of the mortgage interest.

7. Mortgage prepayment penalty. If you paid off an existing mortgage early and were charged a prepayment penalty by the lender, that prepayment penalty qualified as an itemized deduction.

8. When land rent payment qualify as interest deductions. Million of homes are located on leased land. Internal Revenue Code 163 allows land rent to be deducted like interest when the lease; (a) is for at least 15 years, including renewal periods; (b) is freely assignable; (c) contains a present or future option to buy the land; and (d) is like a security interest, such as a mortgage. Payments to buy the land are not deductible, nor are ground rent payments deductible if you do not have the option to buy the land, such as in a mobile home park.

9. Home construction loan interest. If you built a new home in 2010, or are building one now, don’t forget to deduct the construction loan interest paid. It’s deductible if the construction period does not exceed 24 months before occupancy of your principal residence.

10. Deduct prepaid property taxes and mortgage interest. If you prepaid 2010 real estate taxes in 2009, as homeowners do to increase their tax deductions, or if you pay your January 2011 mortgage payment in December 2010, don’t forget to deduct these extra mortgage interest and property tax payments on your 2010 income tax returns

The Right Way To Receive A Cash Gift For Downpayment

2010-12-29T16:57:00.000-06:00

As lenders tighten mortgage guidelines for Texas home buyers, minimum downpayment requirements are increasing. Several years ago, you could finance a home with nothing down. Today, most conventional mortgages require at least 3 percent.

The guideline changes have led to an increase in the number of home buyers accepting cash gifts from family.

Gifts are allowed in most cases but the problem is, if you don’t accept the gift in a “lender-friendly” way, the mortgage underwriter could reject it, and negate it.

You can’t just deposit a cash gift into your bank account. You have to follow a series of steps and keep records.

1. Provide an acceptable gift letter signed by all parties

2. Provide documentation of the gifter’s withdrawal of funds via teller receipts

3. Provide documentation of the giftee’s deposit of funds via teller receipts

Lenders require these 3 steps for two basic reasons. First, they want to make sure that the cash gift is “clean” (i.e. not laundered). Second, they want to make sure the gift is really a gift and not a loan-in-disguise.

MI Tax Deductibility Extended Through 2011

2010-12-27T11:40:00.001-06:00

The President has signed the bill extending Mortgage Insurance tax deductibility through December 31, 2011. This makes it a great time to buy a home sooner and enjoy predictable payments, while benefiting by deducting the premiums from their income taxes. And MI can be canceled once the home buyer builds enough equity.

Details on Tax Deductibility for MI Remain Unchanged

• The home purchase or refinance loan must close between January 1, 2007 and December 31, 2011;

• Household income must be at or below $100,000 for a full deduction of premium;

• The premium deduction is reduced 10% for each $1,000 of income over $100,000;

• The premium deduction is prorated in the first year based on the month the loan closes;

• Applies to primary residence and one other residence purchased for personal use by the taxpayer;

• Monthly, annual, and single MI premiums are eligible. Financed premium deductions should be taken over a seven year period.

And That's Not All

MI can be a better option than FHA for many borrowers, for more than one reason.

• Lower monthly payments.

• Higher maximum loan amounts mean borrowers qualify.

• No upfront mortgage premium.

• Minimum 3% down payment with no upfront mortgage premium.

Note: Tax deductibility currently is approved through December 31, 2011. Network Funding, LP does not provide tax advice. Borrowers should consult their tax advisor to determine eligibility for this deduction.

New Rules Require Rental Property Owners to Issue 1099s

2010-12-20T14:31:00.000-06:00

The recently enacted Small Business Jobs Act contained one provision that may have escaped the notice of taxpayers who own rental property, but will affect them starting in January. Under the provision, owners of property who receive rental income will be required to issue Forms 1099 to service providers for payments of $600 or more during the year.

The act subjects recipients of rental income from real estate to the same information-reporting requirements as taxpayers engaged in a trade or business. Thus, rental income recipients making payments of $600 or more to a service provider in the course of earning rental income are required to provide an information return (typically, Form 1099-MISC, Miscellaneous Income) to the IRS and to the service provider. This provision will apply to payments made after Dec. 31, 2010, and will cover, for example, payments made to plumbers, painters or accountants in the course of earning the rental income.

While rental property owners will not actually issue the required 1099s until early 2012, they need to start keeping adequate records of payments starting Jan. 1, 2011, so they will be prepared to issue correct 1099s. They will also need to obtain the name, address and taxpayer identification number of the service provider, using Form W-9 or a similar form.

Exceptions

The law provides exceptions for individuals who can show that the requirement will create a hardship for them. The IRS is directed to issue regulations on this, but has not done so yet, so there is currently no guidance on what constitutes sufficient hardship to qualify for the exception or how a taxpayer would demonstrate that hardship.

The law also contains an exception for individuals who receive rental income of "not more than a minimal amount." Again, the IRS is directed to issue regulations to determine what constitutes "not more than a minimal amount" but has not done so yet.

If such guidance is not forthcoming before Jan.1, all individuals who receive rental income should start keeping records of payments to service providers so they are prepared to issue 1099s in 2012.

The law also contains an exception for members of the military or employees of the intelligence community if substantially all their rental income comes from renting their principal residence on a temporary basis.

Information Return Penalties

Taxpayers should also be aware that in addition to creating a new reporting requirement, the act increases the penalties for failure to file a correct information return. The first-tier penalty increases from $15 to $30; the second-tier penalty increases from $30 to $60; and the third-tier penalty increases from $50 to $100. For small business filers (with average annual gross receipts under $5 million), the calendar-year maximum increases from $25,000 to $75,000 for the first-tier penalty; from $50,000 to $200,000 for the second-tier penalty; and from $100,000 to $500,000 for the third-tier penalty. The minimum penalty for each failure due to intentional disregard increases from $100 to $250.

The increased penalties apply to information returns required to be filed on or after Jan. 1, 2011.

Expanded 1099 Reporting After 2011

Currently, payments to corporations are excepted from the 1099 information reporting requirements, but starting for payments after Dec. 31, 2011, businesses (including, now, individuals who receive rental income) will be required to file an information return for all payments aggregating $600 or more in a calendar year to a single payee, including corporations (other than a payee that is a tax-exempt corporation). This change was made by the Patient Protection and Affordable Care Act, which was enacted in March. That act also expanded the information reporting requirements to include gross proceeds paid in consideration for property.

15 Tax Deductions and Credits For 2010 Year End Tax Planning

2010-12-19T16:16:00.000-06:00

1. Energy Saving Home Improvement Tax Credits

Certain home improvements qualify as energy saving improvements and as a result can land you a 30% deduction based on the cost of the home improvement. There is a cap of $1,500 on this deduction over the course of two years. Energy saving home improvements are defined as biomass fuel stoves, qualifying skylights, windows and outside doors, and high-efficiency furnaces, water heaters and central air conditioners. New home owners can claim this credit in addition to the recently expired home buyers credit

2. Charitable Giving

This is one of the most well known tax deductions and is this simple rule that results in billions of dollars of charitable giving each year. You must however maintain adequate records for all cash contributions if claiming the deduction. This means retaining receipts from the charity, a canceled check or an official bank statement containing the name of the charity, the date, and the amount.

The one source of confusion comes from those who believe that 100% of charitable giving is deducted when in fact the percentage of deduction is based on your tax rate. This is why charitable giving is certainly a tax advantage but it is still recommended that giving be done for more “charitable purposes” rather than financial reasons.

3. Investment and Tax Expenses

If you’re a retail investor, you probably subscribe to investment publications, incur broker commissions, IRA fees that you pay directly, and even the Wall Street Journal that you purchase off the newsstand count as allowable deductions.

Tax software, tax attorney fees, fees you pay to settle tax implications from a divorce, and any other fee relating to taxes and investments is deductible. Many taxpayers don’t keep adequate records throughout the year in order to remember all of the allowable expenses. If you’re one of those, consider keeping detailed records next year.

4. Refinancing Points

Any points you pay to refinance your home is deductible on a monthly basis over the life of the new loan. For example, if you refinance for 30 years, you can deduct 1/30th of the points each year for 30 years or $33 per year for every $1,000 of points you paid. This doesn’t seem like much but every little bit counts as it adds up over time.

5. Health Insurance Premiums

Any money you pay for health insurance premiums is deductible. These premiums are combined with any out of pocket medical expenses you incur but before you can deduct any of these expenses they must equal 7.5% of your adjusted gross income.

6. Educator Expenses

Are you a K-12 teacher? If you are, you can deduct up to $250 for any expenses you directly incurred for your classroom. Books, Computer equipment or any other expense you incur is deductible.

7. Child Care Credit

If you have a child care reimbursement account set up through your employer, you are contributing money in tot that account on a pre-tax basis to pay for those expenses of up to $5,000. There is also a child care credit that can be claimed, which goes dollar for dollar against your tax bill for up to $6,000. If you have that $5,000 deducted from your paycheck but pay out more than that each year, you probably have another $1,000 credit coming to you. You can’t claim both credits but you can claim the $1,000 difference between the two.

8. State Taxes Paid Last Spring

If you owed the government money when you paid last year’s tax return in the Spring of this year, don’t forget to deduct that amount on this year’s taxes along with state income taxes withheld from your paycheck.

If you have your taxes completed by a tax preparer, ask them to verify that these deductions were evaluated on your return. If you use tax preparation software, check your return to verify that these deductions were applied if you qualify. Tax preparation software has evolved considerably over the past decade and because of that, you can feel confident that these deductions were evaluated and applied if you qualified.

9. Hope Credit for College Expenses

The American opportunity credit modifies the existing Hope Credit for tax years 2009 and 2010, making it available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of two. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.

The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits.

10. Max out your 401K/IRA Accounts

To reduce your taxable income for the current year, consider making extra or additional contributions to your retirement accounts up to the IRS allowed limits. If you have the extra cash, this is probably the smartest way to reduce your taxable income and also save for your future. For Roth IRA and Traditional IRA accounts you do have until April 15 of the following year to open an IRA and make a deductible contribution for the prior year. If

11. Review Your Income and Deductions to Accelerate or Slow Payments

The most fundamental year-end tax saver is to adjust the timing of income and deductions. If you anticipate income tax rates to increase in increase (e.g if Bush tax cuts expire), it may be beneficial to accelerate income into the current year and defer deductions into subsequent years in order to save the taxes on income and have the deferred deductions save you taxes in the current year when the rates are higher. In using this strategy, it should be noted that different itemized deductions are subject to different phase-out limits for regular tax purposes as it relates to the AMT (Alternative Minimum Tax).

12. Pay Deductible Expenses before December 31

Paying your state income tax estimate before Dec. 31 accelerates your federal deduction. You can also pay property taxes early, make an extra mortgage payment (the interest portion is deductible), pay your tax preparer for your year-end planning meetings or opt to have dental work or elective (deductible) surgery before the end of the year. Using a credit card is the same as using cash—the deduction is taken in the year the charge is incurred (rather than the year you pay off the credit card balance). CAVEATS: If you are in the AMT for 2010 you should consider making the final estimated tax payment of state and local income tax in 2011 instead of doing so by Dec. 31, 2010. Also refer to Points 2 and 3. Should tax rates increase for 2011 and your tax bracket is affected you may want to defer expenses from the current tax year to next year in order to save overall tax dollars

13. Consider Gifts to Children

If you intend to make gifts to children (or other relatives), do it well before Dec. 31 so that the checks clear. Gifts up to $13,000 per person need not be reported. This annual gift exclusion for the year 2011 will be indexed and at the time of this writing is unknown. However, if you have not made any gifts in 2010, consider making a gift of $13,000 at the end of 2010, and follow it up with another gift in January 2011 (for the amount of the annual exclusion that will be in effect for that year). Such planning will permit the done to benefit by investing both amounts at the beginning of 2011 and earn income on the principal for the entire year.

14. Consider a “529″ education plan

A 529 Plan allows you to put away money (with tax-free growth) for a child’s college education and get some benefit on your state income tax return and not give up control over the money. This is not the same as an outright gift but you’ll still get some tax advantages and provide for the future education of a loved one.

15. Offset Capital Gains

Review your investment portfolio to determine whether you should sell some “losers” before year-end in order to offset capital gains you’ve already realized. Capital losses are first netted with capital gains, and then are deductible against ordinary income (limited to $3,000 a year). You should consider recognizing gains that might not be taxed because there is a loss that can offset it. In that way, you can immediately buy back the stock since there is no 30-day waiting period for stocks sold at a gain (known as the wash rule). If you expect capital gains rates to increase in 2011 (which will happen if Bush Tax cuts are not extended) you may consider taking the gain in this year in order to save on the potential income tax increase in the rate.

16. Get Organized (Bonus)

While this is not directly a tax deduction, it can make tax time much easier. Start organizing your tax data (receipts, medical reimbursements, share sales/ purchase etc) and files now, to avoid the last-minute rush before April 15th. It is much easier to get replacements when you have the time instead of finding out at the last minute that you’re missing some item that prevents you from finishing your tax return and having to pay penalties.

What Happened to Mortgage Rates Last Week

2010-12-08T12:13:00.000-06:00

Mortgage backed securities (MBS) lost -66 basis points last week causing 30 year fixed rates to increase from the previous week. This marks the fourth straight week of increasing mortgage rates. This further proves that you should not listen to news reports about mortgage rates. The U.S. government cannot and does not control mortgage rates. These are set by an open market place of willing sellers and purchasers of MBS. And as our economy continues to rebound, we will continue to see a longer-term trend of higher mortgage rates when compared to our artificially low mortgage rates in October.

What to Watch Out For This Week:

The following are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. Look for the macro political , as well as increased equities investment to drive extreme volatility.

Date ET Release For

7-Dec 15:00 Consumer Credit Oct

8-Dec 7:00 MBA Mortgage Applications 3-Dec

8-Dec 10:30 Crude Inventories 4-Dec

9-Dec 8:30 Initial Claims 4-Dec

9-Dec 8:30 Continuing Claims 27-Nov

9-Dec 10:00 Wholesale Inventories Oct

10-Dec 8:30 Trade Balance Oct

10-Dec 8:30 Export Prices ex-ag. Nov

10-Dec 8:30 Import Prices ex-oil Nov

10-Dec 9:55 Mich Sentiment Dec

10-Dec 14:00 Treasury Budget Nov

15-Nov 8:30 Retail Sales

15-Nov 10:00 Business Inventories

Your Credit Score: What Is It And How’s It Calculated?

2010-12-02T12:20:00.000-06:00

Your credit score is a three-digit number that lenders use to predict your creditworthiness. Credit reporting companies calculate your score based on your payment history, how much you owe, how long you’ve had credit and how often you apply for new credit. In general, the higher your score, the less likely you are to become delinquent on credit. If it’s above 650, you’ll probably qualify for a standard loan. If it’s lower, you may have trouble getting new credit.

Because your credit score and credit report are constantly changing, it’s important to review them on a regular basis, at least once a year. Since there are three main credit reporting companies—Equifax, TransUnion and Experian—it’s a good idea to check with all three. This helps you identify and correct any inaccurate information, detect any fraudulent activity and gauge your overall credit health.

If you’re planning on applying for a mortgage, it’s especially important to check your report a few months in advance. If your credit score is a little low, here are some actions you can take to improve it:

• Pay all your bills on time. Paying late or going into collection can reduce your score.
• Don’t max out your credit limits. Keeping balances below 30-50% of your limit can increase your score.
• Don’t apply for credit you don’t need. Too many inquires over a short period can reduce your score.
• Don’t close old credit accounts, even if they’re inactive. This can make your credit history appear shorter which can reduce your score.
• Correct any negative inaccuracies on your credit report. This can increase your score.

Texas Job Growth Continues

2010-12-02T12:16:00.000-06:00

COLLEGE STATION (Real Estate Center) – Texas’ economy gained 174,900 jobs from October 2009 to October 2010, according to the Real Estate Center’s latest monthly review of the state’s economy.

That’s an annual growth rate of 1.7 percent. The U.S. economy gained 626,000 jobs, an annual growth rate of 0.5 percent, over the same period.

The state’s private sector posted an annual employment growth rate of 2.1 percent compared with 0.9 percent for the U.S. private sector from October 2009 to October 2010.

The seasonally adjusted unemployment rate for Texas was 8.1 percent in October 2010, the same as in October 2009, while the nation’s rate decreased from 10.1 to 9.6 percent over the same period.

All Texas industries except the trade and information industries and the government sector had more jobs in October 2010 than in October 2009. The state’s mining and logging industry ranked first in job creation followed by the state’s professional and business services, manufacturing, and education and health services industries.

All Texas metro areas except El Paso and Lubbock had more jobs in October 2010 than in October 2009. Austin-Round Rock-San Marcos ranked first in job creation followed by Odessa, McAllen-Edinburg-Mission, Texarkana, and Brownsville-Harlingen.

The state’s actual unemployment rate in October 2010 was 7.9 percent. Midland had the lowest unemployment rate followed by Amarillo, College Station-Bryan, Lubbock and Abilene.

10 Questions to Ask the Condo Board

2010-11-27T19:04:00.001-06:00

Before you buy, contact the condo board with the following questions. In the process, you’ll learn how responsive — and organized — its members are. You’ll also be alerted to potential problems with the property.

1. What percentage of units is owner-occupied? What percentage is tenant-occupied? Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.

2. What covenants, bylaws, and restrictions govern the property? What grandfather clauses are in place? You may find, for instance, that those who buy a property after a certain date can’t rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them. And have an attorney review property docs, including the master deed, for you.

3. How much does the association keep in reserve? Plus, find out how that money is being invested.

4. Are association assessments keeping pace with the annual rate of inflation? Smart boards raise assessments a certain percentage each year to build reserves to fund future repairs. To determine if the assessment is reasonable, compare the rate to others in the area.

5. What does and doesn’t the assessment cover? Does the assessment include common-area maintenance, recreational facilities, trash collection, and snow removal?

6. What special assessments have been mandated in the past five years? How much was each owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about the condition of the building or the board’s fiscal policy.

7. How much turnover occurs in the building? This will tell you if residents are generally happy with the building. According to research by the NATIONAL ASSOCIATION OF REALTORS®, owners of condos in two-to-four unit buildings stay for a median of five years, and owners of condos in a building with five or more units stay for a median of four years.

8. Is the condo building in litigation? This is never a good sign. If the builders or home owners are involved in a lawsuit, reserves can be depleted quickly.

9. Is the developer reputable? Find out what other projects the developer has built and visit one if you can. Ask residents about their perceptions. Request an engineer’s report for developments that have been reconverted from other uses to determine what shape the building is in. If the roof, windows, and bricks aren’t in good repair, they become your problem once you buy.

10. Are multiple associations involved in the property? In very large developments, umbrella associations, as well as the smaller association into which you’re buying, may require separate assessments.

THREE TEXAS CITIES AMONG NATION'S MOST AFFORDABLE

2010-11-11T14:27:00.000-06:00

Texas cities take three spots, with San Antonio coming in at No. 6, Houston at No. 7 and Austin claiming the final spot. The Lone Star State has long enjoyed the benefits of a business-friendly tax climate, rich natural resources and a stable housing economy. As a result, jobs are available, but costs low enough that Texans can stretch the fruits of their labor further. That combination is enticing to Americans seeking to relocate.

"The state (as a whole), and Houston and San Antonio (in particular) are deriving significant income from domestic in-migration. People are moving to Texas because of job availability and because of the cost of housing being so low," says Gaines. But, he adds, the number of people seeking to cash in on the cities' bounty hasn't driven up prices. "Texas has always been a wide-open, laissez-faire, low-control, low-regulation place, but it doesn't add to costs."

Affordability means more than just the ability to buy a cheap box of cereal. No matter how low prices are, it doesn't matter much if your wallet is empty and your next paycheck is only hypothetical. In these cities, costs have stayed down but residents have held onto steady incomes and decent jobs, making them a true bargain.

Source: 2010 Forbes.com

What Lenders Look for in Home Loan Applications

2010-10-23T14:06:00.001-05:00

Once your loan application is filled out and sent to the lender for review, the first thing they will look for is your ability to payback the loan you are requesting. My team and I have a streamlined loan process to help you get your ducks in a row prior to this review. A grand slam loan package is in perfect order and answers all the important questions up front. We know what the lenders are looking for, based on long-term relationships with them and extensive knowledge of guidelines for a multitude of loan programs that are available today.

What is the lender looking for when they review the loan application?

The lender wants to know about your personal financial picture, including savings and credit history and your employment stability. The co-borrower's history is also taken into consideration. The lender also considers the loan amount and appraised value of the home you are looking to purchase. Not every applicant is approved the first time through the process. If the underwriter has any questions or concerns, he or she will require certain conditions be met before they approve the loan. Pre-approval prior to house hunting lets you know exactly how much you are qualified to borrow in advance.

What can I do on my end to make it easier?

Before taking out a home loan it helps to establish a consistent record of paying your bills on time. If you have utility bills that are overdue, bring these up to date. Make sure you are paying credit card installments in a consistent and timely manner.

We can help you evaluate your debt-to-income ratio to determine what mortgage payment will be comfortable and affordable for you on a monthly basis. Aim for having enough savings to cover your down payment, closing costs if necessary, and two month's expenses in case of emergency. We'll help you find the loan program that works for you.

If I just started a new job six months ago, can I still apply for a loan?

A stable employment history is important, but the lender does take human factors into consideration. If you've recently completed college or vocational training, or were released from the military, you have good cause to have a lack of consistent work history. If your profession is seasonal, and gaps in employment are normal in your field, there are loan programs that can work with your situation. If you are a freelancer or do contract work, the lender will look for consistency in income over the last two years.

Consistency is the key word in the lender's mind. But know that lenders have developed many different loan structures to meet the needs of the general public. When your grandparents bought their first home, they probably put 50% down and made a lump sum payment when the note was due. Times have changed, and so have loan programs. My team and I stay on top of current mortgage trends. We monitor rates daily and have a support network of Realtors®, CPAs, Financial Planners and Credit Repair Consultants to lend you additional assistance.

Call me directly for a free consultation.

5 Things to Know About Title Insurance

2010-10-12T14:10:00.001-05:00

Title insurance protects the holder from any losses sustained from defects in the title. It’s required by most mortgage lenders. Here are five other things you should know about title insurance in Texas.

1. It protects your ownership right to your home, both from fraudulent claims against your ownership and from mistakes made in earlier sales, such as mistake in the spelling of a person’s name or an inaccurate description of the property.

2. It’s a one-time cost usually based on the price of the property.

3. It’s usually paid for by the sellers, in Houston.

4. There are both lender title policies, which protect the lender, and owner title policies, which protect you. The lender will probably require a lender policy.

5. Discounts on premiums are sometimes available if the home has been bought within only a few years since not as much work is required to check the title. Ask the title company if this discount is available.

Reprinted from REALTOR® Magazine with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright

10 Questions You Should Ask Your Lender

2010-09-26T09:51:00.000-05:00

1. What are the most popular mortgages you offer? Why are they so popular?

2. Which type of mortgage plan do you think would be best for me? Why?

3. Are your rates, terms, fees, and closing costs negotiable?

4. Will I have to buy private mortgage insurance? If so, how much will it cost, and how long will it be required? (NOTE: Private mortgage insurance is usually required if your down payment is less than 20 percent. However, most lenders will let you discontinue PMI when you’ve acquired a certain amount of equity by paying down the loan.)

5. Who will service the loan — your bank or another company?

6. What escrow requirements do you have?

7. How long will this loan be in a lock-in period (in other words, the time that the quoted interest rate will be honored)? Will I be able to obtain a lower rate if it drops during this period?

8. How long will the loan approval process take?

9. How long will it take to close the loan?

10. Are there any charges or penalties for prepaying the loan?

Used with permission from Real Estate Checklists & Systems,

Watch out for a new fee to be part of a restate transaction for 99 years

2010-09-11T11:11:00.001-05:00

While the housing and mortgage markets are struggling a new fee is quietly being introduced to be part of a real estate transaction. This is how it works. Whenever a home sale is closed in the next 99 years, a 1% fee of the price is paid to the original developer or can be split between other parties and investors. The seller pays it to a third-party trustee, and if he doesn't do so, the deal is off. The reason is that a special lien is attached to the underlying land, called a private transfer fee covenant. It stays with any home tied to the program for the set period of time. It has nothing to do with a government transfer tax, HOA fee or environmental protection concerns.
For an example; if a home covered by this transfer fee covenant and is sold 15 times during this 99 year run, the 1% transfer fee is paid 15 times. That generates a stream of income to the developers and investors every time the property is sold for the next 99 years. For what, some may ask? The sole purpose is to create a 99-year money machine for them. Many Real Estate experts are already calling it a scam or a pyramid scheme. The program is promoted by Freehold Capital Partners out of New York who supposedly have a "patent pending" structure in the works. And its website declares that it has so far signed up partners with real estate projects worth about $488 billion on their drawing boards. That's very impressive, except that none of them are actually named.
The scary part is that Freehold is supposedly in talks with the investment community to securitize bundles of these transfer fees, in other words planning to turn out bonds backed by future cash streams that can be sold to investors.
This is a horrible direction to take. Besides the money grab. It complicates property transfers by making them uncertain and more costly. The title is clouded for long periods of time and to get releases from the original owners could be impossible. The American Law Institute claims that these transfer fees are "arbitrary, spiteful and capricious" and an "unreasonable restraint on alienation." That’s of course lawyer speaking. It lowers home prices due to the built-in feature of a fee encumbrance and making them harder to sell.
As of right now, the majority of states have no limits on these types of fees, so housing trade groups against the program are gearing up to spread the word nationwide and stifle its advance. Preferably bury it for good. Home buyers predictably are out of the loop and should be on the lookout for it, specifically asking whether there is a private transfer fee involved when contemplating a real estate purchase.

6 Things You Need to Know About New FHA Home Loans

2010-09-04T16:31:00.000-05:00

With the passing of H.R. 5981 and the resulting Public Law 111-229, FHA was given authority to change the amount charged to borrowers for both the Up Front and the Annual insurance premiums it requires to insure home loans.

These FHA Mortgage Insurance Premium changes are outlined in Mortgagee Letter 2010-28and become effective for all FHA case numbers assigned on or after October 4th, 2010.

Here are the 6 things that every home buyer or homeowner refinancing needs to know about changes to FHA Mortgage Insurance Premiums:

1. The Up Front premium is now 1.0 % for all standard FHA programs (purchase money mortgages, full credit-qualifying refinances, streamline refinances)
2. The Annual premium is now .90% for LTVs GREATER than 95% on 30 year loans
3. The Annual premium is now .85% for LTVs EQUAL to or LESS than 95% on 30 year loans
4. The Annual premium is now .25% for LTVs GREATER than 90% on 15 year loans
5. The Annual premium is now .00% for LTVs EQUAL to or LESS than 90% on 15 year loans
6. These premiums apply to purchases, regular refinances and streamlines

Please note that this new law also gives FHA the authority to raise the Annual premium at will up to 1.5% for LTVs at or below 95% and 1.55% for LTVs more than 95%.

TEXAS' HOME PRICES CONTINUE TO IMPROVE

2010-08-27T15:16:00.000-05:00

TEXAS' HOME PRICES CONTINUE TO IMPROVE
COLLEGE STATION (Real Estate Center) – When it comes to home price appreciation, Texas is standing strong, said Real Estate Center Chief Economist Dr. Mark Dotzour.
Dotzour was responding to the Federal Housing Finance Agency's (FHFA) second quarter 2010 home price index, which ranked Texas third in the nation in home price appreciation for the year ending June 30, 2010.
FHFA reported a 1.43 percent increase in Texas home prices during that period versus 1.6 percent nationally.
"The strong price trends in Texas are because we didn't have a price bubble in the previous decade," Dotzour said. "For several years, Texans were asking why their homes were increasing only 3 to 5 percent per year, when Arizona was going up 30 percent."
In addition, Dotzour said the credit crisis virtually ended new home construction lending all over the country, abruptly shutting off the pipeline of new supply in 2008 and reducing any chance of heavy overbuilding in the single-family market.
Research Economist Dr. Jim Gaines noted that Texas was one of only ten states that reported increases in home prices during the past year, and it was one of only five states where prices had more than a 15 percent increase over the past five years.
Prices in Texas increased by 15.88 percent since 2005, landing it fourth on FHFA's ranking of states based on five-year price appreciation.
"What that means is that Texas home values fared better than all of the high-appreciation states over the five-year period that included the recession," Gaines said.
Among Metropolitan Statistical Areas (MSAs), Amarillo came out smelling like a yellow rose. It was the only Texas MSA to land on FHFA's list of 20 MSAs with the highest rates of home price appreciation.
Amarillo ranked 16th with a one-year price increase of 0.42 percent.

What Good is an Extension without a Loan Approval?

2010-07-06T16:32:00.000-05:00

The deadline for "tax credit" homebuyers waiting to close on June 30 has been extended to September 30. Not only is the extension great news, but interest rates have fallen over .375-.50% since the end of April according to Freddie Mac.

This could effectively reduce a buyer's monthly payment over $600-800 a year on a $200,000 30-year fixed rate loan!

Unfortunately, for the estimated 180,000 homebuyers this extension impacts, their closing was held up by the lender. Some of the reasons may well be legitimate and some unfortunately may not be.

If you know someone who has had difficulty getting a loan closed, call me. Don't miss this chance to help someone qualify for a tax credit! Just because someone has been unable to get a loan closed so far does not mean that it may not be able to close. What's more, we closed a lot of loans in May and June for people who submitted their application after the Tax Credit's April 30th contract deadline.

I'll review anyone's situation free of charge and offer my opinion on what I would do were I in that position. Act quickly though so we can address their situation before it's too late.

It's important to note that the Homebuyer's Tax Credit extension only applies to people who were under contract by the initial April 30th deadline. Homebuyers who entered into contracts after April 30th remain ineligible for the tax credit.

Managing Your Schedule Just Got Easier

2010-07-06T16:08:00.001-05:00

Google™ is constantly coming up with innovative ways to provide us with quick and easy access to the information we need. In addition to hosting the biggest search engine in the world, Google™ also offers a great desktop search bar, a mapping program with detailed driving directions, and even a photo management system. Now Google™ has turned its sights on keeping our days organized with Google™ Calendar.

As with most of Google's applications, Google™ Calendar costs nothing and signing up is as easy as logging on to www.Google™.com/calendar and creating a free account. It will take you all of two minutes to accomplish this. Once you've registered, organizing your schedule is only a few clicks away. If you're still apprehensive, take comfort in knowing that Google™ Calendar works like most personal scheduling programs but with a few added perks.

For starters, Google™ Calendar is fairly user-friendly, offering daily, weekly, and monthly views of your schedule. The program also offers the ability to create personal calendars for things like American holidays or birthdays. Any calendar you set up can be easily integrated with Google™'s email program, Gmail. This allows you to quickly add events mentioned in Gmail conversations as well most other events you find online.

Google™ Calendar also gives you the ability to share your schedule with others and vice versa. Perfect for families on the go or business associates at opposite ends of the country, Google™ Calendar maintains your privacy by allowing you to pick and choose which events you want others to see. The program also allows you to plan and promote events by giving you the ability to send invitations as well as track RSVPs.

Perhaps the most exciting feature of Google™ Calendar is the options it gives you in terms of reminders. Whenever you schedule an important event, Google™ Calendar gives you the option of receiving a reminder via email, an online pop-up, or a SMS (short message service) which is a text message that arrives via your cell phone.

Google™ Calendar also has a really great tool which allows you to search all of your calendars for specific information. While the program integrates fairly well with most existing scheduling programs, it does require a little manipulation in some instances. One other feature worth noting is called "Quick Add". This enables you to add events to your schedule simply by clicking a link and then typing in the relevant event information in “natural language” (i.e. Tom's party next Saturday at 8:00pm).

Whether you're completely disorganized or simply on the fence about your current scheduling program, you may want to give Google™ Calendar a try. It may open your eyes to some interesting new options!

If you know of any helpful Internet tools, give me a call.
I'd love to hear about them.

Take the Stress Out of Moving

2010-07-06T16:05:00.000-05:00

Moving can be very exciting...but it can also be a bit of a pain as well. Besides packing and unpacking, there is a long list of details to be handled. Things like choosing a mover, connecting utilities, getting Internet and cable service, or subscribing to newspapers or magazines in a new area can be quite a chore. And if you forget to connect one of the utilities you could be stuck in your new home for several days without that much-needed service.

To ease the stress of moving and to schedule new connections for all of the utilities in one convenient location, simply go to http://whitefence.com.

Here you can quickly compare prices for movers, phone, electricity, television, or high-speed Internet. Just select the services you wish to compare. For example, phone, cable, and electric. Or, enter your address on the home page, hit search, and within seconds, a list of services and prices available in that area will appear.

Next, click on the service of your choice to view details and pricing or comparison shop by choosing three providers. Once you determine the provider, select the service plan, complete the requested information, enter the connection date, and within minutes a confirmation will be sent to you.

If you want to change your current provider, simply hit the icon for phone, cable, or Internet, select "switch provider," complete the requested information and a list of providers in the local area will appear. Choose the new provider and the service will be changed.

Additionally, on the site you can complete a change of address form, subscribe to local newspapers, and order magazine subscriptions.

Moving to a new home should be enjoyable and exciting. Using this tool can help remove a bit of the stress of moving and will also help save valuable time.

This is just one great resource to help new homeowners on the Internet. If you or anyone you know would like to make the dream of homeownership a reality, just give us a call. We will review your financial situation and get you pre-approved for the perfect home.

The Lowdown on Social Lending

2010-07-06T16:03:00.000-05:00

You've probably heard of social networking sites like MySpace and Facebook, but have you heard of social lending sites? Over the past few years, several websites have sprung up that combine features of the omnipresent social networking sites, and commerce sites like eBay®. These sites allow individuals to become either a borrower from or a lender to the online community. The website collects basic financial information from would-be borrowers, as well as the intended purpose for the money. The site then posts a short profile of the borrower, so that other members of the community can choose whether or not to lend money to them.

The very first created was www.Prosper.com, which allows individuals to borrow and lend small amounts of money, for any variety of purposes. Posts include families wanting to start a small business and a father seeking to pay off his son's medical bills. You can see their pictures and read their stories.

The maximum loan amount is $25,000, and lenders can loan as little as $50 towards someone's total desired loan amount, and determine what rate they are willing to lend at based on the individual's credit standing and risk profile. Prosper encourages lenders to fund small amounts towards many individuals' loans, to help minimize risk of default. Why consider it? Although risk of default is certainly a potential - because these are generally individuals unable to borrow via more traditional methods - it is quite a learning experience, and the rate of return will be higher than via a traditional savings account.

Another similar site is www.Zopa.com, also a social lending site but with a few key differences. If a borrower's request is approved, Zopa funds it directly, raising funds by offering Certificates of Deposit (CD) to be purchased with attractive rates of return. If you purchase a CD, you are required to choose at least one borrower request to sponsor. By sponsoring a borrower you marginally reduce the interest rate earned on your CD, which in turn is used to reduce the rate that the borrower is paying. Best of all, your money and your rate of return are guaranteed and insured.

Perhaps the most intriguing of the social lending sites, www.Kiva.org is a blend of charitable giving and online lending. This site specializes in very small loans made to individuals in third-world countries. The loan requests and photos are fascinating. Who knew that a cow could be purchased for only $500, or that you could literally purchase tons of coffee and cocoa for $1,000? The downside to Kiva is that the loan is not repaid with interest, and because it is a loan and not a charitable contribution, it is not tax deductible. But the upside - helping those in developing countries create and expand their businesses, provide for their families and improve their countries' economies as a whole - well, this offers a substantial rate of return, just of a different type.

And consider getting your kids involved. Parents can use sites like these to help instill a sense of giving back, as well as a broader view of the economic world. Start with a small amount of money, and let them decide who to lend it to and why. When the loan is repaid, turn around and lend it again. It's never too early to get kids involved in the process of understanding money, lending, and the world around them as a whole.

How Does Inflation Affect Mortgage Rates?

2010-06-29T14:23:00.000-05:00

Thru out the day, conforming and FHA mortgage rates in Texas are in motion. Mortgage Rates change in response to many factors which impose varying levels of influence.
Among the largest influences on mortgage rates is inflation. When inflation is unexpectedly high, mortgage rates tend to rise quickly. Vice versa, when inflation is unexpectedly low, rates tend to fall quickly.
So what is inflation?
Inflation is when a currency loses its value; when what used to cost $1.00 now costs $1.10.
The easiest way we observe inflation is by the items we buy on a daily basis becoming more expensive. However, it’s not that goods are more expensive — it’s that the dollars we’re using to buy them have become worthless.
With respect to mortgage rates, this is a big deal because mortgage rates are directly related to the price of a bond called a mortgage-backed bond.
On Wall Street, mortgage-backed bonds are priced, bought, and sold in U.S. dollars so as inflation renders those dollars less valuable, so it does to mortgage-backed bonds as well. It’s a chain reaction by which mortgage bonds lose value, leading investors sell them, causing bond prices to fall on the excess supply.
And, because mortgage rates move opposite of bond prices, as inflation takes hold, mortgage rates rise.
The Cost of Living is up just modestly this year and it’s helping mortgage rates stay low. And, so long as it lasts, the cost of owning a home in Houston Texas will stay generally inexpensive.

New FHA Lending Policies you Need to Know

2010-06-28T09:42:00.000-05:00

Recently, the Federal Housing Administration (FHA) announced some lending changes. If you or someone you know is considering an FHA loan, some of these changes may affect you. Here's a brief rundown of the major changes.

Increased mortgage insurance – The mortgage insurance premium (referred to as private mortgage insurance by many people) will be increased from 1.75% to 2.25%. This change will add some cost to purchasing a home, but will not overburden consumers since the mortgage insurance is paid over the life of the loan, rather than upfront at closing.

New down payment and credit score requirements – According to the new policy, homebuyers who have a credit score of at least 580 may still be able to purchase a home with 3.5% down, but those with credit scores of less than 580 will be required to put down at least 10%.

Reduced seller concession – The seller will now only be able to offer the homebuyer 3% to help defray closing costs, as opposed to 6% under the previous policy.

The bottom line is that the changes will impact some homebuyers more than others. But in the end, the FHA is still committed to providing affordable home loans.

How to Negotiating More than the Sales Price

2010-06-28T09:38:00.000-05:00

When negotiating to purchase a home, many buyers focus mostly on the sales price, which is understandable. After all, a home is typically the largest transaction home buyers have been involved with and the price paid is a huge factor in their monthly payment.

However, in addition to negotiating the price of a home, a buyer can also negotiate to have the seller contribute money from the proceeds to allocate towards the buyer's closing costs. This money can be used towards either the reduction of cash required to close and/or a reduction in the interest rate on the mortgage.

It's easy to see the benefits for buyers to have a lower interest rate on their mortgage. However, one aspect of this situation not often considered is that the IRS treats points that are paid up front to lower a mortgage interest rate as pre-paid interest, regardless of who pays the fees. This means that when buyers negotiate to have the seller pay the costs to lower their interest rate, they receive the benefit of deducting them on their income taxes in the year the home is purchased.

By focusing on these terms – and, frankly, opportunities – home buyers can save money both now and over time.

Credit Scoring Handout

2010-06-15T16:21:00.000-05:00

Credit Scoring Handout

Others Are Acting Quickly…Don't Miss This Opportunity

2010-06-09T11:34:00.000-05:00

Many of my clients are saving a lot of money by taking advantage of the unusualy low interest rates that exists right now, and I wanted to make sure you didn't miss out.

Interest rates have rallied and improved dramatically on the heels of the recent European debt concerns…and what is most important is that due to the highly unusual set of circumstances that exist in the market, those who are acting quickly are saving. In fact, Freddie Mac reported last week that rates have met either all-time lows or 2010 lows. Bottom line, they are "smokin' hot" right now – but won't be for long.

Regardless of whether people want to convert their loan to a 15-Year fixed to potentially save over $100,000 in payments over the term…or drop their payment several hundred dollars a month, people are acting now!

However - one thing you have to know…rates are incredibly volatile and are not likely to hold these levels. We might only have a couple of days to lock people in at the best rates they will ever see.

Call me quick! I would love to look into your situation and see just what we can do to put some money back in your pocket. I never thought I would see rates this low across the board - so don't miss this chance.

I look forward to hearing from you!

P.S. Home sales and home prices continue to improve. Monday, the NAR released information that shows strength in housing. If you are in the market to buy a home, act now before monthly payments increase as both prices and rates move higher.

Or, if you are looking to refinance and could not last year because of home values…you just might be able to now. Call me!

The Short Sale

2010-06-08T18:51:00.000-05:00

A Unique Selling Proposition for Real Estate Agents

While a short sale may be a last resort for many homeowners facing foreclosure, it also represents a great opportunity for potential home buyers and real estate investors. This article is designed to help answer a few basic questions about the substantial risk and reward involved in this extremely complex and often drawn out process.

What is a Short Sale?

A short sale is a legally-binding agreement to allow a home to be sold for less than the amount that is owed. And, while short sales are not by any means common or easy, because of increasing inventory levels and foreclosures in some parts of the country, lenders are much more eager to negotiate with borrowers who are having trouble paying their mortgages. For potential home buyers and real estate investors, a short sale also offers a great opportunity to purchase property at a significant discount.

However, don't expect a lot of help from the lender without first providing a sales contract from a qualified buyer and all the information required by the lender's loss mitigation department.

Of course, lenders are not looking to bail out "flippers" or other borrowers who simply overextended themselves. In most cases, a borrower must have suffered a serious financial hardship that directly caused him or her to default on the mortgage: the loss of a job, a serious illness, or the death of a loved one.

A written declaration and supporting documentation demonstrating financial hardship will definitely be required by the lender. This may include pay stubs, tax returns, and liquid asset statements, among other documentation.

Key Considerations to Keep in Mind

It's important to note that the difference between what is owed on a mortgage and the final amount the lender collects after the costs of the sale, including real estate commissions and possibly other charges don't simply disappear in a short sale. In the past, this deficiency or "canceled mortgage debt" was considered taxable income to the borrower. However, thanks to the Mortgage Forgiveness Act of 2007, the tax burden for qualifying canceled mortgage debt (as high as 35%) for primary residences only has been temporarily waived. The federal timeline has been extended to 2012 although states are not required to follow it for state income.

If there are multiple liens against the property, all lien holders will have to be involved in the negotiation process, not just the first lien holder. Therefore, communication and patience are essential components of any short sale. This is why an experienced real estate agent and mortgage professional become so valuable to this process.

Call me. Let's discuss how we can market short sales and other foreclosure alternatives to potential buyers and sellers as a unique selling proposition that clearly separates us from the competition.

Save Money on Appliances During the Third-Annual Texas ENERGY STAR® Sales Tax Holiday

2010-05-21T15:14:00.000-05:00

If your old refrigerator eats money or your washing machine loses more energy than socks, you could be wasting hundreds of dollars in energy each year and should take advantage of the third-annual Texas ENERGY STAR Sales Tax Holiday. Texans who want to purchase a new air conditioner, refrigerator, dishwasher or certain other appliances can get big savings on energy efficient products over Memorial Day weekend. During the annual three-day tax holiday, which runs May 29 – 31 this year, Texas shoppers do not have to pay state and local sales tax on certain energy efficient products.
The tax holiday begins on Saturday, May 29, at 12:01 a.m. and ends on Monday, May 31 (Memorial Day) at 11:59 p.m. Texas shoppers get a break from sales taxes when they purchase household equipment bearing an ENERGY STAR label. Shoppers can expect to save about $3 million overall in state and local sales taxes during the event.
The ENERGY STAR Sales Tax Holiday applies only to the following appliances and household equipment, as listed in the state tax code:
• Air conditioners priced at $6,000 or less
• Refrigerators priced at $2,000 or less
• Ceiling fans
• Incandescent and fluorescent light bulbs
• Clothes washers
• Dishwashers
• Dehumidifiers
• Programmable thermostats*
* ENERGY STAR specification of programmable thermostats was suspended on December 31, 2009; however, any existing stock of ENERGY STAR labeled programmable thermostats offered for sale by retailers is still eligible for the exemption.
More information and frequently asked questions (FAQs) about the tax holiday are available at www.texaspowerfulsmart.org. For exemption information on associated fees, please see Delivery and Installation Charge FAQs.
ENERGY STAR is a joint program of the U.S. Environmental Protection Agency and the U.S. Department of Energy for products that meet strict energy efficiency guidelines. Qualifying products display the ENERGY STAR logo on the appliance, the packaging or the Energy Guide label. Clothes dryers are not included in the sales tax holiday because they use similar amounts of energy; therefore, the program does not label clothes dryers. For details on products, visit www.energystar.gov.

Home Buyer's Tax Credit About to End

2010-02-26T13:56:00.000-06:00

You're probably up to your neck by now in forms and paperwork as the April 15th income tax deadline approaches. Maybe you've already completed your taxes, paid your bill, or are awaiting your refund check. Either way, now is the perfect time to revisit the extended and expanded Home Buyer's Tax Credit.

Why? Because now, as you calculate your tax bill or your refund, you can finally see in real terms just how beneficial a tax credit of up to $8,000 can be to your bottom line.

Here's the basics:

Qualified 2009 and 2010 first-time home buyers can get up to 10% of the home's purchase price or a maximum of $8,000. In November 2009, legislation extended a tax credit of up to $6,500 (or up 10% of the home's purchase price) to long-time residents of the same primary residence if they purchase a new main home. To qualify, eligible taxpayers must show that they lived in their previous homes for a five-consecutive-year period during the eight-year period ending on the closing date of the new home.

Important details to remember:

1) You don't have to pay it back (as long as you stay in your qualified home for at least 36 months).

2) If you qualify for the credit, you can still apply it to this year's taxes, even if you've already filed your returns, or save it for your 2010 returns.

3) This is a true tax credit, not a deduction. If you qualify for the full credit, there will be an actual dollar-for-dollar reduction of up to $8,000 (or up to $6,500 for qualified repeat buyers) on your tax bill now or in 2010.

4) New income qualification limits have been put in place that expanded the pool of qualified buyers.

5) If you purchased a qualified home or plan to after reading this article, you must have a contract in place by April 30, 2010 (with closing to take place by June 30, 2010), so don't wait!

There are, of course, other details and qualification requirements and restrictions that you'll need to consider. But don't hesitate to give us a call if you have any questions. Also, if you happen to have your completed 2009 tax return handy, we'll help you calculate how much money you can get if you purchase a home and qualify for the full credit.

How Interest Rates Move

2010-02-18T16:34:00.000-06:00

New FHA Guidelines Going to Get Tougher and More Expensive

2010-02-10T13:37:00.000-06:00

Securing an FHA mortgage is about to get more expensive.

In a statement issued Wednesday, the Federal Housing Authority outlined policy changes to its mortgage assistance program. The shift is meant to both reduce the government group’s portfolio risk while strengthening its overall financials.
For consumers in Texas, the changes mean higher costs.

There are 3 major guideline updates for the FHA:

1. Upfront mortgage insurance premiums are increasing to 2.25% from 1.75%
2. Minimum down payments for applicants with 580 FICOs are rising to 10%
3. Seller concessions are being limited to 3%, down from today’s allowable 6%

Furthermore, FHA has appealed Congress to raise an FHA borrowers’ monthly mortgage insurance premiums.

As a result, homebuyers in Houston, Sugarland, Pearland, Katy, Woodlands should expect tougher FHA underwriting in 2010. Not because the FHA says so, necessarily, but because banks don’t want to do “bad loans”. Lenders are incented to turn down at-risk applicants and, already, we’re seeing examples of this. Despite FHA allowing 580 FICOs and lower, many banks have made 620 their minimum.
Some have other guideline overlays, too.

The FHA’s new guidelines don’t go into effect until spring. So, between now and then, the old guidelines will apply. Therefore, if you know you’re going to need an FHA home loan in the next few months in Texas, consider moving up your time-frame.
If nothing else, you’ll save some money at closing.

Contact Network Funding in Houston to Qualify for Your FREE FHA Home Loan Approval Today!

Useful Tips on Buying a Home

2010-02-01T18:39:00.000-06:00

Making Sense of the New GFE and HUD-1

2010-01-22T19:17:00.000-06:00

WHAT IS TAX DEDUCTIBLE IN THE LOAN PROCESS?

2010-01-05T11:29:00.000-06:00

1. Home acquisition mortgage loan fees. If you bought your primary or secondary home in 2009, you probably obtained a mortgage to finance the purchase. That mortgage is called an “acquisition mortgage” because it enabled purchase of the residence. If you paid a loan fee to obtain that acquisition mortgage, usually called “points”, that loan fee qualifies as an itemized interest deduction. Each point paid equals 1% of the amount borrowed.

2. Home improvement loan fees. Similarly, if you paid a loan fee to obtain a home improvement loan, that loan fee is fully deductible in the tax year it was paid.

3. Loan fees paid to refinance a home loan (or borrow against other real estate). If you refinance your existing home loan in 2009, or borrowed against other real estate such as an apartment building, any loan fee you paid must be deducted over the life of the mortgage.

4. When refinancing, deduct any loan fees that have not already been claimed. Thanks to low mortgage interest rates, many homeowners refinanced again in 2009, or borrowed against other real estate such as an apartment building. Any loan fee you paid must be deducted over the life of the mortgage.

5. If you bought or sold property in 2009 remember to deduct prorated real estate taxes. A major tax deduction many real estate buyers and sellers overlook is the prorated property tax they paid at the close of escrow. Even if the other party remitted the payment to the tax collector, but you were charged a prorated portion of the tax bill, be sure to deduct your share on your 2009 return.

6. Deduct prorated mortgage interest in the year of property purchase or sale. Similarly, if bought a residence and took over an existing mortgage, don’t forget to deduct your prorated interest share for the month of the sale. Your closing settlement statement shows your prorated share of the mortgage interest.

7. Mortgage prepayment penalty. If you paid off an existing mortgage early and were charged a prepayment penalty by the lender, that prepayment penalty qualified as an itemized deduction.

8. When land rent payment qualify as interest deductions. Million of homes are located on leased land. Internal Revenue Code 163 allows land rent to be deducted like interest when the lease; (a) is for at least 15 years, including renewal periods; (b) is freely assignable; (c) contains a present or future option to buy the land; and (d) is like a security interest, such as a mortgage. Payments to buy the land are not deductible, nor are ground rent payments deductible if you do not have the option to buy the land, such as in a mobile home park.

9. Home construction loan interest. If you built a new home in 2009, or are building one now, don’t forget to deduct the construction loan interest paid. It’s deductible if the construction period does not exceed 24 months before occupancy of your principal residence.

10. Deduct prepaid property taxes and mortgage interest. If you prepaid 2010 real estate taxes in 2009, as homeowners do to increase their tax deductions, or if you pay your January 2010, mortgage payment in December 2009, don’t forget to deduct these extra mortgage interest and property tax payments on your 2009, income tax returns.

Don’t forget to file your homestead tax exemption

2009-12-26T22:22:00.000-06:00

If you purchased a primary residence prior to January 1st don’t forget to file your homestead tax exemption. Fill out this form and mail it to your appraisal district or the county clerk’s office and those of you who paid an origination fee (a point), remember…. it is a tax-deductible expense!

WARNING: 2010 Census Cautions from the Better Business Bureau

2009-12-17T10:15:00.000-06:00

Be Cautious About Giving Info to Census Workers by Susan Johnson.

With the U.S. Census process beginning, the Better Business Bureau (BBB) advises people to be cooperative, but cautious, so as not to become a victim of fraud or identity theft. The first phase of the 2010 U.S. Census is under way as workers have begun verifying the addresses of households across the country. Eventually, more than 140,000 U.S.
Census workers will count every person in the United States and will gather information about every person living at each address including name, age, gender, race, and other relevant data.

The big question is - how do you tell the difference between a U.S. Census worker and a con artist? BBB offers the following advice:

** If a U.S. Census worker knocks on your door, they will have a badge, a handheld device, a Census Bureau canvas bag, and a confidentiality notice. Ask to see their identification and their badge before answering their questions. However, you should never invite anyone you don't know into your home.

** Census workers are currently only knocking on doors to verify address information.

Do not give your Social Security number, credit card or banking information to anyone, even if they claim they need it for the U.S. . Census.

REMEMBER, NO MATTER WHAT THEY ASK, YOU REALLY ONLY NEED TO TELL THEM HOW MANY PEOPLE LIVE AT YOUR ADDRESS..

While the Census Bureau might ask for basic financial information, such as a salary range, YOU DON'T HAVE TO ANSWER ANYTHING AT ALL ABOUT YOUR FINANCIAL SITUATION.

The Census Bureau will not ask for Social Security, bank account, or credit card numbers, nor will employees solicit donations. Any one asking for that information is NOT with the Census Bureau.

AND REMEMBER, THE CENSUS BUREAU HAS DECIDED NOT TO WORK WITH ACORN ON GATHERING THIS INFORMATION.. No Acorn worker should approach you saying he/she is with the Census Bureau.

Eventually, Census workers may contact you by telephone, mail, or in person at home. However, the Census Bureau will not contact you by Email, so be on the lookout for Email scams impersonating the Census.

Never click on a link or open any attachments in an Email that are supposedly from the U.S. Census Bureau.

New FHA Condo Guidelines

2009-12-11T16:13:00.000-06:00

FHA has announced new clarified guidelines (Mortgagee Letters 46A & 46B) for condominium project approval and recertification and has provided a transition strategy that will help keep the condominium market moving for another year. Here’s what you need to know:

* All currently approved condo projects will remain on the FHA approved list.

* Projects approved prior to October 1, 2008 will require recertification by December 7, 2010.

* Projects approved after October 1, 2008 will require recertification 2 years from the initial approval date.

HOWEVER, this life raft has a few holes:

Spot loans are eliminated on case numbers on or after February 1, 2010.

Lenders must certify on every loan file that currently approved projects continue to comply with the following or project is ineligible for FHA lending:

* Investor Ownership: One investor may own no more than 10% of units.

* Delinquent HOA Dues: No more than 15 % of total units can be in arrears (more than 30 days past due) of their condominium association fee payment.

* Owner-Occ Ratios: At least 50% of the units must be owner-occupied.

* FHA Concentration: 50% of units may be FHA financed with allowance to 100% (except for new construction and conversions) when:

o Previous 3 criteria above are met.

o Project completed > one year and all units are sold.

o HOA is controlled by owners

o Project budget shows 10% capital reserves.

"The information provided has been based on rules and regulations issued by Federal Agencies and interpreted for you by MortgageCurrentcy.com. Interpretations are not guaranteed but we attempt to make them both easy to understand and help you sell more real estate. Check with your local and state authorities to ensure that you meet all requirements and disclosures."

Little-Known Facts About the 2009 Home Buyer Tax Credit Extension

2009-12-08T19:44:00.000-06:00

Unbeknown to homebuyers, real estate agents and the mortgage industry, the IRS is giving behind-the-scenes instructions—that are not available to the general public—to CPA’s and tax advisors on how to file for the home buyer tax credit after Nov 6, 2009. It will be completely different than what you might have been advised previously—and your are NOT going to like these changes!

The first shocker? You cannot file a 1040 EZ to claim the tax credit! Nor can you file tax returns electronically if claiming the tax credit!

Why no electronic filing or 1040 EZ forms?

It’s the first step in stopping fraudulent tax credit refunds. Believe it or not, the IRS never had a way to determine if a person owned a home—no auditing software in place--to determine if they previously claimed a “mortgage interest” deduction within a 3-year time period. The IRS is building “auditing software” now to “catch” previous homeowners who are trying to claim a FTHB tax credit.

Secondly, the IRS now requires that the HUD 1 or closing statement be attached to the 5405 form (and that cannot be attached electronically).

Third, speaking about the 5405 form…unless the home was purchased on or before November 6, 2009, currently there is NO FORM on the IRS website to file the amended return.

The IRS is telling tax advisors to expect an average of a 16-week turn around time…which means that it could either be the refund OR a request for additional documentation.

So, if you are expecting an income tax refund AND a homebuyer tax credit refund, BOTH refunds could be held up for several months.

The Hidden Cost of Instant Savings on Holiday Credit Cards

2009-12-05T13:05:00.000-06:00

Tis the season to do shopping – and get bombarded with offers to open credit cards.

The deals are tempting, too. ”Open a charge card today” and save up to 20% on your purchase. Considering that the average Black Friday ticket was $343, that’s $68 saved per store.

For big-ticket items like televisions, the savings are even bigger.

But for people in the market for a new home – or looking to refinance – taking advantage of in-store savings could be a long-term money loser.

Every time you apply for a credit card, your credit score drops.

According to myFICO.com, “new credit” accounts for 85 out of 850 possible credit scoring points. New credit is defined by such traits as:

■Number of recently opened accounts
■Number of recent credit inquiries
■Time since credit inquiry(s)
■Proportion of accounts that are recently opened to all open accounts

Shoppers with few open credit cards are more likely to see their scores drop that shoppers with many cards.

Regardless, a credit score is worth protecting because of how mortgage rates are made. A conventional mortgage applicant with 20% equity whose FICO is 720-739 will be offered rates 0.125% higher than a comparable applicant at 740.

■For 700-719, the rate increases by 0.375%
■For 680-699, the rate increases by 0.750%
■For 660-679, the rate increases by 1.250%
Having a low credit score can be expensive.

It is okay to take advantage of in-store savings during the holiday shopping season, but it’s also important to be aware of how your credit score may be affected.

If you’re not applying for a mortgage in the next six months, you’ll likely be alright. But, on the other hand, if you know you’ll need your FICO soon, consider whether saving 15 percent on a $343 ticket is worth the long-term cost of a higher mortgage rate. Source: James K Barath

5 New Year’s Resolutions for your house

2009-11-30T20:23:00.000-06:00

We all start off the New Year with the best intentions for self-improvement. And if your house could talk, it might have a few resolutions of its own. The good news is that these tasks are all relatively inexpensive and easier to accomplish than, say, exercising more or losing weight.

Change the furnace filter
A well-maintained furnace runs more efficiently. During the heating season filters should be checked monthly and cleaned or replaced as needed. Better disposable filters cost $10to $30 but will last up to three months. The 3M Filtrete 1700and 3M Filtrete Ultra Allergen Reduction 1250will keep your heating/cooling equipment operating efficientlyand improve indoor air quality by removing suspended dust and pollen.

Check smoke and CO alarms
Batteries should be changed at least once a year. Smoke alarms usually need to be replaced every 10years and carbon-monoxide alarms every five years. Check the alarm for its manufacture date. CO alarms should be on every level of your home, and smoke alarms should be in all bedrooms, hallways, the attic, and the basement. We recommend the $30 Kidde P12000 smoke alarm and the $60 Kidde Silhouette KN-COPF-l CO alarm if you have a hard-wired system. For battery-powered systems, the $25 First Alert SA302CN or $23 Kidde P19000 smoke alarms and the $83 First Alert OneLink C0511BCO alarm performed well. Remember, you need both smoke and CO alarms forthe best protection.

Perform a radon test
After smoking, radon is a leading cause of lung cancer. Long-term test kits give you a more accurate idea of average radon levels. because levels can
vary from day to day. Winter is a good time to test because doors and windows are likely to be closed and the home's stack effect is more likely to draw radon containing soil gasses into the living space. The $28Accustar Long-term Alpha Track Test KitAT-l00 was accurate and reliable in our tests. Place the detector on the lowest level of your home.

Install a programmable thermostat
By automatically lowering the home's temperature by 5°to 10°F at night or when you're out, a programmable thermostat can pay for itself in less than a year. The trick is to get one that's easy to read and use. The $80 LuxSmartTemp Touch Screen TX9000TS and the $55 Hunter Set &.. Save44360 were easy to use and maintained steady temperatures in our tests. They can also help save on cooling costs.

Clean your humidifier
If dry indoor air in the winter has your humidifier working overtime. remember that it needs frequent cleaning. Minerals in tap water can cause an accumulation of scale, a breeding ground for bacteria. So check the owner's manual to see which parts need to be descaled with vinegar and disinfected with bleach. Filters and wicks also require periodic replacement. Hard water can increase scale buildup. Source: Consumer Reports

The Yield on the 10-year Treasury Continues Drop

2009-11-18T17:22:00.000-06:00

The yield on the benchmark 10-year Treasury continued its drop Tuesday, suggesting that the recent downward drift in mortgage rates might continue. At press time, the 10-year was yielding 3.3% compared to 3.5% less than a week ago. Rates began to fall after Federal Reserve chairman Ben Bernanke spoke Monday, reaffirming the government's intervention policies in the mortgage market. The Fed is set to end its MBS liquidity program by the spring but the Fed chairman said the central bank might adjust the program, depending on what market conditions call for.

HUD ANNOUNCES RESTRAINT IN RESPA ENFORCEMENT FOR FIRST FOUR MONTHS OF NEW RULE

2009-11-17T12:19:00.000-06:00

Aimed at mortgage professionals making good faith effort to comply with new requirements
WASHINGTON - The U.S. Department of Housing and Urban Development (HUD) today announced that for the first four months of 2010, the staff of the Mortgagee Review Board (MRB) will exercise restraint in enforcing new regulatory requirements under the Real Estate Settlement Procedures Act (RESPA), due to take full effect on January 1. The MRB instructed its staff to exercise such restraint in considering an action against FHA-approved lenders who have demonstrated that they are making a good faith effort to comply with RESPA's new requirements.

In addition, HUD is asking other federal and relevant state enforcement agencies to exercise the same 120-day restraint in enforcement for non-FHA originators and other settlement service providers who demonstrate the good faith effort to implement RESPA's new rules. In determining whether a mortgagee has made a good faith effort, MRB staff will consider whether the mortgagee has relied on the new RESPA rule and other written guidance issued by the Department, and the extent to which the mortgagee has made sufficient investment and commitment in technology, training, and quality control designed to comply with the new rule.

"We will work with those who are making an honest effort to work with us as we implement these important new consumer protections," said HUD Secretary Shaun Donovan. "While we will not delay implementation of RESPA's new requirements, we are sensitive to the concerns of the industry as it integrates these new rules into their day-to-day business practices."

On January 1, 2010, HUD will require that lenders and mortgage brokers provide consumers with a standard Good Faith Estimate (GFE) that clearly discloses key loan terms and closing costs. Closing agents will also be required to provide borrowers a new HUD-1 Settlement Statement that clearly compares consumers' final and estimated costs. The new RESPA rule became effective on January 16, 2009, but provided a one-year transition period for the mortgage industry to incorporate these changes. HUD will continue to work with the mortgage industry during this period, including providing a comprehensive set of frequently asked questions (FAQs) on its website.

By improving the disclosures borrowers receive when applying for a mortgage, and by promoting comparison shopping, HUD believes its new RESPA regulation will save consumers an average of nearly $700 in mortgage costs.

Can Biweekly Mortgages save you Money?

2009-11-08T20:08:00.001-06:00

Biweekly payments can save thousands of dollars and take 5-7 years off your mortgage. You can set up a money-saving mortgage payment plan yourself--easily and at no extra cost.

Here's how biweekly payments save time and money: By making biweekly payments, you actually end up making an extra monthly payment each year. Over the course of a year, you'd make 26 payments (one every other week for 52 weeks), which is the same as making 13 monthly payments. Making one extra payment per year will shorten the life of your loan and save you thousands of dollars.

But you don't have to make biweekly payments to obtain those savings. Here are a couple examples of how you can save big money, using the same basic idea:

If you get paid every two weeks, divide your monthly principal and interest payment in half and then send your lender a check for that amount during those months in which you receive three paychecks. Just sending in those two extra checks will be the equivalent of one extra payment a year.

If you don't want to send lump checks, you can get the same results by dividing your monthly principal and interest payment by twelve and then adding that extra amount to your payment every month. Normally, that figure won't put too much extra strain on your budget, and it will add an extra mortgage payment to your loan every year.

You really can save significant amounts of money and shorten the life of your loan by making extra payments.

Senate approves extension of homebuyer credit

2009-11-06T13:05:00.000-06:00

The Senate and the House have approved extending the first-time homebuyer tax credit, settling on an April 30 close date and expanding it to benefit more homebuyers.

Under the bill, the $8,000 homebuyers' tax credit, slated to expire this month, would continue until April 30 and be expanded to include people with higher incomes and some who already own homes.

The Senate plan would allow homebuyers who have lived in their residence at least five years to receive a $6,500 credit. Couples earning as much as $225,000 a year and individuals earning up to $125,000 would qualify. That is up from the current $75,000 limit for individuals and $150,000 for couples.

Those buying homes worth more than $800,000 wouldn't be eligible for the credit, and those who sell their new home or stop using it as their main residence within three years would have to repay the credit.

HUD's Good Neighbor Next Door Program

2009-11-05T11:29:00.000-06:00

Teachers, firemen, policemen, paramedics, etc, can buy a HUD foreclosed home, in certain designated areas, for 50% of the offered price--and then combine it with a 203k loan to fix it up.
For example, if HUD lists a home at $100,000, you can buy it for $50,000 provided; you occupy the home as your personal residence for the required occupancy period. If you qualify for any FHA-insured mortgage program, your down payment is only $100 and you may finance closing costs.
If you need a referral to Realtor that specializes in HUD foreclosures please call me at 832-724-0740.

One Click Open House Flyers

2009-11-01T19:05:00.000-06:00

This whole system is just amazing but this one tool is just amazing. What used to take 20 minutes to do now takes just a click and included the website of the home and the text code, try it out, its crazy ;) Instant info for an instant info society :)...

For More Info on the system to to http://tinyurl.com/yjcvbnn/

Not signed up for this system yet, go to http://tinyurl.com/yjcvbnn/

Final Draft of the Home Buyer Tax credit?

2009-10-30T17:07:00.000-05:00

The expected extension and expansion of the tax credit, probably the last one, is expected to be voted on as soon as today and probably signed in the next few days, at best. The signing may happen in spite of the administration preferring a slightly different version. The latest version, and this has not been voted on by the Senate, would extend the credit to home sales that go under contract by April 30 and close by June 30, 2010. A new, $6,500 tax credit would be available for buyers of owner occupied primary residences who have owned during five of the eight years prior to the purchase. Although the House may have its own version, this extension includes a few items such as the home price limit would be $800,000, and the annual income limit to qualify for the tax credit would be $125,000 if you're single and $250,000 for couples.

Freddie Mac will pay up to 3.5 percent of the sales price in buyer's closing costs

2009-10-14T11:49:00.000-05:00

Freddie Mac Homesteps Sales and Promotion

I got e-mail from Freddie Mac about Home Sales and Promotions. I think is good information for home buyer. Promotion about two year warranty to owner-occupants buying Freddie Mac Homesteps Homes.

SmartBuy" Sales Promotion Offers Two-Year Warranty to Owner-Occupants Buying Freddie Mac Homesteps® Homes
Freddie Mac Will Also Pay Up to 3.5% of Buyer Closing Costs

McLean, VA – People purchasing single family HomeSteps® homes as a primary residence will receive a comprehensive two-year home warranty paid for by Freddie Mac (NYSE:FRE) as part of HomeSteps' SmartBuy sales promotion. In addition, for a limited time, Freddie Mac will pay up to 3.5 percent of the sales price in buyer's closing costs, potentially saving qualified buyers of HomeSteps homes thousands of dollars in transaction costs.

Note : Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets.

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House Passes Legislation Extending FTHB Tax Credit for Active Military

2009-10-13T16:41:00.000-05:00

The House of Representatives voted unanimously Monday to extend the deadline for the home buyers’ tax credit for one group of Americans.

HR 3590 will allow eligible military personnel and foreign service and intelligence officers to apply for the $8,000 tax credit for one year beyond its current November 30 deadline. Those meeting the underlying requirements for the credit must also be serving overseas or have spent at least 90 days deployed outside of the country during the current calendar year. It is expected that about 350,000 military personnel and an unknown number of federal employees may be affected by the new law.

The bill, introduced by Representative Charles Rangel (D-NY) because it was thought that families serving overseas were being passed over for this one-time opportunity to purchase a home. It passed the Housed passed with 416 votes and 16 abstentions.There is currently a battle being waged over extending the popular credit for all eligible persons and possibly even removing the requirement that the home be a qualified first-time purchase. Many credit the current tax break for a recent surge in the housing market after months of rising inventories and falling prices. Such an extension is strongly supported by the National Association of Realtors, the National Association of Homebuilders, and other major players in the housing industry, however, many argue against it on the basis of cost.

The Rangel bill will also prohibit the Internal Revenue Service from pursuing payback of the credit if the homeowner is deployed after receiving it. Under the original law a homeowner was required to occupy the home for 36 months or the credit would be recaptured. Because the military, the State Department and intelligence agencies frequently relocate their personnel and their families, some have been reluctant to apply for the credit even if they did purchase a home.

The bill must still be considered by the Senate but similar easy passage is expected.
by Jann Swanson

10 Questions to Ask a Home Inspector

2009-10-09T14:26:00.000-05:00

When you make a written offer on a home, you should insist that the contract state that the offer is contingent on a home inspection conducted by a qualified inspector. A home inspection is an evaluation of a home’s condition by a trained expert. During a home inspection, a qualified inspector takes an in-depth and impartial look at the property you plan to buy. The inspector will:

Evaluate the physical condition: the structure, construction and mechanical systems.
Identify items that should be repaired or replaced.
Estimate the remaining useful life of the major systems (such as electrical, plumbing, heating, air conditioning), equipment, structure and finishes.

You will have to pay for the inspection yourself, but it could keep you from buying a house that will cost you far more in repairs down the road. If you are satisfied with the results of the inspection, then your offer can proceed.

As the homebuyer, it is your responsibility to carefully select a qualified inspector and pay for the inspection.

Here are ten important questions to ask your home inspector:

1. What does your inspection cover?
The inspector should ensure that their inspection and inspection report will meet all applicable requirements in your state if applicable and will comply with a well-recognized standard of practice and code of ethics. You should be able to request and see a copy of these items ahead of time and ask any questions you may have. If there are any areas you want to make sure are inspected, be sure to identify them upfront.

2. How long have you been practicing in the home inspection profession and how many inspections have you completed?
The inspector should be able to provide his or her history in the profession and perhaps even a few names as referrals. Newer inspectors can be very qualified, and many work with a partner or have access to more experienced inspectors to assist them in the inspection.

3. Are you specifically experienced in residential inspection?
Related experience in construction or engineering is helpful, but is no substitute for training and experience in the unique discipline of home inspection. If the inspection is for a commercial property, then this should be asked about as well.

4. Do you offer to do repairs or improvements based on the inspection?
Some inspector associations and state regulations allow the inspector to perform repair work on problems uncovered in the inspection. Other associations and regulations strictly forbid this as a conflict of interest.

5. How long will the inspection take?
The average on-site inspection time for a single inspector is two to three hours for a typical single-family house; anything significantly less may not be enough time to perform a thorough inspection. Additional inspectors may be brought in for very large properties and buildings.

6. How much will it cost?
Costs vary dramatically, depending on the region, size and age of the house, scope of services and other factors. A typical range might be $300-$500, but consider the value of the home inspection in terms of the investment being made. Cost does not necessarily reflect quality.

7. What type of inspection report do you provide and how long will it take to receive the report?
Ask to see samples and determine whether or not you can understand the inspector's reporting style and if the time parameters fulfill your needs. Most inspectors provide their full report within 24 hours of the inspection.

8. Will I be able to attend the inspection?
This is a valuable educational opportunity, and an inspector's refusal to allow this should raise a red flag. Never pass up this opportunity to see your prospective home through the eyes of an expert.

9. Do you maintain membership in a professional home inspector association?
There are many state and national associations for home inspectors. Request to see their membership ID, and perform whatever due diligence you deem appropriate.

10. Do you participate in continuing education programs to keep your expertise up to date?
One can never know it all, and the inspector's commitment to continuing education is a good measure of his or her professionalism and service to the consumer. This is especially important in cases where the home is much older or includes unique elements requiring additional or updated training.

CityCentre mixed-use project is now open

2009-10-06T18:05:00.000-05:00

HOUSTON (Houston Business Journal) – The Lofts CityCentre has opened at the southeast corner of I-10 and Beltway 8, making 250 upscale apartments available for rent in West Houston.

This development of the mixed-use, 37-acre CityCentre project consists of one-, two- and three-bedroom units located above stores and restaurants.

The developer is locally based Midway Cos.

The latest piece of the CityCentre mixed-use project is now open — making 250 upscale apartments available for rent in West Houston.

The Lofts CityCentre features one-, two- and three-bedroom units located above stores and restaurants. Each apartment has granite counter tops and stainless steel appliances in the kitchen, plank flooring and access to concierge services.

Developed by Houston-based Midway Cos., the 37-acre CityCentre consists of offices, retail stores, restaurants, a hotel, townhomes and apartments at the southeast corner of Interstate 10 and Beltway 8.

BENEFITS OF NET-ZERO HOMES

2009-10-06T17:54:00.000-05:00

DALLAS (Associated Press) – An Environment Texas Research and Policy Center study released last week found that if 10 percent more “net-zero” houses were built each year for the next decade, and all new homes were built that way by 2020, Texans could save more than $5 billion in utility bills.

In Austin, a 40-house net-zero development is under construction about two miles from downtown. The homes are designed to be about 45 percent more energy efficient, with solar energy bringing the net use to zero. Construction of these homes costs about 15 percent more than building a traditional house, but the savings eventually make up for it.

The study estimates homes would save an average of $500 a year in energy bills, and the reduced annual emissions would be equivalent to cutting the pollution of more than three million cars in the nation's leading greenhouse-gas producing state by 2030.

The report calls on state and federal officials to do more to make the upgrades affordable. State agencies this fall will consider increasing efficiency standards and requiring utilities to provide incentives. A bill passed in the 2009 legislative session authorizes cities to offer incentives.

2009 Komen Houston Race for the Cure®

2009-09-28T18:32:00.000-05:00

Saturday, October 3, 2009 Sam Houston Park Downtown

Online registration is now closed! But wait...you can still register for Saturday's big Race! Walk-In Registration is being held this week from Wednesday through Friday for participants who still need to register. To learn more about the Race, click here. Don't miss out on a wonderful celebration of hope and survivorship at the Race...Register this week!

Location: Galleria IV, level 1 in front of Nordstrom's
Dates/Times: Wednesday, September 30th - 10:00 am to 7:00 pm
Thursday, October 1st - 10:00 am to 7:00 pm
Friday, October 2nd - 10:00 am to 5:30 pm
Parking: Please enter parking lots off of McCue or Hidalgo.
Payment: Cash, check or credit card accepted.

*Due to the increase in registration numbers this year, t-shirts and sizes are limited. For your best chance of receiving a t-shirt and in your size, visit Walk-In Registration on Wednesday!

NO MORE LOAN APPLICATIONS FOR FIRST-TIME BUYERS

2009-09-25T14:16:00.000-05:00

SAN ANTONIO (San Antonio Express-News) – The Texas Department of Housing and Community Affairs is no longer accepting applications for short-term loans to homebuyers eligible for the $8,000 federal tax credit.
Because first-time homebuyers generally have enough money to cover their down payment, but not always enough to pay closing costs, the state has been offering 90-day loans since July to help them use the federal tax credit.
Since the department set aside $7.5 million and began offering the loans, it has received 1,225 applications. It stopped accepting loans to ensure it could process them by Dec. 1, the deadline to finalize home purchases while taking advantage of the tax credit.

CUSTOMERS REPORT QUALITY, SATISFACTION

2009-09-20T12:00:00.000-05:00

WEST LAKE VILLAGE, Calif. (J.D. Power and Associates) – Two new studies from J.D. Power and Associates ranked home builders in 24 markets by customer satisfaction and home quality. The studies included the four major Texas metros.
In Austin, David Weekley Homes and Pulte Homes tied for the top builder in overall customer satisfaction. Standard Pacific Homes followed and also ranked the highest in home quality.
In Dallas–Fort Worth, Darling Homes was first in overall customer satisfaction, putting Drees Custom Homes in second and Ashton Woods in third. However, Ashton Woods held the top position for quality.
Village Builders and Ashton Woods tied for overall customer satisfaction in Houston, and were followed by Highland Homes. J. Patrick Homes was tops in quality.
San Antonio’s top builder in overall customer satisfaction and quality was Pulte Homes. KB Home was second in overall customer satisfaction.
Across the 24 markets surveyed, overall customer satisfaction with homebuilders averaged 811 on a 1,000-point scale, up 32 points from 2008.
For information on determining factors for the studies and more comprehensive rankings in each market, visit www.jdpower.com/homes.

TEXAS CITIES RANK HIGH ON ECONOMY, HOUSING PRICES

2009-09-17T16:21:00.000-05:00

TEXAS (Dallas Morning News) – Texas metros boast the strongest economies, according to a just-released analysis by the Brookings Institution.
Austin ranked first in a second-quarter comparison of 100 U.S. cities. Dallas–Fort Worth ranked fourth and El Paso sixth.
Houston's economy landed it at ninth, but the Bayou City ranked first among cities with the biggest increases in home prices. Local home prices jumped 4.9 percent over the last year.
Third-ranked DFW had a 3.8 percent increase in home prices, while tenth-ranked San Antonio had a 3.1 percent increase.

COASTAL PROTECTION PLAN BIGGEST EVER FOR TEXAS

2009-09-17T16:05:00.001-05:00

GALVESTON (Associated Press) – A year after Hurricane Ike destroyed thousands of homes in Galveston, Texas Land Commissioner Jerry Patterson has announced a $135.4 million plan to fight beach erosion and defend the coast against hurricanes.
Patterson said the plan marks the biggest effort of its kind in Texas history.
Work will begin immediately on 26 projects spanning the Texas coastline. The biggest will be a more than $46 million beach renourishment that will replace sand over a six-mile stretch from the west end of Galveston's seawall.
Other projects include $32 million to restore dunes along 20 miles of beaches that protect the McFaddin National Wildlife Refuge, $18.3 million to rebuild dunes on Bolivar Peninsula and a $1 million test project on South Padre Island that will place concrete-filled tubes underwater in beaches on the north end. The tubes will slow erosion by retaining sand usually lost to waves and currents.
Patterson said the state is allocating $25 million for the effort. Matching funds from local communities and the federal government bring the total to more than $135 million.

Tax Credit Expires Soon

2009-09-07T18:06:00.000-05:00

The window for first-time homebuyers to take advantage of the $8,000 federal tax credit will close at the end of November.

To qualify for the credit, any transaction involving a first-time buyer must close before midnight on Nov. 30, 2009.

Rah! Rah! for Texas' College Towns

2009-09-07T18:04:00.000-05:00

WASHINGTON, D.C. (U.S. News and World Report) – Just in time for the start of the fall term and another college football season, U.S. News and World Report has put together its list of 15 most underpriced college towns in the country. Two are right here in Texas.

Houston nabbed the top spot, while College Station ranked third.

Houston, home of Rice University and the University of Houston, had a median home price of $120,000 during first quarter 2009 according to IHS Global Insight's statistics, which were used to compile the list. IHS considered that price to be 37 percent undervalued.

Research Economist Dr. Jim Gaines at the Real Estate Center at Texas A&M University expects future job and population growth to drive home price appreciation upward.

"The medium- and long-term prospects for Houston are extremely good," Gaines says, adding that the city has "good demographic growth, job growth, and a reasonably balanced housing market."

Head north to College Station, and you’ll be in the third most underpriced college town in the country. The median home price in the first quarter of this year was $107,000. According to IHS, houses in the Bryan–College Station area are 21 percent undervalued.

Why Indecision Equals Delays

2009-08-30T14:19:00.000-05:00

Mortgage Disclosure Improvement Act Went Into Effect on July 30, 2009

Overall, there are 4 major reasons behind this law, created to protect consumers who apply for a mortgage. But most importantly, I want to share how it affects you, your sellers and your buyers.

Uniformity – Every lender must now use the SAME Good Faith Estimate. It’s easier to read and includes detailed mortgage loan terms, estimated closing costs and annual percentage rate. The term “business days” has been defined and means Monday thru Saturday, EXCEPT federal holidays.

Disclosure – If anything changes during the processing of the loan—if the loan terms change, the down payment, closing costs, APR (by more than 1/8% higher), another disclosure must be sent to the consumer.

Waiting Periods – The consumer is given “time” to review all disclosures. There is an extra layer of protection where there is a 7-day waiting period before the loan can close.

Comparison Shopping – The new Good Faith Estimate Form now includes a section called “Using The Shopping Chart”. It encourages consumers to compare loan terms, closing costs and interest rates with up to 3 other lenders.

• When negotiating the date of closing, make sure it’s flexible and there are no penalties for not closing on the specified date. The waiting periods are “federal law” and preclude the terms in the written contact.
• No last minute down payment changes
• No “floating the interest rate” until the last minute. Encourage your buyers to lock in at least 7 to 10 days before the projected close date
• No switching of lenders at the last minute. The disclosure process starts over again with another lender
• No waivers—unless it’s a hardship with tens of thousands of dollars at stake because the law is written as such that a ‘waiver” will be virtually impossible to obtain.
• Notify your loan officer if anything…and I mean ANYTHING changes on the purchase agreement. This could require a re-disclosure and delay the closing.
• Appraisal disclosure plays a part in this too. Even if all loan disclosures are met, the consumer has another 3 days to review their appraisal.
The bottom line: The days of negotiating the deal at the last minute ARE OVER—unless your buyers and sellers are prepared to delay the closing date.

Government cash for green appliances

2009-08-29T10:00:00.000-05:00

SAN ANTONIO (Associated Press) – The 2009 stimulus package includes a $300 million rebate program for states to distribute to buyers of energy-efficient appliances and other products that carry the “Energy Star” label.

Energy-conscious consumers can receive between $50 and $200 cash back on their purchase of items like freezers, refrigerators, furnaces and central air conditioners.

Within the next week, participating states will receive 10 percent of their funding allotments, which is determined by state population. The Department of Energy estimates that the full $300 million will be awarded by the end of November, with consumers beginning to see the programs in stores by the end of 2009 or early 2010.

Fannie Move Seen Adding to Condominium Woes

2009-08-25T14:25:00.000-05:00

By Jennifer Harmon
MIAMI-Fannie Mae's recent decision to tighten its lending rules to condominium buyers will affect every condo and community in Florida and every community in the United States, according to the president of Association Financial Services here, who says the move is likely to cause another decline in condominium prices and an increase in condominium association fees.
Under the new rules, if an association has more than 15% of its units delinquent over one month, Fannie Mae is not guaranteeing the loan, which means that the bank can't provide the loan unless they plan on holding onto it themselves forever, said Ken Arnold.
"Few banks will be able to do this because that's not their business to hold loans. These mortgages are typically a lower interest rate type loan. It becomes a cash market at that point. The only people that are able to sell their condos are HOAs if somebody comes in with cash because nobody else can get a loan."
Association Financial Services provides loans or lines of credit against the past-due accounts receivable for condo associations or homeowners' associations. Because its underwriting criteria are not as stringent as a bank, it can provide loans to a lot of associations that are not able to get a bank loan. "Lots of times they can't pay their bills because of unexpected delinquencies that are happening more and more. In a cash market home prices are more realistic to market level. Often, it is substantially discounted from what people can afford if they didn't have to come up with all cash," he said.
"It has a dramatic effect on the market. We see already condos being sold 20 to 30 cents on the dollar. That's because if you have cash and can come up with your 20% or 30%, you can go out and buy a condo. As opposed to if a condo was worth $200,000 before, now you need substantially less money."
In quite a few condos, more than 15% of the units are currently delinquent. Many condos and HOAs are not going to pass a Fannie Mae threshold, observes Mr. Arnold. "It is a difficult threshold. There are a lot of condos and I know here in Florida it's pretty dramatic. And that's one of the things that are depressing the entire housing market."
He said the move by Fannie is having a dramatic effect on the entire real estate market. Even if a borrower lives in a regular home, they are competing against a condo that is selling next door for $50,000 when it used to be selling for $200,000. "So now, you have to lower the price of your standard home, because the condos are cheaper," he added.
During the last several months, existing-home sales have increased, and consumers are becoming more realistic as to the true value of their property. As a result, the market is seeing more transactions. Mr. Arnold said he wouldn't be surprised if Freddie or FHA decides to do the same thing, but he thinks Fannie Mae is larger than the other two by far, and that, in itself, has already created pressure.
"The fact that Fannie did it is enough to shake up the market. You don't need all of the providers to fall in line in order for there to be dramatic changes already," he said." Potentially if the banks are out there and they are packaging up these mortgages that they get and now they only have Freddie to sell them to, it really changes the market dynamics quite a bit. They don't have to do the same thing in order for major changes to take place."
Mr. Arnold has heard from some in the mortgage industry that from a developer's point of view, they have people who want to buy the properties but they are unable to get loans. "A lot of times these developers are stuck with a substantial number of units, and they want to be able to convert this to a member owned development. They can't have a healthy association where everybody is paying their Maintenance fees on time. Ultimately, these condo and HOAs have to get their financials under control and make sure they are prepared for what will happen."

MLS Search

2009-08-22T21:25:00.000-05:00

Appraisal Management Companies Makes Paying for Appraisals Easier

2009-08-17T13:07:00.000-05:00

FNC Inc., Oxford, Miss., has signed a three-year deal with credit and debit card processing firm Elavon, a wholly owned subsidiary of US Bancorp. The appraisal management company said the agreement is to help its customers comply with the Home Valuation Code of Conduct. Under HVCC, mortgage brokers can no longer pay for appraisals directly. Lender clients can pay for appraisals through the dashboard of FNC's Collateral Management System as a result of the agreement, the company said.
Daily Origination News

Realtors Do You Want To Add Properties To Craigs List With Just Four Clicks?

2009-08-16T20:14:00.000-05:00

One of the great tools that comes with my FREE marketing system for Agents is the ability to add your free individual property websites to Craigs List with just 4 clicks. You then can do that every 48 hours to make sure your properties are back at the top of the list!

Loan Officer Shocks All Real Estate Agents with FREE System

Texas Agents....

Just to let you know I had a new agent partner sign up for my marketing system, which is totally FREE, 2 weeks ago and it has won her 2 new listings and got 2 new buyers in just 2 weeks. This is doubling agents business in 90 days! You only have yourself to blame if you are slow. This will bring you business if you use it and work hard. Call or email me and I'll help you get started. Again, its totally free....

You Can't Put A Price On Marketing Like This... So We Didn't, It's FREE!!

MARKETING SYSTEM FEATURES

•A complete professional property website
•"Texting for" property info with call capture
•Mobile phone website ZMLS.mobi included
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Don't Cheat Home-Buyer's Tax Credit

2009-08-09T14:49:00.000-05:00

By Kenneth R. Harney
Saturday, August 8, 2009
The IRS has an urgent message for would-be home purchasers: Make the most of the $8,000 first-time-buyer tax credit before it disappears Dec. 1 -- if you qualify.
But if you don't truly qualify, don't try to play games with the credit. The IRS already has 24 criminal investigations of suspected fraud underway around the country. It has executed seven search warrants, and last month a tax preparer in Florida entered a guilty plea on federal charges of fraud in connection with the first-time-buyer credit. He's awaiting sentencing and faces up to three years in prison, a $250,000 fine or both.
Congress's two versions of the first-time-buyer credit -- a repayable $7,500 credit in 2008, and this year's more generous $8,000 credit that does not have to be repaid -- have stimulated home sales nationwide. But they've also become irresistible temptations for dishonest taxpayers to cash in and claim bogus refunds.
Claiming the credit looks so easy: You just fill out IRS form 5405, list the address of the house you bought, mail it in and wait a month or two for your money. Who's going to check on whether you really qualify under the definition of first-time buyer -- someone who hasn't owned a principal residence in the previous three years -- and that you're eligible on income and other factors?
With thousands of people buying houses and claiming tax credits, who's going to be able to check all those filings? The answer from the IRS: We are. The agency said it uses "sophisticated computer screening tools to quickly identify returns that may contain fraudulent claims for the first-time homebuyer credit."
The IRS won't discuss the nature of its screening, but it's clear from the number of ongoing investigations that claims for the credit are getting special scrutiny.
In the case of the Florida tax preparer, one tip-off evidently was the sheer number of clients who claimed credits as first-time buyers. James Otto Price III of Jacksonville entered a plea of guilty to charges that he fraudulently submitted returns claiming tax credits for 15 clients, some of whom apparently did not understand what he was doing.
According to a summary of the facts agreed to by Price as part of his plea agreement, he admitted that in February he met with a client who told Price that she didn't want to buy a house. But Price insisted that she qualified for the credit because "she had two jobs." He then wrote in a house address on the form 5405, claiming the client closed on the purchase Jan. 5. When she received her $7,500 credit, Price took $1,000 of it for himself.
In the plea agreement, Price admitted following a similar pattern in 14 other tax returns.
IRS spokesman Terry Lemons declined to discuss the ongoing criminal investigations of taxpayers claiming the home-buyer credit. He said the investigations involve individuals as well as tax-return preparers.
The IRS doesn't "want to discourage people from taking advantage of the credit," Lemons said, but it wants them to be certain that they've read through the eligibility rules so they don't end up with audits, back taxes and late penalties. On the list of things that can disqualify buyers:
-- Purchasing your house from a "related person." That's a broad category of people and entities, ranging from immediate family members -- a spouse, parents, children, grandparents, grandchildren -- to a corporation or partnership in which you have more than a 50 percent ownership stake.
-- Buying a home with a spouse who is ineligible, even if you are eligible individually.
-- Acquiring a house through an inheritance or gift.
-- Financing the house through a tax-exempt mortgage bond program.
-- Making too much money -- in excess of $95,000 of modified adjusted gross income for singles, $170,000 or more for married joint filers.
What are the downsides if you claim the credit erroneously and do not intentionally defraud the government? If you are audited, the IRS most likely will ask for the full credit amount back, plus interest and a late-payment penalty.
Bottom line: Don't let this year's tax credit pass you by if you meet the criteria. And if you don't, beware of slick-talking professional tax preparers who tell you that you do.

5 Tips for Dealing with a Home Equity Line Freeze or Reduction

2009-08-06T19:41:00.000-05:00

Homeowners in all regions of the United States are seeing their home equity lines of credit (HELOCs) frozen or reduced and wondering what they can do about it. The Federal Reserve's latest "5 Tips" guide explains consumers' rights and lenders' responsibilities when credit lines are reduced and provides information for those seeking to have a credit line reinstated.

"5 Tips for Dealing with a Home Equity Line Freeze or Reduction" explains that lenders can lawfully reduce or limit a consumer's line of credit regardless of whether the consumer has made timely payments. However, the lender must send a written notice of the action no later than three business days after the freeze or reduction goes into effect. The notice must include information about any other changes to the HELOC.

The freeze or reduction notice should include specific reasons for the action. The most common reasons for modifying the terms of a HELOC are a decline in the home's value, or a change in financial circumstances. Understanding why a lender froze a credit line may help a consumer take steps to have it reinstated to the original amount. For example, a lender may not know that significant home improvements have been made that increased the home's value. Or, if a household's financial circumstances have changed for the worse, consumers should look for ways to rebuild their credit rating.

Consumers are urged to protect their credit history by acting responsibly and contacting the lender immediately if they have questions or concerns about a credit line freeze or reduction. Lenders must reinstate credit privileges when the conditions causing the freeze or reduction no longer exist.

"5 Tips for Dealing with a Home Equity Line Freeze or Reduction" can be found at http://www.federalreserve.gov/pubs/heloctips/default.htm. It is one of several publications the Federal Reserve Board provides to help consumers make informed decisions involving home equity lines of credit.
Board of Governors of Federal Reserve System

Congress to Avert FHA Shutdown

2009-08-04T08:46:00.000-05:00

The Senate passed a bill Thursday evening that provides the Federal Housing Administration with additional loan commitment authority so the FHA can continue to endorse single-family loans through Sept. 30 without interruption. The Senate's action clears the measure so it can be sent to President Obama for his signature. The House passed the bill (H.R. 3357) earlier in the week by a 363-68 vote. The bill provides $85 billion in additional commitment authority for FHA and $100 billion for Ginnie Mae. The Senate passed it by a 79-17 vote. The measure also includes emergency funding for the highway trust fund. FHA warned Congress back in June that it had used 75% of its $315 billion in loan commitment authority and later requested additional commitment authority to avoid a shutdown of the single-family program. Source: National Mortgage News.

HUD Guidance on Tax Credit Bridge Loans

2009-07-26T15:14:00.000-05:00

FHA-approved lenders received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according to guidance from the U.S. Department of Housing and Urban Development on so-called home buyer tax credit loans.

Although the HUD guidance allows the bridge loans to be used in conjunction with FHA first mortgage financing, few lenders are expected to create bridge-loan products. There are a number of reasons for this. First, the loans must be structured as personal loans rather than as second mortgages or mortgage-backed lines of credit because of statutory restrictions. Second, the limited time-frame of the tax credit program--it's set to expire before Dec. 1 of this year--leaves little time for lenders to set up and operate programs profitably.

Given these limitations, despite the announcement by HUD, the best opportunity for buyers to leverage the tax credit for up-front assistance is through programs set up by some state housing finance agencies. About a dozen state housing finance agencies (public bodies that are instrumentalities of state government) have developed their own tax credit bridge loan programs, so buyers in states whose HFAs offer such programs can monetize the tax credit upfront to cover all or part of their downpayment.

Information on the state HFAs that offer tax credit bridge loans is available at the Web site of the National Council of State Housing Agencies.

Fannie Mae Willing To Go to 120%

2008-05-22T14:43:00.000-05:00

Fannie Mae is introducing a refinancing option for struggling homeowners.
Fannie executive said it would purchase loans refinanced for up to 120% of a property’s current value.

This option is available only for Fannie Mae owned or guaranteed loans a borrowers must be current o their mortgage payments.

This new option could help 150,000 homeowners who cannot refinance into a more affordable mortgage because of negative equity.

What You Need to Know About Canceling Your Mortgage Insurance!

2008-03-09T13:49:00.000-05:00

Up to $700M per year is paid to Private Mortgage Insurance Companies by homeowners who are no longer required to carry this type of insurance. If you are one of my clients who have Mortgage Insurance or PMI (as it is regularly called), now is the time for us to check and see if you qualify to eliminate it from your monthly payment.
I have listed below some of the rules that we would need to adhere to, but please call me if your situation is more complicated than that.
There are different rules for mortgages taken before July 29, 1999 than for mortgages signed after that date. So, first determine the date you signed your mortgage. The following requirements are for those mortgages signed after July 29, 1999.
1. Your mortgage insurance will "automatically" drop off when your mortgage is paid down to 78% from its "original" value. That means that even if the value of your property has increased substantially, the lender is required to use the lesser of the two values.
2. Mortgage Insurance has a two-year waiting period before a lender can even consider dropping that portion of the payment. However, there are two exceptions to this rule: (In both instances—you must request that it be canceled.)
A. You have paid money towards the principal balance and have reached the 80% of the original value.
B. You have substantially improved the property (such as a room addition or a second story addition—just remodeling is not enough) and you can prove it with a new appraisal.
3. After two years, you can request that the mortgage insurance portion of your payment be dropped. However, it must meet these parameters:
A. You must provide a new appraisal. (The appraiser must be approved by your lender. The lender has the right to dispute the value.)
B. You must have had a good payment history on your mortgage.
C. The Loan to Value Ratio must be 75% or less—based upon the new appraisal.
4. After five years, the same rules as # 3 apply, however the loan-to-value ratio increases to 80% of the appraised value
5. If you have a second mortgage on your property, it will not affect your ability to get your mortgage insurance payment waived and it will NOT be considered in the loan-to-value calculations.
Each "type" of mortgage—such as adjustable rate and balloon mortgages also has its own set of regulations. In addition, some states have passed their own legislation which makes getting rid of your MI insurance easier. However, I recommend that you call your lender and request their rules on what is required to eliminate it from your payment.

Refinancing Starting to Boom

2008-02-27T17:11:00.000-06:00

The recent drop in interest rates and low home prices has increased mortgage applications across the country.

Despite the negative news about subprime loan problems and rising foreclosures consumers are getting the message that opportunities are alive and well.

The Fed lowering the funds rate by 120 basis points in 10 days is the largest drop in history. Making conditions just right for another refinance boom. However, this refinance boom will be different. The relaxed underwriting guidelines are gone. Today we are seeing lower rates, better products and the pretty standard underwriting practices.

Now is a great time to consolidate debt and for those with ARM's to get a fixed rate. Interest rates are still in the 6's and are still very attractive.