By JIM CARLTON
The green building movement is targeting a goal once thought virtually unattainable: zero net energy use.
While the trend is nascent, dozens of "net zero" and "near net zero" developments -- projects designed to use only about as much power from the public grid as they can save or produce on their own -- have sprung up across the U.S. over the past five years.
Zero-Sum Game
View Interactive
See the details of a net-zero house, which produces as much energy as it consumes.
In Greenfield, Mass., nonprofit Rural Development Inc. has completed eight of 20 planned duplex homes that use almost no net energy. In Berkeley, Calif., ZETA Communities Inc. plans to build a 30-unit net-zero apartment building after opening a factory that can construct 400 to 500 prefabricated net-zero homes a year. And in Green Valley, Ariz., builder Pepper Viner Homes says it plans to incorporate green techniques into a senior housing community so that it reduces energy use more than 50%. U.S. officials are working to wean federal buildings off fossil fuel by 2020, a step they say will help the buildings become almost net-zero energy users.
Behind the push is the fact that buildings are a major consumer of power, accounting for an estimated 40% of energy usage in the U.S.
But a bigger shift toward net-zero construction faces hurdles, largely because such buildings often are more expensive to build. To reach zero energy use, for instance, a building needs to produce its own power such as through solar or wind. Rooftop solar panels can cost upward of $10,000 on a three-bedroom home alone.
Some industry analysts say the costs of erecting net-zero homes have declined somewhat as green building has become more mainstream. With energy costs more than doubling across the U.S. in the past decade, energy-savings measures have become more attractive to builders.
In Greenfield, Mass., where Rural Development is putting up duplexes, the premium for a net-zero home is as much as 15%. For example, it has one three-bedroom home on the market for $240,000, compared with about $203,000 for a comparable home without net-zero features, says Anne Perkins, a Rural Development director. Most of that extra cost is for solar systems, she says.
Building Green
View Interactive
See how the National Renewable Energy Laboratory is building a $64 million "net-zero" research campus.
* More interactive graphics and photos
Eight of Rural Development's net-zero homes built so far have been purchased. One selling point: energy bills that can run more than $2,700 a year are cut to about $700, and total energy savings allow buyers to recoup the purchase premium in roughly 12 years after tax incentives and rebates are included.
Officials of Western Massachusetts Electric Co., which provided financial incentives for the development, say they want to see more projects like this. "The more you can have of this type of work, the less power plants you have to put on line," says John Walsh, a conservation supervisor at the utility.
Some consumers have found a way to add green features to their homes without piling on extra costs. In Hermosa Beach, Calif., Robert and Monica Fortunato are planning to expand their 50-year-old home, adding 611 square feet to their existing 1,329 square feet. The two are committed environmentalists, and their plan is to make the home net zero, despite the increase in size. They expect the work to cost $400,000, about the same as a conventional remodeling that lacked energy savings.
Mr. Fortunato, a management consultant, says he and his wife, an occupational therapist, plan to use special insulation panels that help modulate room temperatures by melting and resolidifying of paraffin wax inside, which reduces energy costs. They would offset the cost of the panels by not having to buy a big furnace.
"We want to save the planet," says Ms. Fortunato.
Write to Jim Carlton at jim.carlton@wsj.com
Thursday, December 24, 2009
A word from one of my trusted lenders:
I always advise my clients to lock in their interest rate at the earliest opportunity. Gambling with a client's interest rate is never advisable. In my business, I have a standardized system in place that we adhere to for all of our clientele.
A mortgage loan cannot be closed without locking in a rate, and there are three main elements to take into consideration:
• Interest Rate
• Points
• Length of the lock
Locking in on a rate does not obligate the client to commit to the loan until the loan is actually closed. The lock simply eliminates any risk of the borrower being exposed to market volatility. It provides the security of having time to complete the mortgage and real estate transactions with some sense of order. The lender must disburse funds to complete the transaction within the rate-lock period, or else the original commitment to provide a loan at a certain interest rate will expire.
When a lender permits an extended lock-in period, the borrower will usually see either a higher interest rate or more points associated with the loan. The lender does this to minimize their own exposure to market volatility; hence the borrower pays for the lender to take on this risk.
For example, a 30-day rate lock commitment may cost the consumer one-half point, while a 60-day rate lock commitment could cost 1 full point. If the borrower needed an extended lock period, but did not want to pay points, the lender could make up the difference in the interest rate. In this case, typically, a 60-day lock would have a higher interest rate than a 30-day lock.
In my business, our standard procedure is to lock in a rate as quickly as possible once we have received the loan application. My team and I let our clients know that while interest rates fluctuate daily, most lenders do not want to lose any business. We know that in many cases, if there is a significant rally in the market that causes interest rates to drop .25% or more, we can ask the lender to renegotiate the rate. or understand that we will take the loan to another lender. Often the lender allows for a renegotiation of the rate to avoid losing the loan to another lender.
If we allow our clients to sit on the fence and not lock in a rate quickly, we would leave them exposed to market volatility. Then, if rates do increase, the borrower may be unable to qualify for the loan they want, which is a situation we try to avoid at all costs.
By knowing our clients' needs and working intimately with them to make the right decisions, my team and I are proud to say that we have many clients who are raving fans.
A mortgage loan cannot be closed without locking in a rate, and there are three main elements to take into consideration:
• Interest Rate
• Points
• Length of the lock
Locking in on a rate does not obligate the client to commit to the loan until the loan is actually closed. The lock simply eliminates any risk of the borrower being exposed to market volatility. It provides the security of having time to complete the mortgage and real estate transactions with some sense of order. The lender must disburse funds to complete the transaction within the rate-lock period, or else the original commitment to provide a loan at a certain interest rate will expire.
When a lender permits an extended lock-in period, the borrower will usually see either a higher interest rate or more points associated with the loan. The lender does this to minimize their own exposure to market volatility; hence the borrower pays for the lender to take on this risk.
For example, a 30-day rate lock commitment may cost the consumer one-half point, while a 60-day rate lock commitment could cost 1 full point. If the borrower needed an extended lock period, but did not want to pay points, the lender could make up the difference in the interest rate. In this case, typically, a 60-day lock would have a higher interest rate than a 30-day lock.
In my business, our standard procedure is to lock in a rate as quickly as possible once we have received the loan application. My team and I let our clients know that while interest rates fluctuate daily, most lenders do not want to lose any business. We know that in many cases, if there is a significant rally in the market that causes interest rates to drop .25% or more, we can ask the lender to renegotiate the rate. or understand that we will take the loan to another lender. Often the lender allows for a renegotiation of the rate to avoid losing the loan to another lender.
If we allow our clients to sit on the fence and not lock in a rate quickly, we would leave them exposed to market volatility. Then, if rates do increase, the borrower may be unable to qualify for the loan they want, which is a situation we try to avoid at all costs.
By knowing our clients' needs and working intimately with them to make the right decisions, my team and I are proud to say that we have many clients who are raving fans.
Friday, December 18, 2009
Home Price Expectations - Will They Rise?
Home Price Expectations—Will They Rise?
by Phoebe Chongchua
According to a recent fourth quarter survey by HomeGain.com, 72 percent of Realtors believe that home prices will either stay the same (48 percent) or increase (24 percent) in the next six months. Despite that news, the study found that an increasing number of homeowners (41 percent) think that their homes should be listed 10 to 20 percent higher than what is being recommended by Realtors. In the third quarter of this year that figure was down to 38 percent and in the second quarter it was at 36 percent.
But the flip side of the coin shows that 62 percent of buyers think homes are still overpriced. According to the survey, that figure is slightly down from 64 percent in the third quarter but up from first quarter statistics (59 percent).
The national study surveys 1,000 current and former HomeGain Realtor members and was conducted between December 1 to 6. According to the study, 21 percent of those surveyed say that half of their transactions involved a first-time homebuyer. The extension of the tax incentives for buying homes is being credited. (Read my column: Extended Tax Credit for Homebuyers and Homeowners.)
In a statement issued by HomeGain’s Louis Cammarosano, the company’s general manager, said, "The fourth quarter HomeGain Home Prices Survey of Realtors shows that Realtors believe that the first-time homebuyers tax credit has driven sales and stabilized home prices, for now. Realtors, however, expressed concerns about the cost of the credit to taxpayers and whether sales will continue once the credit expires later next year and additional inventory hits the market.” The study also asked respondents “whether they approved or disapproved of President Obama’s performance so far—42 percent approved and 58 percent disapproved, unchanged from the third quarter and down from the second quarter when the President’s approval rating stood at 57 percent.
Another poll, the Rasmussen Daily Presidential Approval Rating Tracking Poll, published on December 11, 2009, stated that, “Overall, 47 percent of voters say they at least somewhat approve of the President's performance. Fifty-one percent (51 percent) disapprove.” Still, respondents remain optimistic about the housing industry, “The vast majority of Realtors expect prices to remain the same or increase in the first six months of 2010,” said Cammarosano.
With more first-time buyers searching the market for homes, everything from short sales to foreclosures is being considered. And for sellers, estimates that as high as one in five of homeowners is underwater are causing them to take a hard look at their financial situation. Some are turning to an informational Web site called PayorGo.com. It offers a calculation service to help make the decision but doesn’t offer financial or legal advice on the site. The site aims to address this question, “Is it in my economic interest to walk away? You decide.
This calculator is just a tool to help. Numerous variables are involved but the biggest is probably your assessment of the future of housing pricing.” Interestingly, buyers may not be capitalizing on all of the available incentives and resources. In an article published in the San Francisco Chronicle in early December, Walter Zhovreboff, the administrative director of the Bay Area Home Buyer Agency (that promotes homeownership) said, "Many cities have adequate funding to assist families here (with down payments) and we're not running out of money. It's phenomenally frustrating." Some cities still offer down payment assistance for low-to-moderate income levels. Many of these loans are known as “sleeper loans” which provide a period where no money is initially needed to be paid toward repayment, then a moderate interest rate is applied and the loan is paid back over many years.
As always, give me a call for more information and additional resources for your area.
by Phoebe Chongchua
According to a recent fourth quarter survey by HomeGain.com, 72 percent of Realtors believe that home prices will either stay the same (48 percent) or increase (24 percent) in the next six months. Despite that news, the study found that an increasing number of homeowners (41 percent) think that their homes should be listed 10 to 20 percent higher than what is being recommended by Realtors. In the third quarter of this year that figure was down to 38 percent and in the second quarter it was at 36 percent.
But the flip side of the coin shows that 62 percent of buyers think homes are still overpriced. According to the survey, that figure is slightly down from 64 percent in the third quarter but up from first quarter statistics (59 percent).
The national study surveys 1,000 current and former HomeGain Realtor members and was conducted between December 1 to 6. According to the study, 21 percent of those surveyed say that half of their transactions involved a first-time homebuyer. The extension of the tax incentives for buying homes is being credited. (Read my column: Extended Tax Credit for Homebuyers and Homeowners.)
In a statement issued by HomeGain’s Louis Cammarosano, the company’s general manager, said, "The fourth quarter HomeGain Home Prices Survey of Realtors shows that Realtors believe that the first-time homebuyers tax credit has driven sales and stabilized home prices, for now. Realtors, however, expressed concerns about the cost of the credit to taxpayers and whether sales will continue once the credit expires later next year and additional inventory hits the market.” The study also asked respondents “whether they approved or disapproved of President Obama’s performance so far—42 percent approved and 58 percent disapproved, unchanged from the third quarter and down from the second quarter when the President’s approval rating stood at 57 percent.
Another poll, the Rasmussen Daily Presidential Approval Rating Tracking Poll, published on December 11, 2009, stated that, “Overall, 47 percent of voters say they at least somewhat approve of the President's performance. Fifty-one percent (51 percent) disapprove.” Still, respondents remain optimistic about the housing industry, “The vast majority of Realtors expect prices to remain the same or increase in the first six months of 2010,” said Cammarosano.
With more first-time buyers searching the market for homes, everything from short sales to foreclosures is being considered. And for sellers, estimates that as high as one in five of homeowners is underwater are causing them to take a hard look at their financial situation. Some are turning to an informational Web site called PayorGo.com. It offers a calculation service to help make the decision but doesn’t offer financial or legal advice on the site. The site aims to address this question, “Is it in my economic interest to walk away? You decide.
This calculator is just a tool to help. Numerous variables are involved but the biggest is probably your assessment of the future of housing pricing.” Interestingly, buyers may not be capitalizing on all of the available incentives and resources. In an article published in the San Francisco Chronicle in early December, Walter Zhovreboff, the administrative director of the Bay Area Home Buyer Agency (that promotes homeownership) said, "Many cities have adequate funding to assist families here (with down payments) and we're not running out of money. It's phenomenally frustrating." Some cities still offer down payment assistance for low-to-moderate income levels. Many of these loans are known as “sleeper loans” which provide a period where no money is initially needed to be paid toward repayment, then a moderate interest rate is applied and the loan is paid back over many years.
As always, give me a call for more information and additional resources for your area.
Thursday, December 17, 2009
The Truth About Appraisals
The Truth About Appraisals
Knowing the Guidelines Solves the Mystery
The appraisal process often baffles consumers. They may feel that their home is worth a higher dollar amount, and so the appraised value doesn't always make sense to them. It is important to know that the appraiser is completely independent from lenders, buyers, sellers, and real estate agents, and that the guidelines to which they adhere are dictated by the Uniform Standards of Professional Appraisal Practice (USPAP) and Fannie Mae. In most states, the mortgage lenders must also disclose the purpose of the appraisal, as each transaction carries its own set of rules.
In essence, these important guidelines help appraisers put a fair market value on homes based on comparable sales in the same area, and the home must be bracketed in size and value.
For example, there is no set dollar figure associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, but the local marketplace supports the value of a pool at $15,000, then that item will be bracketed as [$15,000] on the appraisal.
Upgrades can usually be expressed at a higher percentage of their value in newer homes because the only way to obtain those upgrades was to put more money into the cost of building the home. On the other hand, the upgrading or remodeling of an older home is rarely reflected in full in the final appraisal. This is because typically 25-40% of the project involves demolition and the fixing of issues that aren't uncovered until the project has already begun, such as plumbing or wiring that may need updating.
Ultimately, the value of the upgrades must be supported by comparable examples within the same marketplace. These comparisons must be drawn from current market activity within the last six months. This is a safeguard to prevent appraisers from attaching too high a value to the home in question, and opening up the appraisal for review. This guideline further states that appraisers can only base their opinion on the value of home sales that have actually closed.
As a loan professional, I make a point to follow the appropriate guidelines at all times. This promotes a good relationship with the lender, and helps to create easier and much smoother closings for my borrowers.
Knowing the Guidelines Solves the Mystery
The appraisal process often baffles consumers. They may feel that their home is worth a higher dollar amount, and so the appraised value doesn't always make sense to them. It is important to know that the appraiser is completely independent from lenders, buyers, sellers, and real estate agents, and that the guidelines to which they adhere are dictated by the Uniform Standards of Professional Appraisal Practice (USPAP) and Fannie Mae. In most states, the mortgage lenders must also disclose the purpose of the appraisal, as each transaction carries its own set of rules.
In essence, these important guidelines help appraisers put a fair market value on homes based on comparable sales in the same area, and the home must be bracketed in size and value.
For example, there is no set dollar figure associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, but the local marketplace supports the value of a pool at $15,000, then that item will be bracketed as [$15,000] on the appraisal.
Upgrades can usually be expressed at a higher percentage of their value in newer homes because the only way to obtain those upgrades was to put more money into the cost of building the home. On the other hand, the upgrading or remodeling of an older home is rarely reflected in full in the final appraisal. This is because typically 25-40% of the project involves demolition and the fixing of issues that aren't uncovered until the project has already begun, such as plumbing or wiring that may need updating.
Ultimately, the value of the upgrades must be supported by comparable examples within the same marketplace. These comparisons must be drawn from current market activity within the last six months. This is a safeguard to prevent appraisers from attaching too high a value to the home in question, and opening up the appraisal for review. This guideline further states that appraisers can only base their opinion on the value of home sales that have actually closed.
As a loan professional, I make a point to follow the appropriate guidelines at all times. This promotes a good relationship with the lender, and helps to create easier and much smoother closings for my borrowers.
Thursday, December 10, 2009
Baby Boomers
Baby Boomers Retire
Reverse Mortgages Gain Popularity
Born between 1946-1964, the generation known as the Baby Boomers will begin to retire in large numbers, substantially shrinking the labor force in the US. As a result, Social Security, Medicare, and other government programs will be significantly affected over the next several years. In fact, the Social Security Advisory Board (SSAB) estimates that, by 2030, about 20% of the American population will be 65 years old or older.
With rising costs of living and a dwindling budget to accommodate the elderly and disabled, we will see increased usage of the reverse mortgage. This loan allows equity to be taken out of the home to meet day-to-day expenses, and was designed in the late 1980s to help those who owned property, but lacked sufficient income to live on. However, there are benefits and disadvantages to be considered before going into this type of loan.
In most loan scenarios a home will go into foreclosure if payment is not made. If payments are made, the debt decreases and equity increases. The opposite holds true for a reverse mortgage; equity is taken out of the home to sustain the family, causing debt to increase while equity decreases. There is an exception - if the actual value of the home increases, less equity will be lost overall.
Most reverse mortgages are set up so there is no monthly payment as long as the owner resides in the home. There are no minimum income requirements, and the money can be used for any purpose. Equity disbursed from this type of loan is tax-free. Depending on the type of plan, reverse mortgages will usually allow the owner to retain the title to the property until they have lived in a different residence for 12 months, sold the property, died, or the end of the loan term has been reached.
On the flip side, reverse mortgages can be more costly than a normal equity loan. Interest is added to the principal balance each month, and the amount of interest owed is compounded over time. The interest will not be tax deductible until the loan is paid off, in part or in full. Also, since the reverse mortgage uses equity in the property, this constitutes a loss of assets one could pass on to heirs.
The Federal Trade Commission warns of abuse with this type of loan, as they have received reports of predatory lenders taking advantage of the elderly. It is best for the individual interested in a reverse mortgage to research and obtain counsel from reputable sources.* HUD does not recommend consulting an estate planning service to obtain a referral to a lender. HUD provides this information free to the public. Even if the home loan was not originally an FHA loan, the reverse mortgage can be federally secured.
Reverse Mortgages Gain Popularity
Born between 1946-1964, the generation known as the Baby Boomers will begin to retire in large numbers, substantially shrinking the labor force in the US. As a result, Social Security, Medicare, and other government programs will be significantly affected over the next several years. In fact, the Social Security Advisory Board (SSAB) estimates that, by 2030, about 20% of the American population will be 65 years old or older.
With rising costs of living and a dwindling budget to accommodate the elderly and disabled, we will see increased usage of the reverse mortgage. This loan allows equity to be taken out of the home to meet day-to-day expenses, and was designed in the late 1980s to help those who owned property, but lacked sufficient income to live on. However, there are benefits and disadvantages to be considered before going into this type of loan.
In most loan scenarios a home will go into foreclosure if payment is not made. If payments are made, the debt decreases and equity increases. The opposite holds true for a reverse mortgage; equity is taken out of the home to sustain the family, causing debt to increase while equity decreases. There is an exception - if the actual value of the home increases, less equity will be lost overall.
Most reverse mortgages are set up so there is no monthly payment as long as the owner resides in the home. There are no minimum income requirements, and the money can be used for any purpose. Equity disbursed from this type of loan is tax-free. Depending on the type of plan, reverse mortgages will usually allow the owner to retain the title to the property until they have lived in a different residence for 12 months, sold the property, died, or the end of the loan term has been reached.
On the flip side, reverse mortgages can be more costly than a normal equity loan. Interest is added to the principal balance each month, and the amount of interest owed is compounded over time. The interest will not be tax deductible until the loan is paid off, in part or in full. Also, since the reverse mortgage uses equity in the property, this constitutes a loss of assets one could pass on to heirs.
The Federal Trade Commission warns of abuse with this type of loan, as they have received reports of predatory lenders taking advantage of the elderly. It is best for the individual interested in a reverse mortgage to research and obtain counsel from reputable sources.* HUD does not recommend consulting an estate planning service to obtain a referral to a lender. HUD provides this information free to the public. Even if the home loan was not originally an FHA loan, the reverse mortgage can be federally secured.
Sunday, December 6, 2009
Market Conditions
Existing home sales have shown promising figures, as first-time buyers take advantage of the buyer tax credit and historically low interest rates.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – surged 10.1 percent to a seasonally adjusted annual rate1 of 6.10 million units in October from a downwardly revised pace of 5.54 million in September, and are 23.5 percent above the 4.94 million-unit level in October 2008. Sales activity is at the highest pace since February 2007 when it hit 6.55 million.
Lawrence Yun, NAR chief economist, was surprised at the size of the gain. "Many buyers have been rushing to beat the deadline for the first-time buyer tax credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November," he said. "With such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer."
Regionally, existing-home sales in the Northeast rose 11.6 percent to an annual level of 1.06 million in October, and are 27.7 percent higher than October 2008. The median price in the Northeast was $235,400, down 2.6 percent from a year ago.
Existing-home sales in the Midwest surged 14.4 percent. The median price in the Midwest was $146,600, a gain of 1.1 percent from October 2008, the only region seeing a gain in median price.
In the South, existing-home sales rose 12.7 percent to an annual level of 2.30 million in October and are 25.7 percent higher than October 2008. The median price in the South was $151,100, down 6.3 percent from a year ago.
The smallest increase in existing-home sales was seen in the West, which increased just 1.6. However, this number is a healthy 12.0 percent above a year ago. Home prices are still down for the region.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – surged 10.1 percent to a seasonally adjusted annual rate1 of 6.10 million units in October from a downwardly revised pace of 5.54 million in September, and are 23.5 percent above the 4.94 million-unit level in October 2008. Sales activity is at the highest pace since February 2007 when it hit 6.55 million.
Lawrence Yun, NAR chief economist, was surprised at the size of the gain. "Many buyers have been rushing to beat the deadline for the first-time buyer tax credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November," he said. "With such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer."
Regionally, existing-home sales in the Northeast rose 11.6 percent to an annual level of 1.06 million in October, and are 27.7 percent higher than October 2008. The median price in the Northeast was $235,400, down 2.6 percent from a year ago.
Existing-home sales in the Midwest surged 14.4 percent. The median price in the Midwest was $146,600, a gain of 1.1 percent from October 2008, the only region seeing a gain in median price.
In the South, existing-home sales rose 12.7 percent to an annual level of 2.30 million in October and are 25.7 percent higher than October 2008. The median price in the South was $151,100, down 6.3 percent from a year ago.
The smallest increase in existing-home sales was seen in the West, which increased just 1.6. However, this number is a healthy 12.0 percent above a year ago. Home prices are still down for the region.
Wednesday, December 2, 2009
The Federal Reserve and Mortgage Rates
The Federal Reserve and Mortgage Rates
Understanding What Causes Interest Rate Movement
Consumers are often misled when it comes to the subject of the Federal Reserve and how it affects mortgage interest rates. Often the media is the culprit causing the confusion. Many times, the Fed has taken action that caused mortgage interest rates to move in a direction other than what consumers expected, because the media provided weak reporting on the subject.
The Federal Reserve affects short-term interest rate maturities, the Fed Funds rate, and the Overnight Lending rate. These factors have a direct impact on the Prime rate. If you took only this into consideration, you may mistakenly conclude that changes made by the Fed will cause a similar movement in mortgage interest rates. However, mortgage interest rates are dictated by the trading of mortgage-backed securities, which trade on a daily basis. The real dynamic at the heart of interest rate movement is the relationship between stocks and bonds.
Stocks and bonds compete for the same investment dollar on a daily basis. There is literally only so much money to be invested. When the Federal Reserve feels that interest rates need to be decreased in an effort to stimulate the economy, this reduction in rates can often cause a stock market rally. When the market becomes bullish, the money to invest in stocks comes from the selling of mortgage-backed securities.
Unfortunately, selling mortgage-backed securities to fuel stock market rallies causes interest rates to go up, not down.
Historically, there have been many times when the Federal Reserve has increased interest rates. Stocks then sell off in fear that the increase will affect corporate profit margins, and the liquidated stock assets need a place to park until the next rally comes along. The safe haven is found in mortgage-backed securities which cause mortgage rates to drop.
The daily ebb and flow of money is what matters most when it comes to the movement of mortgage interest rates. I make it a point to continuosly monitor interest rates for my clients, and advise them of opportunities to manage their mortgage debt at a better rate. This is the foundation of my business model as a Trusted Advisor.
Let's discuss how we can better educate our clients on the largest purchase they'll ever make!
Understanding What Causes Interest Rate Movement
Consumers are often misled when it comes to the subject of the Federal Reserve and how it affects mortgage interest rates. Often the media is the culprit causing the confusion. Many times, the Fed has taken action that caused mortgage interest rates to move in a direction other than what consumers expected, because the media provided weak reporting on the subject.
The Federal Reserve affects short-term interest rate maturities, the Fed Funds rate, and the Overnight Lending rate. These factors have a direct impact on the Prime rate. If you took only this into consideration, you may mistakenly conclude that changes made by the Fed will cause a similar movement in mortgage interest rates. However, mortgage interest rates are dictated by the trading of mortgage-backed securities, which trade on a daily basis. The real dynamic at the heart of interest rate movement is the relationship between stocks and bonds.
Stocks and bonds compete for the same investment dollar on a daily basis. There is literally only so much money to be invested. When the Federal Reserve feels that interest rates need to be decreased in an effort to stimulate the economy, this reduction in rates can often cause a stock market rally. When the market becomes bullish, the money to invest in stocks comes from the selling of mortgage-backed securities.
Unfortunately, selling mortgage-backed securities to fuel stock market rallies causes interest rates to go up, not down.
Historically, there have been many times when the Federal Reserve has increased interest rates. Stocks then sell off in fear that the increase will affect corporate profit margins, and the liquidated stock assets need a place to park until the next rally comes along. The safe haven is found in mortgage-backed securities which cause mortgage rates to drop.
The daily ebb and flow of money is what matters most when it comes to the movement of mortgage interest rates. I make it a point to continuosly monitor interest rates for my clients, and advise them of opportunities to manage their mortgage debt at a better rate. This is the foundation of my business model as a Trusted Advisor.
Let's discuss how we can better educate our clients on the largest purchase they'll ever make!
Saturday, November 21, 2009
Announcing 2 new assistance programs for Grand Prairie and Rockwall Counties!
City of Grand Prairie
The Foreclosed Home Purchase Assistance Grant Program (FHPAG) assists qualified low, moderate and middle-income families to purchase foreclosed homes in Grand Prairie. The Program is administered through the city of Grand Prairie Housing and Neighborhood Services Department.
The FHPAG program provides up to a $20,000 forgivable second lien to assist qualified buyers with approved closing costs, down payment assistance up to 50% and approved rehabilitation work after closing process is complete.
http://www.gptx.org/index.aspx?page=942
City of Rockwall
This is a true grant/gift program. No second lien is created for the down payment assistance. The only criteria for qualification is that the Borrower must be a resident of Rockwall.
These are on a first come, first serve basis. Only while funds are available so call me today to get started and now miss this huge chance!
The Foreclosed Home Purchase Assistance Grant Program (FHPAG) assists qualified low, moderate and middle-income families to purchase foreclosed homes in Grand Prairie. The Program is administered through the city of Grand Prairie Housing and Neighborhood Services Department.
The FHPAG program provides up to a $20,000 forgivable second lien to assist qualified buyers with approved closing costs, down payment assistance up to 50% and approved rehabilitation work after closing process is complete.
http://www.gptx.org/index.aspx?page=942
City of Rockwall
This is a true grant/gift program. No second lien is created for the down payment assistance. The only criteria for qualification is that the Borrower must be a resident of Rockwall.
These are on a first come, first serve basis. Only while funds are available so call me today to get started and now miss this huge chance!
Housing most affordable now!
Housing at Its Most Affordable in Years
One piece of good news coming out of the Great Recession is the increasing affordability of housing.
The typical U.S. family earning the nation’s median income of $64,000 a year could afford to buy 70.1 percent of all homes sold in the United States during the third quarter, according to a report from the National Association of Home Builders and Wells Fargo. The report relied on the government standard of spending no more than 28 percent on housing. In the same quarter of 2008, only 56.1 percent qualified.
One piece of good news coming out of the Great Recession is the increasing affordability of housing.
The typical U.S. family earning the nation’s median income of $64,000 a year could afford to buy 70.1 percent of all homes sold in the United States during the third quarter, according to a report from the National Association of Home Builders and Wells Fargo. The report relied on the government standard of spending no more than 28 percent on housing. In the same quarter of 2008, only 56.1 percent qualified.
Monday, November 16, 2009
Q/A about the Tax Credit!
FAQs Regarding U.S. Homebuyer Tax Credit Extension, Expansion
From the National Association of REALTORS, here are some of the most frequently asked questions on the changes to the Homebuyer Tax Credit signed into law on November 6 by President Obama.
QUESTION: Existing homeowner credit: Must the new house cost more than the old house?
ANSWER: No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6,500 credit.
QUESTION: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. Do I qualify for the new $6,500 tax credit?
ANSWER: Yes. The existing homeowner credit went into effect for purchases after the date of enactment (Nov. 6, 2009). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.
QUESTION: I am a first-time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered, however, by the new income limits when I go to settlement, will I be eligible for a credit?
ANSWER: Yes. The new income limitations went into effect as soon as the President signed the bill. The income limit and other eligibility rules look to your status as of the date of purchase, which is the settlement date. So when you go to settlement, you should be eligible for the credit (or a portion of the credit if you're within the phase-out range).
QUESTION: I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a non-negotiable price of $825,000. Will I be able to use any of the $6,500 tax credit?
ANSWER: No. The $800,000 cap on the cost of the purchased home is firm. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.
QUESTION: I owned my home for 10 years, but sold it two years ago and have been renting since. If I purchase a home, will I be eligible for the $6,500 tax credit if I meet all the other eligibility tests?
ANSWER: Yes. Because you lived in the home for more than five consecutive years of the previous eight you will qualify for the $6,500 credit. For example, say John and his wife bought a home in 2000 and lived there until 2008, when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for five consecutive years out of the last eight years. The key word here is “consecutive." As long as he lived in that house for five years straight, what he did since then doesn't affect eligibility.
QUESTION: I am an eligible first-time homebuyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?
ANSWER: You do not have to close before December 1. Now that the legislation has been signed, it will be as if the November 30 date had never existed. Therefore, so long as the binding contract is in place by April 30 (and you close before July 1), you will be eligible for the credit.
From the National Association of REALTORS, here are some of the most frequently asked questions on the changes to the Homebuyer Tax Credit signed into law on November 6 by President Obama.
QUESTION: Existing homeowner credit: Must the new house cost more than the old house?
ANSWER: No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6,500 credit.
QUESTION: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. Do I qualify for the new $6,500 tax credit?
ANSWER: Yes. The existing homeowner credit went into effect for purchases after the date of enactment (Nov. 6, 2009). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.
QUESTION: I am a first-time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered, however, by the new income limits when I go to settlement, will I be eligible for a credit?
ANSWER: Yes. The new income limitations went into effect as soon as the President signed the bill. The income limit and other eligibility rules look to your status as of the date of purchase, which is the settlement date. So when you go to settlement, you should be eligible for the credit (or a portion of the credit if you're within the phase-out range).
QUESTION: I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a non-negotiable price of $825,000. Will I be able to use any of the $6,500 tax credit?
ANSWER: No. The $800,000 cap on the cost of the purchased home is firm. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.
QUESTION: I owned my home for 10 years, but sold it two years ago and have been renting since. If I purchase a home, will I be eligible for the $6,500 tax credit if I meet all the other eligibility tests?
ANSWER: Yes. Because you lived in the home for more than five consecutive years of the previous eight you will qualify for the $6,500 credit. For example, say John and his wife bought a home in 2000 and lived there until 2008, when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for five consecutive years out of the last eight years. The key word here is “consecutive." As long as he lived in that house for five years straight, what he did since then doesn't affect eligibility.
QUESTION: I am an eligible first-time homebuyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?
ANSWER: You do not have to close before December 1. Now that the legislation has been signed, it will be as if the November 30 date had never existed. Therefore, so long as the binding contract is in place by April 30 (and you close before July 1), you will be eligible for the credit.
Tuesday, November 10, 2009
Detailed Information on Tax Credit!
Here are details on the extension and expansion of the U.S. tax credit for homebuyers signed into law by President Obama:
Deadline Extended Into 2010
The tax credit was originally to end November 30, 2009. It has now been extended into 2010. If you have a signed purchase agreement by April 30, and close the transaction by July 1, you’re eligible for the credit.
Some Existing Homeowners Now Eligible
First-time homebuyers are eligible for a credit of 10 percent of the price of the home, up to $8,000. (Married couples filing individually can receive $4,000 each.) You are considered a first-time buyer if you haven’t owned a principal home in the U.S. in the last three years.
The tax credit has also been expanded to existing homeowners who’ve lived in their principle residence for five consecutive years in the last eight. They can receive up to $6,500 – or $3,250 for couples filing as individuals.
Caps on Income, Home Price
Individuals who earn up to $125,000, and couples who earn up to $225,000, are eligible for the full credit. Individuals who earn between $125,000 and $145,000 – and couples who earn between $225,000 and $245,000 – can receive a percentage of the full credit.
The maximum purchase price is $800,000. Any home selling for more than that makes the buyer ineligible for the credit.
Taking Advantage of the Credit
You can claim the credit on your 2009 or 2010 tax return, or file an amended 2008 return to get the money sooner. There are also programs in place to enable you to use the funds to help with the down payment.
Contribution to the Economy
National Association of REALTORS® economists estimate that the tax credit has contributed more than $22 billion to the economy, and that 2 million people will take advantage of it this year.
Deadline Extended Into 2010
The tax credit was originally to end November 30, 2009. It has now been extended into 2010. If you have a signed purchase agreement by April 30, and close the transaction by July 1, you’re eligible for the credit.
Some Existing Homeowners Now Eligible
First-time homebuyers are eligible for a credit of 10 percent of the price of the home, up to $8,000. (Married couples filing individually can receive $4,000 each.) You are considered a first-time buyer if you haven’t owned a principal home in the U.S. in the last three years.
The tax credit has also been expanded to existing homeowners who’ve lived in their principle residence for five consecutive years in the last eight. They can receive up to $6,500 – or $3,250 for couples filing as individuals.
Caps on Income, Home Price
Individuals who earn up to $125,000, and couples who earn up to $225,000, are eligible for the full credit. Individuals who earn between $125,000 and $145,000 – and couples who earn between $225,000 and $245,000 – can receive a percentage of the full credit.
The maximum purchase price is $800,000. Any home selling for more than that makes the buyer ineligible for the credit.
Taking Advantage of the Credit
You can claim the credit on your 2009 or 2010 tax return, or file an amended 2008 return to get the money sooner. There are also programs in place to enable you to use the funds to help with the down payment.
Contribution to the Economy
National Association of REALTORS® economists estimate that the tax credit has contributed more than $22 billion to the economy, and that 2 million people will take advantage of it this year.
Saturday, November 7, 2009
Buying Home!
Contact a REALTOR®
This is where I come in :)
A RE/MAX Sales Associate can help you through the entire process of buying a home, starting with the mortgage and continuing right through closing – and beyond. He or she can help you shop for the best interest rate and terms and, if you wish, suggest mortgage lenders.
Get Preapproved for a Loan
Obtain a copy of your credit report and your FICO score and, if necessary, do what you need to do to improve it. The higher your FICO score, the better interest rate you can command. You can get this information online; your RE/MAX agent can also help you. Contact several lenders and determine which one will give you the best deal.
Determine Your Price Range and Area(s) in Which You're Interested
By now you should have a good idea of how much home you can afford. This helps you narrow down your home search. You should also begin researching the neighborhoods in which you might want to live. Your RE/MAX agent can help.
Decide Which Amenities and Features You Must Have – and Which Ones Would Be Nice but not Necessary
How many bedrooms and bathrooms do you want? Would you prefer a newer home or an older one with established landscaping? Are hardwood floors a must? Is an updated kitchen important to you? Walk-in closets? Which features would you be willing to give up if you find the otherwise-perfect home?
Begin Testing the Market
Right here on remax.com, you can find listings that meet your criteria as well as neighborhood data. Identify properties that seem to be fits for you, take an afternoon and go on a driving tour. See what's available in your price range and explore neighborhoods.
With Your Agent, Begin Seriously Looking at Homes
Your agent can add to the list of homes you've already identified – including ones that have just come on the market. Look at homes with a critical eye – does the floor plan work for you, is the property in good condition, would it be right for your lifestyle? In short, can you imagine yourself and your family living there?
Take notes at each home you visit. What do you like and not like? Narrow down your choices; re-visit homes in which you're interested. See them at different times of the day.
Make an Offer
When you've identified the home you want to buy, be prepared to help your agent prepare a written offer quickly. Your agent will be familiar with market values and will help you arrive at a price that gives your offer the best chance of being accepted.
At this stage, try not to become emotionally attached to a home. Your offer may not be accepted for any number of reasons. Have backup homes in mind. Be prepared to negotiate through your agent with the sellers.
Once Your Offer Is Accepted:
* You'll be asked to submit an earnest money deposit that usually isn't refundable.
* Begin making moving arrangements (select a mover, obtain change-of-address cards, inform friends and relatives).
* Have the property professionally inspected.
* If necessary, request repairs.
* Obtain homeowner's insurance.
* Contact utilities (phone, water, power, etc.).
* A few days before closing, stage a walk-through.
* Obtain a cashier's check for the down payment and closing costs.
At Closing:
* Make sure the terms and conditions of the loan statement are correct.
* Carefully read everything before you sign.
ENJOY YOUR NEW HOME!
Why You Should Use a REALTOR® in Your Home Search
Buying a home is probably the largest investment you'll make in your lifetime. Having an experienced, knowledgeable RE/MAX professional representing you in this transaction just makes good sense.
Buying a home is not like buying a car, a mutual fund or other commodity. It can be a life-changing event. RE/MAX agents fully understand the real estate process – and just as important, they understand your local market.
Of course they know the right steps to take, but they can also help you avoid a misstep in your home purchase. If a new freeway is going to be built a few blocks away, they'll probably know it. If you're unsure about school districts, they'll be able to direct you to answers. If you're unsure of a builder's reputation, they'll know how you can confirm it.
Your RE/MAX Sales Associate also performs another important function: minimizing the emotion involved in a home transaction. You may be in love with a home, but your agent can point out factors that might not make it right for you.
Related Articles
* First Time Buyers
* Understand Your Credit Score
View more articles
Real Estate 101
This is where I come in :)
A RE/MAX Sales Associate can help you through the entire process of buying a home, starting with the mortgage and continuing right through closing – and beyond. He or she can help you shop for the best interest rate and terms and, if you wish, suggest mortgage lenders.
Get Preapproved for a Loan
Obtain a copy of your credit report and your FICO score and, if necessary, do what you need to do to improve it. The higher your FICO score, the better interest rate you can command. You can get this information online; your RE/MAX agent can also help you. Contact several lenders and determine which one will give you the best deal.
Determine Your Price Range and Area(s) in Which You're Interested
By now you should have a good idea of how much home you can afford. This helps you narrow down your home search. You should also begin researching the neighborhoods in which you might want to live. Your RE/MAX agent can help.
Decide Which Amenities and Features You Must Have – and Which Ones Would Be Nice but not Necessary
How many bedrooms and bathrooms do you want? Would you prefer a newer home or an older one with established landscaping? Are hardwood floors a must? Is an updated kitchen important to you? Walk-in closets? Which features would you be willing to give up if you find the otherwise-perfect home?
Begin Testing the Market
Right here on remax.com, you can find listings that meet your criteria as well as neighborhood data. Identify properties that seem to be fits for you, take an afternoon and go on a driving tour. See what's available in your price range and explore neighborhoods.
With Your Agent, Begin Seriously Looking at Homes
Your agent can add to the list of homes you've already identified – including ones that have just come on the market. Look at homes with a critical eye – does the floor plan work for you, is the property in good condition, would it be right for your lifestyle? In short, can you imagine yourself and your family living there?
Take notes at each home you visit. What do you like and not like? Narrow down your choices; re-visit homes in which you're interested. See them at different times of the day.
Make an Offer
When you've identified the home you want to buy, be prepared to help your agent prepare a written offer quickly. Your agent will be familiar with market values and will help you arrive at a price that gives your offer the best chance of being accepted.
At this stage, try not to become emotionally attached to a home. Your offer may not be accepted for any number of reasons. Have backup homes in mind. Be prepared to negotiate through your agent with the sellers.
Once Your Offer Is Accepted:
* You'll be asked to submit an earnest money deposit that usually isn't refundable.
* Begin making moving arrangements (select a mover, obtain change-of-address cards, inform friends and relatives).
* Have the property professionally inspected.
* If necessary, request repairs.
* Obtain homeowner's insurance.
* Contact utilities (phone, water, power, etc.).
* A few days before closing, stage a walk-through.
* Obtain a cashier's check for the down payment and closing costs.
At Closing:
* Make sure the terms and conditions of the loan statement are correct.
* Carefully read everything before you sign.
ENJOY YOUR NEW HOME!
Why You Should Use a REALTOR® in Your Home Search
Buying a home is probably the largest investment you'll make in your lifetime. Having an experienced, knowledgeable RE/MAX professional representing you in this transaction just makes good sense.
Buying a home is not like buying a car, a mutual fund or other commodity. It can be a life-changing event. RE/MAX agents fully understand the real estate process – and just as important, they understand your local market.
Of course they know the right steps to take, but they can also help you avoid a misstep in your home purchase. If a new freeway is going to be built a few blocks away, they'll probably know it. If you're unsure about school districts, they'll be able to direct you to answers. If you're unsure of a builder's reputation, they'll know how you can confirm it.
Your RE/MAX Sales Associate also performs another important function: minimizing the emotion involved in a home transaction. You may be in love with a home, but your agent can point out factors that might not make it right for you.
Related Articles
* First Time Buyers
* Understand Your Credit Score
View more articles
Real Estate 101
Friday, November 6, 2009
Avoiding foreclosure
Below are a few tips to help prevent foreclosure. As always, should you be in a situation where you do not see an end in sight, please do not hesitate to contact me to put your home on the market as short sale.
Short sales are continuing trend in todays economy and the "ding" on your credit is much more positive than a foreclosure. I can help you with this. Give me a call today!
Tips to Prevent Foreclosure
* Be proactive. Contact your loan servicer immediately.
o You can find the contact information on your monthly mortgage bill or coupon book.
o Lenders can work out plans to allow you to stay in your home.
o Ask about foreclosure alternatives.
o Be prepared to disclose detailed financial information.
o Provide requested information in timely manner.
o Be ready to change your spending habits and create a budget.
o Open mail and respond to calls from your loan servicer promptly. Failure to respond in a timely manner can result in more foreclosure actions and additional cost.
* Consider refinancing your loan.
o Refinancing to a fixed-rate, fully amortized lower-cost loan may help.
o The FHA offers a program that helps homeowners with good credit refinance. It's called FHA Secure.
* Talk to a housing counselor. HUD approves trained counselors to work with not‐for-profits focused on preventing foreclosure. Search for HUD counselors.
* Get in touch with your local government agencies. Your city, state or county may offer programs for people having trouble making their mortgage payments.
* Notify your other creditors. You may be able to lower interest rates on your credit cards or consolidate some of your other loans. You can put the savings toward your mortgage.
* Create a budget. You may find areas you can save and put the money toward keeping your home.
* Re‐read your mortgage agreement. Understanding the document is critical.
* Talk to a lawyer if you think you may have been a victim of predatory lending. Your local university may host a legal clinic. There also may be fair-lending counseling agencies in your area.
* Beware of anyone who says you don't need a real estate professional or title company when selling your home.
* Do not sign over the deed to your property to any organization or person if you are not working directly with your lender to get your debt forgiven.
Short sales are continuing trend in todays economy and the "ding" on your credit is much more positive than a foreclosure. I can help you with this. Give me a call today!
Tips to Prevent Foreclosure
* Be proactive. Contact your loan servicer immediately.
o You can find the contact information on your monthly mortgage bill or coupon book.
o Lenders can work out plans to allow you to stay in your home.
o Ask about foreclosure alternatives.
o Be prepared to disclose detailed financial information.
o Provide requested information in timely manner.
o Be ready to change your spending habits and create a budget.
o Open mail and respond to calls from your loan servicer promptly. Failure to respond in a timely manner can result in more foreclosure actions and additional cost.
* Consider refinancing your loan.
o Refinancing to a fixed-rate, fully amortized lower-cost loan may help.
o The FHA offers a program that helps homeowners with good credit refinance. It's called FHA Secure.
* Talk to a housing counselor. HUD approves trained counselors to work with not‐for-profits focused on preventing foreclosure. Search for HUD counselors.
* Get in touch with your local government agencies. Your city, state or county may offer programs for people having trouble making their mortgage payments.
* Notify your other creditors. You may be able to lower interest rates on your credit cards or consolidate some of your other loans. You can put the savings toward your mortgage.
* Create a budget. You may find areas you can save and put the money toward keeping your home.
* Re‐read your mortgage agreement. Understanding the document is critical.
* Talk to a lawyer if you think you may have been a victim of predatory lending. Your local university may host a legal clinic. There also may be fair-lending counseling agencies in your area.
* Beware of anyone who says you don't need a real estate professional or title company when selling your home.
* Do not sign over the deed to your property to any organization or person if you are not working directly with your lender to get your debt forgiven.
Wednesday, November 4, 2009
Understanding your credit score
Misunderstandings Persist About Credit Scores
Too many consumers still don't get it when it comes to credit scores.
And what you don't know can hurt you when it's time to buy a home - especially in a tight credit market.
Only 28 percent of consumers are aware they need at least a 700 credit score to qualify for a low-rate mortgage.
Three of every four consumers incorrectly believe that credit scores are influenced by income.
Even more - 79 percent - erroneously believe that credit scores can be obtained free once a year. (They're probably thinking about their credit report, instead.)
Those are among the findings of a report, "Consumer Understanding Of Credit Scores Improves But Remains Poor" commissioned by the Consumer Federation of America.
First, your credit score is a number assigned to your creditworthiness.
Your credit score indicates how well or poorly you'll repay a debt. The higher the number, the more likely you'll repay on time.
Your bill-paying information on credit reports provides the basis for your credit score.
Consumers who take the time to obtain their credit score, for only about $15 under most circumstances, are more likely to have a better understanding of the scores.
That includes knowledge that mortgage lenders rely heavily upon credit scores to approve or reject home loan applications.
Informed consumers also know they can generally raise their credit score by paying bills on time every time; by paying off debt and closing those paid-off accounts; by not coming close to maxing out credit cards and by regularly checking their credit reports to make sure they are accurate.
Your credit report is free from AnnualCreditReport.Com. For more information about your credit score, go to MyFICO.com.
The study also found that consumers could save $28 billion a year in finance charges if they improved their credit scores by 30 points.
"Lack of consumer knowledge about credit scores not only increases the costs of their credit and insurance, but also reduces the availability of these and other services," CFA Executive Director Stephen Brobeck says.
The study's findings include:
* When asked to define "credit score," only 31 percent correctly identified the answer "risk of not repaying the loan" in a multiple-choice question that also included "financial resources to pay back loans" (21 percent), "amount of consumer debt" (16 percent), "knowledge of consumer credit" (15 percent), and "attitude toward consumer credit" (9 percent) as other options.
* Consumers typically fail to understand that a credit score reflects only how they use credit, not factors such as income and age. Significant percentages incorrectly believe that credit scores are influenced by income (74 percent); age (40 percent); marital status (38 percent); the state in which they live (29 percent); level of education (29 percent); and ethnicity (15 percent).
* Most consumers correctly understand that they can learn their credit scores if they are denied a mortgage loan (72 percent) or declined for a credit card (65 percent). But an even larger group (79 percent) incorrectly believes that credit scores can be obtained free once a year. Only credit reports are free every year.
Too many consumers still don't get it when it comes to credit scores.
And what you don't know can hurt you when it's time to buy a home - especially in a tight credit market.
Only 28 percent of consumers are aware they need at least a 700 credit score to qualify for a low-rate mortgage.
Three of every four consumers incorrectly believe that credit scores are influenced by income.
Even more - 79 percent - erroneously believe that credit scores can be obtained free once a year. (They're probably thinking about their credit report, instead.)
Those are among the findings of a report, "Consumer Understanding Of Credit Scores Improves But Remains Poor" commissioned by the Consumer Federation of America.
First, your credit score is a number assigned to your creditworthiness.
Your credit score indicates how well or poorly you'll repay a debt. The higher the number, the more likely you'll repay on time.
Your bill-paying information on credit reports provides the basis for your credit score.
Consumers who take the time to obtain their credit score, for only about $15 under most circumstances, are more likely to have a better understanding of the scores.
That includes knowledge that mortgage lenders rely heavily upon credit scores to approve or reject home loan applications.
Informed consumers also know they can generally raise their credit score by paying bills on time every time; by paying off debt and closing those paid-off accounts; by not coming close to maxing out credit cards and by regularly checking their credit reports to make sure they are accurate.
Your credit report is free from AnnualCreditReport.Com. For more information about your credit score, go to MyFICO.com.
The study also found that consumers could save $28 billion a year in finance charges if they improved their credit scores by 30 points.
"Lack of consumer knowledge about credit scores not only increases the costs of their credit and insurance, but also reduces the availability of these and other services," CFA Executive Director Stephen Brobeck says.
The study's findings include:
* When asked to define "credit score," only 31 percent correctly identified the answer "risk of not repaying the loan" in a multiple-choice question that also included "financial resources to pay back loans" (21 percent), "amount of consumer debt" (16 percent), "knowledge of consumer credit" (15 percent), and "attitude toward consumer credit" (9 percent) as other options.
* Consumers typically fail to understand that a credit score reflects only how they use credit, not factors such as income and age. Significant percentages incorrectly believe that credit scores are influenced by income (74 percent); age (40 percent); marital status (38 percent); the state in which they live (29 percent); level of education (29 percent); and ethnicity (15 percent).
* Most consumers correctly understand that they can learn their credit scores if they are denied a mortgage loan (72 percent) or declined for a credit card (65 percent). But an even larger group (79 percent) incorrectly believes that credit scores can be obtained free once a year. Only credit reports are free every year.
Tuesday, November 3, 2009
Senate Clears the Way for Tax Credit Extension, Expansion
After two weeks of delay, the Senate last night cleared the way to pass a seven month extension and expansion of the tax credit for homebuyers. By an 85 to 2 roll call vote, the Senate voted to cut off debate on a package of measures that includes the homebuyer credit, making it virtually certain that the legislation will reach President Obama for his signature this week.
The homebuyer tax credit, due to expire in 28 days, would be extended through April 30 of next year. First-time buyers who are in process of making a purchased would not need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline.
For the first time, the legislation cleared last night makes move-up buyers as well as first-time buyers would be eligible for a credit. The $8,000 maximum first-timer credit will continue and will now available to couples with income up to $225,000, a nearly $55,000 increase above the level in existing law. A new $6,500 maximum credit would also be available to move-up homeowners who have lived in their current residence for five of the prior eight years.
The legislation cleared last night also contains a provision supported by the National Association of Home Builders. It helps larger companies strapped for cash with net operating losses this year or in 2008.
The homebuyer tax credit, due to expire in 28 days, would be extended through April 30 of next year. First-time buyers who are in process of making a purchased would not need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline.
For the first time, the legislation cleared last night makes move-up buyers as well as first-time buyers would be eligible for a credit. The $8,000 maximum first-timer credit will continue and will now available to couples with income up to $225,000, a nearly $55,000 increase above the level in existing law. A new $6,500 maximum credit would also be available to move-up homeowners who have lived in their current residence for five of the prior eight years.
The legislation cleared last night also contains a provision supported by the National Association of Home Builders. It helps larger companies strapped for cash with net operating losses this year or in 2008.
Welcome!!
My name is Deonna Sheffield and I am a "new" real estate agent with RE/MAX By The Lakes! I realize that the word "new" may raise a few eyebrows and make the public turn their backs on me for what they would assume to be a "green" agent (real estate lingo)! Well, the good news is, I may be a newly "licensed" real estate agent, but I am FAR from new to the industry. I have been working in the industry for several years and have experience with many, if not most, of the aspects of real estate.
I have experience in everything from purchasing, leasing, selling and property management to short sales, Lender REO's and HUD homes. You ask and I'm more than certain, it is a property type for which I have worked many hours on.
I am available for any sort of real estate need you, your family or your friends may have. Please give me a call 972-922-6046 or you may email me at deonnasheffield@remax.net.
I look forward to hearing from you soon!
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