My Mortgage Guy

Purchasing REO Property

2008-10-31T11:13:00.000-04:00

Looking to purchase REO property as an investment or to live in? Lots of companies are selling the countless foreclosure properties on the market today. You can search for mortgage companies properties at Countrywide, or Wilshire Credit Corporation. Another option for finding foreclosed and REO properties for sale is to talk with a Realtor. Contact Brian Burke if you are in Connecticut, or he can even refer you to an agent in the area you live in if you would like. A Realtor can help you to search FHA properties for sale along with the countless other foreclosures.

Avoid Foreclosure

2008-10-13T23:32:00.000-04:00

Looking for a way to avoid foreclosure? You do have options if you act soon enough, and you take action. Did I mention YOU MUST TAKE ACTION? Sitting on your hands and expecting someone else to resolve your problem is a plan to have your family living on the street. Sorry, but no one else will solve this for you.
Check out this article for some ideas on how to avoid foreclosure, 4 ways to be exact. Want a teaser, you can try a short sale, and you could read an article on common questions about short sales as well.
Save your house, take action today.

FHA LTV Changes coming October 1st.

2008-09-11T11:40:00.000-04:00

Did you know that FHA is changing the maximum loan amount come October 1, increasing the down payment to 3.5%? Check out this article on FHA Down Payment - Changes Effective October 1 for complete details. When you think about 3.5% it really isn't that much, and only a .5% increase.

Short Sale Questions

2008-08-07T23:26:00.000-04:00

Do you have questions about short sales? Are you wondering do you have to miss a payment? Is the loss the bank takes taxable to you? How long does the foreclosure process take?
Check out this cool article on frequently asked questions about short sales for answers.
You might also check out this article on Short Sale Games.

Short Sale Games Lenders Play

2008-08-06T09:17:00.000-04:00

Short sales are all the buzz right now. In some parts of the country they and true foreclosures make up a majority of the transactions. Are you stuck in a maze trying to complete a short sale? Have you recently run in to trouble with a short sale offer? Check out some of this posting about short sale games.

Secured Credit Card

2008-07-23T23:45:00.000-04:00

Looking to improve your credit score, or build credit when you have none? A secured credit card is a great tool to do just that. You put up a deposit to secure your credit line in the event you don't pay and you get a credit card with a limit of that much. The limit isn't relevant, simply that they report to the credit bureaus. Check out this article on secured credit cards for more good information.

Pay Option ARM loans are not all evil

2008-07-20T20:17:00.000-04:00

A payment option ARM loan alone is not a bad loan. How can I say that? The loan everyone loves to hate right now. Pay Option ARM loans are responsible for all of the worlds problems right? No they are not. Greed makes them bad loans. Greedy consumers wanting to buy more house than they can really afford, or not asking enough questions as to why the loan sounds to good to be true. Greedy loan officers looking to make a quick buck and not think about what is right for the csutomer. Greedy investors and lenders looking to make big bucks selling a loan to situations where it is not wise. Pay Option ARM loans are not evil, greed is always evil.

Foreclosure Rescue Scams

2008-07-15T07:20:00.000-04:00

A rescue scam, how wrong is that. Taking for someone who is in trouble. Like the opposite of Robin Hood. Steal from the poor and make yourself rich.
The latest thing in our whole housing mess right now are the foreclosure scam artists. While some companies and agencies actually can help you getting your mortgage back on track and saving your house many are just scam artists looking to take your money and run, or your house. Check out this article on Foreclosure Rescue Scams to read more.

6 Ways a Low Credit Score Will Cost You

2008-07-09T09:30:00.000-04:00

Just how does a low credit score cost you? A Connecticut mortgage broker can tell you there are many ways, and some can be quiet costly like when you get a mortgage. A low score can costs thousands and thousands a year in higher interest rates and mortgage insurance rates. Check out this cool article 6 Ways a Low Credit Score Will Cost You and learn more about 6 places you may pay more or be at risk for having a low credit score.

Best ways to spend your tax refund - Mar. 21, 2006

2006-03-21T14:37:00.000-05:00

Best ways to spend your tax refund - Mar. 21, 2006
Money burning a hole in your pocket? A new plasma sure would be nice, so would a trip around the world. Read this article for the best ideas.

6 Myths of Credit of Credit Scores

2006-01-22T21:25:00.000-05:00

Beyond the 6 Myths of Credit - Scotsman Guide

This article is written for a mortgage professional, not a customer, but it has great information about credit scores, and common myths. Give it a read.

Mortgage borrowers know that they don't know much: Financial News - Yahoo! Finance

2006-01-20T13:21:00.000-05:00

Mortgage borrowers know that they don't know much: Financial News - Yahoo! Finance

Please ask questions and lots of them. The past few years have seen loads, and loads of new mortgage products. From reduced documentation, to varied payment options, to products which understand credit scores that are not "excellent".

Even after the closing, no investor wants to foreclose on your home, but if you don't make payments it will happen. Ask for help in getting through your tough spot. Maybe payments could be added at the end, maybe a reduced payment could be accepted, maybe you could be loaned the money to make the payment, maybe a refinance to lower the cost of your payment for a period of time is right. Ask questions.

What is your real estate Hot Button?

2006-01-18T22:32:00.000-05:00

Home Search Can Be Impeded By Real Estate Hot Buttons

Buying a house is an emotion driven investment, one in which the heart all too often gets in the way of the sane, straightforward, rational investor each of us knows ourselves to be.

Sometimes buyers (and renters) are very aware of the hot buttons that drive their home search decisions; other times these triggers are buried so deep that they screw up purchase after purchase until the buyer finally realizes that what he thinks he wants isn't really what he does want.

I hope all of the borrowers I work with read this article and think both with their head and their heart while looking for their next home. What we want we feel we need. Or do we?

Reverse mortgage ceiling just got higher - The Boston Globe

2006-01-10T10:35:00.000-05:00

Reverse mortgage ceiling just got higher - The Boston Globe
As with regular loans, reverse mortgage loans have similar loan amount limits. Great article on the new limits for 2006 on reverse mortgages.

Should You Leverage Your Home or Pay It Down Rapidly?

2005-12-31T21:20:00.000-05:00

There is a great debate within the inner-mortgage circles these days. Should we, as loan professionals, encourage clients to borrow as much money as possible? Or would consumers benefit more if we helped them to understand the advantages of 15-year amortization schedules and pre-paying principal? Let's examine the pros and cons of both strategies.

Leveraging Your Property. In order to understand why you'd want to borrow as much as possible for your home purchase, you must first grasp the concept that equity has a zero rate of return. Here's an example:

If Consumer "A" buys a home for $300,000, and puts 20% down, then they have $60,000 in equity. Over the next 5 years, the property appreciates $100,000 in value. Consumer "A" now has $160,000 in equity.

Consumer "B" buys a home for $300,000, and puts no money down. At the end of 5 years, that same home is now worth $400,000. Consumer "B" has $100,000 in equity, which is the same appreciation as Consumer "A", a net $100,000.

As you can see, your down payment has nothing to do with your rate of return. What becomes important is how you choose to manage the $60,000 you didn't use as a down payment. If you use it for frivolous activities, such as buying toys or going to Las Vegas, it would be more prudent for you to use that money as a down payment. Especially since this will enable you to obtain a lower interest rate.

However, if you were to invest the $60,000 in a vehicle that can out-earn the cost of that debt, then this could be a formula for success. This is why some lending professionals suggest putting as little down as you possibly can, maximizing your tax write-off, and investing the rest. This principle has been applied for many years in the life insurance game. The old saying goes, "Buy term and invest the rest." The key component is taking the money you would have used as a down payment and creating an asset accumulation account. This account should earn a significant enough rate of return to enable you to pay your mortgage off entirely and achieve the ultimate goal of being debt-free.

Paying Your Home Down Rapidly. There are very few times over the course of my career that I have seen a client with zero debt and no financial difficulties. Choosing to pay off all of your debt can reduce stress and help you to gain freedom of cash flow for investment opportunities. A 15-year mortgage or a bi-weekly payment strategy provides structure. It can also put you on track to have your mortgage paid off within a set timeframe. Simply put, it contains built-in discipline.

It's important, however, to understand that regardless of how rapidly you pay your home off, you're not getting any greater rate of return on your investment than if you paid it off slowly.

Conclusion. So how does one determine which scenario is best? The choice depends entirely upon the individual. Savvy consumers who are disciplined, and are comfortable taking chances from an investment perspective, would do well with the first scenario. Over the course of time, it's been proven that your rate of return over the long-haul will be far greater than the rate you'd pay for a mortgage in today's rate environment. It's important to seek the advice of a skilled investment advisor to ensure success with this strategy.

The second scenario is best for those who have a difficult time managing their money or who'll sleep easier at night knowing they have a plan in place to pay their loan off more rapidly. Be sure that your budget can handle accelerated payments. When consumers "bite off more than they can chew" with a 15-year mortgage, they frequently end up having to refinance back into a 30-year schedule.

If you find this subject intriguing and would like to know more, I recommend that you read a book titled, Missed Fortune 101, by Douglas Andrew. It's an outstanding read that is very simplistic and goes into far greater detail than I can cover in this column. Douglas is a financial planner who advises safe-structured investments such as whole life policies and tax-free fixed income instruments.

What Housing Bubble?

2005-12-13T22:37:00.000-05:00

There is a ton of talk right now about the coming burst of the housing bubble.
People are convinced that all of a sudden we are going to see a dramatic drop in home prices.
As a country as a whole we have never seen a year where home prices have gone down on a national basis. Read that again, after you think of all the times we have had recessions, 18% interest rates on mortgages, and the high flying of the 80's among many others. Never as a country have home prices as a whole gone down during a year. This is not to say that there have not been pockets where corrections occurred, this is not to say that certain property types (i.e. condos) have not corrected. Let's now also look at where prices were in the early 90's and where they are today on the same property. The early 90's would be the calm after our most recent run up in values before the past few years. I'll bet that same house is selling for at least 2 times what it sold for the in the height of the late 80's boom, and maybe many times more than that.

I am not an economist, I am not a fortune teller, Could such a decline really be in store? LetÂs look at the facts. Let's read an article from someone who is qualified to speak on the subject - Sue Woodard, vice president, and Barry Habib, CEO, Mortgage Market Guide. The Scotsman Guide is the leading source of news for mortgage professionals, and I offer this link to a recent article by Sue and Barry in the Scotsman Guide. http://www.scotsmanguide.com/default.asp?ID=185&part=1

5 Things To Protect Your Credit Score This Holiday Season:

2005-12-11T20:18:00.000-05:00

1. Avoid Department Store Offers for Instant Credit and Don't Open Up New Lines of Credit

"Would you like to save 10% today on your purchase today?". We have all been asked that question when paying for our purchases. Every store under the sun would like to offer you their own credit card. This is not good for your score. The damage to your score you'll incur by opening up a new line of credit is just not worth the few dollars you might save. Department score credit is poor quality credit and the credit scoring system frowns on it. Just don't apply for the card. You may want or need to apply for a new car loan, a new home loan, a re-finance a home loan. By applying for store credit to save a couple of dollars, you could be hurting your chance of getting an important loan at a good rate until the middle of next year.

2. Avoid Overspending

Spending affects credit. 30% of your credit score is made up of how you manage your debt, and when your credit card balances exceed 30% of their available limit, the credit scoring system red flags you and your score goes down instantly. The logic behind this is that if you suddenly max out your credit cards, it looks to the system as though you are in financial trouble. Only charge if you can pay the balance in full before the next statement date. Plus, overspending and overcharging will also cause you to carry larger balances longer. It is best to keep your balances low at all times.

3. Pay Your Bills On Time

Payment history is 35% of your credit score. One 30-day late can cost you 50 points or more. December is traditionally the busiest time of the year. Active calendars filled with work and social commitments for family and friends and the frenzy of the season can preoccupy you and cause you to be late in paying your bills. Make staying on top of your bills a priority. Put all of your bills in a file and make sure you pay them on time. In doing so, you will save points on your credit score and ridiculous late charges as much as $39 or more. Additionally, when you are late in paying your bills, you nullify any preferential finance rate and your account will default to a dramatically higher interest rate. A ding to your credit score, a high late fee, and a huge increase in interest rates are all big incentives to make sure you are on time with your bills. I recently got a call from a customer who had been late, but not 30 days late and the rate jumped on his card to over 30% annually!

4. Take the Time to Plan and Prepare Your Gift Giving

We all do it. We walk into a store ready to buy a specific item and end up getting lured into a spending vortex. Panic spending because the store does not have the item you went in to buy; deciding that if you buy this item for this person, then you have to buy this item for another person; succumbing to the temptation of the latest must-have gadget. You can prevent this well-woven retailer trap by doing your research online. By preparing before you even darken the automatic doorstep of the alluring retail establishment, you can determine where you can purchase specific items and for what price. In doing so, you can avoid the retail traps and retain control of your spending (and your sanity). Online shopping sites have grown tremendously in popularity. Traffic to those sites is up more than 30% from just last year. There is a wealth of information on the web. In fact, www.pricegrabber.com lists all of the hottest holiday items and tells you who sells them and for how much. Remember, if you pay your credit card bill prior to the statement date, it will help your scores. www.froogle.com is another great site to find the item for less.

5. Manage Your Credit Wisely

Keep track of your credit card balances and keep them as low as possible. Studies show that as consumers increase their credit card balances, they become increasingly apathetic about their balances and even about adding new debt. By tracking balances, you will maintain a sense of control over your credit score and your finances. Write out a chart of who you owe, how much you owe, and what the minimum payment is. It will help you to get a handle on your bills, and help start planning how to pay them off.

No Matter What, Budget For A Home Inspection

2005-12-10T21:46:00.000-05:00

The purchase price of a house is just the beginning of the costs of homeownership. There will be insurance bills, closing costs, moving expenses, furniture purchases and so on. Beware of carpal Tunnel syndrome in the hand closest to your wallet.

Home Inspections are one of those home buying expenses you can avoid but probably should not. Depending on where and what you are buying, pest, radon, mold, or lead paint inspections may or may not be critical. Some will be the sellers responsibility rather than your own (especially true of septic inspections). But please find enough money in your budget to employ a reputable housing inspector (locally in CT. from $250-800) to do a visual inspection of your home before you sign the final contract. This is as important for a new house as it is for one being resold!

There are two reasons to have a qualified home inspector look at your new home. The first is obvious: You want and need to know the current condition of the house you are buying and whether there are any time bombs ticking away, ready to blow your budget right out of the water.

The second is less obvious but just as important. A good home inspector will teach you about your house; what the systems are, how they work, and how to keep them working. The level of confidence a home inspector can instill in a home buyer, especially one without any construction knowledge or innate do-it-yourself skills will be worth the cost involved.

As a professional full- time loan officer I am a strong believer in home inspections. Here in Connecticut we are lucky, home inspectors must be licensed, but in many states that is not the case, anyone can put out a shingle and advertise as a home inspector. A true home inspector should be someone with experience as a home builder, construction experience or engineering experience. A true home inspector is" worth his weight in gold".

What ever you do, don't rely on "Uncle Al's" inspection, get someone you are not related to and who does not have a financial incentive in the outcome of the transaction to inspect your new home.

If you are buying a home in central Connecticut, there are many good inspectors, I recommend and have personally used several times: Bill Camosci, Home and Commercial Building Inspector - National Property Inspections, 860-558-1430, http://www.npiweb.com/camosci/

They have offices nationally, visit their web site at: http://www.npiweb.com/

American Society of Home Inspectors: http://www.ashi.org/customers/default.asp

Conforming Limits for 2006 Officially Announced

2005-11-29T21:29:00.000-05:00

The Office of Federal Housing Enterprise Oversight (OFHEO) has released the new Fannie Mae and Freddie Mac conforming loan limits for 2006. These amounts are sinificantly above the anticipated increase, and up 16% from 2005! The maximum loan limit for purchase is adjusted annually to reflect changes in median home prices. These new limits go into effect January 1, 2006.

Contiguous 48 States, District of Columbia & Puerto Rico, by number of units:

$417,000
$533,850
$645,300
$801,950

Alaska, Hawaii, Guam & U.S. Virgin Islands, by number of units:

$625,500
$800,775
$967,950
$1,202,925

The limits are even higher outside of the continental United States. Under Freddie Mac's charter, the limits on conforming loans are 50 percent higher in the U.S. Virgin Islands, Guam, Alaska and Hawaii.

A report this week from the National Association of Realtors showed the median price of an existing home in October was $218,000, up from $187,000 in October 2004, the biggest year-over-year increase since July 1979.

Energy Efficient Mortgages

2005-11-03T21:30:00.000-05:00

Energy efficient mortgages (EEM) are stirring interest among home buyers, lured by the promise of lower monthly utility bills and the ability to qualify for larger home loans, enabling buyers that may have been priced out the rising housing market to buy larger and better homes.

Energy efficient mortgages allow home buyers to take advantage of the fact they will have lower energy costs, they should be able to afford more home. It is not just about being "green", learn more about these great loans at the following links.

http://money.cnn.com/2005/11/02/real_estate/green_mortgages/index.htm

http://www.pueblo.gsa.gov/cic_text/housing/energy_mort/energy-mortgage.htm

http://www.hud.gov/offices/hsg/sfh/eem/energy-r.cfm

http://www.energyefficientmtg.com/

http://www.energystar.gov/index.cfm?c=bldrs_lenders_raters.energy_efficient_mortgage

http://www.natresnet.org/

http://www.fsec.ucf.edu/bldg/fyh/ratings/lndrhndbk/

No Money Down Mortgages For Those Effected By Hurricane Katrina or Rita

2005-10-21T22:13:00.000-04:00

Housing and Urban Development Secretary Alphonso Jackson announced October 12th. that HUD will offer a mortgage financing program that requires no downpayment for people whose homes have been destroyed or damaged due to Hurricanes Katrina or Rita. In addition to requiring no downpayment, potential homeowners can live anywhere they choose in the United States.

"HUD is committed to helping people affected by these terrible disasters to re-establish their lives," Jackson said. "We want to give these families and individuals an opportunity to start over - as homeowners - whether they owned or rented their previous residences."

Under the special mortgage program, called Section 203(h), HUD, through the Federal Housing Administration (FHA), will insure mortgages for individuals or families in a Presidentially-declared disaster area whose residences were destroyed or damaged to such an extent that reconstruction or replacement is necessary.

Borrowers must be able to qualify for FHA mortgages, which are generally easier to qualify for than those on the private market, but they will not have to put any cash down to purchase the property. In addition, the FHA mortgage insurance premiums can be financed into the mortgage amount, so only minimal closing costs would be required.

An added benefit of the 203(h) mortgages, which are offered by any FHA-approved lender, is that they can be used anywhere in the U.S. For example, Katrina victims from Louisiana can choose to move wherever they wish. The limits on the size of the mortgage amount is up to $312,895, depending on the average sales prices in the area.

For More Information on 203(h) mortgages:
contact a HUD-approved lender,
the HUD National Servicing Center Hotline at: 1 (888) 297-8685,
or HUD's website: http://www.hud.gov

How Did I Get So Much Debt?

2005-10-19T23:16:00.000-04:00

There are a lot of things that can cause you to get in debt. Some of the top causes of getting in over your head are:

1. Reduced income/same expenses. Having one spouse out of work for an extended time, reduced overtime, or a missed bonus. All cause a reduced income, but the same expenses. Usually causing what wasn't earned to be charged on credit cards.
2. Divorce. A natural extention of #1, but far more permanant. Not only are you learning to live on less, but you have new bills of attorneys, maybe child support.
3. Poor money management. Do you have a budget? Make one! Do you know how much money it takes to run your house for a month? You may be suprised to find out it is more than you take in in a month. It will also be very helpful to know that you have "X" amount of money left each month after paying the mortgage, car payments, food, etc. Now you know to never spend more than that.
4. Gambling. This is entertainment folks, not a way to make ends meet. The only people who will ever make money here is the house. It can be addictive, hard to stop and loans are freely available. Gambling establishments may be the only place you can mortgage your house while intoxicated and have it be legal. I'm sorry, I forgot -- this is entertainment!
5. Medical expenses. Gaps in coverage, lapsed policies and increasingly costly alternatives make this a popular category. Just about every doctor I know now takes credit cards. If you think it's for convenience, think again. The medical industry wants to get paid at the time service is rendered. They know that if they don't, the chances of their getting paid drops.
6. Saving too little or not at all. The simplest way to avoid unwanted debt is to prepare for unexpected expenditures by saving three to six months of living expenses. With a savings cushion in place, a job layoff, illness or divorce will not cause immediate financial strain and increase debt. You always hear, "Pay yourself first." Do it and it will grow and be there when you need it. No one has ever regretted having a savings cushion. Do you take advantage of your companies 401k? You will likely get a raise as they will match your contribution. Your contribution will be done with pretax money. Planned correctly I have see people make a contribution to their 401k and actually take home more money than if they had not.
7. No money communication skills. How can you not know what your spouse makes? I'm not talking about knowing they brought home $713.46 last week exactly, I'm talking knowing they make $19.25 a hour, and they usualy bring home $700 a week. Do you know a ball park balance on the checkbook at minimum? Did you talk about where you spent money recently, anticipated bills, and a plan to take care of it all?
8. Banking on a windfall. Living on next years COLA increase this year is no way to manage your money. COLA covers next years increase in the cost of living then, not living this year in excess. Living counting on grandma leaving you all her money is risky business. What happens if she falls for #5 and gambles it all away? What happens if she decides to leave it to the dog and not you? You have the credit card payments to live with now, and you will have a dog who eats better than you later. Don't spend what you might not get tomorrow today.
9. Financial illiteracy. Many people don't understand how money works and grows, how to save and invest for a rainy day, or even why they should balance their checkbook. The schools don't teach it, your parents may not have sat you down and explained it. It doesn't matter. You are responsible for your life and your money anyway. Ask questions, search the internet, read books.

Some good links to check out:
http://www.youngmoney.com/credit_debt/credit_basics
http://www.credit.com/c_home_c.htm
http://www.cccsintl.org/
http://www.nfcc.org/
http://www.masteringmoney.org/
http://www.divorceinfo.com/debts.htm

Save Money Heating Your House This Winter!

2005-10-15T11:06:00.000-04:00

A new government report has predicted large spikes in heating bills this winter. This is mostly due to continuingly high oil prices, as well as the lingering affects of the recent hurricanes Katrina and Rita on energy production.

The Energy Information Administration estimates that the average heating bill will cost one-third more this winter, for typical winter weather. A colder winter may boost bills almost 50%.

As temperatures drop, use these helpful hints to save and stay warm:

Take advantage of heat from activities you already do, recommends TipKing.com, a Web site that offers household money-saving tips. Cook at home to generate warmth. When you shower, leave the bathroom door open to spread heated steam throughout your home.
Cut your time in the shower in half and wash your clothes in cold water.
Always wear socks or slippers at home because your feet are sensitive to cold. If you get cold, put on a sweater or wrap yourself in a blanket before deciding to turn up the thermostat.
If you own a waterbed, make your bed each morning, advises the American Council for an Energy-Efficient Economy. Covers keep heat in the bed, so you can lower the setting and use less energy.
Keep your thermostat a few degrees lower than usual. You won't notice much change in your home's temperature, but you'll save on heating costs.
If your home has a multiple zone heating system, consider lowering the temperature in the zones you are not using, say the bedrooms during the day.
Lower the thermostat when you leave for work, or whenever you won't be home for a long period. But be sure to keep it high enough to prevent pipes from freezing. New-model programmable thermostats can do the job automatically, and pay for themselves quickly..
Minimize your use of ventilation fans, including those in your bathroom and kitchen. They pull hot air out of a room quickly.
Cover windows at night. Lowering the blinds or closing the shades keeps out cold air. The heavier the window covering, the better. Remember to uncover the windows during the day to allow sunlight to naturally warm your home.

Links to check out:

TipKing.com - http://articles.tips.net/Tips_for_cutting_home_heating_bills.shtml

Programable Thermostats - http://www.energystar.gov/index.cfm?c=thermostats.pr_thermostats
http://www.pueblo.gsa.gov/cic_text/housing/thermo/thermo.htm
http://www.powerhousetv.com/stellent2/groups/public/documents/pub/phtv_yh_di_000438.hcsp

News Links:
http://www.washingtonpost.com/wp-dyn/content/article/2005/10/12/AR2005101202199.html
http://www.nytimes.com/2005/10/15/business/15energy.html
http://www.courant.com/business/hc-winterheat1012.artoct12,0,1523617.story

New Conforming Limits for 2006

2005-10-11T22:42:00.000-04:00

Talk has been going around for a few weeks about the upcoming release of the new conforming loan limits for 2006 from Fannie Mae and Freddie Mac. The amounts will not be offiicial until early December, and not effective until January, be here goes to concenseus figures:
1 Unit - $400,000
2 Unit - $512,000
3 Unit - $618,900
4 Unit - $769,100
The 1 unit amount is up 11% from the 2005 conforming limit of $359,650.
Most Americans don't need a $400,000 mortgage. The median existing-home price was $218,000 in July, according to the National Association of Realtors. That's a 14.1 percent increase from the previous July. But in some parts of the country $400,000 isn't enough. For example in California a $500,000 home is not out of the norm. A $400,000 loan is needed just to get to 80 percent loan-to-value ratio.
Record home sales prices this year are driving the increase in loan limits. "There's a lot of differentiation across the country regarding the rate of home-price appreciation. Certain coastal states have seen growth in excess of 20 percent while areas of the Midwest have seen only 4 percent to 5 percent growth," says Mike Fratantoni, economist with the Mortgage Bankers Association.

Bankruptcy, Down to the Wire!

2005-10-10T23:57:00.000-04:00

On October 17th, new laws will go into effect, making it tougher for individuals to file for bankruptcy. The new rules have been given a great deal of publicity; so many consumers are rushing to file prior to the new law taking effect. According to the American Bankruptcy Institute, the number of filings was anticipated to increase another 10% to 20% by the end of the third quarter 2005...and second quarter 2005 was the largest single filing quarter in history with 458,597 filings.

So what is changing so drastically with the new laws?

First of all, the costs associated with filing for bankruptcy will most likely increase, purely due to the complexity of the new law (one lawyer I know has told me his fee will double). Second, the new law requires that prior to filing bankruptcy, an individual must have sought credit counseling from an approved agency, within the six months proceeding filing for bankruptcy. Third and probably most dramatic, many bankruptcies will now have to use Chapter 13 - a reorganization of debt - as opposed to the more commonly used Chapter 7 - more often a complete clear out of debt, allowing the protection of certain assets.

Chapter 13 requires that a plan be filed with the court to repay the debts associated with the bankruptcy in three to five years. But if the filer could not keep up with the set payment plan, the individual could change the bankruptcy from a Chapter 13 to a Chapter 7 and have the remaining debts cancelled. The new law may no longer allow individuals to make this switch.

The rule reads that if someone earns less than the median household income for their state, they will be allowed to file Chapter 7. But if someone earns more than the median income and can afford a $100 per month debt payment, then generally Chapter 13 will be the only option. And the IRS will be the ones determining this based on the persons income and expenses - the individual will not be allowed to make this determination.

As always, it is important to seek the advice of a legal professional on laws governing your particular area.

In Connecticut I would recomend:

Greg Arcaro, Brown Paindiris & Scott - (860)659-0700
http://www.bpslawyers.com/index.cfm/hurl/SectionID=6/AttorneyID=22

Peter Lawrence - 860-677-6416 or (860) 626-1333
http://www.avonct.us/merchant2.php/list2/564/Lawrence,+Peter

Live elsewhere?

Martindale - Hubbell
http://www.martindale.com/xp/Martindale/Lawyer_Locator/Search_Lawyer_Locator/loc_search.xml

What is the median income in your area?
http://www.census.gov/hhes/income/4person.html
or
http://www.huduser.org/datasets/il/il05/index.html

Home Mortgage Interest Deduction

2005-10-09T20:02:00.000-04:00

Probably the most common deduction on U.S. tax returns are home mortgage interest deductions. Home loan interest, along with interest paid on loans used to invest, is deductible if you itemize. Friday the Government Accountability Office issued a report that said tax breaks such as deductions for home mortgage interest and state and local taxes cost the federal government $728 billion last year and need to be reexamined.
With our national budget in the red we need to look at ways to raise more money. This news certainly makes for scary headlines. Read in the articles "We're in the fact business, not the policy business" - Comptroller General David Walker of the Government Accountability Office, and "We do not intend to implement the report. The administration rejects any attempts to address the long term fiscal imbalances with tax increases," said OMB spokesman Alex Conant, spokesman for OMB.
Sounds like the home mortgage interest deduction is safe for now.

Some links of interest:

New links:

http://news.yahoo.com/s/nm/20050923/pl_nm/economy_taxes_dc

http://www.latimes.com/business/la-fi-taxbreak8oct08,0,1112971.story?coll=la-home-headlines

Information:

http://www.taxesindepth.com/mortgage-interest-tax-deduction.html

http://moneycentral.msn.com/content/Taxes/Cutyourtaxes/P33353.asp

The First Post!

2005-10-08T23:00:00.000-04:00

Getting a mortgage for your home is an important descision. You should know your options, and feel comfortable with your choice, both today and when you make your last payment.
I hope with this blog to share with you helpful hints and links, any information I think will help you to be a better consumer when you get your mortgage.