We all need to live somewhere and it costs money. The Federal Government has made home ownership a sign of success in the United States with tax favors, sponsored lending (think FHA, Fannie Mae and Freddie Mac) and other enticements to own.
When you own a home, you can deduct the mortgage interest (usually), property taxes, and in most markets, count on an increase in value year after year.
The community benefits when people own their own homes. Home owners tend to be better employees, have job stablity and their children get better grades in school.
Home ownership also comes with responcibilities: If some thing breaks, you get to fix it; failure to pay your mortgage can devistate your credit; and your neighbors (mortgage lender) expect you to keep your property up to maintain the value.
Visit with a mortgage professional or take a home ownership class to see if you have the resources and want to make the commitment to become a home owner.
MMM
Saturday, June 30, 2007
Friday, June 29, 2007
Short Sale is a Dangerous Sale
The main topic of discussion with real estate professionals and consumers is the "short sale" where a lender agrees to take less than the agreed principal and interest due on a note. Some times there is a sale in process, some times a deed in lieu of foreclosure.
I have heard rumors that lenders are forgiving a set percentage of loans and that this short sale will not hurt one's credit.
There is no standard for a short sale. Lenders have to make hard business decisions based on the information they have. Be assured that every short sale is examined extensively before it agreed to and the lender is acting in its own best interest, not the borrowers.
Any time a lender, whether bank, credit card company, or mortgage holder accepts less that the amount due, the borrower will have negative consequences for the borrowers credit profile. The one situation I have heard with less damage is where the short sale agreement stated the short sale would not reflect on a credit report. This is negotiated, not automatic. In exchange, the lender wants a deficiency note. The deficiency note is where the borrower agrees to make the lender whole over time. Even though the lender does not have a lien securing the loan, the borrowers credit is only as good as the last on time payment.
One last piece often over looked is the tax consequence of a short sale. If a lender settles for less than agreed, that deficiency is treated as income to the borrower. The borrower will have to pay income tax on the money not repaid.
If you are contemplating a short sale, get a good lawyer. It will be money well spent.
MMM
I have heard rumors that lenders are forgiving a set percentage of loans and that this short sale will not hurt one's credit.
There is no standard for a short sale. Lenders have to make hard business decisions based on the information they have. Be assured that every short sale is examined extensively before it agreed to and the lender is acting in its own best interest, not the borrowers.
Any time a lender, whether bank, credit card company, or mortgage holder accepts less that the amount due, the borrower will have negative consequences for the borrowers credit profile. The one situation I have heard with less damage is where the short sale agreement stated the short sale would not reflect on a credit report. This is negotiated, not automatic. In exchange, the lender wants a deficiency note. The deficiency note is where the borrower agrees to make the lender whole over time. Even though the lender does not have a lien securing the loan, the borrowers credit is only as good as the last on time payment.
One last piece often over looked is the tax consequence of a short sale. If a lender settles for less than agreed, that deficiency is treated as income to the borrower. The borrower will have to pay income tax on the money not repaid.
If you are contemplating a short sale, get a good lawyer. It will be money well spent.
MMM
Thursday, June 28, 2007
Ready for Disaster?
Are you ready for a disaster? Many of us have done inventories and copied important records. I learned last week that you should supplement your inventory with digital pictures rather than video tape. Time to get with the times.
What I found out a few years ago as I endorsed insurance checks for hurricane damage is that those who had money to pay the contractor before the insurance money arrived had their lives back together much much sooner.
If you do not have several thousand dollars in your bank account, the next best thing is a Home Equity Line of Credit. You secure a line of credit with your home. You pay interest only on the money you have drawn out of the line. Some times, for a lower interest rate or better terms you may take a draw from the line at closing. Usually you can pay this back within a month.
Your bank, credit union and mortgage company are good sources to check. As always, low fees and low interest rates are best.
Just remember, the line needs to be in place before the disaster strikes!
What I found out a few years ago as I endorsed insurance checks for hurricane damage is that those who had money to pay the contractor before the insurance money arrived had their lives back together much much sooner.
If you do not have several thousand dollars in your bank account, the next best thing is a Home Equity Line of Credit. You secure a line of credit with your home. You pay interest only on the money you have drawn out of the line. Some times, for a lower interest rate or better terms you may take a draw from the line at closing. Usually you can pay this back within a month.
Your bank, credit union and mortgage company are good sources to check. As always, low fees and low interest rates are best.
Just remember, the line needs to be in place before the disaster strikes!
Tuesday, June 26, 2007
Natural Disaster and Mortgages
As you watch the news about tornadoes, floods and hurricanes, you might want to think about how this will impact your ability to borrow against your property.
Once a County is declared a Natural Disaster Area, no mortgage can close in that county until the lender has determined that the home is sound. Sometimes the appraiser must return to the home or a lending officer needs to inspect the property to certify that it is not damaged before closing.
If you have a property under contract to buy or sell, the fine print of your contract determines how natural disasters are handled.
Natural Disasters are not limited to hurricanes in Florida. Could be a volcano in Hawaii! Be ready for a delay if a Natural Disaster Strikes.
MMM
Once a County is declared a Natural Disaster Area, no mortgage can close in that county until the lender has determined that the home is sound. Sometimes the appraiser must return to the home or a lending officer needs to inspect the property to certify that it is not damaged before closing.
If you have a property under contract to buy or sell, the fine print of your contract determines how natural disasters are handled.
Natural Disasters are not limited to hurricanes in Florida. Could be a volcano in Hawaii! Be ready for a delay if a Natural Disaster Strikes.
MMM
Monday, June 25, 2007
Weekly Rate Outlook
Last week rates were on a rollercoaster ride but mostly rates went up. Kiplinger Letter thinks they will not get much higher than they are now. According to the Mortgage Market Guide mortgage backed securities, bonds that finance residential mortgages, are trading in range that supports the Kiplinger view.
I am linking my weekly Realor newsletter from the Mortgage Market Guide if you would like more detailed information. I will link this every Monday.
Paul's MMG Weekly
MMM
I am linking my weekly Realor newsletter from the Mortgage Market Guide if you would like more detailed information. I will link this every Monday.
Paul's MMG Weekly
MMM
Sunday, June 24, 2007
Conservative with Your Money
Clark Howard is my kind of Conservative. He is Conservative with your money. You may have heard of his radio show or website. Check him out at ClarkHoward.com
He has a variety of money saving ideas and ways of taking on the credit establishment.
Know that he does have advertising on his show and website. Clicking on the mortgage offer, I was immediately taken to an offer for a negative amortizing loan. Usually best recommended to sophiticated borrowers.
You cannot go wrong following his advise but take his advertisers with a grain of salt.
MMM
He has a variety of money saving ideas and ways of taking on the credit establishment.
Know that he does have advertising on his show and website. Clicking on the mortgage offer, I was immediately taken to an offer for a negative amortizing loan. Usually best recommended to sophiticated borrowers.
You cannot go wrong following his advise but take his advertisers with a grain of salt.
MMM
Saturday, June 23, 2007
Stop Uninvited Solicitations
Have you applied for a mortgage and then received unsolicited calls offering you a mortgage? When your credit is pulled, the credit agencies know the purpose of the request (car loan, credit card, mortgage) and are given information about you. Your loan officer and mortgage company (and ultimately you) pay for the credit report.
Then the Credit Agencies sell the loan purpose information as "leads". There is nothing the loan officer can do about this. To put it nicely, many of us in the industry think this is a gross abuse of your information.
But there is something you can do: Go to
www.optoutprescreen.com
Follow the directions on the site and opt out immediately for 5 years or send a letter and be opted out forever!
MMM
Then the Credit Agencies sell the loan purpose information as "leads". There is nothing the loan officer can do about this. To put it nicely, many of us in the industry think this is a gross abuse of your information.
But there is something you can do: Go to
www.optoutprescreen.com
Follow the directions on the site and opt out immediately for 5 years or send a letter and be opted out forever!
MMM
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