Archive for Real Estate
So You Don’t Have Credit
Posted by: | Comments
Having credit is like having a golden ticket to financial freedom. But if you have not established credit yet, it’s OK-I can show you where you need to start. Check out the video I have included for you and you’ll learn how easy it is to establish credit and secure your financial future. Take action and implement the quick tips in this lesson and in less than six months, you’ll be on your way to having your very own golden ticket!
I really appreciate you coming back to look around. If you know of anyone else you think might enjoy my blog, please don't keep me a secret.
10 Credit Myths
Posted by: | Comments
The economy sure has thrown us all for a loop this year, but did you know how many consumers have been taken on a wild ride by those who claim to be financial gurus and credit repair specialists? Far too many have gotten caught in this tangled web, and as your trusted advisor, I am committed to making sure that you are armed with the information you need to protect your finances and your family from such predators. This is why I want to share with you, the top 10 credit myths- so that you can avoid the credit advice that can potentially damage your credit.
Great News on USDA Home Loan Funds
Posted by: | Comments
On July 27th, H.R. 4899, Supplemental Appropriations Act, 2010, passed in the U.S. House, and was signed by the President on July 29th.
Contained in this legislation is the authority needed to raise the guarantee fee in the USDA Section 502 Guaranteed Rural Housing Program to an amount not to exceed 3.50% of the loan amount. This change in the guarantee fee has already been referenced on USDA Rural Development loan approvals (RD Form 1980-18) that were issued “subject to Congressional action.”
This legislation also increases the funding authorization level for the USDA Section 502 Guaranteed Program to an amount that is sufficient “to meet the remaining fiscal year 2010 demand.” Therefore, no additional funding shortfalls in the program are expected for the remainder of fiscal year 2010.
With the passage of this legislation that addresses the current funding lapse in the USDA Section 502 Guaranteed Program, USDA Rural Development will begin the implementation process; which will eventually lead to the elimination of the “subject to Congressional action” language on loan approvals that has been in effect since May 27th . Following the completion of all of the Agency’s internal requirements, USDA Rural Development is then expected to announce the restoration of funding for the USDA Section 502 Guaranteed Program.
Why You Absolutely Need to Buy A Home Now
Posted by: | Comments
History Shows That Now is The Best Time To Buy
In 1971 Housing Affordability was at its highest prior to this year. Meaning that this is the best time possible to buy.
Let’s Talk Affordability
The chart below plots two things: National Association of Realtors Affordability Index (green line) and 30 Year Fixed Rates (blue line). As you can see on the far right side you have the highest Housing Affordability and the lowest Rates. So, you have the lowest prices, lowest rates, and highest affordability.
What About the ’80′s?
In the period of 1979 to 1984 you have some of the highest interest rates on record. Yet, still a lot of people purchased homes during that period. The people that bought homes during that time did well 15 – 30 years later. My Mother purchased her first home during that time period even though rates where in the 12′s to 18′s. In 1982 Housing affordability was at its lowest ever. Inflation kicked in 1975, and rates continued an upward trend through 1979. So, the Gap between housing affordability and Interest Rates was very wide, the widest of record.
The Best of All Scenario’s
Today we have a very wide gap as well, but in a good way. Presently because interest rates are so low, home prices are low, and housing affordability is up, the overall risk is greatly reduced. If the risk was so great in 1982 and homebuyers did okay, how can someone look at the chart today and say that it is riskier than in 1982.
What About the Negative News?
That’s the best part if you are a homebuyer. Trulia recently release a report Showing Sellers Continuing to Slash Home Prices. This means you are getting an even better price on an already reduced house. The Department of Housing and Urban Development (HUD) just released there July report card, “The Obama Administration’s Efforts To Stabilize the Housing Market and Help American Homeowners.” This report card shows continued affordability in the U.S. Market.
Historic low rates continue to promote affordability: Families continue to benefit from the lowest rates in history on 30-year fixed mortgages. Since April of 2009, record low rates have helped more than 7.2 million homeowners to refinance, resulting in more stable home prices and $12.9 billion in total borrower savings.
Simple supply and Demand suggest that since there is not as great of demand now, compared to during the tax credit, housing prices will decrease thus further increasing the affordability (Read Better Deal!) There are still large amount of houses on the market and many more still in foreclosure. Both Federal Housing Finance Agency and Standard and Poor’s believe that House Prices are showing signs of stabilizing.
What do you think housing prices and interest rates will do in the next 12 months?
If you are looking to purchase or refinance please give me a call or email Jeremiah so we can get the process started. I’d be happy to get you started.
Rates and APR: What Do They Tell You
Posted by: | Comments
What is the difference between the interest rate and the A.P.R.?
You’ll see an interest rate and an Annual Percentage Rate (APR) for each mortgage loan you see advertised. The easy answer to “why” is that federal law requires the lender to tell you both. By showing both this can lead to confusion, especially to those First Time Homebuyers.
The Federal Reserve wants the APR to be a tool for comparing different loans, which will include different interest rates but also different points, fees, and other terms. The APR is designed to represent the “true cost of a loan” to the borrower, expressed in the form of a yearly rate. The problem is that there are many costs associated with a loan, that are not considered in APR.
What Fees Are Included In The APR?
- Loan Origination Fee
- Loan Discount Fee
- Other Lender/Broker Fees (Application, Underwriting, Processing, Tax Service Fee, etc.) – Anything paid to the broker or lender or affiliate of the broker or lender
- Odd Days Interest
- Mortgage Insurance Premium
- Title Closing Fee
While APR was designed as an attempt to make it easier to compare loans, it’s sometimes confusing because the APR includes some, but not all, of the costs associated with a mortgage. And since the federal law that requires lenders to disclose the APR does not specifically declare what goes into the calculation, APR’s can vary from lender to lender and loan to loan.
What Fees Are Not Included In The APR Calculation
- Escrow Setup
- Appraisal Fee
- Title Insurance
Let’s Throw Adjustable Rate Mortgages In The Mix
The APR on an Adjustable Rate Mortgage (ARM), a loan tied to a financial index, like a 5/1 ARM, assumes the index will never change. The interest rate on an ARM is composed of the index and margin. Because of the underlying assumption that the index will not move over the life of the loan, the APR can be grossly under or over stated on an ARM depending upon if the index moves up or down over the life of the mortgage. ARM’s loans were created because the Bank does not have to assume the interest rate risk of a Fixed 30 Year Mortgage, allowing the consumer to get a slightly lower rate, and assume the risk that rates will rise. These financial indexes have always moved over the course of a 30 year mortgage thus making the APR a difficult tool to compare a fixed rate mortgage to an ARM.
So, APR’s are at best inexact. The lesson is that APR can be a guide, but you need a mortgage professional to help you find the truly best loan for you.
Show What Should You Do?
You as a consumer need to look at two things when considering a mortgage loan
- The front end costs associated with obtaining the loan, not just those deemed pre-paid finance charges, and thus included in the APR calculation
- The interest rate, and the total cost of the loan over time.
Here is a Comparison of two different mortgages, both 30 year fixed rate mortgage.
The first mortgage has an APR of 5.03%, and the 2nd has an APR of 5.25%. So, if you were to choose a loan simply based on the APR the typical choice would be the 1st mortgage; however, if you will be staying in the home less than 90 months (most loans are only held for 60 months) then the best choice is Loan 2, because the total cost is cheaper.
Make sure you are dealing with a mortgage professional that doesn’t just throw rates and fees at you over the phone. I’ll take the time to prepare a total cost illustration and determine that the loan you select meets your long term objective.
