Cheaper than rent

The Fed holds off on rate increase... for now

2015-09-18T13:52:00.000-05:00

You’ve likely read a lot in the media lately about the Federal Reserve (Fed) and its review of its historically low interest-rate policy. At its most recent meeting, the Fed chose not to increase rates as the global market experiences ongoing volatility and slower economic growth. Of course, the Fed is closely monitoring the rate of inflation and job growth as the U.S. economy continues to slowly improve.

These things are almost always an influence on mortgage rates. If you would like to see what the cost of a new mortgage for purchase or refinance is, just reply to this email.

Why get pre-qualified?

2013-05-03T10:22:00.000-05:00

If you read the news, the inventory of homes is a little low. That means sellers can be picky when they receive a contract offer. If you present an offer with our letter and another buyer makes an offer without being qualified (all other things equal or maybe not so equal), guess who gets the home?

Yes it is a little trouble, but we don't charge you to take care of this and you can avoid embarrassing surprises. To do this go to www.mignashville.com/app and fill out our online application. It is easy and secure and will get you on the road to that home!

In Case you wondered about square footage!

2013-05-01T11:33:00.001-05:00

QUESTION: I have a seller that is disputing the manner in which I measured the square footage of their property. What is the correct/legal way to do this?

ANSWER: We do not recommend that agents calculate square footage. Square footage (or gross living area) is difficult to determine and is ripe for a misrepresentation claim.

There are several acceptable ways in which to determine square footage. Additionally, if you have 3 different people determine square footage, you are likely to get three different answers. If the square footage included in the MLS is incorrect, the REALTOR could be liable for negligent misrepresentation depending upon what he or she did to verify the information obtained and when the discrepancy is discovered (i.e. before contract entered into, after closing).

We recommend that square footage be listed as an "approximate" amount and that a disclaimer be included noting that the amount of square footage is not guaranteed. We would also recommend either listing the square footage as what is listed on the tax records or as calculated by an appraiser and indicate the source. The important thing is that the information concerning square footage is disclosed so as to avoid misrepresentation. We would recommend going with either the tax records or from an appraiser's measurements.

[SOURCE: TAR's Legal & Ethics Hot Line Attorneys]

Be a Self-Starter

2013-04-22T15:22:00.001-05:00

by David H. Sandler

• A race car has a tremendous amount of potential energy but cannot start until someone waves the green flag.

• The powerful engines of a jet cannot lift that plane one-inch off the ground without ample runway and someone activating its controls.

• A locomotive can be held in place by a single block of wood placed under its wheel, yet under power it can go through a brick wall 10 feet thick.

Raw power has only potential. Machines cannot turn themselves on - people can! If you're going to wait to feel "right" about doing something, it may never happen. The self-starter knows that there is never a "right" time to get started.

Too many people sit around waiting to be motivated - as if there were some chemical reaction about to take place. The self-starter acts on his goals, and the motivation to achieve those goals is built into that action.

If you are not feeling "up to it," no amount of concentration, wishful thinking, or smoke screen planning will get you into action. Things in motion tend to stay in motion; things at rest remain at rest. The more you think about becoming motivated, the better the chances are that you won't.

The self-starter knows that regardless of how he feels at any given moment, how he will feel in the next moment is determined by the action he takes.

If you have set worthwhile goals, and have developed a plan of action, set your plan into action anytime of the day or night by acting on it. Don't lose precious time by waiting for the time to be right: Become a self-starter.

It's how you act that determines how you feel, not how you feel that determines how you act.

* * *

Excerpted from Sandler's No Guts, No Gain!® training program. © 2002 Sandler Systems, Inc. All rights reserved.

No Credit Scores? We can still do it!

2013-04-12T10:46:00.001-05:00

Do you know someone that has absolutely no credit? Someone who followed a famous radio host to the no score credit report? Then they try to buy a home and find it to be a big problem. In many cases we can help those folks. We will verify rent, utilities etc. and then get it done. So if you or someone you know has this situation, please let me know. Give me a call at (615) 777-3299. Ask for George!

U.S. Governments April Fool's Joke

2013-04-05T15:06:00.001-05:00

By the time you read this, the U.S. Governments April Fool's joke will have taken effect. That is the increase of the FHA MIP. But never fear, they have the next thing all set to take effect in early June. At that time a loan case number pulled after June 3 will carry with it the privilege of paying the MIP for the life of the loan. Presently if you reach the point of 78% of the appraised value or purchase price (whichever is less) the MIP Will drop off. (with a minimum of 5 years). So if you are in the market for a home , and need to use an FHA loan, it would behoove you to go ahead and get it done. Call or email me for details on how to avoid FHA.

Zillow: Home Values To Grow 22 Percent Through 2017

2013-03-28T11:31:00.000-05:00

by Broderick Perkins

Home values will grow incrementally by more than 4 percent a year and cumulatively by 22 percent over the next five years.

That's if growth rates exceed home value growth rates in the 12 years preceding the onset of the housing bubble that culminated in the Great Recession.

It sounds like happy days are here again in the residential real estate market, according to the Zillow Home Price Expectations Survey (ZHPES).

Zillow's panel of more than 100 professional forecasters foresee the 4.1 percent next-five-year annual home value appreciation rate exceeding the pre-housing bubble's (1987-1999) average annual appreciation rate of 3.6 percent.

The finding is the first time the predicted average annual growth rate for the next five years has surpassed pre-bubble levels since the survey's inception by Zillow three years ago.

But don't party like it's 1999 just yet.

"That said, their expectations are a bit shy of the home value gains of 5.5 percent that we saw in 2012, implying some moderation in the pace of gains. The panel expectations are consistent with continued strong home value growth this year fueled by tighter-than-normal inventory of for-sale homes and robust demand attributable to high affordability and a stronger general economy," said Zillow Chief Economist Dr. Stan Humphries.

Bring more homes to market from sellers and banks' "shadow inventory," raise mortgage interest rates, push home values too high, trip up the economy and all bets are off.

Anything can happen

It's true. A cascade of study after study points to real recovery, but anemic economic growth, creeping employment and salary gains and still tight mortgage lending could put a crimp in any forecast.

Year-by-year, Zillow says expect to see home values rise 4.6 percent this year, 4.2 percent in 2014 and then level off between 3.6 percent and 3.8 percent from 2015 to 2017.

For the five-year period, expectations for home value increases ranged from a whopping 34.2 percent, among the most optimistic quartile, to only 11.7 percent among the most pessimistic, Zillow reports.

Even at the average annual home value rate growth forecast by the most pessimistic of Zillow's forecasters, about 2.4 percent, the growth rate would not be far below the pre-bubble average of 3.6 percent.

Among single forecasters, the smallest cumulative (through the end of 2017) home value forecast was for an 11 percent depreciation.

The greatest cumulative forecast for the five-year period was for a home price appreciation rate of nearly 78 percent.

Mortgage Investors Group Grabs THDA Top Lender Spot 10th Year in a Row!

2013-02-27T15:15:00.001-06:00

From the THDA Newsletter:

NASHVILLE, February 15, 2013 - For the tenth consecutive year, Knoxville-based Mortgage Investors Group is the top originator of Tennessee Housing Development Agency's first-time homebuyer loans.

"It's dedicated partners like MIG who work to introduce the THDA program to buyers," said Ralph Perrey, THDA executive director. "We appreciate how hard they work to research the best program for each consumer."

Established in 1989, Mortgage Investors Group (MIG) has been a key a partner in Tennessee Housing Development Agency's (THDA) goal of providing all Tennesseans with access to safe, sound, affordable housing opportunities. Over the last 10 years, MIG submitted 4,579 applications for a value of $ 446,560,896. The next most-active THDA lender secured 2,283 applications over that same timeframe.

A total of 2,102 loan applications from households of low- to moderate-income were originated by lenders across Tennessee for the 2012 calendar year. MIG's staff submitted 333 applications in 2012 for a total value of $33,429,536. The second most-active lender for 2012 was First Community Mortgage with 195 applications and $23,482,920 in value.

"We are thrilled to be THDA's Top Lender for a record 10th straight year," said Jesse A. Lehn, Executive Vice President, MIG. "Our relationship has grown stronger with each year and will continue into the future. MIG's core focus is putting homebuyers into the right program and there is no better program for first-time homebuyers than THDA."

THDA is a political subdivision of the State of Tennessee, established in 1973. THDA is the State's housing finance agency, responsible for selling tax exempt mortgage revenue bonds to offer affordable mortgage funds to homebuyers of low and moderate incomes through local lenders, and to administer various housing programs targeted to households of very low-, low- and moderate-incomes.

THDA made its first mortgage in 1974. It has provided affordable fixed rate mortgages to over 107,000 households without using state tax dollars. The total contribution of the THDA-related activities to Tennessee's economy in 2011 is estimated at $728.6 million.

THDA issues between $250 and $300 million in mortgage revenue bonds annually for its first-time homebuyer program.

THDA created the Tennessee Housing Trust Fund in 2006, using state, THDA and locally-generated match to support programs for households of very-low income, elderly and special needs populations.

More information about THDA is available on-line at http://www.thda.org

FHA MIP

2013-02-20T16:24:00.001-06:00

I mentioned a couple of weeks ago that FHA is raising the mortgage insurance April 1 by 10 basis points. That doesn't sound like much, but it adds up. It is their April Fool's Joke. At the present in most cases when you get 22% equity based on your purchase price it drops off your payment. On June 3 all the new loans will see the MIP become permanent for the life of the loan. So If you can move your time table forward a little, it could save you a lot of money. Call me at (615) 777-4663 to help you with this.

Condo Approvals

2013-02-15T10:35:00.004-06:00

I have written about this before, but it continues to rear its ugly head. Many Condominium associations have let their FHA and/or Fannie Mae approvals expire. Basically if both happen there is an extremely good possibility that a unit owner may not be able to sell or refinance with favorable financing and be relegated to non-conforming interest rates. They apparently do not realize that this can and probably will hurt their property values and limit their options down the road.

Yes it takes some time and effort, but for optimum real estate management, it badly needs to be taken care of. Probably most of the boards of directors do whatever their management company's recommend, so the management companies need to get on board too.

"Normal" Housing Market may not be what it used to be!

2013-02-04T10:39:00.001-06:00

I was reading today that Fannie Mae has looked into their crystal ball. They note that we have the following positive trends:

• Washington seems to be slowly getting their act together. (That is writing fewer checks)

• The Fed is likely to continue to support the economy.

• They expect mortgage rates to remain relatively low over the next few years "rising to no more than 4.2% by the end of 2014.

• They expect growth of about 2% per year.

• Foreclosures are declining.

• Housing starts should rise 23% in 2013

All this doesn't spell boom time, but in my opinion it is a positive environment to buy a home. Call us if we can help at (615) 777-4663.

CREDIT ALERT!!

2013-01-24T11:27:00.001-06:00

If you are a parent of a college student or for that matter a child over 18 living at home, listen up.

Unless you want them to become a renter or to live with you for the foreseeable future, you need to help them build a credit history. I can't tell you how many times the graduate comes in and has no credit. We investigate further and they don't have a rent history. Then we find out the cell phone they are so proud of is in Dads name and his car loan and insurance is too. And so on. You get the picture. No credit and no alternative credit (like insurance, cell phones, utilities etc.).

So ideally, you would help them get a secured credit card (actually two) and an installment loan even if it is secured by savings. They will want a 12 month perfect history on these accounts. In the meantime get some of the above mentioned alternative accts in their name and push them to pay on time. Next week we will address what to do with these accounts when you get them.

Good News for Veterans!

2013-01-16T14:18:00.001-06:00

Today's news includes an announcement by Wal-Mart that they are pledging to hire 100,000 Veterans with honorable discharges over the next 5 years. I think this is great. I am not really a Wal-Mart fan, but this could make me one. I have seen some numbers that if a veteran who works for Wal-Mart has a spouse who has an average job, that they could qualify for the average home in the U.S. which is $186,000. So selfishly that could be a boost to the housing industry.

And since we at MIG also specialize in VA loans we can participate too. This is a good time to point out that THDA (the first time buyer agency in Tennessee) is offering Vets (and they don't have to be first time buyers) one half per cent off on their mortgage. That would put their starting rate at 3.1%. This is their Homeownership for the Brave program.

So if you know a Vet we can help please email me at george.margrave@migonline.com or call me at (615) 777-3299 and I will help them!

MIG & Team Margrave 2013

2013-01-09T14:10:00.001-06:00

We have been getting geared up for 2013. MIG had a record year in 2012 closing about $1.17 Billion in loans. Yes, MIG is the largest independent lender in the State. My teams volume was the second best year we ever had thanks to my loyal clients.

This would be a good time to let you know who my team is. Stephanie Holland is my right arm. My second assistant and Stephanie’s right arm is David Baker. We also have Kim Shumate and Jennifer Hegele as our processors.

Our Manager Darin Anderson gives us great support and we also have two underwriters and Nita our closer right here in the office. So we are all set to handle your referrals!

Is Home Buying a Safe 2013 Investment?

2013-01-02T16:49:00.000-06:00

No one knows the future, but it appears to even the most negative advisers that housing has bottomed and is headed toward better days. The last statistics show that homes are now appreciating. Of course Real Estate is local, but we see that here also. The bottom line is that housing markets depend on Jobs and other economic factors.

If you compare buying with renting, buying is winning out in almost every calculation now. It is hard to beat low prices with low interest rates.

And guess what?

We can help you make that purchase. Just email me at George.Margrave@migonline.com or call (615) 777-4663!

7 Places Your 2013 Down Payment Might be Hiding

2012-12-19T17:06:00.000-06:00

If buying a home is on your New Year's Resolution list for 2013, know this: your biggest challenge will almost certainly be coming up with your down payment and closing costs.

Whether you're trying to scrape by with 3.5 percent for an FHA loan or you're planning to put down a full 20 percent, saving for a down payment might be the largest savings endeavor you ever undertake, after retirement planning.

But don't let that daunt you. Look at it as more of a challenge or a game than a slow-slogging deprivation-driven chore. In fact, I suggest that you add something to your scrounging and saving: scavenging. Finding your down payment money hidden in resources that are right in front of you can be a fruitful and fun angle to take on an otherwise overwhelming goal.

Use this short list of oft-untapped down payment treasure troves to open your eyes to funds that might be hidden in plain sight:

1. Your budget's biggest line items. I like to get maximum bang for my buck. And I like to enjoy my life, too, so depriving myself of little luxuries without getting much mileage toward my goal is definitely low on my savings strategies list. But I've often found that if you take your top 10 or so monthly expenses, there are almost always at least one or two that you could slash significantly or totally do without, push come to shove: all without feeling as deprived as you would if you cut your daily coffee.

Home buying is one of those push-meet-shove-type situations. If you're serious about coming up with your down payment funds, sit down during your holiday off-days, and backtrack over your monthly budget (if you have one) or your last month's checking account statements. Isolate your top 10 budgetary line items and do an internal gut check on whether there is anything on this list that you can slash or eliminate.

If this seems obvious or silly to you, don't scoff before you give it a chance. I have seen buyers do this exercise and decide to:

•move home or to a cheaper place to eliminate rent

•go from two cars to one to eliminate a car payment

•cancel cable or switch cell phone service providers to get rid of a hundred bucks or more every month,

pressing fast-forward on their down payment savings and home buying plans by many months, even years.

2. Your bad habits. Have you heard yourself say - out loud or internally - I've got to stop:

•smoking

•drinking so much

•eating out so much

•eating so much junk

•watching so much TV

•drinking so many sugary coffee drinks

•impulse shopping

•OSUI: Online Shopping Under the Influence (it's a real thing - I promise!)

- or anything in that vein? Well, each of these are bad habits that cost. And because they are often engaged in compulsively, they can cost much, much more over time than you have any idea you're actually spending.

Again, far be it from me to suggest that someone who works hard every day shouldn't treat themselves to a coffee or lunch here or there. The fact is, if you deprive yourself too severely, there's a good chance your efforts to cut back and save will be very short-lived, and possibly even backlash into binging behavior. But if there's a habit you've been wanting to change for health or other reasons that also costs you a pretty penny, you might find it easier to make those changes when you know you're doing it in service of your vision of owning a home.

So, make a project of it. Figure out roughly what you're spending on your bad habit, and set up an automatic saving transfer from your checking account into your down payment savings account. Then, get and leverage some habit-changing resources, like those at ChangeAnything.com or in one of my favorite books this year, The Power of Habit: Why We Do What We Do in Life and Business. Then, when you feel the compulsion to engage in your bad habit, come to Trulia instead and peruse new listings in the price range and neighborhood of your own target dream home - that will help you stay on track by staying mindful of what's really important.

3. Your stuff. When you need to save money, there are really only two levers you can pull: you can spend less, or you can make more. Selling stuff you have and don't use or need is a relatively painless way to make more money to go toward your down payment. If you're really serious about home buying, put everything on the table.

I've known buyers-to-be who sold any and everything, including:

•cars and motorcycles

•clothes, costumes, shoes and handbags

•hobby-related gear (bikes, tools and even costumes)

•furniture and antiques

•and electronics, CDs and even books (think: TVs, computers, old smart phones, etc.)

to fund their down payment and home buying-related debt elimination plans.

Don't underestimate the amount of cash you can bring in from the stuff you already own. Millions of home owners worldwide are now renting out rooms or floors of their current homes for short periods of time on sites like Airbnb and VRBO. Sites like Getaround and Zimride allow you to rent out the extra seats in your car - or the whole vehicle, if you're not too faint of heart!

4. Your skills and time. One way to make more money, as discussed above, is to liquidate the things you have lying around. Another way is to get to work! Spend your off-time, your evenings and weekends leveraging your professional skills or personal hobbies to bring in some extra cash. A friend of mine recently had a savings target she was trying to reach and actually sent her whole circle of friends an email detailing (a) what she was selling and (b) what sorts of projects she was willing to do to get there - she earned well into the four figures, in less than a month.

Maybe you can sew or knit stuff to sell on Etsy, grow things in your backyard to sell at the farmer's market or, like one enterprising Mom I know, use your baking and cake decorating skills to monetize your kids' classmates' birthday parties. Or maybe you're more interested in cooking, house cleaning, babysitting or dog walking - in fact, another acquaintance of mine has earned thousands of "extra" dollars dog sitting while she works at home. If that sort of thing is not up your alley, think about whether you can help people you know with their small business projects, like research, bookkeeping or office organizing projects.

Once you get serious about coming up with your down payment cash and decide to be creative about where to find that money, using your skills and your time creatively is a power-packed way to open the financial floodgates. Consider starting out with a simple email to your circle of acquaintances or by listing your services on a site like TaskRabbit.

5. Your loved ones. Some folks are fortunate enough to have cash-flush loved ones who would love nothing more than to help you have a home of your own. The best case scenario is to have some idea of what sort of gift money you can count on as far in advance as possible, as it will impact your own savings targets and your lender's documentation requirements. If you have a parent, sibling or auntie who has mentioned their interest in giving you this sort of gift, it's not bizarre to bring the subject up, express your gratitude and let them know that you're planning to buy in 2013 so you can have a detailed conversation about logistics - including their financial, tax or estate planning pros, if it makes sense.

Alternatively, if your home buying plans are timed alongside your wedding plans, graduation plans or new baby due date, consider opening a down payment registry, so well-wishers can funnel their gift funds right into your real estate savings. For example, the federal Dpeartment of Housing and Urban Development (HUD) allows small gifts to be combined in a single savings account and eliminates otherwise onerous gift money documentation requirements with the FHA Bridal Registry program, which is available around weddings and "other legitimate occasions where substantial gifts are typically received by an individual or individuals."

Touch base with your lender and agent to see whether there are any registry programs that might make sense for your situation.

Finally, buyers who decide to team up with their BFFs, siblings, parents or other loved ones to buy a place they can jointly own and/or live in might be able to structure things so that they have to come up with less down payment money than they would otherwise - the co-buyer comes up with the rest! Think about whether this sort of arrangement might help you and your loved one accomplish your respective financial and real estate goals, in one fell swoop.

6. Your employer. Believe it or not, some employers actually offer down payment and other forms of mortgage assistance to employees. In particular, universities and governmental agencies that employ first responders who are required to live locally for their jobs (e.g., police, fire and other emergency personnel) often have housing assistance programs that can include down payment funds or access to mortgage programs with lower down payment requirements.

Even if you don't work for one of these sorts of agencies, if you are relocating for work, touch base with your HR department to find out whether there are any relocation benefits that can help you make up the difference between the cash you have and the down payment you need to make your move.

7. Your city, county or state. What you've heard is true: there are few, if any, down payment assistance programs still available on a national level. But many states, counties and cities offer their own down payment assistance programs, which are generally available to folks falling into one or more of the following categories:

•first-time buyers (people who haven't owned a home in the area in the last 3 years)

•buyers in low- or moderate-income brackets

•or those buying homes in a particular part of town.

Your mortgage pro and real estate agent should be able to help you track down any such local programs applicable to you. In fact, this is one great reason to touch base with them at the beginning of your down payment savings adventure versus waiting until the end. But make sure you read up on the programs extensively before you decide to opt into one. Many of them run out of cash over the course of the year, so shouldn't be counted on; others may require you to repay any assistance received if and when you sell or move - things you should keep in mind at the outset.

-Trulia

Contact Your Congressman

2012-12-12T14:39:00.001-06:00

Last week I mentioned a couple of things that homeowners should contact their Congressman and/or Senator about. That was the mortgage interest deduction and the deductibility of PMI. Hopefully you have done that. By the way, I just learned that only about 25% of the folks that could use these write offs actually take advantage of the write off. Surely you don't want to give Uncle Sam more money than you have to. I'm just sayin.

There is another bill that is expiring that really needs to be renewed. If you know someone that is selling on a short sale or is or has been foreclosed on they are at risk. The amount of loss is taxable income after Jan 1. That is just piling on. If someone could afford that tax they probably wouldn't have trouble keeping their home. So I encourage you to contact them again.

Housing Market Comeback

2012-12-05T15:29:00.001-06:00

By any measure, almost everyone would agree that the housing market is finally making a comeback. It is an ideal time to buy if you have a need. The prices are great (at least if you are buying) and the interest rates are even better. The bottom line is that housing affordability is amazing. You can buy much cheaper than you can rent in most cases.

Here is the problem. Various groups in Washington are wanting to take away the mortgage deduction and not wanting to renew the deductibility of PMI. And there are other issues that would hurt. The country doesn’t need to do anything that hurts the housing industry. We all know it has been difficult enough to get it back on the right track. Please let your Representative or Senator know.

Condo Closing Fees

2012-11-28T15:13:00.001-06:00

Last week I wrote about the problems with getting FHA approval for your condo associations. Today we address the fees that are charged at closing. I am told that the associations get some of them, but I think in most case the fees are accessed and kept by the management companies. One again the offenders are the large three or four management companies in Nashville. They have all kinds of creative names like transfer fees. But the bottom line is that someone's name is added to the roll and someone is taken off. The cost has to be almost nothing. I have seen $500 and more charged. I am sure they correctly believe they can do this and though they may grumble, no one walks away from the closing. These things should be addressed by the associations. That is my thought for the day.

Do you need or want to move?

2012-11-14T17:01:00.001-06:00

Is it proving difficult to sell or are you upside down?

You have to be able to qualify for both payments, but you may be able to rent your present home and then buy a new one. So even if your present home is under water (so to speak) you may be able to get a great buy on a new one. You may be able to rent out the home for more than your total mortgage payment and have an investment that not only pays for itself, but pays you dividends every month for the next 30 years or more.

Your rental property will slowly build equity for you and can probably give you a tax advantage. For more details shoot me an email or call at 777-4663.

Why should one own a home?

2012-11-07T16:51:00.003-06:00

Here are five reasons. Many people across our nation are finding their dream home, but many are still on the sideline in spite of record low interest rates and great prices on the potential new homes.

•Build Equity---You can build equity rather than pay for a home for your landlord. If you rent you are giving him your money to pay his mortgage. If you pay your own mortgage, you gain a little principal each month and in the long run the home should continue to grow in value.

•Predictability--- Other prices will go up over time. But the principal and interest portion of a fixed rate mortgage remains the same over time.

•Tax Breaks---You may deduct the interest and property taxes. Even energy-efficient upgrades may be tax deductible.

•Appreciation---Home prices are again rising. Over our history (though there have been some bumps) the long term trend is definitely up.

•Social Benefits---Homeowners generally rate themselves happier and healthier than their renting counterparts.

3.8% Tax: What's True, What's Not

2012-10-31T16:59:00.000-05:00

Rumors about the 3.8% Medicare tax continue to circulate. Here's the definitive word on what's true and what's not on how the tax impacts real estate.

Ever since health care reform was enacted into law more than two years ago, rumors have been circulating on the Internet and in e-mails that the law contains a 3.8 percent tax on real estate. NAR quickly released material to show that the tax doesn't target real estate and will in fact affect very few home sales, because it's a tax that will only affect high-income households that realize a substantial gain on an asset sale, including on a home sale, once other factors are taken into account. Maybe 2-3 percent of home sellers will be affected.

Nevertheless, the rumors persist and the latest version that's circulating falsely say NAR is advocating for the tax's repeal. But while NAR doesn't support the tax (it was added into the health care law at the last minute and never considered in hearings), it's not advocating for its repeal at this time.

The characterization of the 3.8 percent tax as a tax on real estate is an example of an Internet rumor, says Heather Elias, NAR's director of social business media. Elias and Linda Goold, NAR's director of tax policy, sat down for a discussion of how the tax works and how Internet rumors work.

Goold says the tax will affect few home sellers because so many different pieces must fall into place a certain way for the tax to apply. First, any home sale gain must be more than the $250,000-$500,000 capital gains exclusion that's in effect today. That's gain, not sales amount, so you really have to reap a substantial amount for the tax to even come into play. Very few people are walking away with a gain of more than half a million dollars today, even in the high-end home market, so right off the bat only a few home sellers would be a candidate for the tax.

For the few households that do see a gain of more than the $250,000-$500,000 exclusion (that's $250,000 for single filers and $500,000 for joint filers), only the amount above the exclusion would be factored into the tax calculation, and that would still only apply to high-income households, which the law defines as single people earning $200,000 a year and joint filers earning $250,000 a year.

So, if you are a household with annual income of $250,000 or more and you earn a gain of more than $500,000 on your house (again, that's after the $500,000 exclusion), any amount of gain above the exclusion would be plugged into a formula to see if it's taxable. If it turns out that it's taxable, then the amount could be subject to the 3.8 percent tax. If the household had a gain of more than $500,000 but only earned $249,000 a year in income, the tax wouldn't apply.

(Note that these are just hypothetical examples. To know if a case would really be subject to the tax, a professional tax preparer or tax attorney has to look at all the particulars of the tax filer's case. Only a tax professional is in a position to say the tax is applicable, but the examples cited here could help you get a sense of how the tax works.)

The other thing about the tax worth noting is that, although it takes effect in 2013, any impact on taxes wouldn't happen until 2014. That's because the tax filer would do the calculation in 2014 for the 2013 tax year. Because it's not a tax on a real estate sale but rather on a capital gain, it's not calculated at the time of an asset sale, whether that asset is a house or something else. It's calculated at the time the filer figures his or her tax.

October 2012
By Robert Freedman

Know the pitfalls of refinancing....

2012-10-17T11:10:00.000-05:00

The TV and radio ads make it all seem so easy. Walk into a lender's office, refinance your home loan at a rock-bottom rate, and walk out with a lower monthly payment.

Here's a little tip: It's not so easy.

If you know the pitfalls, you can at least prepare for them - and perhaps chart a wiser course. A few issues that could have your application earmarked for the ‘Rejected' pile:

1. Heightened credit score demands

If you're refinancing, that means you've successfully secured a home loan already. But since then, lenders have started to demand near-pristine credit scores. "Now to get access to the lowest rates, you need a FICO score above 740," says Keith Gumbinger, VP of mortgage information site HSH.com.

Not quite the perfect score of 850, but still quite challenging to achieve. Credit scorer FICO does not break out the average number for refi applicants, but the national average is 690 -- well below what will get you prime lending rates.

2. Low appraisal

While interest rates have gone down, so have U.S. home values. The average home value dropped a third from the start of 2007 to the start of 2012, according to housing analytics firm Fiserv. For refinancing, that's a problem.

Chicago's Jesse Raub and his wife have owned a home for about three years, and recently started the refi process. But then the appraisal came in low.

"Beware that the appraised value of your home may not be what you think it should be," says Raub, 27, who's a trainer and educator for Intelligentsia Coffee. "Our new mortgage amount was close to the total value of the home - which required us to get mortgage insurance as well."

3. A home equity line of credit

You may have forgotten that you once took out a home equity line of credit. You may have not even touched a penny of it. But it could still derail a refi, because it means another lender has a claim on the value of the home.

"If you're refinancing your first mortgage, the lender of the home-equity line has to agree to that," says Mike Fratantoni, vice president of research for the Washington, D.C.-based Mortgage Bankers Association.

Essentially, that lender needs to sign off on being second in line, and agree that the primary mortgage will always be paid off first (in the event of a foreclosure, for instance). "There may be fees associated with that, and so a home-equity line of credit is one more thing that could make a refi more difficult."

4. Condo or co-op troubles

If lenders are going to fork over hundreds of thousands of dollars, they don't want any issues to make them nervous. And when the property is subject to decisions of an unpredictable board of directors, that can make them nervous.

"Any number of issues might trip you up," says Gumbinger. "If the building finances aren't in good shape, or if the insurance isn't paid up, or if there are any units in foreclosure, or if there are any lawsuits against the condo association, or if the building is comprised largely of renters. All kinds of fun stuff can arise."

5. Timeliness requirements

Banks want to see the most up-to-date financial information possible before they sign off on a mortgage. But they also have a tendency to ask for document after document after document regarding your financial situation. If the refi process has ballooned to 60 or even 90 days, but they require documents from the last 30 days, that could put you on a carousel of paperwork straight from the ninth circle of hell.

So get out your yoga mat, breathe deeply, and have a mantra ready. You're going to need lots of patience. "Expect the worst," advises Erin Lantz, director of the mortgage marketplace for real estate site Zillow.com. "If you come to terms with that at the beginning, it will remove the stress later on."

(Follow us @ReutersMoney or finance/personal-finance">here Editing by Beth Pinsker Gladstone)
By Chris Taylor; NEW YORK; Sat Oct 13, 2012 9:00am EDT

Yes, at MIG have these issues too. But we know what we are doing and routinely get our clients closed in 20 - 40 days. Call or reply to this email if we can help.

Consumer Financial Protection Bureu Proposes New Rules

2012-10-10T17:02:00.002-05:00

Have you ever heard, "I am from the government and I am here to help you."? (Yeah right) Anyway here is what is coming. Maybe it will be ok?

Consumer Financial Protection Bureau proposes rules to bring greater accountability to mortgage market

Rules Would Help Consumers Understand Mortgage Costs and Comparison Shop

WASHINGTON, D.C. - Today the Consumer Financial Protection Bureau (CFPB) proposed rules that would bring greater accountability to the mortgage loan origination market. These rules, which the CFPB is seeking comment on and will finalize by January 2013, would make it easier for consumers to understand mortgage costs and compare loans so they can choose the best deal.

"Consumers have a hard time comparing loans when they are dealing with a bewildering array of points and fees," said CFPB Director Richard Cordray. "We want to provide consumers with clearer options and enable them to choose the loan that they believe is right for them."

The Dodd-Frank Wall Street Reform and Consumer Protection Act places certain restrictions on the points and fees offered with most mortgages and the qualification and compensation of loan originators. Most notably, without this rulemaking, the Dodd-Frank Act would prohibit payment of upfront points and fees for most mortgages even where a consumer prefers a loan with a lower interest rate and some upfront costs. The CFPB is seeking public comment on a proposal that would:

Require Lenders to Make a No-Point, No-Fee Loan Option Available: It is often difficult for consumers to compare loans that have different combinations of points, fees, and interest rates. Under the proposed rule, creditors would have to make available to consumers a loan without discount points or origination points or fees, unless the consumers are unlikely to qualify for such a loan. These options would enable a consumer buying or refinancing a home to better compare competing offers from different creditors, better able to compare loan offers from a particular creditor, and decide whether they would receive an adequate reduction in monthly loan payments in exchange for the choice of making upfront payments.
Require an Interest-Rate Reduction When Consumers Elect to Pay Upfront Points or Fees: Consumers can pay points, which are expressed as a percentage of the loan amount, and fees to covers costs associated with origination or prepaid interest charges. While these points and fees come in many different names and combinations, they all should function similarly to reduce the interest rate and thus a consumer's monthly loan payments. The CFPB is seeking comment on proposals to require that any upfront payment, whether it is a point or a fee, must be "bona fide," which means that consumers must receive at least a certain minimum reduction of the interest rate in return for paying the point or fee.

In addition to regulating upfront points and fees, the CFPB is proposing changes to existing rules governing mortgage loan originators' qualifications and compensation. Mortgage loan originators, who take mortgage loan applications from consumers seeking to buy a home or refinance a mortgage, include mortgage brokers and loan officers. The rules the CFPB is proposing would:

Set Qualification and Screening Standards: Under state law and the federal Secure and Fair Enforcement for Mortgage Licensing Act, loan originators currently have to meet different sets of standards, depending on whether they work for a bank, thrift, mortgage brokerage, or nonprofit organization. The CFPB is proposing rules to implement Dodd-Frank Act requirements that all loan originators be qualified. The proposal would help level the playing field for different types of loan originators so consumers could be confident that originators are ethical and knowledgeable. The proposed rule includes:

Character and Fitness Requirements: All loan originators would be subject to the same standards for character, fitness, and financial responsibility;
Criminal Background Checks: Loan originators would be screened for felony convictions; and
Training Requirements: Loan originators would be required to undertake training to ensure they have the knowledge necessary for the types of loans they originate.

Prohibit Payment of Steering Incentives to Mortgage Loan Originators: In 2010, the Federal Reserve Board issued a rule that was designed to curtail the practice of loan originators directing consumers into higher priced loans based not on the consumer's interest, but on the possibility that the loan originator could earn more money. The Dodd-Frank Act included a similar provision banning the practice of varying loan originator compensation based on interest rates or other loan terms. The CFPB's rule would implement the Dodd-Frank Act provision and clarify certain issues in the existing rule that have created industry confusion.
Place Restrictions on Arbitration Clauses and Financing of Credit Insurance: The proposal implements Dodd-Frank Act provisions that, for both mortgage and home equity loans, prohibit including mandatory arbitration clauses in loan documents and increasing loan amounts to cover credit insurance premiums.

The CFPB has engaged with consumers and industry, including through a Small Business Review Panel, and used this feedback in developing the proposed rules. The Bureau believes that today's proposal, if adopted, would promote stability in the mortgage market, which would otherwise face radical restructuring of the current pricing structure in order to comply with Dodd-Frank.

The public will have 60 days, until October 16, 2012, to review and provide comments on the proposed rules. The CFPB will review and analyze the comments before issuing final rules in January 2013.

An overview of the proposal is available at: http://files.consumerfinance.gov/f/201208_cfpb_detailed_summary_of_proposed_loan_originator_rules.pdf

The proposed rules are available at: http://files.consumerfinance.gov/f/201208_cfpb_tila_mlo_compensation_proposed_rule.pdf

The SBREFA Panel report on the outreach with small servicers is available at: http://files.consumerfinance.gov/f/201208_cfpb_LO_comp_SBREFA.pdf

2012-09-19T16:43:00.001-05:00

Who is left to refinance?

Plenty of folks, per the number crunchers at CoreLogic. Putting aside the question of, "What will a world of 3.5% 30-yr borrowers look like in five years?" there are still oodles of homeowners with rates in the 5% and 6% range who could benefit. "Roughly 69% of American homeowners with mortgages at the end of the second quarter had rates of 5% or higher and about 33% of them had rates above 6%, according to detailed mortgage data provided to The Times by Santa Ana research firm CoreLogic."

-Terry O'Donnell

I know there are many people who have tried but various problems keep them from refinancing. If I haven't talked to you about it shoot me an email or call at (615) 777-4663 and we can discuss it.