Gary Welch Home Loans Blog Site

Why It Is Getting More Expensive To Be A Renter

2015-06-23T13:31:00.000-04:00

Senior Director of Economic Research, Svenja Gudell, for Zillow, an online real estate database company, recently reported that rental affordability is getting worse, and is likely to remain the same without a change. “We will continue to see rental increases and affordability will worsen before it gets better.”

Income has not kept up with the rental increases. More of your monthly income is now being spent on rent and is a big concern. This is a national epidemic, not restricted to a local market or big cities. Rents have been soaring so high they are even outpacing home values! Places that were affordable are growing more quickly. An unbelievable fact is that there is a shortage of available rentals.

Seattle, San Francisco and Denver have been hit the hardest. These markets are having a difficult time keeping up with the demand for more rental buildings. As you can see, even with the higher rental costs, there is still the strong demand for rentals and is creating a housing crunch in some cities.

Low mortgage rates make purchasing a home very attractive, but with the rising rental rates, it is becoming more difficult for potential homebuyers to save money for down payments and other costs. Frustrations remain high when a renter sees approximately 30% of their income is spent on rental costs, while homeowners statistically pay 15% of their income on their mortgage payment. Those living in a high-income area are paying nearly 50% of their income on rents.

Low and middle income renters are feeling the pressure of rising rental costs the most. Unfortunately, it appears that new rental construction is being targeted for the high-end and luxury renters. Building is not proportionate to the renters that need a place to live.

CNN Money reports, http://cnnmon.ie/1MlCJj5, the rising rent prices as a percentage in some of the most popular cities, just to name a few, over the last year:

Denver-11.6%, Charlotte-6.6%, San Francisco-14.9%, Austin, TX-6.2%, Atlanta-4.9%, and New York-3.4%.

Today, inventory of available homes is limited and rental construction slowed down considerably when the housing crisis halted new construction. Now that the housing market is slowly recovering and the economy is showing more confidence, the rental properties are at a minimum. Building more rental units will clearly make the rental costs go down, but the average time for building may take up to two years to complete. Relief is not immediate. Thus, the law of supply and demand prevails.

Families paying 50%, 60% and 70% of their household income indicate that this rental fever is not going away anytime soon. Many renters who have long awaited the American Dream to be a homeowner will need to wait even longer, with the hopes that the low interest rates today will remain unchanged in the future.

Is there a solution to this crisis of rising rental costs and what can you do as a renter? If wages and employment opportunities improve, it may be a small solution to help ease the cost of renting. Be proactive and consult myself or my team who can assist you with providing ways of saving for your home purchase. Call today at (770) 888-2232 or click here to complete our contact form to get started!

Unnecessary Household Expenses You Can Cut Today

2015-06-07T09:40:00.000-04:00

Prior to the mortgage meltdown, Americans were flying high on money. People were making substantial returns in the real estate and the stock market. It was easy to make big money and borrow big money. Then 2008 came……the financial tidal wave hit the American shorelines from all angles and BOOM it crushed us. In the last seven years we have become fiscally fit.

Today people have less debt and save more. The fiscal mindset of consumers is ever present.

We have listed some topics you can begin to research for immediate cost cutting opportunities that will save you money. We hope this help strengthens you fiscally and allows you to be a wiser, more discerning household consumer. Here are some of the most unnecessary household expenses you may consider eliminating immediately.

Cable TV

With so many devices available today for the addicted sports or movie fan, think about eliminating your cable TV service and its high costs. Consider a Blu-ray player with an internet connection, a Roku or any other appliance that can tap into programming delivered free via the Internet from network websites. Another option is to consider paying a minimal cost for Hulu Plus, Netflix or Amazon Prime membership through streaming.

Try using a high-powered antenna. You may be pleasantly surprised at the volume and variety of programming that may be offered.

Sports fans can find many choices on new sport-specific services that cost much less than one year of cable.

Cleaning Products and Toiletries

There are two household products that surpass all others for cleaning: vinegar and baking soda. Think about it! They clean countertops, unclog drains, clean the dishwasher, make tubs and toilet bowls sparkle, boost laundry, and can even clean hair! Imagine the savings of purchasing unnecessary household cleaning items, plus these two are among the least expensive cleaners to buy.

Late Fees

When it is time to pay, don’t delay. A Google or Outlook calendar reminder to pay your bills will avoid unnecessary late charges. If you have the money to pay your bills, be diligent and pay on time. Your credit rating will improve by showing no late fees and help you for qualifying for a home loan. Another helpful hint is to set up automatic bill paying through your checking account that may be a free service.

If you should have a late payment, make a phone call and request the late fee be waived. If the representative will not cooperate, ask for a supervisor. You may try telling them you will close out your account. If you have an account in good standing for several years, chances are they will abide by your request.

Landscaping Services

Become an active participant in your landscaping. You will find that paying for landscaping services can be avoided if you minimize the amount of lawn you have by planting low maintenance native plants. Try planting a variety of grass that requires less care. Clippings from the lawn could be used in place of expensive fertilizer.

Phone Bills

If you are familiar with Skype and use it for video or voice calls from computer to computer, you can also use it for mobile or home calls, both domestically and internationally with great rates. Using Skype Credit in $10 or $25 increments, you can add credit through the Skype app or website. The credit can be used for home or mobile calls, Skype Wi-Fi hotspots or to send SMS messages.

Subscriptions and Memberships

Review all the magazine and newspaper subscriptions, online services and all organizations that you are a member. You may be surprised at those you have not used in a year or find that the magazine could be found online or read in the library. Find options that are free to replace the membership and subscription fees.

Service Plans, Extended Warranties and Some Insurance

Consumer Reports state that many extended warranties and service plans are not worth the money. Think twice before selecting cell phone or identity theft insurance, while renter’s, homeowner’s and auto insurance are among the must haves.

Credit Monitoring Services

Check your credit periodically for any fraud or credit theft. It may not be necessary to pay additional fees for high-end credit monitoring. If you feel you have been a victim of identity fraud, you can freeze your credit for free. You can monitor your credit on a regular basis without the high costs of paying for a service.

If you are interested in charting your household budget google household budget software and check out some options at www.quicken.com, www.mint.com, and www.youneedabudget.com to organize your game plan. This will help you measure and monitor your money.

There are many ways to reduce costs in your home and the best time to start is now. For any specific loan or mortgage questions, speak with your mortgage banker today. With low interest rates, ask how you can save thousands a year by refinancing into a lower interest rate. Find out more at 770-888-2232.

What Homebuyers Are Really Looking For

2015-04-10T09:19:00.000-04:00

Today’s homebuyers are searching for their perfect “dream” home. Here are the most desirable features that will attract the future homeowner. These “wants” will also help sellers who want to make best marketable improvements on their property.

Wireless Home Security - According to the NAHB, this is a feature that most tech-savvy buyers are wanting in their home. Security for a family is a top priority. Having the ability to control security by a smartphone or tablet is key. A wireless system is less costly than a hard-wired system and doesn’t require a professional to install.

Costs to install: $100-$300
50% of homebuyers desire this feature

Exterior Lighting - First impressions are lasting ones. This is surely attractive to a potential homebuyer before setting foot in the door. It is the most wanted outdoor feature with minimal costs to improve. Curb appeal is important and having exterior lighting will accent and grab their attention.

Costs: $150-$300 per fixture
90% of homebuyers desire this feature

Energy-Star Qualified Windows - Homebuyers are always looking for energy efficiency and this is a good solution to help reduce energy costs.

Costs: $270-$850 to install per window
89% of homebuyers desire this feature

Garage Storage Space - For those with a garage, there is always the need for extra storage. Easy accessibility to the home’s front door makes it a bonus to have shelving, cabinetry and places to store tools, toys or sports equipment. Having the organization will ease in locating your items. Those without a garage, may consider constructing a storage shed that conforms to home plan style, color and features.

Costs: $2000-$3000 per 350 square foot space
86% of homebuyers desire this feature

Eat-in Kitchens - Kitchens are a gathering place for breakfast in the morning and dinner at night. Families with children appreciate time around the table before school or off to work. An existing kitchen could have walls extended, added cabinetry and counter space, a breakfast bar, or a bay window to make the kitchen more desirable. Always consult a licensed professional to be sure guidelines are followed and possible improvements may be made.

Costs: $1400+ install
85% of homebuyers desire this feature

Walk-in Pantry - Walk-in pantries are always a necessity for families needing extra storage. A shelving system that keeps food and supplies organized is an added bonus to the homebuyer. Adjustable shelving will give flexibility in storage and takes away counter clutter. Having extra space to store small appliances and countertop items gives the kitchen an open feeling and less cluttered. Easy access to mops, brooms and cleaning supplies is helpful to store in a pantry.

Costs: This will vary. Consider adding cabinetry or a rolling cart that can be moved
85% of homebuyers desire this feature

Separate Laundry Room - over 55% of homebuyers are saying they would not buy a home without a separate laundry room! Space for washer and dryer, folding laundry, ironing, and keeping laundry separate from living space in the home are huge benefits. Renovation may include additional plumbing and electrical wiring, countertops, cabinetry and flooring will be based on available space and budget.

Costs: Variable
93% of homebuyers desire this feature

With the ever-changing economy and fast-paced lifestyle today, homebuyers are wanting their dream home to be more efficient, stylish and storage rich. Above all, a professional should always be the top priority in making improvements, whether as a new homebuyer or as a homeowner. Call me today to find the most professional and experienced contractor in your area and learn ways to increase your asking price when selling your home.

Tips to Successfully Restoring Your Credit after Tax Liens

2015-03-18T09:32:00.001-04:00

A recent article from CNBC brought to light some of the common misconceptions about the realities of tax liens and the effects they have on your credit score. A tax lien, which is a serious strike that occurs when you neglect or fail to pay a tax debt, can be longer lasting than you might have expected. Here’s some information and resources that may help if you’re dealing with a tax lien on your credit report.

What is a tax lien and how does it affect my credit?

Tax liens can vary depending on your individual situation. A tax lien can be one of the worst items to appear on your credit report, and can cause your credit score to drop significantly. Essentially, when you fail to pay your tax debt on time, the government can claim all or some of your assets. It can occur at the local, state or federal level.

It’s important to remember that any tax penalty against you becomes a matter of public record, and will negatively affect your credit score. Worse still, under federal law, unpaid tax liens can remain on credit reports indefinitely, though more often, credit bureaus tend to remove them after a decade or so. Once you’ve paid off the debt and the lien is released, it will be removed from your score seven years from the date it was filed.

Because no two credit histories are alike, there is no way to state equivocally how much change removing the tax lien will have or even what an average change might be for any given scoring system. Further complicating the issue is that there are many different credit scoring systems. So, the impact on one system could be very different from another because the numeric scales are different.

Do I qualify to have the lien withdrawn from my credit score?

You qualify if:

your tax liability has been satisfied (you’ve paid what you owe) and your lien has been released;
you are in compliance for the past three years in filing your individual and business returns, and;
you are current on your estimated tax payments and federal tax deposits.

Even if you haven’t paid the IRS what you owe, you may be able to qualify for this program if you currently owe $25,000 or less and have entered into a direct debit installment agreement where your payments to the IRS are taken from your bank account automatically.

How do I remove a tax lien from my credit report?

First, it's important to know that unpaid tax liens, unlike other public records, may remain on your report indefinitely. Because of this, the best way to get rid of a tax lien is to pay your tax debt in full.

If your credit report shows an outdated paid tax lien, you could file a dispute with the credit bureaus, just like you can for other credit report errors. You could also dispute a tax lien on your credit report if you have proof that you should not have been subject to it in the first place.

If the debt has been paid in full, then Form 12277 is your new best friend. As CNBC outlined, there are five suggested tips to ensure the lien is removed from your account using this form:

1. Locate your state IRS field collection office. This is where you will be sending forms or asking any questions you might have.

2. Search the Internet for IRS Form 12277 and fill it out.

3. Call the IRS office and ascertain the fax number. Inform them that you will be submitting Form 12277, and call a couple of days later to confirm they have received it. The turnaround time is about 30 days. If you haven’t received a letter confirming the lien withdrawal, follow up with another call.

4. Contact the three credit bureaus, Experian.com, Equifax.com and Transunion.com, and follow their specific step-by-step instructions for submitting the withdrawal. Within 30 days you should receive updated credit reports from each of the three credit bureaus.

5. Check each report to ensure that the tax lien was expunged. If any of the three bureaus did not remove the lien, contact the bureau continuously until it’s removed.

The Road to Recovery

BrandMortgage and the Loan Star Team want you to understand how tax liens work, how they affect your credit score and what you can do to deal with them. Because the laws regarding liens can vary, it's always smart to consult the proper resources, such as the IRS, your state or local tax authority or a credit counselor. Protect your credit by paying your taxes promptly to avoid tax liens appearing on your credit report whenever possible.

Should I Buy or Rent?

2015-03-04T11:22:00.001-05:00

Who shot Kennedy? How were the Pyramids built? Is the Oscar dress gold and white or blue? Why didn’t Seattle run the ball on their last offensive play to win the Super Bowl? These questions may never be answered. However two questions that can be answered this week are: Who is Jihadi John and should I buy or rent? Scotland Yard has solved the first question and The Loan Star team will provide a clear answer for the latter question.

For years it has been one of the biggest parts of the American Dream, Home Ownership. Historically the benefits have been so advantageous that home ownership was “a no brainer”. While the drive to be a homeowner is still strong, the housing crisis of 2008 has caused some uncertainty in the mind of some. Let’s take a look at the benefits of renting vs buying.

REASONS PEOPLE RENT:

Flexibility. Renting allows you to explore an area before making the longer-term commitment of homeownership. Unless you are certain about a specific neighborhood, renting allows time for research and discovery.
Career uncertainty. If you think you might need to move in the near future, or are mulling job changes that span several areas of town or are located elsewhere in the country, you might want to rent. Buying ties you down to a greater extent.
Income uncertainty. If you expect a pay hike or cut in the near future, that can change your borrowing ability as well as impact your ability to pay a mortgage.
Bad credit. Creating a history of on-time rental payments can help you build the sort of credit you’ll need to qualify for a mortgage.
No maintenance expenses. When a pipe leaks, you don't head to the store; you head for the telephone and call the landlord.
Utilities (sometimes) included. In some instances, the landlord may pay for many utilities such as water, sewer, garbage, and, in some cases, even heat and hot water.

But there is a downside, too: You may have no control over the fluctuation of your rent, a big-budget item that can change often. Long-term budgeting becomes more difficult. The Loan Star Team would recommend purchasing a home if the following benefits appeal to you:

REASONS PEOPLE BUY:

Equity. When you pay rent, you are paying your landlord’s mortgage or adding equity to his or her bank account. However, when you have a home mortgage, you increase your degree of ownership in your home with every payment. A general rule is that if you intend to stay in your property for at least five to seven years, the costs of purchasing the home are more likely to be offset by accrued equity and increased housing value. In the event that equity in the home grows to more than a 20-to-80 percent loan-to-value ratio, you will be able to borrow against your equity in the home.
Tax deductions. You can deduct mortgage interest as well as your property taxes. Uncle Sam doesn't give renters this bonus. Not only that, but if you meet certain requirements the IRS won't apply a "capital gains" tax on your profits from the sale of your home. You can keep the first $250,000 in profit you make when selling the home if you're single, or the first $500,000 if married. In addition, those who work from home may be eligible to take deductions for their home office and portions of utilities.
Creative control. You like dozens of pictures on the wall? Well, hammer away -- they are your walls now. Go ahead and paint them mango! Wish you had another room? Go ahead and add one.
Maintenance choices. If you live in a house, you can decide how to approach maintenance, either doing it yourself or picking your own contractor. If you live in a condominium or homeowners' association, you may pay a monthly fee to have maintenance work covered by the association's contractors.

Still unsure of what’s the best option for you? Ask Gary Welch or Jeff Morris for help and we’ll talk through the various scenarios and available options together. Not sure how much you qualify for?

We’ll provide you with a free, detailed credit report and choose the most creative financing available for you.

Call us at 770-888-2232 (Gary), 770-842-3480 (Jeff) or email us at gary@loanstarteam.com or jeff@loanstarteam.com to get started!

Debt Consolidation: Truth or Myth?

2015-03-01T10:04:00.001-05:00

We often hear the words, debt consolidation, but what does it mean? Debt consolidation is a debt management plan. You may choose to create your own plan for paying off your debt, or choose to use a third party, such as a non-profit credit counseling organization.

Here are some important tips and information truths and myths that will help you decide which management plan best suits your needs:

HOW DO YOU KNOW DEBT CONSOLIDATION IS FOR YOU?
If you have most of your balances in credit or charge cards, personal loans and collection accounts then this may be a wise choice to pursue. These types of debts are called unsecured debts. If the balances you have for example are in old violation or parking tickets, tax debts or child support/alimony arrearages, then debt consolidation plans will not help.

Before you choose debt consolidation, review your debts carefully. You may only need counseling. With the Loan Star Team we can help you make your own plan to pay off your debt. Homeowners may consider refinancing as an option to reduce high interest rate loans.

TRUTH: DEBT CONSOLIDATION IS NOT BANKRUPTCY.
These terms can cause confusion. Debts will always be debts until all are paid in full. Bankruptcy is a discharge or settlement for debts. While debt consolidation payment plans seem like a solution, your credit report will be affected. If a payment plan to pay off your credit card is lower than what you normally pay each month, it may show creditors that you have trouble paying your bills.

TRUTH: DEBT CONSOLIDATION CAN WORK BECAUSE IT IS SIMPLE AND STEADY.
For those that need the discipline of a never changing monthly payment, then debt consolidation is the answer. You payment will be the same each month to each of your creditors until all your debts are paid in full. You will never need to worry about how much to pay-it is just that simple. One thing to remember…as your monthly payment is lowered, it will expand the time it will take to pay off your debts.

MYTH: YOU CAN CONTINUE TO CHARGE.
When you choose debt consolidation, you will need to be charge-free until all the debts are paid. This is a true adjustment for most accustomed to using lots of plastic.

TRUTH: YOU CAN DO THIS ON YOUR OWN.
At first, it may seem difficult, but you can do it. It is not easy to change your habits, but determination will work in your favor, financially and mentally. Ask your creditors for a reduction in rates, stop the frequent charging, revisit your budget and see exactly how much you can afford to spend. Make all efforts to be diligent in saving and making payments on time. Your credit report will be affected positively and you will be more confident in securing a loan for your home needs.

Get advice from the professionals before considering debt consolidation with agencies. The Loan Star Team is at your doorstep to provide this guidance and counseling. With the lowest interest rates of all times, consider refinancing to a lower mortgage rate and pay off your debt faster!

We provide you with professional help for your refinancing and future home loan needs. Call us at 770-888-2232 (Gary), 770-842-3480 (Jeff) or email us at gary@loanstarteam.com or jeff@loanstarteam.com to get started!

Filing Homestead Exemption Is Near

2015-02-08T11:15:00.002-05:00

The beginning of a new year reminds us that the tax season is soon approaching. As a first time homebuyer or if you recently purchased a new property, you have a tremendous tax advantage and may be eligible for what is known as Homestead Exemption. The term homestead exemption can refer to exemptions from property tax that homeowners can claim. It can also refer to homestead protection, which protects a person's primary residence in the case of financial hardship, such as the death of a spouse.

Homestead Exemption laws are not the same in all states. Some states provide automatic protection under the law, while other states require the filing of a claim for Homestead Exemption. In Georgia, it is required that you file a claim for Homestead Exemption. An important note is that your registration of all vehicles and filing of your Georgia and Federal State income taxes must reflect your primary residence address. A claim for Homestead Exemption may not be made on any rental or vacant property, or more than one property. Interestingly enough, as a homeowner, you may lose your right to Homestead Exemption if you abandon the property or if you should occupy a different primary residence than the one previously claimed.

If you have occupied your new residence on January 1st, you will need to file in person, online or by mail at the County Courthouse or Tax Commissioners Office. The amounts of exemption will vary for each county and filing procedures may be different. Typically, filing applications in Georgia is January 2 through March 31.

To make it simple for those filing for the first time, here are the Tax Commissioners Offices for filing your claim:

CHEROKEE COUNTY – 678-493-6120
http://qpublic.net/ga/cherokee/exemptions.html

CLAYTON COUNTY – 770-477-3311
http://www.claytoncountyga.gov/departments/tax-commissioner/exemptions.aspx

COBB COUNTY – 770-528-8600
http://www.cobbtax.org/property/exemptioninformation

DEKALB COUNTY – 404-298-4000
http://taxcommissioner.dekalbcountyga.gov/TaxCommissioner/tc-home.html

DOUGLAS COUNTY – 770-920-7272
http://www.douglastaxcommissioner.net/Exemptions_31XR.html

FAYETTE COUNTY – 770-461-3652
https://www.fayettecountytaxcomm.com/subpages/Homestead.asp

FORSYTH COUNTY – 770-781-2106
https://www.forsythco.com/DeptPage.asp?DeptID=175&PageID=1681

FULTON COUNTY – 404-612-6440
http://www.qpublic.net/ga/fulton/homestead_inst.html

GWINNETT COUNTY – 770-822-8800
http://gwinnetttaxcommissioner.manatron.com/Tabs/Property/HomesteadExemption.aspx

HENRY COUNTY – 770-288-8180
http://www.co.henry.ga.us/taxcommissioner/propertytaxexemptions.shtml

PAULDING COUNTY – 770-443-7606
http://www.paulding.gov/index.aspx?NID=210

For more information, please contact the Loan Star Team of Gary and Jeff at gary@loanstarteam.com or jeff@loanstarteam.com. Stay connected and follow us on LinkedIn!

Tax Benefits to Owning a Home

2015-01-22T12:21:00.002-05:00

There’s certainly no better place than home and even more so when it comes to tax time each year. Below are 8 financial advantages to owning a home.

1. You build equity in your home each month.

Equity in a home is the amount of money you can sell your home minus what you still owe on your mortgage. Every time you make a mortgage payment, a portion of that goes toward paying down your principal. The way mortgages work is that the principal portion of your payment increases slightly every month year after year. It’s lowest on your first payment and highest on your last payment. The reduction in your mortgage each month, increases the equity in your home!

2. Homeownership can increase your wealth.

Buying a home can be a very savvy move and great financial investment, only when you purchase a home you can afford. In 2015, the idea of sticking to a home you can afford to gradually build wealth is a “rule” that just happens to be new and old at the same time.

3. Tax deduction benefits.

There are a few tax deductions that can help alleviate some of the tax burdens which may be associated with owning a home. Below are just a few deductions you should be taking.

Mortgage deduction:Homeowners can deduct the interest they pay, since often times interest is the largest component in their payment.

Property tax:Real estate property taxes paid on your primary residence and a vacation home are fully deductible for income tax purposes.

Closing costs (when applicable):Homebuyers may pay origination fees that are charged by the lender when you apply for your home loan. The first year you purchase your home, you may deduct these fees, regardless if the origination fee was paid by you or the lender. The savings can be high since origination fees may be 1%, or higher!

To find out what your tax savings are after you purchase your home, use this handy mortgage calculator to find out your deductions and your savings!

4. Home Equity Lines are deductible.

In addition to your mortgage interest, you may also deduct your equity lines of credit. This allows you to shift your credit card debts to your home equity loan, pay a lower interest rate than the credit card interest rates, and get a deduction on the interest as well.

5. Buying is cheaper than renting.

Although the cost of renting may be cheaper the first year you own your home, over time, the interest you pay will eventually decrease and be lower than the rent you would have been paying. More importantly, you are actually building equity in a home you own and not spending all of your hard earned money on rent. So, instead of paying off your landlord’s home or building, you can pay off your own!

6. Receive a capital gains exclusion.

If you buy a home to live in as your primary residence for more than two years then you will qualify. When you sell, you can keep profits up to $250,000 if you are single, or $500,000 if you are married, and not owe any capital gains taxes. If you purchased your home anytime prior to 2003, chances are it has appreciated in value and this tax benefit will come in very handy.

7. A mortgage is similar to a savings account.

By making monthly payments on your mortgage, you are paying the principal balance down and building more and more equity in your home. In a sense, you are forced to save this money in a separate account, and when it’s time to sell your home, this equity becomes yours.

8. Unforseen circumstances.

A partial exclusion can be claimed if the sale was prompted by residential damage from a natural or man-made disaster or the property was "involuntarily converted," for example, taken by a local government under eminent domain law. This may include:

Death
Divorce or separation
Job loss that qualifies for unemployment
Employment changes that makes it difficult to make monthly payments and basic living expenses
Multiple births from same pregnancy

To find out if you qualify, please consult with your mortgage banker.

Buying a home in order to build equity is one of the main financial reasons buyers jump into the market. As we have seen above, there are quite a few advantages to owning a home. That is why many homeowners who have taken out a mortgage in order to buy do so in anticipation of the tax breaks that come with homeownership. Depending on your tax bracket, a first-time purchaser's 1040 tax deductions can heavily subsidize many of the expenses you have poured into your new home.

While a home is a good investment, it’s best to weigh the pros and cons of both buying and renting, and how cost effective these will be. Along with the joy of painting, plumbing and yard work, you now have some new tax considerations when purchasing a home.

If you are thinking about purchasing a new home, resale, or investment property, it’s important that you get pre-qualified before you start the home buying search.

To learn more or to get pre-qualified, contact the Loan Star Team of Gary or Jeff at gary@loanstarteam.com or jeff@loanstarteam.com.

Home Trends and Predictions in 2015

2014-12-24T08:04:00.000-05:00

The new year brings resolutions and predictions. Check out The Home Buying Institute’s Five Real Estate Predictions to Watch in 2015. Get an insider’s look at the prediction and how it relates to real estate housing, mortgage lending, and home buyers buying. Are you betting with or against these predictions?

Prediction 1: Home values will continue rising, but more slowly than 2014.There is no such thing as a “the” housing market when it comes to pricing trends. It is a local thing. We understand that to be true as we view housing markets throughout the country. In states or cities where population is increasing and job opportunities are plentiful, housing would be more active than parts of our country that are depressed or deficient in employment openings.

CoreLogic, a financial data firm, published its annual HPI Forecast that predicts monthly home price gains and annual pricing trends stated it is expected that home prices will rise from July 2014 to July 2015 by 5.7%. July is the time for families with school age children who make enrollment a priority when relocating. Following winter break is another time that home demands may be on the rise and may precipitate price gains.

Generally speaking the consensus is that residential property values will continue rising in 2015 but at a slower pace than what has been seen in the previous 12 months.

Prediction 2: Double-digit gains will be limited to California and the Southwest.According to a real estate information company, Zillow, it believes that the rapid pricing gain will be in California and the Southwest. Their data is stating that double digit increases will most likely be in only a select few cities in California and the Southwest.

A map featured in this article indicates cities that may see a double-digit price gain include ten cities in California, Reno and Las Vegas, Nevada. Zillow uses their predictions based on their own pricing models, housing trends, sales prices, and other data.

Prediction 3: Mortgage Rates should remain low through first half of 2015.
In the latest comments from the Federal Reserve earlier this month, the Fed indicated they plan on keeping rates relatively low for the first part of 2015. Rates today resemble the historic rates of Dec of 2007 for the 30 year conventional fixed rate. Unlike 2007 though, the Jumbo rates are much lower today than seven years ago. Additionally government rates are as low as I have seen them in my 23 year mortgage career. Do not rule out some rate volatility as both the stock market and bond market move now on predictions, speculation, and emotion as opposed to logic and data. But overall rates will assist in making home buying affordable in all price points. This is a nice Christmas present from the Fed as we begin 2015.

Prediction 4: Foreclosures will continue to decline, as a percentage of total inventory.
When the housing market crashed, activity of home foreclosures was on the rise and continued to remain so over the last few years. Soon foreclosures declined which brought back confidence to the real estate market, both to buyers and sellers. With competitive, low mortgage rates, buyers anticipated the joys of home ownership. Distressed properties were fewer and values of homes were appraised closer to their true value. This confidence was uplifting to the real estate market and mortgage lenders.

The foreclosure market has not completely disappeared, and according to Realty Trac, a company that monitors foreclosure activity, states that we will not “cross the finish line until early 2015”. Many analysts are in agreement with this prediction. A decline in foreclosure activity will help solidify home prices, normalize inventory, and allow more move up buyers to help boost the housing market, as well as the overall economy.

Prediction 5: Mortgages Will Be Easier to Obtain.
In July, the Federal Reserve released a report that stated mortgage lenders are “relaxing their standards” mostly in debt ratios and credit scores. Lenders are allowing for credit scores to be lower and debt ratios to be higher for borrowers. The reason for this “relaxation” is due to the reduction in loan applications. Lenders needed to increase the volume of borrowers, and found the best solution was to loosen their lending standards.

In Vegas, the house always wins eventually. In 2015, the Loan StarTeam sees homebuyers winning. There is a perfect formula in play here: reasonable and rational appreciation of homes, affordability with low rates merged with a renewed sense of consumer confidence, and lower unemployment numbers. 2015 could be the best time for buying and selling real estate in the last seven years. Here is to 2015, a year we all win in the housing market.

5 Secrets that Keep Closings on Track and Money in Your Pocket

2014-10-16T10:19:00.001-04:00

Secret #1 - Keep Your Deal from Drowning

One or two times a year, the flood gates open…..figuratively, and an independent flood certification notifies me that one of the properties I am financing is in a flood zone. Informing all parties the subject property is in a flood zone is no fun. To the naked eye, the subject property does not look like it is in flood zone. Many times the seller did not have to buy flood insurance when he purchased the home. Telling all parties involved that the topography has changed since the property was last purchased is like Noah trying to convince his neighbors that live on the hill that they too should build an ark.

Fortunately, I have a good solution for you and your clients when you run into this scenario. Do not linger in disbelief of the determination. Realize the first step is to work with your lender to appeal the determination by the flood certification company. Avoid the natural temptation to talk the lender into believing you. Instead find out what your lender requires to solve the problem….to prove the subject property is not in the flood zone, flood insurance is not required, and the closing can take place…and ultimately the home can be sold.

The solution is to contact a land survey company, have an elevation survey shot, and then work through the process of having the flood certification company amend their certification. Now the price and time it takes to do this will vary. Time is critical to keeping the closing on track. The sooner you have the elevation survey shot and work to correct/amend the flood certification, the more likely you are to avoid a the black cloud of uncertainty that blows a termination and release to the property from the south.

The last flood certification issue I had was this past July. The listing agent, Tracy Haskins, found the perfectly qualified man for the job! His name is James Carter with Carter Land Surveying. Simply put, he knows the drill. James knows exactly what to provide AND the fastest way to resolve the issue with the flood certification companies. His knowledge is invaluable and his fee is fair. Save this information:

James Carter

404-213-5706

jcarter@carterlandsurveying.com

If you have ever run into this issue, you know how important a James Carter is. If you have not…hope you do not, but anticipate that you might, and keep this number for future reference. My goal is to share resources and expertise that may keep your sale on track and not be washed away.

Stay tuned for Secret #2.

Avoid “The Big Gotcha” When Closing on Your Home Loan

2014-07-30T18:17:00.000-04:00

My iPhone rang and on the other end of the phone was one of my clients, distraught, rushing to explain how the buyer (and the buyer’s lender) of her house did not have their cash to close verified yet. Closing would be delayed, her interest rate would need to be extended, and her blood pressure rocketed while realizing moving plans had to be reconstructed. Some form of this scenario happens ALL TOO OFTEN in today’s mortgage industry.

Two reasons why the Big Gotcha happens...
1) Borrowers are not properly educated as to the importance of verifying cash to close and establishing a reasonable timeline.

2) Today, more than ever, mortgage lenders create a thorough paper trail and document every dollar used in buying and closing on a new home.

The best way to avoid THE BIG GOTCHA is to make a game plan with your lender. From the beginning, understand the amount of money you need to have verified in your bank account, when the money must be verified, and what documentation is needed for all non-payroll related deposits.

A checklist to help you avoid delays and surprises…

1) Email your lender specifically where your money is coming from for the closing. Use specific dollar amounts if coming from multiple sources.

2) Establish a timeline with your lender on when those funds will be in the main bank account.

3) Request in writing from your lender what documentation will be needed to verify funds.

4) Contact your lender (as many times as necessary) before you move money from one account to another, get a gift for closing funds, sell an asset to another individual for funds to close or liquidate or borrow against a retirement account….yes, PLEASE over communicate!

5) Funds for closing must be wired to the closing agent’s account. Contact the closing agent for wiring instructions and a time frame for when the wire should be sent. Typically wiring funds 24 hours in advance is recommended.

Cash to close on the purchase of a new home can come in a variety of ways, including tapping into a 401k, receiving a gift from a family member, a settlement, selling a car, or selling jewelry... just to name a few. I have even had buyers sell a race horse for funds for closing.

Examples of standard documentation required by a lender…

1) If using equity from sale of current home, please provide copy of closing statement on sale of home.

2) If selling an asset, please take picture of asset then provide documentation to establish a fair market value (e.g., blue book value if selling a car),. Also provide bill of sale, copy of check, and copy of deposit slip showing funds going into your bank account.

3) If tapping into a retirement account, please get a copy of the monthly statement, a copy of the check or proof of wire, and a copy of the deposit slip.

4) Getting a gift from a family member is great! Simply get gift letter from your lender, get the letter signed by all parties, and get a copy of the check and deposit slip showing funds going into your bank account.

At this point you may be able to relate to the catch phrase, “moving paper through a paperless society" from Dunder Mifflin; the fictional paper company in Steve Carell’s sit- com, The Office. Simply put, it is “documentation overkill." Accept it as fact and then move forward with supplying the documentation.

The main thing you can do to avoid THE BIG GOTCHA is to work with your lender to create a game plan on what needs to be documented and when the money AND documentation will be ready.

Two big “NO NO’s"...

1) Please do not sell an asset for cash or get a gift funds in cash. Cash is near impossible to document. You can see a common theme in this process: connecting the dots from where the money came from into the bank account that is being used for cash to close on your new home.

2) Do not wait till the last minute. Stay out in front of this potential pitfall by communicating with your mortgage banker. If you are going to be out of town during any part of the loan process alert your lender and processor. Going on a cruise for 10 days during the loan process without the right preparation and planning is likely to create a BIG GOTCHA. Yes, it happens.

My goal is to provide you some checkpoints to avoid last minute chaos and disappointment. Cash to close is a very big deal! Typically there is a fair amount of documentation needed for cash to close. In an age where technology is so advanced and the speed of communication is instantaneous, it is surprising how common this issue can potentially be. Uneducated, unguided buyers are left with a frustrated (sometimes furious) look on their face as they scramble, jump, and crawl through last minute hoops to satisfy the lending requirements for cash to close.

Buyers that plan and prepare in advance will continue to their closing without interruption. Please use this checklist so that you can be that buyer! It will ensure a more pleasant home buying experience, which is my goal as well as your Realtor’s goal.

The only thing we have to fear, is fear itself……inflationary fear

2014-06-29T20:08:00.000-04:00

Two observations I have seen since I became a mortgage banker on October 1^st 1991: 1) the most commonly asked question in the mortgage business is, “What is your interest rate?” and 2) the biggest change I have seen in the last twenty three years in the mortgage business is rates move on emotion and speculation, before economic data is released and studied. How are these two observations linked together?

Interest rates have major impact on monthly payment. Homeowners want to know what price range they should be shopping in and what mortgage payment they can afford. Rates dictate affordability in the buyer’s mind. Rates are constantly advertised and used as a primary decision maker for purchasing or refinancing. Mortgage companies go to great lengths to advertise interest rates. Governments attempt to stimulate or slow the economy thru regulating rates. In short, the perception is interest rates rule the psyche of the consumer.

So it is no surprise that mortgage bankers are asked to predict the future of rates every time we answer the phone. Based on this historical chart it is easy to predict rates will go up. The only question is “when?” The answer is simple. Rates will go up when speculation and emotion drive them up. When I entered the mortgage business economic data would come out first, suggesting how strong the economy was (or was not) and rates would move accordingly, providing a true reflection of the state of our economy. Today, perhaps much like the stock market, the market prices interest rates in anticipation of what economic data will be released and speculative interpretation of how that signals the state of our economy.

A recent move in interest rates serves as a great example of this observation. Fifty three weeks ago, interest rates for a 30 year fix were resting at close to a 42 year low. Then one Tuesday, the Federal Reserve hinted that the Federal Government would begin tapering off on their monthly purchase of Mortgage Backed Securities (MBS). In the span of 4 hours, rates rocketed to .75% in rate, rates moved from 3.5% range to 4.25% range on a 30 year fixed. “When is turns, it burns” and ouch…that day left a scorching burn! Keep in mind the cause of this rocket- like rise was a hint……a hint the government was tapering.

Reprodeced with the permission of Mortgage-X.com

None of us need to be a recognized, published economist to understand rates are low, really low and affordability is up. Historical data suggest we are near the basement of the interest rate cycle. Rates will go up. The question is when will rates go up? Many “experts” believe rates will stay low for a while. The government has a huge debt service. Low interest rates are in the government’s best interest. The economy is getting stronger. Jobs are coming back from overseas to America. Some prognosticators believe the DOW is going to 18,000 +. Today, one year later, many experts see tapering as a positive sign the economy can stand without the aid of the government. What a difference a year makes! Consumer confidence is going up and unemployment is going down. We are in an election year (just ask Eric Cantor). All these factors suggest rates should stay steady for a while. But as Lee Corso says every Saturday on ESPN in the fall, “Not so fast my friend!” Nothing, and I mean nothing makes rates race up like inflationary fears. Beware that the speculation of inflation is growing like a tidal wave at sea. Be alert and listen for the anticipation of inflation. The government keeps a watchful eye on inflation. Short of a national tragedy, nothing will make for a dramatic increase in rates go up in a recovering economy like inflationary fears.

So do not fear “inflationary fears”. Anticipate it. Lock in on rates at your first opportunity. Do not find yourself in the same shocking position as those 53 weeks ago who returned from lunch to learn rates had jumped from 3.5% range to 4.25% range one afternoon in the summer. There is no warning of rates going up when speculation and emotion gain momentum…..especially when it relates to inflation. Remember gasoline prices going from $1.50 to $3.00/ gallon overnight? Bingo!

Can you say Bye to MI?

2013-09-02T15:30:00.001-04:00

For homebuyers, Mortgage Insurance (MI) is like going to the dentist office, necessary but no fun.

So how fast can homeowners drop MI? With home prices on the rise again, it is a great time to reference how and when MI can be removed from and realize a lower monthly mortgage payment.

Typically there is a two year seasoning, mortgage payments must be current for the last 12 month period AND;

78% loan to value (LTV) by principle reduction of original value – minimum 2 years of payments

80% loan to value based on the current loan amount divided by the current value – minimum 2 years of payments

It is important to emphasize that waiving MI is always to be coordinated with the servicer of the loan. Each servicer will have specific instructions on how to have the MI removed.

For reference visit www.mgic.com/hpa specifically page 6 and 8 for more details and specifics.

Taking the time to research if you or someone you know can say goodbye to MI, could lead to a significant monthly savings that no one would want to pass up.

Tax Benefits 2011

2011-02-04T16:25:00.001-05:00

As most everyone is aware, Congress and the President came to agreement on extending the Bush era tax code. The existing income tax code is basically being extended for 2 more years. This extension is perceived to be a good stimulus tool to try to help the economy continue to rebound. Time will tell as to its effectiveness. There are several changes in the new tax law that will help most individuals going into 2011. Some of the more important are: * reduce payroll taxes by 2% - this is an across the board cut for all taxpayers * estates are not taxable unless they exceed $5M * unemployment benefits extended for 13 months for the long term unemployed * reduction or elimination of the Alternative Minimum Tax for middle income taxpayers If you bought a home in 2008 and claimed the first time homebuyer credit ($7500) it is now time to begin to re-pay that credit. The first installment is due with your 2010 tax return and is re-paid over 15 years. The 2008 credit is different than the first time homebuyer credit that was offered in 2010. The 2010 credit does not have to be re-paid as long as you live in the house for at least 2 years. Due to a recent tax-law change, you may be able to claim an enhanced “residential energy credit” for qualified energy-saving improvements. While Congress discussed limiting or reducing the amount of tax benefit associated with mortgage interest the final bill made no changes. A taxpayer may deduct interest on a mortgage up to $1M on a 1st mortgage and $100,000 on a 2nd mortgage or home equity line of credit. This deduction will almost certainly be up for discussion again in 2 years. As always, it is important to consult with your tax adviser before implementing any tax saving or tax avoidance plans.

Condominium Lending Update

2010-08-02T09:12:00.006-04:00

In 2008 and 2009, Fannie Mae and Freddie Mac greatly tightened guidelines for condominiums. In late 2009 HUD followed with the first update of their requirements in years. Most of the HUD reforms were adoptions of those of Fannie Mae. However, they did rescind their spot approval process which the industry had been using for years for existing properties. Now each condo project must be approved by HUD, or in some instances, a delegated lender. For those projects currently approved by HUD, they must meet some of the new guidelines before a loan can close with all the new guidelines being required at the time of the project recertification. There is also a limit on the number of loans that can be financed by FHA. This information is available on the HUD approved condominium website. Some of the guidelines that are currently causing issues with project approvals are: Litigation - If property is involved in litigation it should be for the collection of HOA dues. Fannie Mae will occasionally issue an exception for frivolous lawsuits. Delinquency - If more than 15% of the HOA are 30 or more days delinquent, then it won't get approved. Budget - It should show 10% of the income being set aside for reserve items. Special Assessments - will be looked at closely because the agencies want the budget to be adequate to pay the expenses and property repairs from the yearly HOA dues. 10% - No one group or individual should own more than 10% of the units which could include the developer if the units are not currently on the market, but are being leased out. Commercial Space - Fannie allows up to 20% and HUD allows 25%. Insurance - Required coverage is 100% replacement cost on the buildings, liability or at least 1 million dollars, and fidelity insurance, which is often referred to as employee dishonesty. This is for a 20 unit or more project, and requires 3 months of HOA dues for Fannie Mae and 3 months of HOA dues and the reserve account balance for FHA. Before listing a property, I think it would be a good idea to review a condo questionnaire to make sure the property can get financing. We will be glad to answer questions.

The City of Alpharetta, Georgia

2010-03-24T17:35:00.002-04:00

As Alpharetta City Councilman, I recently had the opportunity to sit with Bob Strader of The North Group to discuss the city of Alpharetta, how it is faring in the current economy, what projects are going on, what’s happening with Prospect Park and Westside Parkway and the likleyhood of Milton County. Bob Strader is a Realtor whose focus is on merging technology and real estate. He specializes in helping buyers search for homes online and leveraging technology to maximize online exposure for home sellers. He lives in Milton, GA and is passionate about nurturing and growing the North Fulton community. Part 1 of our interview is posted below. To view the entire interview, please visit the post on the North Fulton blog: http://www.liveinalpharetta.com/blog/?p=1622

Interest Only Demise

2010-03-24T16:48:00.001-04:00

Freddie Mac is no longer going to offer interest only products for loans after 6/13/2010. I expect Fannie Mae to follow Freddie’s footsteps and by Labor Day of 2010 the availability of interest only products will be slim. So if you or anyone you know wants to refinance to an interest only program, time is of the essence. It is too early to predict that interest only programs are going to be extinct but trends do suggest less availability.

Interesting Facts about 2009 from a Real Estate Perspective

2010-03-12T14:39:00.002-05:00

As many of you know, I attend various Tuesday morning sales meetings at various real estate offices throughout Atlanta. Sometimes I have been asked to speak about the economy or what are the hot mortgage programs being offered; and other times, I simply attend to listen to the leaders of the office talk about the sales activity and what is effecting their business. This week, I attended the Keller Williams Community Partners meeting and listened to Gene Tuggle go over some very interesting statistics that made me say WOW….So, I thought I would share them with you….Facts About 2009…. 1. US Mortgage rates average 5.04% which is the lowest average since Freddie Mac tracked this statistic going back to 1971. 2. 2009 affordability….Most favorable on record. 3. 2009 US Home Sales ranked 4th highest on record. 4. 69% of first time homebuyers stated they “desired to own a home” as the primary reason they purchased a home. 5. Only 6% stated they purchased a home for the tax credit. 6. 90% of buyers used the internet to gather information during the home buying process. 7. 66% of home buyers interviewed only ONE agent. 8. 66% stated they would use their agent again. Interesting facts about 2009….From the numbers, things were not as bad as some have stated and 2010 is projected to be a better year than 2009!!! Some lessons can be taught with these figures. The one that jumps simply off the page to me is that 66% of home buyers only interviewed ONE agent. This is obviously where “prospecting” pays off. Always be asking your current and past clients, friends, vendors and even the person who is your waiter at your next visit to a restaurant if they know anyone interested in buying or selling a home. By the numbers, you have a 2 in 3 chance of getting that deal simply because you asked the question.

Bernanke Speaks...Uncle Sam Throws Another Treasury Auction(s)…..

2010-02-23T18:08:00.002-05:00

Federal Reserve Chairman Bernanke will have two speaking performances this week starting with his semi-annual monetary policy testimony to the House Financial Services on Wednesday and then he will he will testify in front of the Senate Banking Committee on Thursday. While I don’t think the message from the two testimonies will differ that much, the market will be listening as to whether the Federal Reserve will continue their current position of keeping rates at current levels for an “extended period” of time. If Bernanke reiterates their commitment to keep rates low and the outlook on inflation seems to be in check for at least the next 12 months, look for rates to move marginally to lower levels. After last week’s rise in rates...any relief would be welcomed!!! In other news, Uncle Sam is throwing another HUGE treasury auction this week. Over $132B in bonds and notes will be auctioned this week starting today with $8B in 30 year inflation indexed bonds. $44B in 2 year notes will be auction tomorrow which should be received well. Wednesday Uncle Sam will auction $42B in 5year notes. Again, this auction is expected to be received well however...if this is not the case it will tee the ball up for a bad auction on Thursday for the $32B in 7 year notes which I believe is the “biggie” of this week's auction party. A poor showing at the 7 year auction will move rates notably higher. Keep your eyes on this auction...we need a good showing here to set the tone for rates for the next several weeks.

Market Looks Overseas For Direction

2010-02-16T15:12:00.001-05:00

The markets are concerned about Greece and several other European countries as to whether they will default on their debt. The potential economic collapse of several European nations has investors worried that this may spread into a global issue. The good news to this story is that many investors are making the “flight to quality” (investing in US bonds) which has kept our rates at current levels with some bias to lower levels. European finance ministers are meeting today in order to come up with a viable solution for their debt crisis. If a viable solution is reached, look for rates to move higher as the demand for US bonds will move to a more normal trading range. The best thing to watch this week will be the DOW. Higher DOW = Higher Raters...Lower DOW=Lower Rates. Economic Calendar for the Week…. Tomorrow we will get a look at housing statistics, Industrial Production and the minutes from the January Fed meeting. Housing starts are projected to have risen by 4.13% in January however, building permits are expected to have fallen by 5%. Both Industrial production and utilization are expected to have risen slightly in January giving some hopes that we may actually be emerging out of the recession. I still believe we need to see several more months of consistent growth before we can wave the victory flag. The minutes to the January Federal Reserve meeting will be released tomorrow. I don’t expect any surprises here but if their minutes hint that they may feel that the economy is beginning to pick back up….look for rates to move marginally higher. Thursday and Friday will produce the “Biggies” of the week with the release of the Producer Price Index as well as the Consumer Price Index figures for January. The market is looking for a minimal increase of .1% in both the Producer Price Index and the Consumer Price Index. If actual numbers come in at or even below these projections, look for rates to move marginally lower. Overall, I expect rates to continue to move within a very narrow range this week. Homebuyers need to take advantage of these rates and sign contract before the tax credit expires!!!

The “Three CardRule” andRESPAFact or Fiction?

2010-02-11T13:56:00.002-05:00

Over the years, I have heard that realtors have to give at least 3 cards out to their buyers since this is a RESPA rule. The article below dispels this myth and even goes on to say that violations can occur as easily with one referral as multiple referrals. The article below is written by Kate Hoskins of O’Kelley and Sorohan. “A number of licensed real estate agents have long held to the common belief that referring less than three mortgage lenders to a purchaser of real property is a per se violation of the Real Estate Settlement Procedures Act (“RESPA”), Section (8)(a). In fact, RESPA contains no such exact prohibition or mandate for what has become the common practice of providing three different lender’s business cards to each buyer. As providers of “settlement services” under Section (8) (a),mortgage bankers and brokers, as well as real estate brokers and affiliated licensees, are prohibited from accepting “…any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.” Therefore, it is the agent’s intent in providing a referral to a lender and the lender’s response to that referral and not the number of referrals that determine the parties’ compliance with RESPA. You can view the whole article on our Realtor Corner.

Bernanke Testifies This Week...Uncle Sam To Auction $78B In Notes This Week...

2010-02-08T18:49:00.002-05:00

While the economic calendar is filled mostly with “nice to know” economic releases this week, the market will focus its attention on Uncle Sam’s treasury auction, Federal Reserve Chairman Bernanke’s testimony in front of the House Financial Services Committee and January Retail Sales data. Uncle Sam will hold yet another treasury auction to the tune of approximately $78B this week in 3,10 and 30 year notes. Given what is happening in the “world economy” regarding several countries defaulting on their debt, look for this auction to pan out pretty well which should keep rates at current levels. The 3 year notes should do well while there may be some question on the 30 year notes (auctioned on Thursday). The better the participation from foreign countries in these auctions, the better chance we will have to keep rates at current levels. Federal Reserve Chairman Bernanke will testify in front of the House Financial Services Committee on Wednesday. This will include a Q&A session. While I don’t expect anything earth shattering from his testimony, it is certainly something to watch especially the Q&A part of this session. Any comments that he believes the economy is emerging out of the recession now would be a concern for rates. Once again, I don’t believe this will happen but if it did...rates will move marginally higher. On Thursday, we will get a look at January Retail Sales numbers. The market is looking for an increase in sales of approximately .5% excluding auto sales as compared to a –.2% in December. A number above the expect .5% increase will not be good for rates as they will most likely move marginally to notably higher. Even with all of what I have reported that will happen this week, your best bet on which direction rates will head is to watch the DOW….Higher DOW...Higher rates….Lower DOW...Lower rates!

Rates Flat To Slightly Higher As Market Sets Sights On Friday’s Unemployment Figures….

2010-02-02T10:24:00.000-05:00

Look for rates this week to take their direction from the DOW...at least up to Friday’s unemployment data. The market is looking for non farm payrolls to have increase by 5000 and the unemployment rate to have remained at 10%. If the actual numbers show any sign that this economy is beginning to emerge from our current recessionary environment, rates will move notably higher. Until then, if the DOW moves higher...look for rates to move higher.

Punxsuntawney Phil Sees Shadow...FNMA Announces Assistance On their Foreclosures...

2010-02-02T10:12:00.002-05:00

While we may be heading for 6 more weeks of winter since Punxsutawney Phil saw his shadow this morning, FNMA (Fannie Mae) may have warmed things up with their announcement of providing up to 3.5% in seller contributions on their HomePath Properties. Last Thursday, FNMA announced that people purchasing a FNMA owned HomePath property will receive up to 3.5% of the SALES PRICE to be used towards closing cost or their choice of appliances. This offer is available to any owner-occupant who closes on the purchase no later than May 1, 2010. “Attracting qualified buyers to the market and reducing the inventory of vacant homes is critical to stabilizing neighborhoods and helping the market to recover. Many families are taking advantage of the federal tax credit to buy a new home so this is a great time for FNMA to offer some additional help” said Terry Edwards, Executive Vice President of Credit Portfolio Management. Properties eligible for this incentive are listed on www.HomePath.com and most listing include detailed property descriptions, photographs, community and school information and more. For further information, go to www.HomePath.com or contact FNMA directly at 1-800-732-6643.

Federal Reserve Begins Pull Back on Mortgage Securities

2010-02-01T17:01:00.000-05:00

As reported to you last month, the Federal Reserve will be hitting its cap on purchases of mortgage backed securities sometime in March or early April. This program was created y the Federal Reserve to add liquidity to mortgage market which in turn was intended to lower rates, keep people in homes, slow the pace of foreclosures, increase home sales and ultimately help the economy to recover from the deepest recession we have seen since the Great Depression. The Federal Reserve will cut their purchases of mortgage backed securities by Billions, yes that is Billions with a “B,” each week as they approach their established cap. I have to say with all the “stimulus” programs that are out there through our current administration, this is one of the “packages” that has actually worked!!! Not to mention it has been a tremendous investment for the Feds since they have been purchasing undoubtedly the most pristine mortgages we have seen in probably 30+ years due to the radical changes in guidelines where borrowers actually have to have a job, verify their income, put money into the transaction, and actually have had to pay their bills on time. ...what a novel concept! As rates rise, the value of these securities will rise and the FEDS will actually get a huge return on their/our investment...as opposed to the other things the current administration has done which will ultimately cost us money. So, the only real “stimulus package” that has truly worked and will ultimately not only pay for it self but may actually make the government money is about to come to an end??? Do they really think we are out of the recession??? Where do they think rates will go without liquidity in the mortgage backed securities arena??? The answer is that rates will move higher, foreclosures will begin to rise again, and home prices will fall again driving the economy further into this recession and putting off any potential recovery for our economy for another year or two. Is there hope??? I believe so as we are once again into another election year which tends to be a great motivator for those running for reelection...especially if their constituents are unemployed and facing the loss of their home.