The 680 Lender

What You Didn’t Learn in School: Six Tips from the Experts!

Kaveh — Wed, 09 May 2012 00:07:44 +0000

Did you ever wish they had taught courses in personal money management in school? Oh, they probably touched on it in high school. Maybe a little bit in college — that is, if it was a course as part of your major!

So, what we did was depend upon family, friends, and bankers and tax preparers to help direct our financial future.

Here are six common questions that people ask when it comes to managing their money…

Should I hire a financial planner OR come up with my own financial plan? Financial planners can help you organize your finances and come up with a long-term plan (like retirement, home improvement, college funds). If you are money savvy, there are plenty of financial planning tools that you can use online—and most of them are free.
Should I hire an accountant OR should I do my own taxes? If your taxes are pretty straightforward, you receive a W-2 form, regular deductions; it’s easier and cheaper to do them yourself. However if you are self-employed, receive commission or 1099 income, have rental properties or write off business expenses, then hire a professional. Tax laws change from year to year so if your taxes are a little more complicated, it’s better not to chance it – or worse, miss valuable deductions that you are entitled to just because you did not know about the changes in the tax code.
Should I use a credit card or a debit card? Use a credit card to get “rewards” like travel miles or money toward goods and services. However, be sure to try to pay a majority of the credit card off every month. Use a debit card if you have trouble managing your finances or controlling your spending.
Should I write my own checks or schedule automatic bill paying? If you have trouble paying bills on time, by all means schedule automatic bill paying through your checking or savings account. Even if your bank charges you to do so, it will still save you a ton or money in late fees—not to mention the damage late payment does to your credit score. Write checks for one-time expenses, like an emergency plumbing repair or school tuition.
Should I get a credit card with a low rate and no perks — or a higher rate with lots of perks and rewards? You are better off getting a credit card with a low rate. However, if you pay off the credit card every month and never miss a payment (oh, and want to go on trips), then go with the higher rate because by paying it off every month, the higher rate does not matter at all.
Should I contribute to my 401K or pay off my bills first? If your company matches your 401K contribution, only put in as much money as the company will match (a company match is like free money). If your company does not have a 401k matching program, pay off your credit cards, starting with the highest interest rate first, before contributing to your retirement fund.

4th Quarter GDP Increase

Kaveh — Mon, 02 Apr 2012 18:01:00 +0000

Gross domestic product for Q4 2011 increased 3.0% from Q3 2011. Overall for 2011, GDP came in at 1.625%. Gross Domestic Product is a measure of the total production and consumption of goods and services in the U.S. GDP components like consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy’s behavior. This report provides the single most encompassing picture of economic activity available. It also provides estimates of output based on both demand and supply. Combined with employment data, GDP gives an important measure of productivity growth.

80/10/10 Mortgage Financing is Back!

Kaveh — Mon, 26 Mar 2012 23:51:05 +0000

Remember the days when FHA was just a three letter word that most people didn’t know about? Remember when you could get away with a 10% down payment and take out two loans totalling 90% to avoid mortgage insurance? Those days have come and gone…until now.

The good ‘ol 80/10/10 mortgage is back. What this mortgage allows you to do is take out a first mortgage of 80% of the homes purchase price. You will then have a piggyback Home Equity Line of Credit, also known as a HELOC, for 9.99% and you will put your 10% down payment. Okay, so it may not be exactly 80/10/10 but close enough.

Click Here for a Live Rate Quote

This program is offered for purchase or rate and term refinance transaction of Single Family Homes (SFR). This loan is available for condos and townhomes on purchases only to 89.99% and 84.99% on refinances. There is a minimum credit score of 700 and other restrictions apply.

Click Here for a Live Rate Quote

For more information, please give me a call.

Unemployment Drops In 45 States

Kaveh — Mon, 19 Mar 2012 03:56:00 +0000

Monthly state unemployment levels fell in January in 45 states, plus the District of Columbia according to the Bureau of Labor Statistics. Only one state (New York) saw an increase, while 4 states remained the same. From this time a year ago, 48 states plus the District of Columbia have posted unemployment decreases. Year-over-year only New York saw an increase while Illinois remained the same.

January Pending Home Sales Up 2.0%

Kaveh — Mon, 27 Feb 2012 16:19:44 +0000

Pending home sales for January 2012 were up 2.0% from December 2011. The reading of 97.0 was also the highest reading since April 2010, during the home buyer tax credit. Year-over-year pending home sales were up 8.0%.

Pending home sales is an index that measures housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos and co-ops. A signed contract is not counted as a sale until the transaction closes.

February Existing-Home Sales Rise

Kaveh — Wed, 22 Feb 2012 18:49:04 +0000

Existing-home sales increased in January, up 4.3% from December. Though some of the increase was a result of December being downwardly revised, it still marks the third gain in the past four months. The 4.57 million existing-home sales is also the largest reported number since January 2011.

Total housing inventory also fell, dropping .4% to 2.31 million. This represents a 6.1-month supply at the current sales pace. Down from a 6.4-month supply in December.

Existing Home Sales is a measure of the selling rate of pre-owned single-family homes, collected by the National Association of Realtors from 650 realtor associations. This report sometimes moves markets and is considered a good gauge of near-term spending for housing-related items and of consumer spending in general.

Core Consumer Price Index Increases

Kaveh — Fri, 17 Feb 2012 22:35:11 +0000

The Consumer Price Index (CPI) rose .2% in January from December, falling just below expectations. However, the Core CPI (as shown in this chart) also increased .2%, which was just above expectations.

The Consumer Price Index (CPI) is a measure of the average price level paid by urban consumers (80% of population) for a fixed basket of goods and services. Core CPI removes the volatile food and energy categories and is considered a better gauge on inflation trends.

Year-over-year, Core CPI is up 2.3%, the largest yearly gain since September 2008. It’s important to keep an eye on CPI readings as it’s an indication of inflation being passed down from the producer to the consumer meaning higher costs on goods and services.

Core Producer Price Index Up

Kaveh — Thu, 16 Feb 2012 19:45:39 +0000

The Labor Department reported today that the Producer Price Index (PPI) increased .1% in January from December. However, Core PPI (minus the cost of food and energy) rose .4% in January, double expectations. As you can see from this chart, this is the largest month-over-month increase of the Core PPI reading since July 2011. The Core PPI is considered a more accurate look on inflation because it removes the highly volatile categories of food and energy.

The year-over-year Core PPI number also increased, up 3% from January 2011. This was also an increase from the previous year-over-year reading of 2.7% from December 2010 to December 2011.

The Producer Price Index (PPI) is a measure of price changes in the manufacturing sector of the average price level for a fixed basket of capital and consumer goods paid by producers. It’s important to keep an eye on these numbers as inflation is the arch enemy of bonds, and therefore home loan rates.

Oops, They Did it Again…FHA to increase Mortgage Insurance

Kaveh — Tue, 14 Feb 2012 21:12:40 +0000

Britney Spears once wrote: “Oops!…I did it again I played with your heart…” Well, FHA has come out with their own version and the lyrics go like this: “Oops!…I did it again, I played with your wallet!..” Yeah, I know, it’s not going to be a big hit and it will get a few people upset as I’m sure Britney’s crush was.

Here’s what’s happening. The Obama Administration has sent its FY 2013 budget to the Congress. It includes two increases in the annual mortgage premium and raises the prospects for additional premium increases if that becomes necessary (i.e. because of an increase in seriously delinquent loans).

The increases are:

10 basis point increase in annual premium for single family forward mortgages (1.25% annual premium)
25 basis point additional increase for loans above $625,500 (1.5% annual premium)

When will these increases be implemented?

The Budget indicates these changes will be implemented “soon”. When the 25 basis point increase in the annual premium was implemented last year (from 90 bps to 115 bps), the Mortgagee Letter (2011-10) was published on February 14, 2011 with an effective date for case numbers assigned on or after April 18th, 2011. Accordingly, based on last year’s experience, we expect the new mortgagee letter to be published in the near future (possibly today) with an effective date in mid-April.

What are the prospects for further increases?

FHA has indicated that further increases are possible to ensure the solvency of the fund. While we hope that will not be necessary to raise premiums beyond the levels noted above, rising defaults are an ongoing problem.

FHA’s seriously delinquent loans have increased significantly in the last six months (from 584,822 loans in June 2011 to over 711,000 loans in December 2011). However, only 47,180 loans originated in the last two years (2010 & 2011) are seriously delinquent (6.5% of FHA’s total seriously delinquent loans). Accordingly, FHA’s delinquency problems are concentrated in older, more seasoned loans. These loans include seller funded downpayment assistance loans and loans with lower credit scores.

Hopefully, FHA will heed the advice of the New York Federal Reserve Bank William Dudley who in a recent speech said:

“But the guarantee fees (referring to the GSEs) for new purchase mortgages should be based on the expected losses on these mortgages – not the realized losses on loans of earlier vintages.”

What does this mean to you:

Well obviously you’re monthy mortgage payments are going to go up. If you are currently looking at purchasing a home and you’re using FHA financing, it’s best to get off the fence and not wait for lower home prices. I’ve always said that waiting for the bottom of the market can come back and bite you right back on, well, your bottom. Interest rates can increase at any point and changes such as the FHA mortgage insurance premiums are just going to make your monthy payments higher.

If you currently have an FHA loan and have been thinking of refinancing, this is a great time. Rates are still at all time lows. You want to make sure that you start the refinance process now to make sure that you take advantage of the low interest rates and the lower monthly mortgage insurance premiums. To apply, simply go to: http://ow.ly/94tUt and fill out an application. Otherwise, give us a call today before FHA does it again to see how we can help you get into a home now.

Existing Home Sales Up 5%

Kaveh — Wed, 25 Jan 2012 17:05:44 +0000

Mortgage Market Guide: Existing-home sales for December 2011 increased 5% from November. This is the third consecutive month of increases and the second highest reading of 2011. The December level was also 3.6% above December 2010, and as a whole, existing-home sales were up 1.7% from 2010. Total housing inventory dropped 9.2% for December, representing a 6.2-month supply, down from a 7.2-month supply in November.

Existing Home Sales is a measure of the selling rate of pre-owned single-family homes, collected by the National Association of Realtors from 650 realtor associations. It includes a geographical breakdown, as well as a measure of prices and house inventory, the number of months it would take to deplete the existing supply of pre-owned houses at the current sales pace.