Archive for the 'Mortgages & Finance' Category
Five Things Every Home Buyer Should Know About Mortgages and Mortgage Lenders
April 30th, 2008 categories: Mortgages & Finance
1. Mortgage Lenders/Brokers Don’t Owe Any Fiduciary Responsibilities to Borrowers
A fiduciary is one who acts legally on behalf and in the best interests of another. Realtors are required ethically and legally to act as fiduciaries for their clients. Examples of Realtor fiduciary responsibilities are: Disclosure; Reasonable Care; Loyalty and Obedience, just to name a few of them. Unlike Realtors, mortgage lenders and brokers are under no obligation, legally or professionally to look out for your best interests. If a lender does not do CHFA loans, he/she is under no obligation to tell you about CHFA, as an example.
2. Don’t Count on Rate Quotes to Be Accurate
If you’re calling around or surfing the net for the best rates, there are three hazards. First, rates can change throughout the day so unless you are looking at the same time, comparing rates will be inaccurate. Secondly, lenders may purposely give you a low rate quote knowing that you’re not going to lock in right that minute. Surprise, when you are ready to lock in, the rate has gone up. Thirdly, you are not locked in until you lock in - so your rate will probably change. Read the rest of this entry »
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Just How Did We Get Into This Mortgage Mess?
April 23rd, 2008 categories: Mortgages & Finance
My office hosted a luncheon today with Bill McCue of McCue Mortgage. Mr. McCue, in the mortgage business for longer than I’ve been alive, had a lot to say about the mortgage mess we find ourselves in.
In case you’ve been in a hole for the last year, the mortgage mess is as follows: No or low down payment loans almost non-existent, no subprime loans, no stated income loans and increasingly stringent credit and income guidelines coupled with increases in rates of foreclosures/defaults/short sales and housing prices on the decline nationwide. A big pot of yuck.
If you’ve scratched your head in wonderment then I have some answers, thanks in part to Mr. McCue. Caveat for you economists out there - this is a simple man’s explanation. I am only a Realtor, after all:)
A long time ago, if you wanted to buy a home, you went to your local bank. You opened up an account (or already had one) and a local loan officer qualified you for a mortgage. Unless you were borrowing money through FHA or VA, which guaranteed loans in the event you defaulted, banks wanted to ensure you did not default and you had to meet pretty stringent guidelines. Read the rest of this entry »
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Want Some Free Money? How Little Known Loans and Grants Can Help You Buy A House
March 18th, 2008 categories: Mortgages & Finance
Free money is cool. It’s usually hard to find, difficult to qualify for and most real estate agents (and lenders) don’t know about them.
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The Truth About Deducting Private Mortgage Insurance, Part 2
February 27th, 2008 categories: Mortgages & Finance
This has been updated to include new information about refinancing.
Private Mortgage Insurance, or PMI, is
“insurance that protects a lender or investor against loss if a borrower stops making mortgage payments. It makes it possible for you to buy a house with as little as a three percent down payment or less for qualified borrowers, helping you buy a home sooner than you otherwise could. “ PrivateMI.com
Although it protects the lender, the borrower actually pays for it. And until recently, PMI was not a tax deductible item for primary residences.
PMI is now tax deductible for some. Here are the requirements:
- Borrower must have purchased or refinanced* the home using a loan backed by PMI in 2007. For the next three years, ending in 2010, borrowers who pay PMI will also be able to deduct it as long as they meet the other restrictions.
- Only borrowers with an adjusted gross income of $100,000 may deduct 100% of the premium. Families earning up to $109,000 may deduction a portion of the premium.
- Premiums are deductible for the borrower’s primary residence or for a second home. Owners of rental property are already allowed to deduct PMI.
The IRS publishes a 16-page guide to “explain” this further.
*For more about how refinanced mortgages are affected, visit SmartMoney.com for their article.
Contact your tax advisor for more information.
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Living In Less:Smaller home = Larger life
October 30th, 2007 categories: Mortgages & Finance
Nearly ten years ago, I had a conversation about money with a good friend of mine, Ann. Wiser than me in many ways, she told me that when she and her husband bought their house, they took out a 15-year mortgage and bought a house smaller than what they could afford so they could pay it off faster. I distinctly remember this conversation because I gave her a hard time about it. I didn’t understand how someone would actually choose to live in a smaller, less expensive house if the bank was ready to give them the money!
I was in full consumption mode at the time, enjoying “easy” money as a full-time employee and never seeing the end of the hamster wheel I had just jumped in. Earn just enough money to spend it all on housing I couldn’t really afford and then keep doing it again and again, never saving enough to be able to make a difference. I was trapped by a job because I needed the income to pay for the house.
Then, I read books like The Total Money Makeover, The Millionaire Next Door, Rich Dad/Poor Dad, the Automatic Millionaire, and many others. I re-thought the life I was building and eventually, I created a plan to downsize my current living space so I could live my life on my own terms, save more money and be able to live comfortably.
Just recently, I put my house on the market and moved to a house with 500 less square feet in a less expensive town. Essentially, I lost a bedroom (that my three dogs shared!), a first-floor laundry room and some square footage via smaller rooms. Although I lost some space, there are many advantages to this downsize: Read the rest of this entry »
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