Credit score myths

With many Americans considering a home purchase or refinance, seeking a new job, purchasing a new car, or striving to pay off credit card debt, 2009 might be the year of the credit score, said Bills.com president Ethan Ewing.

“Many Americans hold mistaken beliefs about credit scores,” cautioned Ewing, who heads the free online consumer portal at Bills.com. “Misinformation on television and in hearsay from friends and neighbors only compounds the problem.”

Here are the top 10 commonly held myths surrounding credit scores:

Myth #1: A credit score is a credit report. The credit report is a detailed listing of all debts and payments, going back throughout an individual’s entire payment history, Ewing explained. For each entry, it shows the creditor’s name, amount owed, the highest balance owed, the available credit, whether the account is open or closed (and who closed it), the number of late payments and whether the account is in default. A credit score is a number between 300 and 850 that is based on complex formulas incorporating all the data in the credit report.

Myth #2: Those who are not in default do not need to check their credit report. Everyone should check his or her credit report at least once a year (quarterly is not a bad idea in today’s market) to be sure the report contains no erroneous information. Visit www.annualcreditreport.com for a free, no-obligation copy of the report.

Myth #3: Checking a credit report damages credit. Reviewing your own credit information has no effect on a credit score, Ewing said. Neither does a credit report review by a prospective landlord or employer.

Myth #4: Everyone has one credit score. Credit score calculations are compiled using data from three different credit scoring agencies (Equifax, Experian and TransUnion). The resulting scores might vary slightly among the three agencies if they have slightly different information, but they will be similar.

Myth #5: Married couples share a credit score. If all of a couple’s accounts are joint, their scores will likely be similar, but each individual maintains a unique credit record and credit score. On the flip side, after a divorce, ex-spouses need to follow protocol to have creditors remove either party from a joint account.

Myth #6: Shopping for a loan destroys credit. It is true that “hard inquiries” - examinations of a credit score in preparation for extending credit can have a small negative impact on credit. However, credit bureaus take into account that consumers might inquire about a loan from multiple mortgage companies or auto lenders. “If multiple inquiries are received from the same type of lender within a 14-day period, the credit scoring companies do not count each inquiry against the borrower,” Ewing explained. But credit card account inquiries to open new accounts are counted individually.

Myth #7: To improve a score, close unused accounts. An important component of a credit score is available credit, or the unused credit that has been offered (on a credit card, for instance) but not used. Closing unused cards removes those available balances from the equation and can actually lower a credit score. Today, some banks are automatically lowering limits or closing accounts to reduce their own credit exposure. Individuals whose debt load is manageable should not experience an extreme effect on their scores.

Myth #8: To boost credit quickly, just pay off bills. Credit scores reflect performance over time. Scores will not change overnight.

Myth #9: For a fee, vendors can fix a bad score. Again, credit scores show historic behavior. Be cautious about companies that claim to “fix” or “repair” credit. “You yourself can remove inaccurate information,” Ewing said. “Beyond that, be aware that some companies send credit scorers a deluge of letters asking that they verify - and in the process, remove all past negative information. If and when truthful information is verified, however, it will quickly return to the credit report.”

Myth #10: Never get help - it is too hard on credit. It is true that credit counseling, debt settlement and bankruptcy all can cause significant black marks on a credit report. “If you are in real trouble, however, you can and should seek help,” Ewing urged. “Which option you choose will depend on the severity of your situation. Credit counseling can help to manage bills, and lower interest rates and monthly payments to creditors. Debt settlement firms can negotiate to lower the principal amount of your debts, typically providing a faster path to debt freedom than credit counseling. Bankruptcy, an even more serious alternative, should be discussed with a bankruptcy attorney.”

“Credit is important, but knowing the truth about credit might be even more important,” Ewing concluded. “Before taking action that might hurt or help your score, check your facts to be sure your actions will help your financial picture.”

5:54 PM - Jun. 21, 2009 - comments {0} - post comment

Move up buyers have advantages in this market

Potential home buyers who aren’t eligible for the $8,000 first-time home buyer tax credit because they currently own a home actually have what could be an even bigger advantage - the opportunity to buy a new home that is bigger and better than they could have just a year or two before. “Now may be an ideal time for any family looking to upgrade from their starter home to one more suited to their current or future needs,” said Joe Robson, chairman of the National Association of Home Builders and a home builder from Tulsa, Okla. “Buyers are able to get more home for their money by taking advantage of current prices and interest rates, along with the bargaining power that comes from the large number of homes on the market.”

Here are the top five reasons current home owners should consider upgrading to their dream home:, which means you can buy more house than you could a year ago - for the same monthly mortgage payment.

1. Interest rates are at historic lows

2. Prices have come down. Even if your current home is worth less than during the last housing market peak, your dream home is likely more affordable too.

3. There are plenty of homes on the market right now, both new construction and existing, giving you lots of choice-and negotiating power.

4. You can move in to your new home faster, as many builders either have completed homes in inventory or they can start work right away due to the production slowdown.

5. You may have outgrown your home, but it’s probably someone else’s ideal starter home. With the $8,000 tax credit expiring Nov. 30, now is the time to market your home to first-time buyers.

The current housing market offers unprecedented opportunities for first-time and move-up buyers alike. For more information on the $8,000 first-time home buyer tax credit, go to www.federalhousingtaxcredit.com.

2:41 PM - Jun. 13, 2009 - comments {0} - post comment

You can get a mortgage

This article is by Barry Habib, an expert in the mortgage-backed securities market, chairman of Mortgage Success Source and founder of Mortgage Market Guide.

Yes, you can get a mortgage in today's market, but you have to understand that lenders have returned to a pre-2000 mindset – a kind of "common-sense lending" that seeks long-term success versus short-term profits. There's plenty of money available, says Habib, but your mortgage must make sense in today's terms, not the looser standards permitted by lenders in 2000 and 2001.

How Did We Get Here?
In 2000 and 2001, real estate was hot – make that white hot. According to the S&P/Case-Shiller Home Price Composite 10 Index, an index that follows home prices, values increased 21.5% from the years 1990-1999. During the first two years of this decade alone, home prices increased 23.6% for the same index. This resulted in a period of wildly loose lending guidelines that would ultimately fuel the subprime mortgage collapse in 2008.

In retrospect, it's easy to see, and even understand, the mistakes that were made during this unusual period of growth. Rapidly escalating home prices not only eased economic and personal financial woes, they invited opportunity and risk whose rewards, while hard to resist, couldn't possibly be sustained at such a high level. Nonetheless, increasing equity created flexibility that benefitted buyers and sellers alike – as long as property values continued to ascend.

During this time, borrowers with no jobs, no down payments, and poor credit histories could easily obtain financing. A host of exotic mortgage products flooded the market. And even if a borrower got into trouble, there was a multitude of options to help him or her climb out of the hole, including refinancing or even selling the property. A lot of people made a lot of money during this time.

But, as the real estate market began to turn and the economy began to suffer, home values slowed and then ground to a halt, and the true risk in the market was exposed. No longer supported by skyrocketing home values, borrowers had fewer options, lending guidelines tightened, adjustable rates adjusted, resulting in a crash in the market that is only now just beginning to turn.

What Does This Mean to Borrowers Today?
Simply put, home lending has returned to what insiders call a "full-doc world." This means lenders need proof, documented evidence that a borrower is creditworthy and likely to repay the loan. This creditworthiness is based on the four tenets of lending: the borrower's ability to pay, willingness to pay, equity in the transaction, and the property itself.

Ability to Pay
This is the documentation portion of the equation. In determining one's ability to repay a loan, it is now common for a lender to ask for recent paystubs, W-2s, and possibly tax returns in the case of a salaried employee. For self-employed borrowers and those earning commissions, tax returns for the two most recent years and a profit and loss statement for the current calendar year will likely be required. While certain exceptions may be granted, potential borrowers can further increase their chances of securing a mortgage by keeping their debt-to-income level below 45%.

Willingness to Pay
Repercussions of the credit crisis have made FICO scores more important than ever to lenders. In order to obtain the best interest rate and have a broader selection of loan programs from which to choose, potential borrowers should strive to keep their FICO score above 720.

Borrowers whose scores fall below 720 where the loan will be sold to Fannie Mae and Freddie Mac can expect risk-based pricing, which could result in either higher costs or higher rates. So, while it is possible to get a loan with scores as low as 620, programs other than Fannie Mae or Freddie Mac are probably the best path for a borrower with a lower score to take.

Equity in the Transaction
With the exception of mortgage programs guaranteed by the USDA and VA, no-down-payment loans have pretty much evaporated on a national level. Today it is expected that borrowers put a minimum of 3.5% down for an FHA loan and 5%-10% down for agency loans sold to Fannie Mae or Freddie Mac.

If someone is strapped for cash, however, it is still possible in the purchase contract to negotiate with the seller to pay a percentage of the closing costs, as long as it's within the program's limitations and the property appraises highly enough for this action to be permitted.

With the exception of the President's Home Stability Plan, it is no longer possible to refinance a loan without equity in the property. However, under this plan, millions of homeowners are expected to be able to take advantage of being able to refinance at a loan-to-value of up to 105% of the appraised value.

Cash-out refinancing has also been tightened, compared to just a few years ago. While pulling equity out of a home is still possible, the costs to do so have become more expensive for homes with a higher loan-to-value. Depending on the program, cash-out transactions have generally been limited to a maximum of 85% of the home's appraised value.

The Property
Home appraisals are also being more scrutinized today to ensure the value of the home is both fair and realistic for lender and borrower alike. On May 1st, new legislation (Home Value Code of Conduct or HVCC) placed a barrier between loan originators and appraisers for loans sold to Fannie Mae and Freddie Mac (legislation does not affect mortgages guaranteed by the FHA, USDA or VA.)

For those loans impacted by HVCC, all parties involved should be prepared for potential delays. If value conflicts occur, sellers, buyers, homeowners, and real estate agents must be prepared to provide information where needed.

In locations of the country where property values have been in significant decline, additional documentation may be required by the appraiser to help the lender justify the appraised value.

In Summary
Yes, getting a mortgage may be more difficult than it was a few years ago, but don't assume that you can't get one.

9:48 AM - Jun. 8, 2009 - comments {0} - post comment

Navigating today's mortgage markets

”There are five distinct strategies that can help home owners, buyers, and sellers successfully navigate today’s turbulent mortgage and housing markets,” said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers.

1. Understand and Utilize the New Tax Credits. Many home owners are not aware that the latest government stimulus package gives them a special tax credit of up to $1,500 for making certain home improvements. Also, if you are buying a primary home and you have not owned a primary residence in the last 3 years, you may qualify for the new $8,000 first-time-homebuyer tax credit. “Although you can’t use the credit to help with your down payment, the credit can be claimed on your 2008 tax returns if you buy the home in 2009,” Nicholas said. “This means that even if you buy the home after you file your taxes on April 15, you can simply file an amended 2008 tax return and the IRS will send you a refund check for $8,000.”

2. Consider Paying Points for Your Mortgage Transaction. Mortgage “points” are upfront fees that you pay in order to lower your mortgage interest rate. One point is equal to 1% of the loan amount. “In the past, it almost never made sense to pay points in most situations where you were refinancing your mortgage,” Nicholas said. “However, enormous changes have taken place in the mortgage securitization process. Wall Street investors are demanding higher upfront fees for borrowers with credit scores below 740, and mortgage lenders don’t have as much flexibility when pricing loans. This means that the interest rate savings can be very significant when you pay upfront points.”

“If you are buying a home, negotiate into your purchase contract for the seller to pay points on your behalf,” Nicholas said. “In addition to the significant interest and payment savings you will enjoy, you will also receive a tax deduction this year for points paid by the seller on your behalf. If you are selling a home, offer to pay points for potential buyers as part of your marketing efforts. This will make your home more affordable for potential buyers and help your listing stand out from the glut of available inventory in today’s market.”

3. Carefully Structure Your Real Estate Short Sale Transaction. A real estate short sale is when a home owner sells their property for less than what they owe on the mortgage, and the lender gives their permission to do this by forgiving the difference and/or releasing the mortgage lien on the property. “Short sales are very common in many markets because of negative home owner equity due to the steep decline in house values,” Nicholas said.

“If you are selling your home as part of a short sale transaction, make sure to negotiate for a release and full satisfaction of the mortgage from your lender. Depending on the laws of your state and your individual circumstances, lenders may be able to wait a year or two for you to improve your financial situation, and then file a deficiency judgment against you to try and recover the money that you still owe them. The only way for you to avoid this risk is to have the lender not only release the mortgage lien, but also agree in writing to a full satisfaction of the mortgage.”

If you are a buying a home as part of a short sale, Nicholas advises you to take steps to make sure the deal is closeable. “It is estimated that approximately 30% of short sale listings are not closeable deals because the lender simply won’t approve it. In most of these cases that aren’t closeable, the first or second mortgage lender is expecting home sellers that have money to contribute something to the deal. One way to avoid getting caught up in the middle of this is to have your Realtor verify the status of the seller’s hardship package with their lender.”

4. Utilize the Special Options Available for Seniors Age 62 or Older. “If you are 62 or older, you could use a reverse mortgage to buy a new home without making any monthly mortgage payments,” Nicholas said. “This is a fantastic opportunity if you are contemplating a move but are worried about trying to sell your current home into a down market. Additionally, reverse mortgages can be used to supplement your retirement income that may be declining due to unfavorable economic or financial market conditions.”

5. Carefully Interview Your Mortgage Professional. With all the noise, confusion, fear and misinformation in today’s market, it is more important than ever for you to work with a Certified Mortgage Planning Specialist who has the training and experience to guide you through the home buying or refinancing process. The largest financial transaction of your life is far too important to place into the hands of someone who is not capable of advising you properly and troubleshooting the issues that may arise along the way

2:53 PM - May. 6, 2009 - comments {0} - post comment

5 Tips to De-stress your move

People who are moving are faced with many challenges, and now more than ever they are looking for ways to cut costs, cut down necessities, and still have everything they want. Below are some tips to cut down the cost of the move and at the same time get the service you need:

De-Clutter - Now is the time to clean out your closet and get rid of anything that you don’t need. That old heavy desk in the corner that is not being used and the treadmill that doubles as a clothes hanger. Having a garage sale or giving things to charity will help reduce the weight and cost of a move.

Get a ‘Binding Not-to-exceed’ estimate - One of the costs contributing to a move is the weight of the shipment. With this estimate, if your actual weight is more than the written estimate, you still pay for only the amount of the estimate. But if your actual weight is less than the estimate, then your costs can go down.

Get full replacement ‘valuation’ coverage- When you move, things can get damaged. This coverage is what will protect your goods in the event of any damage.

Furniture assembly & reassembly - If you have a large desk, entertainment center, or table that has to be taken apart and put back together, do it yourself to cut down on costs. If that is not possible, make sure the company you use has these services so you can take advantage of them.

Get a reputable mover - It is important to use a mover that is going to provide the level of service promised to you. Check out the better business bureau website to make sure they are what they say they are.

5:09 PM - Apr. 24, 2009 - comments {0} - post comment

What in the world is a DTI ratio?

This article is by Ralph R. Roberts who is a consumer advocate, spokesperson for Federal Loan Modification Law Center host of keepmyhouse.com, and author of numerous books, including Foreclosure Self-Defense For Dummies and Loan Modification For Dummies

Ask homeowners about their DTI (debt-to-income) ratios, and they’re likely to respond with something like, “My what ratios?!” However, when distressed homeowners are sizing up their foreclosure options, they need to brush up on DTI ratios. Lenders will be scrutinizing these ratios to determine homeowner eligibility for loan modification and other debt relief.

Homeowners need to know that their DTI ratios are crucial to determining an affordable house payment. The current government plan defines an affordable house payment as one that is no higher than 31% of the homeowner’s front-end DTI. In other words, the house payment or PITIA (principal, interest, taxes, insurance, and any association fees) on the first mortgage cannot exceed 31% of the household’s gross monthly income.

Homeowners should examine both their front-end and back-end DTI ratios:

Front-end DTI ratio is based solely on the house payment. (Under the current government plan, the front-end DTI target of 31% accounts only for the first mortgage. If the home has other liens against it, such as a second mortgage or home equity line of credit, those are accounted for separately as part of the back-end DTI.)

Back-end DTI ratio is based on all monthly debt payments combined, including the house payment, credit card payments, payments on auto loans, and other loan payments.

Calculating the Front-End DTI Ratio

Although the formulas for calculating DTI ratios are simple, homeowners are unlikely to have encountered them in the past. To calculate their front-end DTI, homeowners must divide their house payment by their monthly household income (gross income):

House Payment / Gross Monthly Household Income = Front-End DTI Ratio

This is easy, assuming the monthly house payment includes an amount held in escrow to pay the property taxes, homeowner’s insurance, and any association fees. Such a payment is often referred to as PITIA (principal, interest, taxes, insurance, and association fees).

If they pay property taxes, insurance, and association fees separately, then they have to perform an extra step. Total these additional annual expenses, divide by 12 months, and add the result to their monthly house payment (principal and interest). They can then divide the resulting house payment by their monthly household income to determine their front-end DTI ratio.

Private mortgage insurance (PMI) payments fall outside this calculation under the current government plan. 

Calculating the Back-End DTI Ratio

To calculate the back-end DTI ratio, homeowners should total their monthly debt payments, including: House payment or PITIA, as discussed in the previous section; Any payments on second mortgages, home-equity loans, or home-equity lines of credit; credit card payments; auto loan or lease payments; alimony and other payments on credit accounts or loans.

Now, they should divide their total monthly debt payments by their total gross monthly household income:

Monthly Debt Payments / Gross Monthly Household Income = Back-End DTI Ratio

Exploring DTI Ratios under Obama’s Foreclosure Prevention Plan

The Home Affordable Modification Program accounts for both front-end and back-end DTI ratios. When attempting to reach the 31% target for the front-end DTI, the focus is only on the first mortgage:

For qualifying homeowners, the lender will have to first reduce payments on the first mortgage to no greater than a 38% front-end DTI ratio. Treasury will match further reductions in monthly payments dollar-for-dollar with the lender/investor, down to a 31% front-end DTI ratio.

Borrowers who qualify for a modification but would have a post-modification back-end DTI ratio greater than or equal to 55%, will be provided with a letter stating that they are required to work with a HUD-approved counselor. The modification will not take effect until they provide a signed statement indicating that they will obtain counseling.

Keep in mind that only lenders, investors, and servicers who choose to participate in this program are bound by its guidelines and that the guidelines may change over time. Different lenders may have their own DTI ratio targets and limitations.

1:10 PM - Apr. 20, 2009 - comments {0} - post comment

First time homebuyer tax credit revisions

FIRST-TIME HOMEBUYER TAX CREDIT 

As Modified in the American Recovery and Reinvestment Act

Major Modifications Italicized

February 2009

FEATURE	CREDIT AS CREATED JULY 2008 APPLIES TO ALL QUALIFIED PURCHASES ON OR AFTER APRIL 9, 2008	REVISED CREDIT – EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009
Amount of Credit	Lesser of 10 percent of cost of home or $7500	Maximum credit amount increased to $8000
Eligible Property	Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence.	No change All principal residences eligible.
Refundable	Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser.	No change Purchasers will continue to receive refund for unused amount when tax return is filed.
Income Limit	Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000).	No change Same income limits continue to apply.
First-time Homebuyer Only	Yes. Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase.	No change Still available for first-time purchasers only. Three-year rule continues to apply.
Revenue Bond Financing	No credit allowed if home financed with state/local bond funding.	Purchasers who utilize revenue bond financing can use credit.
Repayment	Yes. Portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010 tax filing.	No repayment for purchases on or after January 1, 2009 and before December 1, 2009
Recapture	If home sold before 15-year repayment period ends, then outstanding balance of repayment amount recaptured on sale.	If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009.
Termination	July 1, 2009 (But note program changes for 2009)	December 1, 2009
Effective Date	Purchases on or after April 9, 2008 and before January 1, 2009. Repayment to begin for 2010 tax year.	All revisions are effective as of January 1, 2009

5:55 PM - Apr. 16, 2009 - comments {0} - post comment

First time homebuyer tax credit FAQ's

How could this effect my mortgage payment?

Assuming you are eligible for the full $8,000 refund it would be like reducing your monthly payment by $667 dollars a month!

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6:27 PM - Apr. 6, 2009 - comments {0} - post comment

Moving and taxes

This article is byThe Move Advocate:

Now that 2008 is over, it’s the right time for you and your clients to begin thinking about taxes. Many of us are getting our records in order in preparation for tax day, April 15, 2009. If you or your clients have made a move this year, deducting moving expenses may be on your mind. But are all expenses allowable tax deductions?

The IRS does allow tax deductions for some of the costs associated with a move to accommodate a job in a new location. There are, however, two tests which must be met in order to qualify for deductions.

Test 1 - Distance Test

To qualify for a deduction, your new principal workplace must meet a 50-mile test. The distance between the old home and old work minus the distance between the old home and the new work must be greater than 50 miles. In other words, if the commute to the old workplace was 3 miles, a commute from the previous home to the new workplace must be at least 53 miles. If the person did not have a job before moving, then the new job must be at least 50 miles from the previous home.

Test 2 - Time Test

A person must work full time in the general area of the new workplace for at least 39 weeks during the 12 months right after the move. There are exceptions to the time test and other rules apply for those that are self-employed.

If you are not sure if you or your clients meet the requirements to deduct your moving expenses it is best to check with a tax advisor or visit the IRS website, Publication 521, and Form 3903 for more details.

If both tests are passed then some expenses may be deductible:

- Costs for packing, crating and movement of your household goods
- Up to 30 days of storage and insurance for household goods
- Transportation and lodging expenses (not meals) while traveling to new location

If you have clients who have made a move in 2008, it is a good idea to advise them to check with a tax advisor before deducting their expenses to make sure that they take the right deductions. According to Forbes, one of the top reasons for IRS tax audits is claiming too much for itemized deductions, including the deduction of moving expenses.

5:51 PM - Mar. 31, 2009 - comments {0} - post comment

There are still benefits to home ownership

If you or someone you know are still paying a landlord's mortgage instead of building equity of your own, see what you're missing. Check out some of the other financial benefits of being a homeowner.

Typical Tax Deductions for Homeowners

• Mortgage interest – One of the biggest tax incentives to owning a home is that the interest you pay on your mortgage is tax-deductible, up to $1 million. This deduction applies to any kind of home, including a second home under certain conditions.
• Real-estate taxes – As a homeowner, you can deduct the local property taxes you pay each year, too. This applies to both your principal home and any others you may own.
• Points – If you (or even the seller) paid points to the lender to secure your mortgage, you may be able to deduct those points on your taxes.

New and Temporary Deductions

• $8,000 for First-time Buyers – Just when you were figuring out the $7,500 tax credit for first-time buyers, Congress changed the rules and is now offering an $8,000 tax credit – and guess what? Buyers won't have to repay it unless they sell their homes within three years.
• Mortgage Insurance Premiums – Thanks to Congress, MI premiums can be deducted in most cases by home buyers for mortgages issued after 2006 and before 2010 (although Congress may extend this provision). This one has income limits, so ask your tax professional for help.
• New Standard Deduction – Prior to 2008, only taxpayers who itemized their deductions could deduct state and local property taxes. New legislation changes this for 2008 and 2009. Qualifying tax payers who don't itemize but pay property tax, get up to a $500 extra deduction; married filing jointly get up to $1,000.

Special Incentives

• Tax-Free Profits on Sale – When you sell your primary residence, you can make up to $250,000 in profit if you're a single owner, twice that if you're married, and not owe any capital gains taxes.
• Other Benefits – Ask your tax professional about Penalty-free IRA payouts for first-time buyers, home improvement deductions, energy credits, and even moving expense deductions.

3:21 PM - Mar. 29, 2009 - comments {0} - post comment

Buyer Resolutions

The New Year is here, and many are more resolved than ever to achieve real estate goals that went by the wayside in 2008 due to economic and other concerns. But, what’s one to do to optimize their chances of success amid what’s still a tumultuous, highly demanding marketplace?

“While tricks of the trade abound to give buyers and sellers a leg up on the competition, there are also a number of basic pitfalls buyers and sellers should be sure to avoid lest they commence their real estate venture on shaky ground,” notes Robert Jenson, CEO of luxury Las Vegas real estate purveyor The Jenson Group.

With this in mind, Jenson offers these New Year’s Real Estate Resolutions to help buyers avoid common blunders and get the deal done:

Buyer Resolutions:

1. I Will Get Loan Pre-Approval: Many buyers want to find the “perfect” home before having their credit pulled, which can backfire when an offer is on the table and time is of the essence. It’s wise to get pre-approved for a loan even before you view your first home. Your credit report may contain inaccurate information that you were not aware of, which can be a time consuming process to rectify. Or, you might not like what loan program you qualify for, or you might qualify for a higher loan value than you thought. Ultimately, you will need a pre-approval letter with your offer, so do yourself a favor and do this in advance. It’s free, after all.

2. I Will Have Clear Goals. Create a realistic idea of the property you’d like to buy. What features are most important to you? Make two lists: one of the items you can’t live without and one of the features you would enjoy. Refine the lists as the house hunt progresses, but remember that no place is going to be 100% perfect. It is going to be up to you to put the finishing touches on and call it home.

3. I Will Not Forego Home Inspections. After your offer is accepted, set up a home inspection. It’s not uncommon to find problems, including leaky roofs, cracked walls, insect infestations and foundation problems. Hire a reputable inspector, and negotiate to get you the most for your money once the inspector’s report is final. If you negotiate repairs as part of the purchase, ask for a “walk through” before finalizing the paperwork to assure all issues are resolved to your satisfaction. Also inquire about home protection plans as part of the purchase, which may save you money in the short and long-term future.

4. I Will Diligently Shop Mortgages. A difference of even half a percentage point can mean a considerable savings over the life of a loan. For example, the difference in the monthly payment on a $100,000 mortgage at 8% vs. 7.5% is about $35 per month. Over 30 years, that’s $12,600. Be a smart consumer and comparison shop for the most favorable mortgage rates and terms.

5. I Will Use a Buyer’s Agent. Purchasing a home could be the most important and complex financial transaction you engage in, and going it alone is risky. Indeed, a buyer’s agent can save you time, hassle and thousands of dollars. Take time and care when selecting a real estate buyer’s agent - find someone you can trust, and that you have a good rapport with.

Seller Resolutions:

1:45 PM - Feb. 13, 2009 - comments {0} - post comment

Medical collection accounts may be effecting you

This article is by Rodney Anderson and more information on the Credit 911 Medical Relief Bill is available at http://www.rodneyanderson.com/credit/medical_collections.php

When the Federal Reserve announced its plan to invest up to $600 billion in mortgage backed securities owned by Fannie Mae, Freddie Mac and Ginnie Mae, mortgage interest rates dropped to their lowest point since February 2008. However, few borrowers may actually qualify for these savings. In addition to tighter lending standards and declining home values, borrowers are also being plagued by the nation’s credit reporting system.

According to Rodney Anderson, the country’s top producer of FHA/VA loans and the fourth highest producing loan originator, 45 percent of the 1,701 loan applications he received between June and September 2008 had borrowers with at least one medical collection account. “In evaluating these loans, we uncovered a huge injustice against the American public,” says Anderson. “The tragedy is that the collection accounts, even those that have been paid in full, are lowering these individuals’ credit scores, often to the point that they either can’t qualify for a loan, or will have to pay higher interest rates if they do.”

A nationally acclaimed mortgage and credit expert, Anderson regularly appears on WFAA Channel 8 Good Morning Texas, and the Evening News of CBS 11 and TXA 21. He also has a weekly radio show to discuss the mortgage industry and provide consumer advice.

He explains that medical collections are particularly problematic because of four main issues:

- Medical billing is a notoriously error-prone arena
- Many individuals with medical collection accounts never received the bill in question
- Medical collection accounts customarily remain on a credit report for seven years after the individual has settled or paid the account in full
- Medical collection accounts can reduce a credit score by as much as 100 points, sometimes more.

“The issue of medical debt plagues the patient-physician relationship, to the detriment of the health of the patient,” says Texas-based cardiologist Fred Maese, MD, FACC. “The way the system is set up, there’s no incentive for patients to settle their accounts quickly. Once the collection account hits the patient’s credit report, that consumer is held hostage for up to seven years, whether they settle the account or not.”

“Based on our extensive research, we can surmise that nearly half of Americans have at least one medical collection debt that’s lowering their credit score,” says Anderson, who uses analytical software to evaluate credit reports and determine how borrowers can best improve their own credit scores. In doing so, he found that medical collection accounts are routinely reducing borrowers’ credit scores by 60 to 100 points or more. “This is disastrous news for loan applicants, especially since earlier this year Fannie Mae and Freddie Mac started requiring higher credit scores to qualify for loans, and loan servicers of FHA and VA loans have implemented additional credit score-based premiums,” he adds.

Anderson, a vocal advocate and educator in the credit arena, has initiated a petition to create a federal law mandating the permanent removal of a paid or settled medical collection account from the consumer’s credit report within 30 days of settlement.

“I’ve seen many hard working, conscientious individuals who diligently address their monthly obligations, but because they unwittingly incurred a medical collection account, are forced to settle for a mortgage rate that’s half a percent higher than if they’d never had that collection account,” adds Anderson. “That half point can translate into thousands of dollars in wasted money, and that’s only for a home loan. They can also expect higher rates for auto financing, credit cards and insurance. That’s a hard pill to swallow for the many individuals who were never notified of the initial billing and who have since paid the collection account in full. In this market, where interest rates and low home prices present the ideal time for buying, we need to make sure that individuals who deserve credit, get it.”

1:31 PM - Jan. 18, 2009 - comments {0} - post comment

Geting a mortgage doesn't have to be difficult

The credit crunch, the credit squeeze, the credit crisis... You've seen the headlines. You've heard about the government's $700 billion rescue plan to deal with it. But what does it mean to those looking to secure financing and take advantage of lower home prices? Can someone still get a mortgage in today's volatile market?

The answer is yes, absolutely! While the credit markets have certainly tightened compared to two years ago, nearly $2 trillion of residential mortgages will have been funded in the US by the end of this year, according to the Mortgage Bankers Association. This means there is plenty of money available to potential borrowers who know how to properly position themselves for success.

Get Back to the Basics

It's true. Just a couple of years ago, the mortgage process was incredibly simple, and it seemed mortgage funding was available to everyone. All you had to do was pick up the phone, put in an application, and wait until closing. That was it. And unless your credit rating was horrible, you didn't even need any documentation to get your loan approved.

While a lot has changed in the last two years, getting a mortgage today can still be a simple process, if you plan ahead. This means understanding documentation requirements, your credit history, minimum down payment requirements, and how to structure your mortgage with smaller down payments. It also means working with an experienced mortgage professional who knows what lenders are looking for.

In others words, the mortgage market of today looks a lot like it did ten years ago, long before the proliferation of the exotic and unconventional mortgage products that flooded the market from 2000 to 2006 – risky products that are now being blamed for some of the financial woes we're facing today. Fortunately, these products are no longer available. Unfortunately, this means you'll need to do a bit more work to get a mortgage than you might have had to a few years ago.

This means being prepared to supply income and asset documentation to support what is on your application. This could include your most recent pay stubs and bank statements, W-2s for the previous two years, and tax returns if you are self-employed or have non-salaried income.

If you want the best interest rates and the lowest costs, you'll need an excellent credit score as well – 720 or higher. You can, however, even with FICO scores in the low 600s, get a lower interest rate on a home loan guaranteed by the Federal Housing Administration (FHA) - but you'll need a minimum investment of approximately 3% (please consult your mortgage professional for your required minimum investment.) This is a great option for you if you don't have the 10% or even 20% you might otherwise need to qualify for a low-interest fixed-rate mortgage.

Two years ago, yes, you probably wouldn't have needed a down payment at all, as 100% financing was commonplace. But this is no longer the case. To qualify for 100% financing today, you'll have to qualify for either VA or USDA loans from the government. The Veteran's Administration (VA) and the US Department of Agriculture (USDA) have special programs that allow 100% financing for those who qualify. What is particularly attractive about both of these loans is that monthly mortgage insurance is not required and interest rates are very competitive.

Other than being a Veteran, there are few restrictions involved in securing a VA loan. To qualify for a USDA loan, however, there are some income limitations and the property you're purchasing needs to be located in a designated "non-metro" area. Ask your mortgage or real estate professional if your area qualifies. You'd be surprised how many areas actually do qualify for this valuable government program, so it's definitely worth investigating.

If you're not a Veteran and you can't qualify for a USDA loan, FHA is the way to go. The down payment requirement is minimal. One other benefit is that FHA financing is available, through some lenders, with FICO scores in the 500s, so you don't need perfect credit. There are, of course, loan limit restrictions, but for many parts of the country, these limits have increased recently, making FHA loans comparable to conforming loan limits in many cases. For first-time home buyers (that's anyone who hasn't owned a home in the last 3 years), the government has also created a special tax credit of up to $7,500 for those who qualify. And while you can't use the money as a down payment, this temporary credit can help lower your overall costs. Be sure to ask your lender about this special tax credit.

In the end, no matter which mortgage you choose, the best path for anyone buying a home today is to get yourself pre-approved – not pre-qualified. With a pre-approval in hand, you won't have to worry about the credit crisis. You will know exactly what you qualify for, and by getting pre-approved, your real estate agent will typically have the ability to negotiate either better terms or a lower price for you. And that puts you in the driver seat to take advantage of some great real estate opportunities in a buyers' market.

3:28 PM - Jan. 2, 2009 - comments {0} - post comment

The Real Estate "Perfect Storm"

This article was written by James A. Crumbaugh, CEO of Allison James Estates and Homes Real Estate

”The Perfect Storm.” What could I possibly mean when I say that the real estate industry is about to enter the perfect storm?

After 35-plus years in the real estate industry, I’ve watched good and bad markets come and go. There are always mitigating factors that cause these markets, both good and bad, to make an abrupt change. Those that have spent a couple of decades in the real estate industry will tell you this: when a market changes from bad to good or the opposite, it almost always happens very quickly, particularly when a market goes from good to bad.

I think everyone reading this article will agree - that is what happened this time as well, when the real estate market went south on us.

So what do I mean when I say that the real estate industry is about to enter the perfect storm? Let’s look at several factors. The first factor is (at the time the original article was published) a new national election was about to take place with a change of leadership.

Markets tend to pause when we are in this phase, waiting to sense what the change will mean. Next, with the possibility of a recession facing the United States, with several states already experiencing a recession, the stock market is going to continue to retreat.

When the stock market starts to retreat as it is now, investors almost always start to look at real estate, because it’s a tangible item-it’s concrete, something they can fully grasp.

Then, you have to take a look at where the real estate industry is at this moment. With the exception of Texas, we have in most states a severe real Estate issue facing this country. We have declining prices in most areas as well as a huge over-supply of inventory. Yet, we also have some of the most attractive mortgage interest rates available in quite a while, and contrary to popular belief, there is still plenty of mortgage money available for the qualified borrower.

Let’s now take all these issues and throw them into a paper bag, give that paper bag a good shaking and then dump it out. What do you have?

It is the perfect storm for the real estate market. Real estate prices are at a very attractive level. In fact in some areas, due to an over-correction, the properties are undervalued.

Mortgage interest rates are very low and very attractive and we have a huge over-supply of resale inventory. You add all of this together, and for the real estate investor and the natural real estate buyers, the ones who what to move up or move down or move to a new area or whatever the reason is, you have one of the very best times in years to buy property.

The year of 2008 is going to go down in the history books as the year that the current real estate market makes a u-turn and starts to stabilize and appreciate again. Everyone keeps saying now is the time to buy. Let me tell you, it’s not only the time to buy, it’s one the very best times to buy we will see for years to come.

7:11 PM - Dec. 28, 2008 - comments {0} - post comment

First Time Buyer Tax Credit

The $7,500 home ownership tax credit that the federal government created earlier this year as part of the Housing and Economic Recovery Act (H.R. 3221) is another tool to encourage potential buyers to jump off the fence and get into the real estate market. 

 When you combine the tax credit with today’s low interest rates, wide selection of for-sale inventory, and affordable home prices, many of the pieces are in place for you to buy now. But tax credits can be confusing. To help you understand how the credit works and why it would help, here are the details:

 1. Buyers have until July 2009 to make a purchase that qualifies. 

The tax credit was passed in July of this year as part of the Housing and Economic Recovery Act (H.R. 3221). It’s worth up to $7,500 and can be taken in a single tax year. Authorization for the credit ends July 1, 2009, so if you wait to buy in the first half of 2009 you can take the credit on your 2009 tax return. Taxpayers can take the credit on their 2008 tax return if they bought their house this year after April 9.

 2. Buyers don't really have to be "first-timers."

The tax credit is actually available to any individual or household that hasn’t owned a home for at least three years. And the NATIONAL ASSOCIATION OF REALTORS® has asked Congress to expand the credit to all buyers, not just those who haven't owned a primary residence in recent years.

 3. Even if buyers exceed the income limit, they can benefit from the credit. 

The actual credit amount is set as a percentage of the home purchase amount. That percentage amount is 10 percent, so you can get 10 percent of the home price credited against tax liability, up to a maximum $7,500. Sounds like a great deal. But what if you make more money than the income limit of $75,000 for individuals and $150,000 for households? Good news: Individuals whose income exceeds the $75,000 limit but don't make more than $95,000 can still take the credit but on a reduced basis. The same thing applies to households earning up to $170,000. By the way, any house is eligible as long as it’s a primary residence and is in the United States.

 4. Think of it as an interest-free loan.  

The federal government requires the tax credit to be paid back in small, 6.67-percent increments over 15 years, although repayment will be no more than $500 yearly and payments will not start until 2011. For that reason, some analysts have likened the credit to a 15-year, interest-free loan to help make home buying affordable. NAR is pushing congress to remove the repayment provision, making this tax credit a true tax credit rather than an interest-free loan. 

 5.  You don't have to be authorized before making a home purchase. 

There is no pre-purchase authorization, application, or other approval process. Eligible buyers simply have to claim the credit on their IRS Form 1040 tax return and/or any form that the IRS might devise. 

 6. New-home construction qualifies. 

For a home that a buyer constructs, the purchase date is the first date the buyer occupies the home.However, any home that is not a primary residence, such as a vacation home or income property, does not qualify.   

 NAR Asking Congress to Expand Credit  

 As mentioned above, NAR has asked Congress to do away with the repayment provision of the first-time buyer tax credit and expand the credit to all home buyers, not just first-timers. The proposals were part of a four-point housing stimulus plan the association submitted in mid-October.  

 “Housing has always lifted the economy out of downturns, and it is imperative to get the housing market moving forward as quickly as possible,” said NAR President Richard F. Gaylord. “It is vital to the economy that Congress take specific actions to boost the confidence of potential homebuyers in the housing market and make it easier for qualified buyers to get safe and affordable mortgage loans.

11:33 AM - Dec. 18, 2008 - comments {0} - post comment

Where is the current real estate cycle?

This article is by Jeff Shore, founder and CEO of ShoreSelect, a real estate consultation firm with offices in California and Texas,

Real estate has been in the news just about every day as housing prices have fallen in many areas. There are all kinds of opinions about what’s going on and where this is all heading. But these opinions are just guesses and do not take every piece of the puzzle into consideration. History has shown us that the economy goes up and down all the time, and real estate has long coincided with these fluctuations.

Shore says economic cycles of all kinds (stock, macroeconomic trends, housing, etc.) are known for a tendency towards extremes and that market corrections have a way of over-reacting which is exactly what we are seeing today in the real estate market.

“The problem is that there is no one single business cycle. There are major cycles, combined with minor ups and downs, plus small random fluctuations, so if you look at the economy year by year, it looks irregular, but if you see real estate price ups and downs over the past several cycles you can see a clear cyclical pattern,” explains Shore.

So where are we in the current real estate cycle? Is waiting to buy a brand new home a safe option? These are very valid questions that require credible answers in order for home buyers today to achieve the confidence that the future can and will be better than the past.

First, don’t panic over newspaper headlines. Make an informed decision. Run your own numbers. For most buyers, there is no real need to wait for the market as a whole to officially adjust out.

“The bottom of the market is not a date, but a band of time or season,” Shore says, and therefore what constitutes the bottom for the entire country is meaningless for those looking to buy and sell homes in their own communities. “If you sit on the fence and wait for the absolute best deal, you could end up literally waiting for years. And most likely, your guess on market timing would be wrong. But if you choose to buy now, you will not only be in the driver’s seat during the buying process, you will also reap the gains of price appreciation once you become a home owner,” adds Shore.

Waiting for the right time to buy puts you at risk of missing it and getting caught in a market on the upswing. Plus, for some first-time buyers, owning simply makes better economic sense than renting. In such areas as Los Angeles, rents are getting close or surpassing a mortgage payment. And you don’t receive any tax benefits from paying rent, nor do you accumulate any price appreciation, as you would if you owned a home of
your own.

Next, realize there are always some people who need to move because of job relocations, expanding families, or a desire for better schools. In sought after neighborhoods, there’s a price to pay for waiting. You have to ask yourself, “If the price goes down much more, I’ll have other people trying to buy it, even if it’s not the absolute bottom of the market.” In the end, you might erase the savings you thought you had achieved by waiting.

For Linda Brown, a teacher with the Corona/Norco School District, the current real estate market provided the perfect opening for her life’s redirection with her new home purchase at Serafina, a new William Lyon townhome neighborhood in Eastvale.

“I visited many different neighborhoods, but nothing compared to Serafina in terms of financial value, price and the advantages of having everything brand new,” Linda describes. “I was definitely looking for a fresh start and choosing this gated neighborhood was an easy decision. While I certainly preferred the convenience and more carefree ambiance of an attached floorplan, I really liked the idea of being near the middle school and being part of the local community where my students and their families are. Thanks to William Lyon, I ultimately found a new neighborhood that I could afford and also have the opportunity to become more involved in the area where I teach, and that was very appealing.”

Shore’s advice to buyers is simple, “Live in the right home. There’s no reason to compromise in buying the home that is right for you.” Make a priority list of things that are ‘must-have’ versus ‘nice to have’ versus ‘not important.’ Write it all down and use this as a checklist to unlock the reasons about the home you’re searching for, where you want to live, and what it will take to get you there.

2:05 PM - Dec. 8, 2008 - comments {0} - post comment

FHA loans explained

This article is by Jason Kotar, president of Kotar & Associates. Contact him at (954) 734-3504 or e-mail jason@kotarassociates.com.

With the Federal governments re-emphasis on the FHA as a key vehicle for resuscitating the real estate market, now is a good time to review FHA in more detail.

Let’s start with some basics. First, the FHA insures loans that approved lenders make, it does not purchase them as Fannie and Freddie do. If a FHA insured home goes into bankruptcy, FHA pays off the mortgage to the Lender, takes ownership of the home, and then proceeds to sell it (a HUD home.)

To mitigate its risk and provide income to offset foreclosures and defray their expenses, FHA charges the borrower insurance premiums, both an up-front and a monthly premium. The up-front premium can be included in the mortgage amount.

FHA loans are available for purchasing or refinancing a 1 to 4 unit, owner occupied home. There a number of FHA programs that cover the gamut of real estate offerings, from your “vanilla” FHA loan to Condos to REO’s to Reverse Mortgages to Rehab to Veteran loans and more. In subsequent articles we will be reviewing these programs in more detail.

Over the last number of months, FHA began implementing some changes to their programs. In addition, the Housing and Economic Recovery Act placed additional changes in FHA practices, some of which modified FHA proposed changes. I have listed some of those changes below.

Converting Existing Homes to Rentals

The FHA changed their underwriting rules to limit the ability of a homeowner to use rental income from a previous residence that it converted to a rental property, when applying for a new mortgage on a second property. Under the new rule, the homeowner must prove sufficient income to make both mortgage payments without the rental income or has an equity position in the rental property that it will not likely result in defaulting on that mortgage. There can be an exception to this rule for employment relocations.

This change mirrors the announcement by Fannie in August. Apparently, homeowners, in increasing numbers, are choosing to vacate their existing principal residence and purchase a new residence. They are then providing misleading information on the rental income of the property being vacated to justify the new mortgage. These changes effectively end “bail and buy” loans.

Moratorium on Risk Based Premiums

The Housing and Economic Recovery Act provided for a one-year moratorium on the implementation of the FHA’s risk based premiums beginning October 1, 2008. The effect of the risk based premium was to increase the premium based on the amount of the down payment.

This will not delay the implementation of an upfront premium as well as well as monthly premiums on all loans.

Seller concessions of 6% are still allowed; however, down payment assistance programs have been eliminated effective October 1, 2008.

Down Payment Requirements

The Housing and Economic Recovery Act also called for an increase in down payment required to 3.5%. That change will not go into effect until January 1, 2009.

As with any loan program, there are a number of stipulations that need to be met to gain approval. That is why it is important to choose the right FHA approved lender. Not all FHA approved lenders service all FHA loan programs.

1:44 PM - Dec. 2, 2008 - comments {1} - post comment

Choose the best lender

With all of the mortgage industry’s recent changes, especially those related to high loan-to-value loans, credit score-based pricing, and increased scrutiny around appraisals, choosing a mortgage lender is critical.

1. Liquidity is tightening, and a lot of mortgage companies are struggling to fund their loans. Correspondent lenders’ credit lines are shrinking, and brokers have less “wiggle” room with their wholesale lenders, scared by their new re-purchase agreements. Borrowers should be encouraged to work with well-capitalized lenders, ensuring their funds will be there when needed-at the closing.

2. Borrowers should always work with a lender that can accommodate all types of loans, including FHA, VA, Conforming and Non-Conforming loans. With the recent price increases with PMI (private mortgage insurance), FHA has become much more attractive than in years past. With recent MIP (FHA’s mortgage insurance premium) changes, higher credit score FHA buyers, even those with 10% down or more, may benefit by comparing an FHA loan with a similar conforming loan.

3. Buyers should always get preapproved, as opposed to prequalified. With no assurances of what future mortgage industry changes will look like, buyers’ agents should ensure that their time investments are going to pay off in the future. In order to do this, agents should insist on a fully underwritten preapproval (subject to appraisal) before house hunting and presenting an offer. Likewise, sellers should always demand, before tying up their property for 30 days or more, that a “preapproved” offer is being presented.
Nobody benefits when a listing is “tied-up” to find out later that a “prequalified’ borrower’s underwriting terms have changed and, as a result, no longer qualify for a loan.

4. Sellers, if mortgaging their next transaction, should also get preapproved prior to listing their current home. With recent mortgage changes, some sellers may not qualify for a new home loan after they sell their current residence. None of us needs the humbling experience of explaining to a recent home seller that they have to lease rather than buy, after the fact.

5. And lastly, recent documentation changes have slowed the processing time for many loan types. Agents should recommend to their clients that they should work with a lender that will give them an “on-time” closing guarantee. A responsible lender will “put their money where their mouth is” if they are confident of their service offering, motivating them to hit that important closing date.

1:51 PM - Oct. 27, 2008 - comments {0} - post comment

Let your house be personal - to you

This article is by Melissa Birdsong whoi is vice president for Trend, Design & Brand, Lowe’s Companies, Inc

Buying a house is the first step; after the move, it’s about making it your home, with personal expressions and affordable, easy-to-execute upgrades.

When I moved into a new home a few years ago-a spec home finished with safe, neutral-and-marketable décor-I was happy to be there but soon realized that I had some work to do to add character to my new spaces. When it comes to home décor, a just-purchased home falls into two camps: new but somewhat benign, like mine; or older and in need of updating and refreshing. With a new house, simple changes such as more expressive color, more unique lighting or window treatments may be all that is needed. If the home is older, there may be some serious “un-decorating” to do before the re-decorating begins. Either way, to avoid a random approach and also create the most impact, I usually organize the first level of planning around a few basic themes: colors, finishes and lighting.

Colors and finishes are the first two keys to unlocking the door to personalization. Creating a coordinated palette is one of the most cost effective and efficient ways to personalize a home because it also provides a map for planning everything else. When selecting colors, it’s important to consider wood and metal finishes as part of the palette, too. For example, wood tones may have yellow and orange, red or pink tones. Metal finishes range from warm, dark tones like oil-rubbed bronze to cool, light tones like brushed nickel. Considering the compatibility among all the elements as well as the contrast between them is the best way to achieve the look and feel you want.

The third-and I believe one of the most underrated decorating tools-is lighting. The right combination of lighting reveals unexpected possibilities for creating ambiance in your home. I often speak about “layering” lighting, which is combining general, task and accent lighting wired with dimmers to allow flexibility in light levels. The same room takes on a completely different mood under bright, overhead lighting versus when softly washed with accent lighting. And because colors and finishes appear differently in natural light vs. incandescent vs. different types of fluorescent and LEDs, it’s important to view them under all conditions.

Turning a house into a home that reflects a homeowner’s personality is a journey that can take time, but it all begins with the first few steps. By focusing on these three basic areas with a few doable and affordable projects, much progress can be made within the first few weeks. And achieving early successes will yield long-term results in satisfaction and feeling good about finally being home again.

12:45 PM - Oct. 5, 2008 - comments {0} - post comment

Consider a Green Mortgage

Tired of heat and energy prices skyrocketing out of your budget? Now you can do something about it...and your mortgage can help!

Energy-efficient improvements, such as installing double-paned windows and additional ceiling insulation, can save you money every month, not to mention pay for themselves in the long run. But how do you come up with the cash to pay for those projects up front or to buy a slightly more expensive house that already has them? One way is with a "green mortgage."

What is a Green Mortgage?

Green mortgages actually come in a couple of different formats. Officially these loans are classified as either Energy Efficient Mortgages (EEMs) or Energy Improvement Mortgages (EIMs).

An Energy Efficient Mortgage essentially allows you to purchase a home that is already energy efficient - even if the price of that home is larger than you would normally qualify for under your debt-to-income ratio. Energy Improvement Mortgages, on the other hand, allow you to take out a larger loan to make energy efficient repairs and improvements to a house that is not currently rated as energy efficient.

The main benefit of both of these mortgages is that they help you to qualify for a larger loan amount and help make it possible for you to live in a better, more energy-efficient home. The basic principle behind this type of financing is that the money you save from the more efficient home will offset the larger mortgage payments.

Qualifying for a Green Mortgage

To qualify for a green mortgage, you typically need to have a Home Energy Rating conducted. This rating provides the lender with an Energy Savings Value, which is the estimated monthly energy savings and the value of the energy efficiency measures.

Depending on your unique circumstances, you may qualify for a conventional, FHA, or even a VA green mortgage. Each type of loan is designed to fit specific situations and, therefore, each loan has specific requirements that must be met.

You can learn more about the differences between conventional, FHA, and VA green mortgages at the Energy Star website. And for more details about green mortgages in general, visit the HUD website.

12:47 PM - Sep. 17, 2008 - comments {0} - post comment

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