About Judith Weiner

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Four Ways the 2009 Economic Stimulus Plan Benefits Home Owners & Buyers

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Four Ways the 2009 Economic Stimulus Plan Benefits Home Owners and Buyers

There are four primary sections of the 2009 economic stimulus plan that could be very beneficial if you own or are buying a home.

Benefit #1 - Expansion of Home Improvement Tax Credit
The tax credit for making energy efficient home improvements is now 30% of the cost of the improvements up to a maximum of $1,500. This means that if the improvements cost you $4,500, you would receive a tax refund of $1,500 when you file your tax returns. Eligible improvements include energy efficient exterior doors and windows, insulation, heat pumps, furnaces, central air conditioners and water heaters. Generally, your home improvement contractor and/or the manufacturer selling the improvements issues a certification that clarifies whether the improvements meet the necessary
standards for energy efficiency. Most modern windows, furnaces, and air conditioners meet these requirements. If you've been holding off on making some of these improvements, now is a great time to get a move on it -especially with all the great deals that are being offered!

Benefit #2 - Expansion of First-time Home Buyer Tax Credit
The tax credit available to first time home buyers was increased from $7,500 to $8,000 for homes purchased between January 1, 2009, and December 1, 2009. Also, the credit no longer needs to be paid back as long as you live in the home without selling it for at least 3 years. The previous version of the credit expired on July 1, 2009, and required home buyers to pay the funds back over a 15 year time frame. The income limitations remain the same ($75,000 for single tax payers claiming the full credit and $150,000 for married tax payers), as do most other qualification requirements. Also, the credit remains refundable. This means that first-time home buyers who owe less than $8,000 in taxes for the year are still eligible for the full $8,000 credit when they file their tax returns. In that case, the IRS will write you a check for the difference between $8,000 and your actual tax bill. In fact, the credit can be claimed on your 2008 tax returns that you file by April 15, 2009, even if you buy the home in 2009. There is one catch, however: if you bought the home in 2008, the credit remains $7,500, and it still needs to be paid back over a 15 year timeframe beginning in 2011 when you file your 2010 returns.

Benefit #3 - Higher Reverse Mortgage Loan Limits
The loan limits for FHA-insured reverse mortgages have been increased to $625,500 across the entire country -not just the higher cost areas. The previous limit was $417,000 across the country. This is especially important because the FHA program is virtually the only game in town as private and jumbo reverse mortgage programs have nearly all evaporated. This coincides with another little-known change in the reverse mortgage arena: the availability of reverse mortgages on home purchase transactions. This is a fantastic opportunity for senior citizens to buy a new home and live mortgagepayment-free without having to wait for their old home to sell. Seniors could also use this strategy to buy a new home and turn the old home into a rental or otherwise wait for market conditions to improve before trying to sell the old home.

Benefit #4 - $729,750 FHA and Conforming Loan Limits Restored in High Cost Areas
The $729,750 maximum loan limit had been in force throughout 2008, but was reduced to $625,500 in 2009. The economic stimulus plan restores the $729,750 maximum. This makes higher cost homes more affordable - especially in the coastal housing markets that tend to have higher than average home values. It is always advisable to consult with a Certified Mortgage Planning Specialist TM (CMPS®) when navigating today's turbulent mortgage and real estate marketplace. Call me for names of mortgage brokers.

 

Foreclosure Fraud Video

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View this Freddy Mac video to get the low down on Foreclosure Scams.

Judith Weiner's Home News - November 2009

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Judith Weiner's Home News November 2009

He Never Gave Up

In 1955 Harland Sanders was 65 years old and virtually broke. Fortunately, he possessed two things: a car, and a recipe for chicken. He took his recipe on the road to sell to restaurants, and the rest, as they say, is history.

 

Harland "Colonel" Sanders was the founder of Kentucky Fried Chicken, and now KFC restaurants serve more than 12 million customers every day in 109 countries and territories around the world. Colonel Sanders is proof that it's never too late to decide to never give up.

 

Let's celebrate that it's never too late!

 

Help Yourself By Helping Others

When the difficulties of life are getting you down, often a way to work your way out of the dumps is to perform a personal act of power that benefits someone else. What's a "personal act of power"? An action that's within your control, such as:

 

Holding a door open for someone.

Smiling.

Offering kind words and encouragement to those who need them.

Listening to someone without interrupting him or her.

Picking up the phone and dialing when your intuition tells you to call someone.

Forgiving others and yourself for imperfections.

Cooking a meal for a friend.

Offering a compliment to someone.

Stopping - when you catch yourself starting to judge someone.

Remembering that things can change in a moment.

Focusing on the present and what you can do for someone else right now, not sometime in the distant future.

Remembering that everything you do, think, or say matters.

How To Learn New Skills

Acquiring a new skill is a journey. Follow these steps to ensure that you're headed in the right direction:

 

Start with the basics. We often jump past the fundamentals to speed up the learning process. To find the right road, begin with material that explains how and where to get started.

 

Break down the tasks. The distance ahead can seem overwhelming at first. Cut down your journey into manageable segments to avoid growing frustrated.

 

Become an expert at each segment. Don't move on to the next step until you've tested your knowledge. Try to get the same measurable results over and over before you move on.

 

Let go of the past. As we get older, it can get harder to pick up new skills, sometimes because of fears or bad habits. When you're learning something new, train your mind to let go of preconceived ideas that will slow your progress.

 

Ask for directions. The key to understanding is to ask questions. Consult with experts who can guide you toward your destination. Develop some test questions for yourself as a way to really confirm your understanding of the material, and also to retain the information better.

Let's Use Less Stuff

It should come as no surprise that between Thanksgiving and New Year's Day, our excessiveness hits an annual high, especially where waste is concerned: We throw out 25 percent more garbage than we do the rest of the year. That's a million extra tons of garbage per week.

 

So this year consider some of the ideas below provided by The ULS (Use Less Stuff) Report. Your planet will thank you!

 

· If every family saved and reused just two feet of ribbon per year, enough ribbon would be saved to tie a bow around the entire planet. When unwrapping gifts, poke two holes in a paper plate and feed the ribbons through so they're easy to find and reuse later.

 

· The more than two billion holiday cards sold in the United States each year could fill a football field 10 stories high. If each family cut back by one card (not that The ULS Report advocates "scrooginess"), they'd save 50,000 cubic yards of paper. At least try using recycled paper products, and consider sending e-cards when appropriate.

 

· If each of us throws away just one tablespoon of mashed potatoes, it adds 16 million pounds of waste to landfills. If that's unimaginable in your family, think of it this way: One discarded spoonful of cranberry sauce amounts to over 14 million pounds. Make only as much as you need, then store any leftovers in airtight containers and be sure to use them.

 

· Reduce the number of bags thrown out by carrying your own, whether you're shopping for gifts or groceries.

 

The ULS Report has more useful tips on its Web site at http://use-less-stuff.com.

Can More Sleep Help Eliminate Childhood Obesity?

Researchers have found that getting less sleep could increase your child's risk of becoming overweight or obese. In fact, for each additional hour of sleep children get, their risk for obesity drops by nine percent. The researchers found that children with the shortest sleep time had a 92 percent higher risk of being overweight or obese when compared with children who experienced longer sleep durations. Short sleep durations were categorized as follows:

 

· Children younger than five - less than nine hours per day.

 

· Children ages five to 10 - less than eight hours per day.

 

· Children older than 10 - less than seven hours per day

 

Previous research has recommended the following daily sleep times for children:

 

· Younger than five - 11 hours or more per day.

 

· Five to 10 - 10 hours or more per day.

 

· Older than 10 - nine hours or more per day.

Lest We Forget

You probably know that Veterans Day in the U.S. and Remembrance Day in Canada are observed on November 11. This is a day to honor our veterans for their patriotism, love of country, and willingness to serve and sacrifice.

 

But do you know why this date was chosen?

 

The major hostilities of World War I were formally ended at the 11^th hour of the 11^th day of the 11^th month of 1918 with the German signing of the Armistice. World War I - known at the time as "The Great War" and "The War to End All Wars" - had raged across Europe, Africa, and the Middle East from 1914 to 1918, with a death toll estimated as high as 15 million people.

 

The red poppy that you'll see veterans wearing on November 11 is a symbol of remembrance inspired by the most famous poem of the war, In Flanders Fields by Canadian Lt. Col. John McCrae. The sale of manmade versions of these red poppies benefits veterans, their families and dependents.

Waiter, Please…

A guest of a resort hotel in a tourist area walked into the dining room where breakfast was being served. Shortly after the guest sat down a waiter arrived to take his order.

 

"I would like two eggs, over easy, one with the yolk overcooked and rubbery and the other undercooked with the yolk broken and running out on the plate. I would also like some sausage that has been grilled and set out on the plate to get cold, burnt toast that has also grown cold so that it crunches and crumbles into nothing at the first bite, butter that has been in the freezer so that it's impossible to spread, and a pot of coffee that is lukewarm and very weak."

 

The waiter busily scratched down the guest's order and said, "This is a very complicated order, sir. It might be difficult to deliver it exactly as you have requested."

 

The guest replied, "But I had that exact breakfast here yesterday!"

Get Read - Get Results

Do your emails get the attention - and rapid response - they deserve? Here's how to make sure people read and answer your messages while they're still fresh:

 

· Grab them with your subject: The subject line should read like a compelling newspaper headline. Another technique is to use the subject line to tell people what you want up front: "Please come to the 3pm meeting," for example, or "Do you have the Jones file?"

 

· Limit yourself to one subject per message. Don't overload readers with questions and data. Single-topic emails are easier to answer than lengthy essays or questionnaires.

 

· Ask for action. Tell the reader what you need him or her to do: present a report at the 3 o'clock meeting, or bring the Jones file to your office. Specify whether you want a response to your email. If it's not necessary, close with a simple NRN (No Reply Necessary).

 

· Be consistent. Tracking emails is easier when you keep the same subject line.

Doggie Holiday Dos And Don'ts

Don't let your holiday feast become a holiday hazard for your dog. Control the situation with these guidelines:

 

Never give a dog a cooked bone, especially poultry bones. These can splinter and harm your pet's throat or even cause internal injuries.

 

Don't serve your dog leftovers. What's good to us may seem tasty to a dog, but beware: Many foods are difficult for dogs to digest; some are toxic and can even be fatal. On the "Do Not Serve" list: fat, grapes, tomatoes, garlic, onions, raisins, and salt.

 

No dessert, please. Sugar and fat can lead to weight and dental problems, as well as diabetes. And chocolate can be lethal, especially to small dogs.

 

Don't decorate with items that may be hazardous to your dog. Be aware that small ornaments can cause choking. If you plan to burn candles, make sure your dog can't knock them over.

What A Gift!

Daylight Saving Time ends November 1, which means we'll "fall back" and regain the hour we lost when Daylight Saving Time began back in March.

 

A whole hour - what a gift! What will you do with it?

Stop Before You Shop

Before you head out to that next sale, stop and ask yourself if you really need to go. Why? Because many "sales" aren't really sales at all, and you'll end up spending money that you wouldn't have if you just hadn't gone.

 

Think about things you've purchased on sale. We've all done it - bought things we didn't need and really didn't want, but we just couldn't pass up that bargain.

 

If you do find yourself at a sale, try to keep yourself from overspending by stopping and asking yourself, "Do I really need this? or "Do I really want this?" You might also ask yourself if what you're about to drag home will end up being something that sits in the back of your closet until you drag it back out for a yard sale. If so, keep your wallet closed. Don't add clutter, work, and guilt from bad purchases.

 

You have to be careful when you go grocery shopping as well. First, avoid grocery shopping when you're hungry! Second, always shop with a list, try to resist all that temptation sitting on the shelves, and buy only what you really need. Finally, don't fall prey to using coupons that are for things you'd never buy otherwise. It will just pump up your expenses unnecessarily.

On Blessings

What if you gave someone a gift, and they neglected to thank you for it - would you be likely to give them another? Life is the same way. In order to attract more of the blessings that life has to offer, you must truly appreciate what you already have.

- Ralph Marston

Where's Your Honey?

Honey experts say that the pantry - not the refrigerator - is the best place to store honey, particularly raw varieties. All honey eventually crystallizes, forming a semi-solid, grainy block, but cold temperatures accelerate that process. If your honey has crystallized, this doesn't mean it's spoiled or unsafe to eat. To re-liquefy it, put the jar in a pan with hot water and heat it on the lowest setting on your stove. Or microwave the honey in a microwave-safe container, stirring every 30 seconds until the honey has dissolved back to a liquid state.

What's In Your Pocketbook?

Researchers recently tested 50 purses for harmful bacteria and discovered that one in four handbags was contaminated with E. coli, the bacteria found in human and animal waste. Many more were carrying other bacteria, such as staphylococcus aurous and salmonella.

 

Researchers advise using a disinfectant wipe daily on your purse and, when in public spaces such as restrooms, suggest hanging your bag rather than placing it on the floor. It's also a good idea to avoid putting your purse on countertops or anywhere food is prepared.

Should You Stay The Course?

Are you on the road to success? Success expert Michael Nicholas (Success Triggers.com) says that sometimes people are on the road to success but they don't realize it, and they stop before they get to their destination. This forces them to start the whole process over, never staying the course long enough to reach any destination.

 

So the next time you feel like your life is going nowhere, ask yourself if perhaps you really are going somewhere, but it's hard to see from where you are.

 

It's a well-documented fact that as people get older, they often look back on their lives and have an aha! experience that can be summed up like this: "Oh, this was where I was coming all along - I just didn't recognize it while I was busy making my way."

How To Handle A Talkative Coworker

Do you work with a talky coworker who's driving you up the wall while simultaneously driving your production down? If so, you'll need to handle this annoying person, otherwise he'll plant himself at your cube and make himself at home.

 

When someone is talking your ear off and you want to stop him or her, try these tactics:

 

Excuse yourself and walk toward the restrooms. It'll stop the conversation.

 

Excuse yourself to get a drink of water.

 

When they pause for breath say, "OK! Well, I have a lot to do and I need to get to work." And then turn to your computer and start working.

Don't make eye contact, and keep working on your computer. This works with some people who will take the hint, but some people either don't care or don't get it and you'll have to do something more drastic. It may be time to get your manager involved.

 

 

Quotes

 

Confidence is preparation. Everything else is beyond your control.

- Richard Kline

 

If you think you're too small to have an impact, remember the mosquito.

- Anita Roddick

 

The moment of victory is much too short to live for that and nothing else.

- Martina Navratilova

 

Rate Lock Duration

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The Truth About Appraisals

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The Truth About Appraisals
Knowing the Guidelines Solves the Mystery

The appraisal process often baffles consumers. They may feel that their home is worth a higher dollar amount, and so the appraised value doesn't always make sense to them. It is important to know that the appraiser is completely independent from lenders, buyers, sellers, and Real Estate Agents, and that the guidelines to which they adhere are dictated by the Uniform Standards of Professional Appraisal Practice (USPAP) and Fannie Mae. In most states, the mortgage lenders must also disclose the purpose of the appraisal, as each transaction carries its own set of rules.

In essence, these important guidelines help appraisers put a fair market value on homes based on comparable sales in the same area, and the home must be bracketed in size and value.

For example, there is no set dollar figure associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, but the local marketplace supports the value of a pool at $15,000, then that item will be bracketed as [$15,000] on the appraisal.

Upgrades can usually be expressed at a higher percentage of their value in newer homes because the only way to obtain those upgrades was to put more money into the cost of building the home. On the other hand, the upgrading or remodeling of an older home is rarely reflected in full in the final appraisal. This is because typically 25-40% of the project involves demolition and the fixing of issues that aren't uncovered until the project has already begun, such as plumbing or wiring that may need updating.

Ultimately, the value of the upgrades must be supported by comparable examples within the same marketplace. These comparisons must be drawn from current market activity within the last six months. This is a safeguard to prevent appraisers from attaching too high a value to the home in question, and opening up the appraisal for review. This guideline further states that appraisers can only base their opinion on the value of homes that have actually closed escrow.

As a loan professional, I make a point to follow the appropriate guidelines at all times. This promotes a good relationship with the lender, and helps to create easier and much smoother closings for my borrowers.

Greg Schneider
V.P. Residential Lending
PHH Home Loans
Phone: (847)686-0158
Fax: (847)686-0158
gxschneider@cbburnet.com
http://www.GregSchneiderOnline.com

Choosing a Fixed Rate Loan

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Choosing a Fixed Rate Loan

Fixed rate loans generally come with one of two options; the 30-Year Fixed and the 15-Year Fixed. If a borrower is planning on being in the same home for a long period of time, a 30-Year Fixed may be more attractive because it offers stability. The monthly payment will remain consistent over the life of the loan. If interest rates are at historic lows at the time the borrower is seeking to obtain financing, this is a good program to consider. A 15-Year Fixed loan program offers the same stability, but the accelerated amortization schedule makes the monthly payment substantially higher. While the interest rate may be lower on this type of loan, the borrower must be willing to commit to a higher monthly payment. If the borrower wishes to retire in 15 years and be debt-free at that time, this loan program may be more suitable to the borrower's long-term needs. It is also possible to make pre-payments on a 30-Year loan and reduce the life of the loan, as well as the overall interest payment, without committing to the higher monthly payment of a 15-Year program. As long as there is no pre-payment penalty associated with the 30-Year mortgage, pre-payment offers the borrower the latitude to make additional payments when it is affordable. If cash flow becomes difficult, this arrangement will not put the borrower in a compromising position.

What Is a Prepayment Penalty?

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What Is a Prepayment Penalty?

A prepayment penalty is a fee charged to borrowers that make full payment on their mortgage, or pay off a substantial portion (generally anything exceeding 20% of the total loan amount), ahead of schedule. This is a clause written into some contracts to protect the lender's book of business in exchange for providing a lower interest rate, or for providing financing to a high-risk borrower.

Prepayment penalties vary with different lenders, but generally apply to a one-, two-, three-, or five-year period of time. This fee can be expressed as either a specific number of months' interest or a percentage of the outstanding balance. A 'hard' prepayment penalty applies to either the refinance or the sale of a property. A contract written with a 'soft' prepayment penalty permits the borrower to sell their property without incurring a penalty, but does restrict refinancing for a set period of time. It is important for the consumer to know that a prepayment penalty is the borrower's choice and should never be considered a requirement!

Make sure you are working with a reputable loan professional who is aware of your long-term plans before consenting to sign off on an agreement that includes a prepayment penalty! Always ask for a written evaluation of your loan options.

What Is "Seller Rent-Back"?

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What Is "Seller Rent-Back"?

In home purchase transactions, there are many times when the buyer and the seller are simply unable to agree upon a specified closing date. The Real Estate Agent involved can negotiate a 'rent back' period that is agreeable to both parties. This means the transaction technically closes, the loan for mortgage financing is funded, and ownership of the property is transferred into the buyer's name. However, the buyer does not take occupancy of the property until several days later. Instead, the buyer sets up a rental agreement in which the property is leased back to the seller for a temporary period that everyone has agreed upon.

While this strategy is fairly common, it is important to make sure the seller is not occupying the property in a lease agreement for more than 30 days* after the close of the purchase transaction. This would constitute a big problem for the new homeowner. After 30 days, the lender would view this as a non-owner occupied purchase, and it would cause the terms of the loan to change radically.

*This requirement can vary depending upon the lender. Always verify that the timeframe is permissible prior to drafting such an agreement.

Ways to improve a Credit Score

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Ways to Improve a Credit Score

With identity theft on the rise, consumers are becoming increasingly aware of the importance of reviewing their credit reports. However, their thoughts about credit and its long-term impact upon their financial future typically end there until it's time to apply for a home loan. A credit score is used to evaluate how likely a borrower is to repay their loan. There are several actions a person can take to impact their score. Here are a few to keep in mind.

If someone has a credit card which has a high balance, while their remaining credit cards have low or zero balances, it's best to distribute the debt across the cards in order to change the ratio of debt to available credit.

Many consumers believe that they should close an existing credit card account if the card is inactive. It's better to keep the account open and use it periodically in order to take advantage of its contribution to their long-term credit history.

With the flood of credit card offers that come in the mail, it may be tempting to open new accounts. However, these "pre-approved" offers are not approved until the companies run a credit report which will temporarily impact the applicant's credit score. In addition, experts recommend that a person maintain between two to five credit card accounts, total, so it's best to avoid accumulating too many.

There are several factors that contribute to a credit score. But by observing the tips above, as well as making payments on time and keeping balances as low as possible, a consumer is sure to achieve superior results.

High Credit Score = Low Mortgage Rate

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High Credit Score = Low Mortgage Rate

Credit scoring was developed in the 1960s as a means to determine whether or not consumers were likely to repay their loans. The score ranges from 350 to 850 with a higher score being extremely favorable. Essentially, a high credit score translates into lower interest rates for the borrower.

There are five factors that comprise the credit score. Payment history accounts for 35% of the score; outstanding credit balances have a 30% impact; credit history makes up 15%, type of credit factors at 10%; and inquiries influence the score by 10%. This gives the lender a snapshot of an individual's sense of financial responsibility and ability to pay back loans.

There are many quick tricks to improve the credit score, and I can provide borrowers with more information on this subject. If necessary, I guide them to a reliable resource for credit remediation. If a borrower has to pay a higher interest rate to close a loan, the tarnished credit rating will begin to improve once mortgage payments are made on time and in full. If that is the case, my team and I will be on the watch to alert the borrower when an opportunity arises to refinance and get a lower interest rate.

The Home Equity Line of Credit

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The Home Equity Line of Credit

Home equity lines of credit have become increasingly popular, and there are many types of loan programs available in this genre. This type of credit line is not meant for day-to-day expenses as a credit card would be, however, many consumers use their home as collateral to obtain an equity line of credit to pay for higher ticket items such as educational expenses or home improvements.

Borrowers may want to compare the advantages of a traditional second mortgage over an equity line of credit. But they should not compare these programs based on the Annual Percentage Rate (APR) alone. The APR in an equity line of credit is based only on the periodic interest rate, and does not include other charges such as points, maintenance fees or transaction fees. Conversely, a second Trust Deed takes all points, fees, and other charges into account when calculating the APR.

If someone you know is interested in an equity line of credit or a traditional second loan on their mortgage, I can provide them with a spreadsheet to compare available loan programs to review with their financial advisor.

Preparing Your House for the Market

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Preparing Your House for the Market

If you're selling your home, make sure your home has "curb appeal." Remember, you can't change a first impression. If your home looks like a diamond in the rough, think about putting a small investment into cleaning up the outward appearance.

Imagine that you are seeing the property as a potential buyer. You'll want to do a little yard work - clear away dead shrubbery, and trim your trees and lawn. Weed the flower beds or plant some flowers that will bloom in season. Make sure the driveway is not stained, and if you can't afford to paint the home entirely, at least make sure the front door and immediate entryway is immaculate.

Fresh and clean are still the keywords to making a good first impression once the potential buyer walks through the door. Unless a particular window is facing an eyesore or a neighboring building, open the drapes and let the sun shine in! Put your dog in the back yard or garage so he's not jumping on the new people who just walked in.... they might have allergies! There is much you can do to improve the look of your home, without investing a great deal of money.

Dealing with Debt After Retirement

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Dealing with Debt After Retirement

Reverse mortgages designed to help "house rich, cash poor" seniors meet their day-to-day expenses have gained popularity. Equity is taken out of the home, so debt increases and equity diminishes over time, (unless the property value increases and offsets this use of equity).

Many lenders offer reverse mortgages, and most are set up so that there is no monthly payment as long as the owner or co-owner(s) reside in the home. There are no minimum income requirements, and most plans allow the owner to retain title to the property until they have lived in a different permanent residence for at least 12 full months, sell the property, die, or the end of the loan term is reached.

The Home Equity Conversion Mortgage (HECM) is the only type of reverse mortgage insured by the Federal Housing Administration (FHA). Even if the original loan on the home was not an FHA loan, the reverse mortgage can be.

Seniors should first consider all their options and take a realistic look at monthly expenses. The AARP warns not to take too big of a chunk out of home equity, as this may affect the ability to collect Social Security Income (SSI). As an alternative, the retired home owner can consider downsizing to a smaller dwelling, or relocating to a less expensive neighborhood. Visit http://www.aarp.org for more information.

Rate Lock Duration

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Rate Lock Duration

Lock durations can vary for mortgage financing, but most lenders lock in the interest rate for 60 days from the date the loan application is submitted. As long as the loan is closed within that lock-in period, the lender honors the agreed upon interest rate.

Some consumers are misled by advertising that quotes unrealistically low rates based on 15- or 30-day lock durations. This is called 'short-pricing.' The lender basically knows the borrower doesn't have time to meet their conditions and have all the necessary paperwork in order within that brief time period. As a result, the lender is not obligated to honor the low rate that was listed in their advertising.

For simple refinance transactions, a 45-day lock-in period is more realistic. For purchase transactions, which are typically much more complex, you're much safer going with a 60-day lock, even though the interest rate might be a little higher than the rate you see quoted on billboards and the Internet.

Borrowers should make sure they have a written rate lock agreement, and allow themselves a reasonable amount of time to close their loan. I prefer to lock in all my clients as soon as their application is filed, rather than gamble with predicting short-term interest rate movement. My team and I focus more on assisting clients with long-term goals and management of their mortgage debt to secure a strong financial future.

The Difference Between Pre-Qualification and Pre-Approval

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The Difference Between Pre-Qualification and Pre-Approval

Pre-qualification is the first step in obtaining mortgage financing. A potential borrower answers a few questions to provide the loan consultant with a quick snapshot of the borrower's income, existing debt, accumulated savings and whether or not there is a co-borrower. Signature(s) allow the loan consultant to run a credit report and begin to determine what loans are good candidates for this particular client. However, there are literally thousands of loan programs available. It is important for the loan professional to know the long-term financial objectives of the prospective homeowner.

Pre-approval is a written documentation that proves the borrower has full support of a lender. It means the form 1003 Uniform Residential Loan Application has been completed and reviewed by an underwriter. Based on the borrower's income, debt ratio and savings, the underwriter will provide a dollar amount this borrower is eligible for. Now the borrower has the convenience of shopping for a home in the price range agreed upon by the lender.

Pre-approval allows potential homeowners to shop as cash buyers, and that means negotiating power. The seller will take an offer from a pre-approved shopper much more seriously and may even accept a lower bid because they know the financing is in place and the deal is secure.

What Constitutes Closing Costs?

Posted at 12:51 PM, Jan. 20, 2007

What Constitutes Closing Costs?

Closing costs are expenses that cover fees associated with the transfer of property ownership, fees paid to state and local governments, and the costs of obtaining a mortgage loan. Some of these fees are negotiable, and could be paid by either the buyer or the seller. Some costs are one-time fees (non-recurring closing costs, such as title search, termite inspection, appraisal, etc.); while other fees such as homeowner's insurance or property taxes are things you will expect to continue to pay on a regular basis as a homeowner.

As part of the loan selection process, your mortgage consultant should be giving you some idea of how much money you should have in reserve to cover your end of these costs. The Real Estate Settlement Procedures Act (RESPA) requires the lender to provide you with a Good Faith Estimate within three days of the submission of your loan application.

RESPA also states that as a home buyer, you have the legal right to request a copy of the HUD-1 Settlement Statement 24 hours before your closing is scheduled. The HUD-1 clearly defines all closing costs, including those that are to be paid by the buyer and the seller. It's a good idea to have both of these forms before your closing so you can compare the estimated costs to the actual costs before you finalize your transaction.

PMI deductible for many homeowners

Posted at 12:49 PM, Jan. 20, 2007

How Adjustable Rate Mortgages Work

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How Adjustable Rate Mortgages Work

During the last decade, Adjustable Rate Mortgages (ARMs) have increased in popularity among consumers. These days, few homeowners (especially first-time buyers) remain in their homes for more than seven years. In this case, it often makes sense to get an adjustable rate mortgage with a lower rate, especially one with a 5-year or 7-year fixed portion, since they won't have the loan long enough to be concerned about rate fluctuation.

Adjustable Rate Mortgages have three main features: Margin, Index, and Caps. The Margin is the fixed portion of the adjustable rate. It remains the same for the duration of the loan. The Index is the variable portion. This is what makes an ARM adjustable. Margin + Index = Interest Rate.

It's important to understand that there are many different indices: The 11th District Cost of Funds (COFI), the Monthly Treasury Average (MTA), The One Year Treasury Bill, the Six Month Libor, etc. Each index has its own strengths and weaknesses; some are slow moving, others are more aggressive.

The third and final component of Adjustable Rate Mortgages is Caps. Caps limit how much the rate can fluctuate over time. Annual Caps limit changes to the annual rate, whereas Life Caps provide a worst case scenario over the life of the loan.

What Is Title Insurance?

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What Is Title Insurance?

Title insurance is a policy that is usually issued by a title company to protect the lender against something that might have happened in the past, rather than something that might occur in the future. In essence, an extensive search of public records is conducted by the title company to validate who has held title to the property in the past. The lender wants to know if there are any liens, judgments or easements on the property that they should be aware of.

But title insurance also guards against hidden risks or unknown factors that might cause an encumbrance at some point in the future, such as unknown heirs, forged deeds or wills, misinterpreted wills, false impersonation of the true owner of the property, deeds signed over by persons of unsound mind, or defects in the recording of past titles. Title insurance covers the cost of the title search, and any legal fees that may result from any dispute over past property ownership. It is required by the lender and paid for by the buyer.

The smart home buyer will also purchase title insurance to protect their own interests. This is a one-time premium that protects the buyer or their heirs, as long as they retain an interest in the property.

What is Negative Amortization?

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What is Negative Amortization?

A negative amortization loan is an adjustable rate mortgage that allows the consumer to tap into home “equity” by offering several monthly payment options. Up to an additional 25% of the original loan amount is available to the borrower.

This flexibility works well for consumers who have seasonal income or want more control over their cash flow. However, the borrower must have some degree of financial discipline. Each month, the borrower will choose to make a fully amortized payment, an interest-only payment, or a low introductory rate payment.

A fully amortized payment is larger, and includes payment toward principal + interest. The interest-only payment is lower, but no part of that mortgage payment goes toward the principal. The borrower is simply keeping their head above water.

The third option is where negative amortization comes into play. If the consumer chooses to make the low introductory rate payment, the interest is not sufficiently covered for that month. The balance of interest owed is then tacked back on to the principal, thus increasing the mortgage debt.

Smart consumers can use these payment options to their advantage, but should have a full understanding of how adjustable loans work. They should also know that once the maximum loan amount has been reached, the lender will immediately increase the payment amount to the fully amortized rate.

The ABC's of Radon in Illinois

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The ABC’s of Radon in Illinois

 

Test Your Home Today

 

Test your home for radon today. Radon, an indoor air pollutant, is a colorless, odorless radioactive gas. Radon comes from naturally occurring uranium in the soil. The only way to tell how much radon you have in your house is to TEST.

 

BE AWARE

 

 

 The USEPA estimates that approximately 13% of lung cancer deaths are radon related. The remaining 87% of lung cancer deaths are related to smoking. The USEPA has also concluded that smokers are at higher risk from radon. The USEPA recommends that indoor radon levels be below 4 picocuries per liter of air.

 

Do You Know Where Radon Comes From?

 

Most radon enters a home because of air pressure and temperature differences between the home and the outside air. When air is vented from buildings by natural or powered ventilation, radon and other soil gases are drawn in from the surrounding soil through openings between the house and the soil.

 

Elevated radon levels have been found throughout Illinois which is made up of 3 zones. Lake and Cook Counties are in zone 2 where Moderate to High levels of Radon can be found. People residing in zone 2 and zone 3 may tend to dismiss radon as a health risk. But, elevated radon levels (4.0 pCi/L or more) occur in these areas just as they do in zone 1. Don’t be fooled. Test for radon. The only way your family can know whether you have an elevated radon level is to test for it.

 

Where Do You Obtain Kits?

 

• Kits may be available at your county health department, local extension office, hardware store, or home improvement store. • Call the Illinois Emergency Management Agency (IEMA)-Division of Nuclear Safety Radon Program at 1-800-325-1245 for a list of laboratories that sell radon kits, or visit our website at www.state.il.us/iema. • IEMA also has a list of measurement professionals who can test for you. For consumer protection, the Radon Industry Licensing Act (RILA) requires measurement professionals who test for radon and mitigation professionals who reduce radon in structures to be licensed by IEMA.

  

 If your home has elevated radon, IEMA has a list of licensed radon reduction contractors (mitigators) who can fix your radon problem. IEMA recommends hiring a licensed mitigator because they have the proper equipment, specialized training and technical skills needed. Using a professional can offer peace of mind. Don’t let radon be a problem in your house.

 

Where Do You Get Information About Radon?

 

Courtesy of:  The Illinois Emergency Management Agency-Division of Nuclear Safety Radon Program, 1035 Outer Park Drive, Springfield, Illinois 62704, Radon Information Line:1-800-325-1245 and at www.state.il.us/iema