Real Estate Info & FAQ

FSBO Scam

2007-05-28T07:28:00.001-05:00

Here is something to watch out for....
http://activerain.com/blogsview/109282/FSBO-Scam

John

Advice for sellers

2007-05-16T05:11:00.000-05:00

I found some great advice for home sellers. Click here to go to the site.

The point of the article is that we live in a very "lawsuit happy" world. And there is no reason to expose yourself to more risk than is absolutely needed.

This article has some very practical tips.

John

Getting the best interest rate

2007-05-13T06:09:00.000-05:00

Here is a link to an article that I wrote on Helium.com

"Dirty Little Secret"

This article covers some very practical advice for anyone that is currently shopping for a mortgage.

It also touches on a hot spot within the mortgage industry.

Take a read (it is a little long--1500 words). It does give some very practical, actionable advice at the end.

Thansk!

John

Real Estate Agents

2007-05-13T05:56:00.000-05:00

I found this article on Real Estate-News on Blogger. They talk about the value of traditional listing agents versus Flat Fee Agents.

This is a hot issue. Traditional agents despise the flat fee agents and in some states, have actually been able to get laws passed that put them out of business. The National Association of Realtors has a very powerful lobby.

Read this article. It spells out some of the good and bad about traditional versus flat fee agents. The writer stands with the flat fee, but it is still good information.

What it really comes down to is what am I willing to do myself and what do I want to pay someone else to do.

http://realestate-news.blogspot.com/2007/05/flat-fee-mls-vs-real-estate-listing.html

Thansk!

John

Save my Home!

2007-05-06T07:25:00.000-05:00

If you are one of the unlucky people who find themselves caught up in an increasing payment and therefor are in foreclosure trouble, you find this article helpful.

Go to:
http://realestate-news.blogspot.com/2007/05/stop-foreclosure-quick-and-enjoy-life.html

Best Wishes,
John

Another reason not to pre-pay the mortgage

2007-04-23T05:18:00.000-05:00

I have read (change that to skimmed) the article that is referenced here. It really does not get into the tactical (what to do) part of the solution. However, it does bring home the point that paying off the home as fast as possible is not really the best long term option for most people.

Take a look at this link. Mr. Stenbeck does a good job of summarizing the salient points of the article. Of course, there is a link to the article if you feel the need to read it yourself.

http://www.behindthemortgage.com/behind_the_mortgage/2007/04/home_equity_as_.html

Thanks!

John

Tough times for applicants...

2007-04-11T06:26:00.000-05:00

There is a great post on Mortgages Undressed.

Here is what Larry Cragun has to say:

I realized today just how much the implosion of the subprime world has affected our business. Everyone is running and hiding. Few are willing to take any chances. Things that used to be easy decisions are difficult. No one at the lender level is willing to take any chances. The days of getup and go have got up and went. It reminds me of a poem: How do I know my youth is all spent? My get up and go has got up and went.

This state of affairs has important implications for you the borrower. Expect no favors and no exceptions. Additionally you should go overboard to prove how worthy you are to borrow. Give no crap to anyone asking for anything, just to(sic) it and to(sic) it right.

If you are requested to give bank statements give copies of all pages front and back.
Do it fast. Do it thoroughly, Do it all. Otherwise your loan will drag out and no one will have any sympathy for your state.

No one is moving fast so you move fast to help compensate.

That is great advice. There is an impact on EVERYONE regarding the subprime fallout and I have noticed it in my loans that I am trying to process. I had a loan turned down yesterday because they felt that the property values were declining in the area. I want to call them up and say "No kidding? They are declining or are flat everywhere", but this is all the reason they need to deny the loan. So, make sure your application is TOP NOTCH and is an easy approval.

On a personal note...

2007-04-07T07:39:00.000-05:00

Posting here has been a little sporadic. The reason for that is that I have been finishing my MBA course work. I completed my last test on April 3rd! Praise the Lord!

I think I am going to advise the Professional MBA department to offer counseling to people that are completing their PMBA's on "re-entering" their family's' lives, since my family has seen me only scarcely for the last 2.5 years.

On another personal note, I have accepted a new job with a different firm. Actually it is a total career change. I will be working as a Project Manager for Colite International. They manufacturer signs (but not yard signs...they make the big ones that go on top of buildings and places like that). I start on April 16th. This position, based on the description that they gave me, matches well with the loan process. It also is in line with my education and will allow me to use my MBA in an effective way

I still intend to keep posting on this blog. While this is a career change, real estate and mortgages (and the personal finance and planning that surrounds them) are really a passion for me. On the up side, the past 6 years has been a real joyous occasion for me and I have loved the people and getting to help them. On the down side, the income has been a struggle. The inconsistency and the lack of enough money to provide for my family has prompted me to take a different path.

However, I still intend to do home loans for people on the side. Of course, they would have to understand that I have a full time job, and I will help them after work or on the weekends. But from my point of view, if I do not NEED the money to make the ends meet, it will fun and enjoyable again, and that should translate for the customer into a great experience. David Rucker, the owner of Sturkie Mortgage, has agreed to let me still run some loans through the company. So, if you, or anyone that you know, is in need of a home loan, I can still help, albeit in a somewhat reduced capacity. Of course, since my availability will be reduced, I will lower the cost of doing the loan for the client.

That's it. As I said before, I still intend to post on this blog about real estate and I intend to keep up with everything. I just need to make a move that will provide better for my family.

Trigger Lists...Bummer

2007-03-26T12:25:00.000-05:00

This is from REALTOR (R) Magazine online.

Daily Real Estate News March 26, 2007

FTC Says It Can't Regulate 'Trigger Lists'

The Federal Trade Commission announced earlier this month that it lacks the legal authority to crack down on unwanted “trigger list” phone solicitations to consumers who have applied for mortgages within the preceding 12 to 24 hours.

Companies sell lead generation lists to lenders. The names on the list come with significant financial information, including credit scores, loan balances, credit card debts, and estimated home values. The information emanates from the big three credit bureaus — Equifax, Experian, and TransUnion — following their receipt of an inquiry by a mortgage broker or loan officer.

Rebecca E. Kuehn, the FTC's assistant director for privacy and identity protection, says even though the FTC lacks statutory authority to ban prescreened telemarketing mortgage offers, it does have enforcement authority against bait-and-switch scams and misuse of consumers' credit information. Consumers who experience such problems can file complaints with the FTC online at FTC.gov.

Source: Washington Post Writers Group, Kenneth Harney (03/25/07)

Personal Financial Analysis

2007-03-23T14:59:00.000-05:00

I have been wondering about something lately. In management, there is a term called a SWOT (actually pronounced Swat) Analysis. This tool is particularly valuable when analyzing a company in realtion to its competitive landscape. But, could you use the terms to analyze your own personal financial picture?

What does the acronym stand for? It stands for Strengths, Weaknesses, Opportunities, Threats. I can see this breaking down like this - and this is a ROUGH breakdown...I am still going over this in my head.

> Strengths - What strengths does my personal financial life have? Do I have good income, low debt, good credit, or good habits?

> Weaknesses - Opposite of the above. Do I have poor habits?

> Opportunities - What opportunties are in front of me? These could be a raise, an investment, a business decision, etc.

> Threats - This could be anything and could be boiled down to "Life". But I think that if you have young children, like I do, paying for college could go here.

I do not think that the answers you get are as valuable as the process you would go through in working this out in your mind.

I am open to all comments on this!

Have a great weekend.

Cost of a mortgage

2007-03-20T08:26:00.000-05:00

What is the true cost of getting a mortgage? I talk to many people and when the cost of getting the loan done comes up, usually one of the questions is about comparing two different offers. The trouble is that getting two offers structued the same so that you are comparing "apples to apples" is quite hard. There are so many variables that it is hard to set them both equal to each other. In addition, so many of the numbers that go into the deal are not "known" and are only estimates.

I found a great post on Outer Banks Real Estate. In this post, Mr Roach does a GREAT job of line by line comparing one of his loan offers to another offer. The other offer is not fully disclosing the FULL cost of the loan. This is the "apples to apples" problems that I mentioned before.

Thanks Mr. Roach.

Spring time

2007-03-19T06:35:00.000-05:00

I am not going to say this is really something I am going to do myself (smile), but I know that it is something I need to do.

Spring cleaning appears to me to not only be a ritual (where did it start anyway), but it does make sense. Over the winter, things can tend to be put off, so the spring and fall seem to be good times to catch up on that sort of stuff.

Also, it makes sense if you may consider selling. A good deep cleaning is step one if you are thinking of selling your home. So, while you are going around cleaning, try to put yourself into the eyes of a potential buyer. What would they like to see?

Another good investment is a black light. No, not for some wild party once you get your home really clean. If you have pets, like we do, they have accidents on the carpet. You rush to clean it up and do the best job you can. But did you really get it all up? The black light will reveal the truth. We recently got one and I was SHOCKED at what I say. Not just the pet spots, but just general dust showing up in areas that I never thought to look.

Here is a good article on this to help kick start your brain on what needs to get done.

http://blueroof.wordpress.com/2007/03/11/spring-cleaning-checklist/

John

Your credit identity is at risk!

2007-03-16T07:29:00.000-05:00

ALERT: WHAT’S YOUR NAME WORTH?

Your name is worth everything to you…it’s your identity, it’s YOU. Here’s breaking news you need to know…and you need to let all your family and friends know right away as well.
Few people realize that each time their credit is checked, the information provided to the credit bureaus (Equifax, TransUnion, Innovis or Experian) immediately becomes a commodity that is sold not only to other lenders but also to companies that sell and resell the same names and personal information.

That’s right - The credit bureaus have found a way to increase their revenues at your expense….and without your permission. These ‘inquiry leads’ include name, address, phone numbers (including unlisted), credit score, current debt and debt history, property information, age, gender and estimated income. They are marketing your personal, confidential information to competing creditors and making millions. Your privacy is being sold, not just once, but over and over again.

The lenders that have purchased these leads at a premium will then do everything they can to recoup their investment and turn a hefty profit. Often, bait and switch tactics are being used to lure clients away from their reputable lender.

The good news is that you can make it stop! The consumer credit reporting industry has provided a way for you to “opt out” or remove your name from these lists. You can contact them by phone at 1-888-567-8688 or online at https://www.optoutprescreen.com/?rf=t. You must opt out at least 48 hours prior to having your credit checked to make sure it is processed in time. You can choose a five year or lifetime option. The lifetime option does require a signed form.

At this time the practice of generating and selling these lists is allowed by the law. If you would like to complain about this or have been targeted after opting out, you can contact the FTC or your state Attorney General's Office. These agencies will investigate reported violations. In most cases, an agency's primary source of information is complaints from the public.
As a consumer, it is your right to shop for the best service and price for a product, but this should be when and how you want to shop. These unsolicited marketing tactics are a nuisance and intrusive. Take your privacy back and refuse to be a part of this system.

Sub Prime mortgage fallout

2007-03-14T22:49:00.000-05:00

If you pay any attention to the news, I am certain that you have heard numerous reports of Sub-Prime lenders going under. This is rocking the financial markets. There are many reasons for this, including the glut of money that was dumped into the markets over the last 5 or so years. Another culprit is the innovative loan products that were sold to people that had no business getting them. Couple this with VERY loose underwriting standards and...VIOLA! You have companies dropping like flies now that their portfolios of loans are defaulting and they are cash strapped.

But what does this have to do with you? Even though you may have good credit, solid job and easy to prove income, this does effect you. It effects you in rates. Obviously, as this shakes out in the markets, mortgage rates are bouncing around like a yo-yo as Mortgage Backed Securities investors try to figure out how to price their deals.

One other effect of this is in underwriting times. I have a loan in underwriting right now that is taking 2 to 3 times as long as it did 6 to 12 months ago. I am certain that this is due to the fact that, due to the lack of work, underwriters are getting layed off. So, a loan that would breeze through in the past in about 2 to 3 days, now takes over a week to get done and that time is getting even worse.

Another way this effects you is in underwriting standards. I ran a loan today that, 6 to 9 months ago would have flown through the underwriting engine. But not today. It took some real time and the final deal that I could put together for the client was not as attractive. This is all due to the pressure put on the markets to tighten up the belt. So, it effects you in what you may qualify for, since the pot is smaller and pressure is on the banks to deliver better QUALITY loans, as opposed to QUANTITY. So, if you have credit that is good, but not great, or if you have some other extenuating circumstances, get involved early. Do not let someone tell you that "we can get that done in 10 days", because that is unlikely. Stay on top of it and understand that, if you are working with a professional mortgage planner, you are in good hands. They will figure something out for you.

The one thing you can count on in the mortgage business is CHANGE!

Personal Finance and Strategic Equity

2007-03-07T12:14:00.000-05:00

(cell 1) 3-6 Months emergency income
then
(cell 2) Get out of non-preferred debt
then
(cell 3) One year salary (liquid)
then
(cell 4) Payoff the mortgage

I must give proper credit to this model. It was developed by Jim McQuaig of Nations Home Funding of Reston, VA.

Basically, the model is a very conservative approach to personal finance, and I doubt that there would be anyone that would argue it would not work.

The real strategy comes into play in cells 3 and 4. It is Mr. McQuaig’s belief (and my own) that whether the mortgage is actually paid off or strategically paid off is the personal decision for everyone.

By actual payoff, I mean that the loan is satisfied and a payment is no longer made to the mortgage company. You own the home free and clear.

A strategic payoff is if cell 3 (One year salary in a liquid account) actually continued to grow to the point that there is enough in this account to payoff the mortgage at anytime. You personal balance sheet has an asset (the side account) greater than the liability (your mortgage). You are in a POSITIVE position.

There is much more to this model and this thought process. I will try to share more in the coming weeks. If you would like to discuss this further, or apply a particular situation to this model, call or email me.

Subprime loans are a problem

2007-02-28T09:36:00.000-05:00

First, subprime loans are loans that are NOT run through Fannie Mae and Freddie Mac. They are typically given to customers that have poor credit or other issues like income they cannot document.

The other problem with these loans, and I know this from working with these lenders in the past, is that they usually push Adjustable Rate Mortgages (ARM). The favorite is the 2/28, which means that for 2 years, the rate is fixed. After that, it can adjust. The real problem with this is when there is a 3-year pre-payment penalty on the back side. That means that for one year (month 25 to 36), you MUST pay the higher payment, but you cannot refinance without paying a huge penalty.

These loans serve a purpose. I have done them and then worked with the clients during the two years to fix their credit and get them into a conventional loan before the interest rises.

That is the main problem with them. You have lenders and brokers with a product and un-informed consumers. To many (not all) of the lenders and brokers, these are transactions, with the borrower left to fend for themselves.

Here is an article that points out these problems from a national economic level.

http://brokerwatchdog.com/2007/02/26/signs-of-a-subprime-mortgage-market-earthquake/

SweetScooterBicks: It's Pretty Soon To When I Get Here

2007-02-18T22:39:00.000-05:00

I am very sorry that the posts have been few and far between. As you may (or may not) know I am in school getting an MBA, and sometimes we adults have to play the little game of "intentional neglect."

One of my favorite people in the whole world and one of the most talented writers I know personally (and I know soooooo many!), has finally decided to start a blog. This post and this link are completely unrelated to real estate (except the lady the wrote on the other blog actually worked for a real estate agent in a past life), we all need a good laugh sometimes.

The following link is a must read if you simply want a pick me up and to have a good chuckle.

SweetScooterBicks: It's Pretty Soon To When I Get Here

Check out her blog.

John

First Time Home Buyers

2007-02-06T15:54:00.000-05:00

I found the following list on Realtor.org today. This is a good, quick-hit list of stuff for first time home buyers to consider. It is not comprehensive, but it is a good place to start.

Of particular importance (of course, I would think so) is that they should get pre-qualified. This process can catch all sorts of issues, from credit problems to problems sourcing the down-payment money.

Here is the listing:

Daily Real Estate News February 6, 20076
Ways First-Time Buyers Can Prepare

A cooling housing market gives buyers, especially first-time buyers, more opportunities to snatch up a good deal. But just because there are good deals, doesn't always mean buyers are ready to make the leap.These six tips will help prospective buyers find out if they are ready for homeownership.

1. Take a first-time home buyer class. It will make repairing a credit score and shopping for a loan less stressful.

2. Be conservative. Borrowing too much can mean stretching and even sacrificing — to the point that it’s hard to even keep a six-pack of beer in the fridge.

3. Organize documents. First-time buyers should keep a pay stub, W-2, and bank and
retirement account statements on hand to expedite the loan application process.

4. Get pre-approved. Before starting the homebuying process, consumers should get pre-approved by at least one lender. Being pre-approved won't lock buyers in to a loan but it may save them the heartache of falling in love with a home they really can't afford.

5. Play house. Every month, prospective buyers should bank the amount that they'd have to pay if they owned a home. It's good practice so they'll be ready for the real thing.

6. Consider all the costs. It's not just a mortgage payment they have to worry about. Repairs, assessments, and other costs of homeownership can add up quickly.

Source: Star-Tribune, Kara McGuire (02/02/07)

Inman.com has a Wiki

2007-02-01T13:22:00.000-05:00

If you are unsure what a "wiki" is, take a look at Wikipedia. It is user controlled content. The users of the service write the content.

Inman.com, a nationally known real estate information service, has a new wiki. It is located at Inmanwiki.com.

I just added the following information on Adjustable Rate Mortgages this morning.

== ARM (Adjustable Rate Mortgage)==
An adjustable-rate mortgage, aka ARM, usually has a fixed interest rate period, followed by a period of fluctuating interest. The fixed period can range from as short as one month to as long as 10 years. ARM's are always linked to an index. These indices are usually published numbers such as the LIBOR rate, treasury bill or bond rates, or the Cost-of-Funds Index. The lender then adds their margin on top of this index. A good place to look at historical index numbers is [http://www.forecasts.org Forecasts.Org].

These loans act just like fixed rate loans during the initial fixed rate period. However, as soon as the loan begins to adjust, things can change and quickly. Lenders differ on margins that are added to the index rate and they differ on how fast the rate can adjust. Recent trends though show that the rates can go to their max rate on the first adjustment, which can almost double your interest rate when you move from the fixed period to the adjustable period.

The strategy behind using these loans are to either maximize monthly cash flow or to get the best rate if you know that your time in the home will be limited. These loans are less popular in times with an inverted yield curve (see [http://money.cnn.com/markets/bondcenter/index.html BondCenter on Money.cnn.com]), because they offer rates that are close to longer term fixed rates, so the risk is not worth the reward. With an inverted yield curve, the short term rates, carry the same or higher risk as the long term rates. Normally, the yield curve shows that rates are lower with shorter terms, which makes sense. If I was to lend you money today for 6 months, I will not loose much buying power on that money over six months, so the interest rate I will charge will be less. However, if I loan you money for 30-years, the money will have significantly less buying power 30-years from now, therefore, I need to charge a higher interest rate. This is inflation risk priced into interest rates.

American's no longer saving for a rainy day!

2007-02-01T13:14:00.000-05:00

I heard a story on the radio this morning and found an article on VOA NEWS. Last year, the national average personal savings rate was at a 70-year low of NEGATIVE 1%. That is absolutely astounding that on average, a person earning $80,000 would have spent $80,800. They are going in the whole. I am not sure if this factors in retirement accounts like 401K's, but I know of many people that have taken loans against those retirement accounts.

This underscores a post I made in the past regarding saving some money in a liquid side account and calling it you "Mortgage Reduction Account". I would recommend this instead of sending extra money to the lender. This side account is liquid and can be a safe account (like a simple savings account, money market or CD) or something more aggressive. But it is yours! And, it increases your savings rate.

Life happens and this average American that this article talks about is going to be in trouble when it does, because they will have no choice but to go even deeper into debt.

What is your home worth?

2007-01-25T16:23:00.000-05:00

While there is no online valuation tool that will give you a 100% accurate reading, there are two online tools that are good at giving a starting number.

Cyberhomes is fairly recent and many other bloggers feel that it is superior. The other is Zillow. I like to use both to give me an idea of a starting number when coming up with a value.

Of course, the details of the property and recent local sales will impact the value of any property. So, please engage a real estate professional when you are needing a value for your home for a transaction.

Raise your Credit Score!

2007-01-15T13:07:00.001-05:00

There is often a good deal of confusion over exactly what factors play a role in your credit score. It is generally understood that a history of on-time payments factors in heavily. However, most do not know that other factors play a very important role.

The following list is from USAA Magazine (Winter 2006, p 31).

RAISE YOUR SCORE

Pay your bills on time – Payment history affects about 35 percent of your score. So do whatever it takes to be timely: Set up automatic payments online, keep stamps on hand, maintain your budget.

Keep credit card balances at 30% of your credit limit, or lower – Around 30% of you score is based on how much credit you have access to and how much you are using. If you’re cutting it close to the credit limit on your cards, that will reflect poorly on your score.

Don’t cancel credit cards to up your score – About 15% of your score is based on how long you’ve held your credit cards. A card that you’ve had for a few years is better for your score than one you’ve just obtained. Having no credit history at all can readily throw off the score, so do carry a credit card – just pay it off in full.

Don’t apply for too many cards - About 10 percent of your score is determined by the number of times lenders request your credit report. Lots of requests might indicate that you are desperate for credit and might be headed into trouble, or are already there.

Watch the kinds of credit you use – About 10 percent of your score is based on the types of credit you are using – secured loans such as car loans and mortgages, or unsecured loans such as student loans, credit cards, and so forth. Unsecured loans are considered riskier on you report.

I would take issue with only on point in this list. In number 3, it states that you should use a card, but “just pay it off in full.” It has been my own experience, both personal and professional, that carrying some balance, even $100, is better than nothing because it shows you know how to make a scheduled payment. But, if you are in a situation where this becomes a very big deal, there are larger credit issues that you are facing.

Bottom line – use your credit wisely and pay the bills on time. With that, all other things should work out.

Happy Birthday!

2007-01-14T11:32:00.000-05:00

I want to make a post to wish my brother-in-law, Cam Moss, a happy birthday. Although his brithday is not until tomorrow, I figured I would take the time now, while I had a moment.

Some other good news for Cam is that he just accepted a job with Chris Tomlin. If you are unfamilar with Chirs Tomlin, he is a very well know christian muscian and worship leader. Cam's position will be on the technical side, but I am certain that he will excel at this. This really is one of his passions, so he is one of the fortunate ones in that he is going to get paid to do what he loves.

So, Happy Birthday Cam!

Tax tips for 2007

2007-01-12T07:33:00.000-05:00

Thanks to Lenderama for these tips. Link to this article for great tax tips for the upcoming year. The most relevant one to real estate has to do with the deductability of the Private Mortgage Insurance. If you are dealing with a reputable loan officer or mortgage company, they will notice this is a BIG change in evaluating the proper program to meet your needs.

Tis the season for escrow adjustments

2007-01-04T07:36:00.001-05:00

I am not sure what it is like in your part of country, since property taxes are different everywhere, but here in SC, this is the month that lenders do their annual escrow analysis. It is inevitable that I will receive phone calls this month from my past clients regarding their tax bills.

Here is what happens. The lenders analyze each loan for which they collect escrow payments (taxes and insurance). They look to see if they are collecting enough to pay the bills due or if they are colelcting too much. By the end of the month, clients will start to get letters stating that their total payment is going to either rise or fall, based on this analysis. In addition, if the tax or insurance payment went up, and there were insuffcient funds to cover the debt, the lender went ahead and paid it, but will expect to be paid back. This payback be either one lump sum or stretched out over the nest 12 months.

So, if you get a letter from your in January or February stating that your payment is going to increase by $10 or $20 dollars, this is the cause.

Of course, if the payment absoltuly skyrockets, to the tune of $100 per month or more, I would recommend some investigation on your part. There is typically an assignable cause for this sort of variation. Maybe your insurance shot up due to a claim, or your property taxes got re-assesed, something like that.

Of course you can email me and I will help as much as I can with any questions. Email john@bigbearmortgage.com

Have a great day.

How many homes to look at before buying?

2007-01-02T11:48:00.000-05:00

This is a question that everyone asks themselves before buying...how many do I look at? Is this home, that I love, THE ONE, of is the next one it?

My wife and I looked at over 20 homes before we purchased the one we are in now. We have been looking for over a year now for the next one and have seen at least 15 and I know there are more to come.

Check out this post BlueRoof to read up on it.

Good news about Mortgage Insurance

2006-12-22T05:40:00.000-05:00

I found this on Behind the Mortgage website. This is very good news.

Congress Passes Tax Deductibility of Mortgage Insurance Premiums

A rare bit of good news from the beltway: Early last Saturday morning, congress passed a "tax extender" package that included the deductibility of mortgage insurance on new mortgages originated in 2007. Though this is great news, and a long anticipated change, there are some restrictions, so not every homeowner will benefit. The rules, as we understand them, follow:

Permits federal personal income tax deduction for mortgage insurance premiums
Applies to new originations only in 2007 (like many other provisions in the bill, it must be reauthorized for 2008)
Only taxpayers earning less than $110,000 per year are eligible for the deduction (We understand that the deduction is phased out for borrowers w/ incomes between $100,000 and $110,000)
Applies to premiums for both private and government (FHA,VA & RHS) insurance programs.

As with any bill, this one now heads to the President's desk for signature, and there has been no indication of any veto action on this bill. Will post a link to this as soon as we can dig it up at congress.org

Baby is here!

2006-12-18T01:16:00.000-05:00

My baby boy was born on Wednesday, December 13th. He is a healthy 6 lbs 10 oz and he and mother are doing fine.

Understandibly, my posts may be a little sporadic over the next few weeks as we celebrate Christmas and adjust to the new family member.

Here is a very cute picture!

Thanks!

John

Building a new home?

2006-12-12T07:04:00.000-05:00

I found a link to a very interesting article on REALTOR(r) magazine online. Here is the abstract of the article:

New-Home Contracts Get Tougher on Buyers

Buyers of new homes are discovering that their contracts with home builders leave very little wiggle room as settlement day nears.

Some consumer advocates and real estate lawyers who have been fielding calls from remorseful buyers in recent months say few contracts are as rigid and one-sided as those for new home sales.The contracts are "written in a way to give every possible edge to the home builder," says Allen J. Fishbein, director of credit and housing policy at the Consumer Federation of America.

Some developers have added provisions that block buyers from getting any "remedy" beyond reimbursement of their earnest money, even if the builder breaks its agreement. Other provisions keep consumers from taking the dispute to court — instead forcing them into arbitration.

Builders say they're trying to protect themselves against buyers who frivolously try to back out from completing purchases, and they say that buyers weren't complaining about the contracts during the boom, when many were earning a profit even before they went to settlement.However, it should be noted that in today's softer real estate market, an increasing number of builders are willing to work with buyers to keep the deal alive.Nonetheless, consumers should take precautions.

Jeffrey Silverstein, a real estate lawyer, say buyers should get legal help to insert contingencies in contracts that outline when construction will begin and what will have to happen for the buyers to get their deposits back.

The full text article can be found online at WashingtonPost.com.

Have a great day!

Title Insurance

2006-12-11T15:22:00.000-05:00

Sorry that I have been away. I was finishing up this semester in my MBA program. Thankfully, I only have one more semester to go and then I am done!

I wanted to post something I wrote awhile back on title insurance...

When you close a loan, if you are borrowing money to purchase the property, you will find a title insurance premium in the attorney section of the Settlement Statement. What is this premium? Title insurance is insurance to the lender that you have a clean title (no judgments, liens, etc). It is also an assurance that the new lender is in the first lien position on the home. In addition, if an issue ever arises that would affect the title, like an heir to a prior owner trying to claim your land, then title insurance would kick in.

However, the premium you pay for through the closing only covers your lender. It DOES NOT cover your interest in the property. Now, most buyers lately put very little down on the purchase, so their exposure is limited. However, if you put money down OR as you pay off the loan, your exposure (this could also be called our equity) increases. You can purchase an owner's policy for title insurance. It is relatively inexpensive, especially at the time you purchase or refinance the home. If you inquire about it prior to the closing, the cost can be rolled into the Settlement Statement.

Let me give you an example. You buy a home with a contract purchase price of $100,000. You put down 5%, or $5000. You are borrowing $95,000. The title insurance premium to the lender on this would be $262.50. You could also purchase an owners policy to cover your interest in the property. In the above scenario, the owners policy would be less than $100. The exact figure can depend on the title insurance company. Any attorney will be happy to handle this for you. After all, if the attorney is an agent of the title insurance company, they get to keep 60% of the premiums.

Getting the best rate

2006-11-28T09:30:00.000-05:00

A lot of the national lenders now allow us, as the brokers, to renegotiate a rate in order to keep a deal "in house". IN the past, this was not the case.

The way that it used to work is this. If the client was real sensitive to the rate, we would lock the loan with one lender and if the market changed for the better, we could actually close it with a different lender at the lower rate. This is sort of a "hedging" effect. Of course, this could not be abused because lenders did track the ratio of locks to closed-loans, and if you had too poor of a ratio, they would delete your account. In addition, the unscrupulous mortgage brokers will still charge the borrower the same rate and move it to another lender and make more money on the back end of the loan for selling the customer on a higher rate.

Now, we have the ability to lock a loan and if the market gets better, the lender we locked with will "renegotiate" the rate down to the new, lower rate. For example, if we locked the loan at 6.25% for 45 days, but as it gets closer to the closing, the market rate is 5.875%, the lender will now move the rate down to either 5.875, or at least 6%.

What are the advantages to this? The customer gets the market rate at or near the time of their closing, plus protection from a rising market. The lender gets to keep a loan that they otherwise would have lost. The mortgage broker gets to keep a loan processing through a particular lender. As mortgage brokers, we develop good relationships with particular lenders and we learn how they work. This is important in being able to deliver on the intangibles of speed and ease-closing.

2006-11-22T22:47:00.000-05:00

I was editing some pictures and I could not resist posting this one of my two kids.

Helpful Tips!

2006-11-21T00:23:00.000-05:00

I heard about this website that has over 6000 helpful tips for around the house and other areas.

Credit for finding this need to go to Jerry Fowler, a local real estate broker that is very successful. Jerry has a very informative website. In addition, he has a weekly radio show on WVOC (560 AM) and has little one minute updates every weekday in the morning and afternoon. Thanks Jerry!

Get ready to sell

2006-11-17T08:38:00.000-05:00

If you are thinking of selling your home, I found a link to a good litle article that lays out the top 10 things you can do to your home to boost the value. Thanks to AGENT CEO blog for this link.

Now is a great time to start those little renovations / fix ups to get that home in top shape for the buying season that is right around the corner.

A simple idea to save money

2006-11-07T17:02:00.000-05:00

I wanted to take a moment to throw an example out about the power of putting some money to the side. I am comparing this to the question of paying extra on your principal balance on your home loan, or investing the money.

Lets say that you just bought a home and borrowed $170,000 at 5.75% on a 30-year note. That payment would be $992.07 per month. You have budgeted and decided that you have $100 extra per month to put somewhere. Now, does that go to the lender or in a bank account?

If you give it to the lender as an extra principal payment, you will pay the loan off in almost 24 years (287 months to be exact). You will save a gross amount of $44,150 on the tail end of the loan. But, you did have to send in $100 per month for this time frame, so your “investment” in the home made $15,450 over the course of this time frame. That is a rate of return of 3.35%.

Now, what if you put that money to the side? The logical question is where is the best place. That answer is beyond the scope of this article, but I know that some online banks pay about 4% for simple money market accounts. CD’s pay in the 5 to 6% range. And, if you an find a good planner, I know that most of them can get you 10% if you give them enough time (7 to 10 years). So, lets just average it at 6%.

You take that $100 and put it somewhere that will earn ON AVERAGE, 6% per year. You pay the normal payment on the home. At about the same time (month number 287), you will have enough in this side account to pay the loan off in full. This assumes that you make 6% on average. If it makes 8% on average, you will have thousands more in the account than is needed.

The other benefit to this is that the side account is liquid. It is money that you can access for good or bad reasons, for investment opportunities, or to get you through a job loss or disability. I know from working in the mortgage business, lenders do not like to loan to people that do not have a job. There are loans, but there are strict limitations on cashing out equity and higher than normal rates. What if you had one-year worth of salary in this account and could take your time looking for a new job?

I know that this is very verbose and I apologize for the length. I am simply passionate about this topic. Americans have become HORRIBLE at saving, and anything that I can do to help people save just $25 per month, I will do it.

Congratulations to Greenville/Spartanburg Area

2006-10-25T08:49:00.000-05:00

ExpansionManagement.com released its Top 40 Real Estate Markets and the Greenville / Spartanburg area is listed as Number 9 in the country. That is great!

Also, the area is number 46 in the list of the Top 50 Hottest Cities. This really should not come as a surprise. That area includes a number of corporate headquarters, BMW and it equal distance from Atlanta and Charlotte, arguably the biggest metro areas in the south.

I have been to Greenville numerous times and the downtown area is WONDERFUL. IN fact, my wife and I went there overnight for a wedding anniversary and had a great time. They have many shops and dining within walking distance and a great park right downtown. They are a model for cities looking to revitalize their downtown areas.

Congratulations!

Save a few dollars

2006-10-23T06:33:00.000-05:00

Refinances are not at the level that they were a few years ago. Back in 2003 and 2004, many people took advantage of the 40-year low rates and did a new loan. However, even when refinances slow down, they never completely go away. This is because there are still the "cause-driven" refinances. Those are done because of the need to get equity to fund some event (college, vacation, etc) or to get out of an adjustable rate that is about to reset to a much higher rate.

If you are considering refinancing, a good way to save a few dollars is to use the same title company or attorney you used for the last loan. Title insurance is one of the largest single line items that the attorney or title company charges. However, if they are simply redoing a loan from a few years ago, they only need to update the information. You can get what is called a "re-issue" rate on the title insurance. This rate can save as much as 50% of the full title insurance charge. In addition, many attorneys or title companies will reduce the search fee and closing fee. They are feeling the pinch of slower business right now, just like everyone else, and will likely reduce their fees a little just to get some business.

I hope this helps.

The power of using your home.

2006-10-06T15:13:00.000-05:00

A mortgage is simply a tool. Nothing else. Too many people fear the "big, bad mortgage debt" for reasons that they may not even understand.

Something that comes up in almost every closing that I do is "so what would it take to pay this thing off early?" This is socializing at work. We are taught that we must pay this mortgage off as fast as we can.

While a debt free life is enviable, for must of us, it is not realistic, at least not for people like me in their 30's. Therefore, the question becomes, how do we approach this?

I think that instead of throwing extra money at the mortgage lender, set that money to the side. I will expand more on this as time moves on, but the power of this very evident. Setting it to the side gives you liquidity, safety and a rate of return. Dave Savage shows that even the Chicago Fed believes in this strategy.

A Shady Mortgage Person

2006-09-28T11:32:00.000-05:00

7 ways to spot a shady mortgage personI found this on blog.mariah.com: 7 ways to spot a shady mortgage lender An interesting read from MSN. I'd say these traits are just as common in lazy mortgage lenders, as they are in shady ones. In the end, clients of neither are properly served. According to the Federal Trade Commission, you may be signing on for trouble if a lender:

* Encourages you to falsify your application information to get the loan.
* Urges you to borrow more than you need.
* Pushes you to accept payment terms that you can't realistically meet.
* Fails to give you the required disclosures (e.g., APR, rescission rights, etc.).
* Shows up at closing with a totally different loan product than you agreed to.
* Asks you to sign blank forms. ('It'll speed things up. We'll fill in the blanks later, trust me.')
* Denies you copies of documents you signed.

MSN Money - 7 ways to spot a shady mortgage lender

Spreading like fire

2006-09-08T08:20:00.000-05:00

This article is spreading across the mortgage / real estate blogosphere very quickly. My feeling is that all of the different loan options available are tools. But, just like with a hammer or screwdriver, if you pick the wrong tool, you will fail. You do not hammer a nail with a pair of pliers. You do not put an uneducated, uninformed borrower into an Option ARM. These programs are very sophistcated instruments that even most mortgage people do not completly understand. And they WILL bite you if you miss the fine print.

I am all for higher standards in the industry. I would like to see national standards, a national test, education requirements (ie college degree), continuing education and the trade associations to step up on a national level in the pubic spolight.

Check out the article.

2006-09-07T07:05:00.000-05:00

This is an article on the "bubble". It makes a good note about the cylce in the markets.

People will come up with just about anything

2006-08-31T15:30:00.000-05:00

I read this article on RealBlogging.com. This builder was just a little overanxious to get some business.

Take a look...

HIstorical home values

2006-08-30T05:58:00.000-05:00

I got this chart from the His Move Blog. It is a chart of historical home values. Very Interesting.

This weeks mortgage impacts

2006-08-28T08:51:00.000-05:00

Check out this blog for some very good information on IMPACTS TO RATES THIS WEEK.

Top 5 Renovations?

2006-08-26T13:23:00.000-05:00

What are the top 5 areas of your home that you can renovate and see a return on your investment? According to an article on Bankrate.com, the areas are the siding on the exterior, the bathroom, the kitchen and the attic space.

Check out the article if you are considering doing some changes around the house.

South Carolina stacks up well in foreclosures

2006-08-21T13:56:00.000-05:00

According to data from RealtyTrac.com, South Carolina ranks 27th nationally in the number of homes per foreclosure. For Q2 of 2006, SC had one foreclosure for every 958 households. This is higher than the national average (425) but it does represent a 28% drop from 1Q2006.

All of this to say, some predicted that the foreclosures would skyrocket this year. There is a still a chance for that to pan out, but so far this year, the number of foreclosures for SC have been good.

Homeowners who fall behind on mortgage can find help

2006-08-21T06:44:00.000-05:00

Homeowners who fall behind on mortgage can find help: "Whether it's from a job loss, medical emergency, mortgage-payment hike or simply personal-finance mismanagement, a small but growing number of homeowners is falling into foreclosure every year."

Home Builders offering incentives on SC Coast

2006-08-17T07:21:00.000-05:00

Print on www.thestate.com

Special deals aim to pick up sales among wary buyers in shaky market
By JENNY BURNS
jeburns@thesunnews.com

MYRTLE BEACH — Big builders, taking cues from the auto industry to sell their oversupply of homes, are offering big incentives along the S.C. coast.
Buyers can get 4.25 percent financing, no payments until 2007 or free homeowners association fees for a year.
The deals are aimed at making cautious buyers during this real estate slowdown take the plunge and buy.
“(National builders) are seeing sales falling in general, seeing cancellation rates pick up, and they’re using the incentives to help drive sales and use it to sell inventory that they didn’t plan on having,” said Todd Vencil, analyst for BB&T Capital Markets, who covers eight publicly traded home builders.
For consumers, the payoff is in lower monthly payments and less upfront cash to get into a new home.
While incentives are normal, Vencil said this summer’s incentives go beyond the typical appliance upgrade and free closing.
“They’ve clearly picked up,” he said.
One example is Centex Homes, the Grand Strand’s largest builder. The company is offering 4.25 percent financing with an adjustable rate mortgage. On a $150,000 home, that would make monthly payments about $738 before insurance and taxes are figured in.
That rate is only on spec homes that close by Oct. 31 in most Centex neighborhoods, said Ken Balogh, Myrtle Beach division president.
For a 30-year fixed mortgage, that rate jumps to 6.5 percent.
Balogh said Centex wants to take rates down to last year’s level to help buyers fight rising rates.
The builder is seeing an uptick in cancellations compared with last year, especially in condos, he said.
Builders also are looking at ways to ease the pain of skyrocketing insurance rates along the Grand Strand.
For instance, Centex is paying homeowners association fees between $3,000 and $9,000 in most of its condo and town home projects.
Some Strand condo complexes have seen double and triple increases in their fees because of insurance hikes.
“We can’t fix the insurance challenges but we can help our customers to overcome a year or two of that increase,” Balogh said.
Builders aren’t saying how long they’ll be touting incentives, but analysts expect the enticements to stick around a while.
Jenny Burns is a reporter for The (Myrtle Beach) Sun News, a McClatchy newspaper.

Mortgages are cooling off

2006-08-15T14:28:00.000-05:00

I have noticed that in July, mortgage applications really cooled down. This is right on track with national trends. See the Business Week article. This is what usually happens in a cooling market. People will still move, but they will simply adjust the size of their purchase to match with the available monthly cash flow.

SC is still below the national average in mortgage rates. Since the Fed meeting recently where they held the line on the Fed Funds rate, SC rates dropped. 30-year fixed rates for a 30-day lock are in the low 6's now. As recently as the end of June or early July, they were in the 6.5 to 6.6 range.

Bankrate not really the best

2006-08-12T17:46:00.000-05:00

You can find a lot of very good information on the Internet. Unfortunately, the interest rate information can be very misleading. There are so many factors that ultimately determine what interest rate you receive when applying for a loan. These factors include the loan amount, whether you are proving your income or you are stating your income and the level of the down payment.

Some people start their shopping on the Internet. Unfortunately, quite often the rates you see are teaser rates, designed to get you in the door. I found an article about some issues that Bankrate.com has had recently.

A good rule of thumb is usually if it looks to good to be true...it is.

John Ballentine

Check your insurance policy!

2006-08-09T07:52:00.000-05:00

From New York Times Online

Small Clause, Big Problem

By JOSEPH B. TREASTER
Published: August 4, 2006
Marilyn Haverty, whose house in Waveland, Miss., was buffeted by wind and surging water in Hurricane Katrina, thought her homeowner’s insurance would cover at least the wind damage. But it never paid her a penny.

As it turns out, Ms. Haverty’s insurance policy, like nearly every one around the country, said, essentially, that if the house was damaged by a flood or earthquake or something else not covered, it did not matter that she had coverage for wind damage. There was no coverage at all.
Since at least the mid-1980’s, insurers have been putting into their home insurance policies “anti-concurrent causation’’ clauses that effectively eliminate coverage that insurers promise to provide when selling their policies. But most people skip over the legalistic language — if they read their policies at all. And until Katrina, there had never been such an outpouring of challenges.
“There’s no question that the anti-concurrent clause is bad for policyholders,’’ said Adam F. Scales, an associate professor who teaches insurance law at the Washington and Lee University School of Law, in Lexington, Va. “It’s not fair because it defeats policyholders’ reasonable expectations.’’
Insurers counter that they need the clause to protect themselves from being drawn into paying for floods, earthquakes or mudslides and other widespread calamities that are beyond their scope and that they specifically refuse to cover.
The insurance companies say they expect to pay out $17.6 billion for homes damaged in Katrina and $20.8 billion to businesses — the most insurers have ever paid out in a catastrophe. But lawyers for homeowners say the insurers would have had to pay out perhaps billions more had it not been for the anti-concurrent clause. Industry officials said they had no comprehensive data, but acknowledged that a substantial amount of money was at stake.
The provision has become one of the central issues in the thousands of lawsuits that have been filed against insurance companies since Hurricane Katrina hit last August.
In the first trial, which began in July and is now awaiting a federal court judge’s verdict, the homeowner’s lawyer, Richard F. Scruggs, argued that the storm surge in Katrina was not a flood — as defined by the insurance companies — but an inseparable part of the hurricane. Mr. Scruggs also argued that his client, Paul Leonard, a police lieutenant, was told by his agent that he did not need to buy flood insurance. Mr. Scruggs contended that the anti-causation clause should be voided.
The insurance companies say they paid for damage to homes in areas where there was no flooding. Where there was flooding, they say, they paid for damage that could have come only from wind, like the loss of a roof and broken upper-story windows — above the highest marks left by flood waters. But they have generally refused to pay for damage to houses, or parts of houses, that were hit by both wind and flood water.
“They are sitting on this idea that the water washed everything away and whether there was any wind damage or not, they don’t feel they have to provide any coverage,’’ said Zach Butterworth, a lawyer in Bay St. Louis, Miss., who, with Mr. Scruggs, is representing Ms. Haverty and dozens of other storm victims.
Courts around the country have been divided on whether the provision may be used to deny coverage. Many have backed the insurers. But other courts have sided with policyholders, concluding that the clause was ambiguous or ran counter to reasonable expectations of what was covered.
“It is not a settled issue,’’ said E. Farish Percy, a law professor and insurance expert at the University of Mississippi. “Courts that have decided in favor of plaintiffs are saying, ‘It may be perfectly clear to an insurance lawyer, but it’s not that clear to a policyholder.’ ’’
Insurers and other insurance experts say the only way policyholders can protect themselves is to take on the additional expense of buying special government policies that cover floods and earthquakes. But that is only a partial remedy for more expensive homes that are flooded, because the federal government limits coverage for floods to $250,000. Earthquake insurance sold by California carries a high deductible.
Robert P. Hartwig, the chief economist at the Insurance Information Institute, a trade group in New York, said the insurers priced their policies in the expectation that they would not be paying for damage in combination with flooding. Otherwise, Mr. Hartwig said, premiums would be much higher and some insurers might decide not to offer coverage on homes at all in certain areas.
Without the provision, he said, “if a home is destroyed by an excluded peril like flood, but the damage occurred in connection with another peril like wind, you’d effectively be saying that, in effect, flood coverage is provided.’’
In papers filed in the first trial in Mississippi, the Nationwide Insurance Company said the anti-causation clause “relieves insurers of the untenable task of proving a negative,’’ that is, “eliminating wind as a potential partial cause of the loss.’’
Even homeowners who say they fully understood that flood coverage was provided only by the government and had to be bought separately say they expected to receive at least some compensation for wind damage since both wind and water harmed their homes.
“I thought I would get something,’’ said Ms. Haverty, who retired in January as the assistant branch manager of a bank. During the storm, Ms. Haverty said, pine trees near her house were snapped off high above the ground by strong winds.
But, she said, State Farm told her: “No, we’re not paying you anything on the wind. It was water.” State Farm declined to discuss the case. Ms. Haverty was one of the relative few in Mississippi who had federal flood insurance, and she received $93,900 on that policy. Like many others whose insurers did not pay, she has applied for a federal grant. Congress has committed $15 billion to help with rebuilding for people who had no flood insurance or not enough and who received partial or no payment from their insurers.
The insurers say they spell out their terms of coverage in their policies. But even lawyers representing insurance companies say customers do not always understand the limits of their coverage.
“When you look at anti-causation language, it just doesn’t look that important,’’ said Randy J. Maniloff, a lawyer at White & Williams in Philadelphia who represents commercial insurance companies but is following insurance developments along the Gulf Coast. “They don’t appear to be words of substance. But they’re actually enormously important.’’
In the Nationwide Insurance Company’s home insurance policy, which is being debated in the Mississippi trial, the anti-concurrent language precedes a list of things not covered. “We do not cover loss to any property resulting directly or indirectly from any of the following,’’ the passage begins. “Such a loss is excluded even if another peril or event contributed concurrently or in any sequence to cause the loss.’’
The insurers point out that in most states, insurance regulators approve the language in their policies.
But insurance experts said that was not necessarily a test for fairness or consumer protection. “The regulators look a lot more carefully at rates than they do at policy terms,’’ said Gary S. Thompson, a lawyer at Reed Smith in Washington who represents commercial policyholders but also follows home insurance issues. “It’s really the courts that cause insurance companies to go back and re-examine their coverage terms.’’
In questions about the anti-concurrent clause at the Mississippi trial, John Griffin Jones, a colleague of Mr. Scruggs, raised the prospect of a tree theoretically crashing through the roof of a house and rain water pouring in. If nothing else happened, all the damage would be covered. But, Mr. Jones asked, if a storm surge came two hours later and flooded the house, would everything below the water line be excluded from coverage?
“Yes, sir,” Jeffrey Kline Gilbert, an executive in charge of Katrina claims at Nationwide, replied.
“Under the anti-concurrent clause provision, right?’’ Mr. Jones asked.
“Yes, sir.’’
Then, Mr. Jones asked: “How is a guy like Paul Leonard going to know that when he is buying one of these policies? How is he going to know it is going to get that technical that you have an anti-concurrent clause provision that if any water touches the property, he is on his own?’’
“First,’’ Mr. Gilbert said, “by reading the policy.’’

Real Estate Agent commissions

2006-08-07T07:56:00.000-05:00

I found the transcript of testimony from Geoffrey Lewis to a Congressional Sub Committee on RISMEDIA.COM. Mr. Lewis is the chief Legal Officer for REMAX International. In the testimony he discussed competition, commissions and the MLS, which are all very hot topics right now regarding Real Estate Agents.

Yield Curve Info

2006-08-06T17:41:00.000-05:00

I found this information on the current yield curve to be very interesting.

John

Welcome and intro

2004-05-23T23:59:00.000-05:00

I would like for this post to be a place that I can answer questions that others may have. I work in real estate and will try to post answers to my frequently asked questions and other thoughts related.

However, if a particular question is in your head, please express it.

Thanks,