Rising Mortgage Fees = Rising Closing Costs

Alert. If you do not have a FICO Score 680 or higher and cannot put down a sizable down payment you’re being squeezed in the mortgage market. Fannie Mae and Freddie Mac are charging fees much higher than before to borrowers with lower scores and down payments of less than 30%. Unfortunately these are borrowers that were once considered “prime” credit applicants. Mortgage insurers like MGIC and PMI Group are raising premiums on consumers who have low down payments and scores mid-to upper 600s. Both penalties total thousands of dollars, payable either at settlement or in higher interest rates. Example if you qualify for a loan for 300,000.00 and your credit score is 675 and your LTV (Loan To Value) is 75% with a 25% down payment the additional cost will be 2,250.00 per loan. In today climate of finance the mortgage fallout and rising cost to loans are being passed on to us the consumer placing more strain on our economy and housing sector.

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5 Ways To Restore The Mortgage Market

With the mortgage industry struggling mightily here are 5 creative ways to fixing the mortgage market. Shared Appreciation a few banks offered this mortgage in the 1970s, but the Internal Revenue Service never clarified whether the payments to outside investors could be view as tax-deductibles interest, which left homebuyers nervous. The way it works a homeowner agrees to share the profit on the home if he sales at a profit. This idea is popular in Australia. Hedge with a short sale the homeowner would short a regional index of home prices. The bank would hold the futures position in escrow; it could reduce its risk of losing money. If the homeowner had to sell, he’d make enough on the short sale to cover the decline in value of his home. Offer Puts the homeowner would buy insurance against a decline in regional home prices. Vary duration, not monthly payments keep payments fixed, translate a higher interest rate into a longer mortgage term. Treasury inflation-protected mortgages these mortgages would have monthly payments that creep up slowly even in times of fast-rising interest rates. This is very similar to TIP bonds. Some states prohibit these mortgages

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A Cheaper Way To Homeownership

Buying your next home at an auction can save you a huge amount of cash in your wallets. First and foremost you set your OWN price when bidding on a home. You are not at the mercy of a seller unrealistic “asking price”. Other benefits include: No long negotiation period with offers going back and forth, huge selection of homes at rock-bottom auction prices. The lenders at these auctions are very motivated to sell these homes as soon as possible; lenders are in the lending business not home ownership. And to say the least these events are free, registration, pre-qualification, and admission are all included. Go to www.USHomeAuction.com for more details. When you check in you must have a 5,000 cashier check (made payable to yourself) or (cash equivalent) and checkbook. Keep in mind that 5% buyer’s premium will be added to the final cost of the home. Example if you bid 300,000.00 for a home it actually will be 315,000.00 after the 5% buyer’s premium is added. Realtor’s commissions are 1%. Overall if you are in the market for a home this could provide a viable option for homeownership

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Escrow And The Way It Works

Buying or selling a home (or other piece of real property) usually involves the transfer of large sums of money. It is Important that the transfer of these funds and related documents from one party to another be handled in a neutral, secure and knowledgeable manner. For the protection of buyer, seller and lender, the escrow process was developed. As a buyer or seller, you want to be certain all conditions of sale have been met before property and money change hands. In part escrow functions work like well oiled machine. One party engages in the sale, transfer or lease of real or personal property with another person delivers a written instrument, money or other items of value to a neutral third person, called an escrow agent or escrow holder. The third party (the escrow officer) waits for the completion of a specified event or the performance of a specified condition to finally disperse money or other items.The escrow holder responsibilities are to carry out the written instructions given by the principals. This means receiving funds and documents necessary to comply with those instructions, completing or obtaining required forms and handling final delivery of all items to the proper parties upon the successful completion of the escrow. In order for escrow to close successfully all documents need to place in the escrow holder care. This includes loan documents, tax statements, fire and other insurance policies, title insurance policies, terms of sale and any seller-assisted financing, and requests for payment for various services to be paid out of escrow funds. If the transaction requires new financing it is the buyer or the buyer’s agent to make the necessary arrangements. Documentation of the new loan agreement must be in the hands of the escrow holder before the transfer of property can take place. Once all instructions in the escrow have been carried out, the closing can take place. For example all outstanding funds are collected and fees such as real estate commissions, termite inspection title insurance premiums are paid. Finally when closing sellers and buyers should stay in close contact with their realtor to make sure all instruction are being met during escrow.

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Advice to Buyers: Spend Cautiously Before Closing

Homebuyers beware. Please do not throw your debt ratio out of whack before the close of escrow. Many deals fall through simply because of inopportune spending. A mortgage that you were previously approved of by a lender before closing can drastically change due to excessive debt. Lenders are pulling credit history and credit scores within a week of a buyer’s schedule closing date just to make sure nothing major has change. What the lender doesn’t want to see is a huge run-up of credit-card debt or other loans. Some lenders may require for you to sign a statement affirming that there has been no change in your finances and employment that will affect your ability to repay the loan back. Accumulating debt before closing can cause your credit score to change and the lender may longer be willing to lend money at the rate promised, or maybe not at all. My advice is to wait to do that shopping after closing.

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Boost Your Tax Deductions

1. Make an extra mortgage payment. The extra interest you pay will be added to this year’s mortgage interest by your lender, boosting your itemized deductions.

2. Donate to charity. It pays to be charitable, especially at the end of the year. Donating cash is always a good idea. You can also donate household goods, clothing, and other items.

3. Boost your business expenses. Business owners and independent contractors can buy office supplies, invest in new equipment, or pay bonuses to their employees.

4. Pay doctor bills, insurance premiums, buy eyeglasses, or stock up on prescription medications. You can take a deduction for medical expenses exceeding 7.5% of your adjusted gross income.

5. Organize your financial records. Good record keeping can really pay off at tax time. Not only will it make your tax preparation easier and faster, but you might uncover enough tax deductions to be able to itemize.


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How Greener Can The Other Side Be?

Are you one of those who constantly think of ways to conserve energy and save more in the process? Here are a few options you can use to save more on your power bills. Heat or cool your home less. Drive or fly fewer miles. Run electrical equipment less and run less water since pumping water takes lots of electricity. Buy more locally grown food and goods that are manufactured nearby; they’re typically made with cleaner U.S. manufacturing processes, and companies use less fuel to transport them. For appliances buy the most energy-efficient devices you can afford. Look for appliances with the Environmental Protection Agency’s Energy Star Label. Since 1992 the EPA says that is has help save Americans an estimated 14 Billion dollars on energy bills. The EPA has over four dozen types of products in its program. That includes everything from a DVD player to an air conditioner. The EPA also allows you to monitor your savings with the use of its website calculator so you can create a customize plan for reducing your environmental impact. The biggest annual energy impact in your household comes from climate-control systems (45%), Water heating (13%) and followed by your refrigerator (8%). By using a 25-watt compact fluorescent light bulb vs. using a conventional 100-watt bulb is the equivalent of saving 100 pounds of carbon dioxide. Moving your thermostat 2 degrees either up or down can reduce your energy usage by 1%. Houses that are well sealed and insulated, including heat ducts, use less energy because the furnace does not have work as hard. The easiest way to cut emission from your car is to drive less and use more public transportation and if you must drive consider car pooling. I know that saving money is on everyone’s mind. Discipline and having a plan in place can play a vital role in reducing your energy usage.

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