Home Loan Focus

Archive for July, 2008

Just like the title says, there is hope for homeowners out there and it was passed into law on Wednesday. The legislation will enable homeowners to work with the FHA to replace their preexisting adjustable rate mortgages with 30-yr fixed rate loans for up to 90 percent of the homes current value.

In order for homeowners to be eligible for the restructured FHA loans, borrowers need to have spent greater than 31 percent of their income on their mortgages as of March 1st. In addition, any potential borrowers must have their original loan on their primary residence, have their income verified and cannot have had the troubled loan originated after Jan. 1st, 2008. The lending institutions still have the final say in the approval process.

Whether or not this act will benefit the American people is difficult to say as politicians have a way of applying an airbrush to problems that covers them up but does not solve anything.

The program will take effect October 1st and will run through September 2011.

Source: MSNBC

We all know the importance of maintaining a good credit rating. We also know that the better your rating is, the better you will do when it comes to getting good rates on loans, credit cards and even gaining employment in some states. There are easy steps that can possibly increase your score 15-20 points in one day! That can make a big difference whether you are applying for a car loan, signing a condominium lease for Hilton Head rentals for a long weekend, renting a new apartment or buying your first home.

The five steps a based on the premise of paying attention, so it should be no major lifestyle change or burden.

1. “Check with your bank” to see if they have an auto payment program. You can set up the payment program to make the monthly minimum payment in order to avoid potential late fees.
2. “Get a copy of your credit report” so that you can see just what accounts are listed and where you stand on them
3. “Check for mistakes” because any error, no matter how miniscule, can have a devastating effect on your overall score.
4. “Resolve the errors” by contacting your lender and straightening out the problem before it begins to have negative effects on your financial wellbeing.
5. “Check your credit limits” you may be stretched a little too thin. If you are using over fifty percent of your credit, a quick solution may be to call a creditor and ask for a credit line increase thus lowering your debt ratio.

When you open up your wallet do you have take your credit score into account? If not, maybe it is time. There are a number of effective ways to increase your score while gradually paying down your card debt that won’t require new computer software or computer memory or a lot of extra time even to crunch the numbers.

We all know that carrying a number of cards that are near maxed out will put a big hurt on your score and that paying them off can be a process, so why not utilize an installment loan?

An installment loan will not affect your credit in the same fashion as excessive card debt. Regarding debt ratio, the loan isn’t subject to the same scrutiny and will most likely not accrue as much interest as a credit card. In addition, an installment loan will also reduce your overall “debt over time” as the amount due is set.

There are a number of factors that determine when and where someone will buy a home. Lately, there has been an increasing trend of homeowners looking to relocate to “Dream towns”. Dream towns are eerily similar to the “bedroom” or “commuter” communities that gained popularity over the last 25-30 years as people escaped the big cities and swarmed the suburbs.

With many Americans sharing their preference of small town over big city living, it is no wonder why places like Lebanon, VT and Concord, NH are enjoying an influx of new residents due to the availability of foreclosure opportunities as well as fully developed infrastructure with a small town feel. The top ten dream towns have many differences while sharing a common theme of being either geographical regions (New England and the Midwest) or maintaining relative proximity to the ocean.

People are retiring, approaching retirement, looking to be closer to family again, and some are even cutting the tethers and working from home.  All of these factors are enabling people to choose their perfect location to live.  They don’t want to settle for a cheap plastic watch when they could choose gold watches with just the right fit.  They want it all and as they look at the pitfalls in the mortgage system, their probably thinking that if they have to risk so much to buy a home in this economy, they might as well do it in their dream town.  It might just be the last opportunity they have to move.

Source: MSNBC

Top Ten List of Dream Towns for 2008

1.    Torrington, CT
2.    Bozeman, MT
3.    Lexington Park, MD
4.    Lebanon, NH-VT
5.    Helena, MT
6.    Kalispell, MT
7.    Mankato, MN
8.    Oak Harbor, WA
9.    Stevens Point, WI
10.    Concord, NH

It is no secret that the housing sector is in a bit of a “slowdown”. The Mortgage Bankers Association, who maintains a variety of indices to measure activity, released a report Thursday that declared applications have decreased by 14.1 percent in July.  In addition to the July decline of new applications, refinancing application slipped 22.9 percent last week.

The current trends have really begun to stir originators as well as lending institutions. The MBA suspects that potential home buyers are viewing the record number of foreclosures as their opportunity to ride the decline and jump in as prices drop in order to obtain more favorable conditions.

Meanwhile, single-family homes in some major metro areas have declined nearly 16 percent in value since this time last year.  So don’t expect your banker to give you a free toaster or Panasonic camera the next time you close or finish a refinancing.  They are looking to provide incentives to get people in the door, but they don’t necessarily have the extra funds to spend to do that!

Source: MSNBC

You are looking for your dream home.  Something big, large kitchen with all the upgrades, but watch out, those granite countertops can be deadly!

That’s right some granite counter tops of many different colors have two serious problems.  They can contain radioactive particles that can be extremely detrimental for developing babies in a mother’s womb.  Plus, granite counter tops can emit radon gas.

A physics professor at Rice University is warning of a radioactive threat found in some kitchen countertops.

Some granite countertops contain levels of uranium high enough to be dangerous to humans, said Rice professor W.J. Llope.

Using a spectrometer, Llope tested 25 varieties of granite bought from Houston-area dealers. In some cases, he said, he found countertops that could expose homeowners to 100 millirems of radiation in just a few months — the annual exposure limit set by the Department of Energy for visitors to nuclear labs.

Radon gas like asbestos can cause lung cancer, and many homes these days even have radon detectors built in. 

It seems crazy, especially because you might have previously expected to pay $10 – $20 thousand dollars for an upgrade on a home to install granite countertops, but that could be the worst buy you ever made. 

We take so many precautions when we buy things today from travel insurance to seat belts to infant car seats and much much more.  We hardly expect a beautiful luxury item to contain something so dangerous as Uranium and radon gas.

Before you buy a home, you should have the granite counter tops tested for radioactivity and radon gas.  If the countertop is dangerous, have it removed before you buy!

If you are going out today shopping for a home there are a number of tools that you really must have.  Times have changed and those people that are technically savvy will benefit the most during the home shopping experience.  Here are few items that you definitely should invest in and most of them are even on sale before you make one of the biggest investment of your life in your future home.

• A Good GPS Device - You need a GPS device these days to insure that while you are house hunting, you do not get lost, you have the option of reviewing routes from a prospective home to your work, to the store and your children’s school.  Plus, it helps you to remain orientated so that your realtor does not confuse zipping in and out of subdivisions and backroads!
• A Radio - Make sure you have a good radio in your car.  Its kind of a weird item as things go extra digital, but many homes have the option at the curb that allows you to listen to information about a home.  Use this to your advantage!
• Laptops and Wireless Cards - Take your laptop with you and look into investing in a cellular air card while you are house hunting.  It will help significantly, if you can review other homes in the area, check comparables on the spot, and even find the next house to visit if necessary.  Plus, if you happen to drive by a great looking house on the way there, you can check its listing on your computer!
• Digital Camera with lots of Extra Flash Cards - Don’t be shy, take pictures of everything and Video is even better.  Make sure you snap a picture of the address or mailbox as the first shot so that you will know one set from another as you review them later!
• Cell phone – Really we shouldn’t have to mention this, but don’t forget it.  You will need it and while you are in the house check to see how many (if any) bars you have for cellular reception in all the rooms of the house. 
• Take your own car - This is not the time to save gas money.  You will need private time after each house viewing to think things over and talk with your spouse or family.  Give yourself that by taking your own car.

Looking to get a little extra juice out of the seller? Ask for a cellular repeater antenna to be installed on the house for a couple hundred bucks.  It is a buyers market and if the house doesn’t get signal this could help and make it home sweet connected home.

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This week I am preparing to list my own home on the market.  That preparation is starting by emptying my house of my belongings and furniture.

It also involves finishing one of the home improvement projects that never happened while I lived in the home. 

New Carpet Installation

While we lived in the house we installed thousands of square feet of ceramic tile.  OK, it was more like ‘a thousand’ but felt like ‘thousands’.  That left about 1500 square feet of floor space with twenty year old dingy carpet left to be replaced.  Plus, that carpet was stained from the home improvement projects and cut up a bit from ripping into floors for plumbing upgrades and installing that great looking tile.

So when we went to make the purchase to install the carpet, we had a different perspective than we thought we might have.  Instead of choosing between wood floors and something fancier, we were trying to choose the carpet that would look good enough to sell our house yet still possibly hold up under the strains of renters, should we need to rent the place out in the advent that it did not sell.

Now, our house is literally a mess as we are packing, and we need to have the furniture out of the house by tomorrow morning (or at least pushed to the side or possibly out of some of the rooms so the carpet guys have a place to start).

All in all, our carpet installation cost $2400, which should include tax.  We picked it up on a special 18 month no interest no payment deal.  We could have paid for the carpet but free interest is free interest and the way the economy is going, $2400 will likely only be worth $1900 in today’s dollars 18 months down the road anyway.  So we’ll put the more valuable money today into something else and pay the loan back tomorrow with devalued US dollars.  (Note if we are wrong about that, the economy will be better and we will be better off anyway, so it is a win win no matter what happens.)

We opted for a fairly bright looking carpet color that has a pattern that should not show dirt very well.  The idea is that it will look good for prospective home buyers, but will be durable enough for renters should we turn down that alley way.  So that is it for now.  I won’t have any spare money for Titleist golf balls, but at least we are one step closer to moving this house, and my packing break is now over too!

In this quick news report by Reuters things continue to look ugly for Freddie Mac and Fannie Mae.  The real concern for the economy and the world however, is the growing signs of trouble in a number of small to medium sized regional banks.

There are over 90 banks on the FDIC watch list that are facing severe financial threats that could trigger the FDIC to step in and seize control.

The problem is that many investors have even lost confidence in this after the FDIC had to step in and seize IndyMac last week.  IndyMac was not even on the radar for potential trouble and this has many investors concerned that other sleeping giants may fall as well.

So you have told your company, “Yes, I’ll relocate” having decided that it was your best course of action.  How do you keep yourself working efficiently and productively without spending all your extra money after hours on things you don’t need because you are not used to living away from your family in corporate housing?

Its easy to do but difficult to execute on.  You have to plan ways to keep yourself busy. 

Pack away some DVDs, pack up a Wii, or buy a Nintendo DS for the airport.  Get some audio books as well.  These are all great things to give you some peace and relaxation while keeping your mind off what every you are missing.  Games, audio books and movies can be a Swiss Army knife of mental engagement and help you keep your sanity through some long hours at night.

You need to try and focus on things that will not make you go out and about.  For example, take some DVDs with you to help avoid a trip to the video store where you might then proceed to go shopping and waste some money. 

Better yet get a Netflix account and have them deliver the movies to you, or try Movielink where you can download and watch movies on your laptop.

Odds are during a relocation when you are separated from your family, you will work more hours.  Try and dedicate some of that extra time to long term projects that you can bank or sand bag for a rainy day a few months down the road.  You might work like crazy the first month or two because you have nothing better do do.  But 3 months later when your family joins up with you, you’ll have no spare time and that hard working example you made in the early days might be tarnished by a severe slow down in month 3. 

When that time comes, pull out some of those projects that you completed, but banked and roll them out precooked to your team or company!  This is good for you and your career.  Plus, some of your employees or coworkers may not be able to keep up with you during the first 2 months.  This will enable you to appear to work more at their pace, but still be extra efficient and productive for a longer period of time, matching your pace to theirs through your peak and your valleys.