The 2008 National Association of REALTORS® Profile of Home Buyers and Sellers
reveals that the number of first-time buyers have risen as a percentage of the market share and they plan to own their homes longer than buyers in the past.
Lawrence Yun, NAR chief economist, said a higher share of first-time buyers makes perfect sense, and it’s a trend he expects to grow.
“First-time buyers are much more flexible in entering the market because they aren’t concerned about selling an existing home,” he said. “Given low home prices, plentiful supply, and affordable interest rates, it’s been an optimal time for entry-level buyers with a long-term view.
“Considering the temporary first-time buyer tax credit and improvements to the FHA loan program, we expect stronger entry-level activity as the flow of credit improves – that, in turn, should free more existing owners to make a trade in 2009.”
The number of first-time buyers rose to 41 percent from 39 percent of transactions in last year’s survey and 36 percent in 2006. “Although modest, this is a meaningful gain for the 12-month period ending at the close of June, and more recent independent data show a stronger uptrend in first-time buyers who are helping to reduce excess inventory,” Yun said.
According to the NAR study, the median age of first-time buyers was 30, down from 31 in 2007, and the median income was $60,600. The typical first-time buyer purchased a home costing $165,000 and plans to stay in that home for 10 years, up from seven years in 2007.
Monday, November 10, 2008
Tuesday, October 7, 2008
Tuesday, September 9, 2008
New $7500 Tax Credit for First Time Home Buyers!
YOU could get a $7500 interest free loan from the government just for buying a home in 2008 or 2009!
As a part of the Housing and Economic Recovery Act of 2008, the government has made a vailable a tax credit of up to $7500 for first time home buyers. "First Time" is a flexible term, only meaning you can't have owned a primary residence in the past 3 years. It is in fact a loan, but only has to be paid back at the rate of $500 per year over 15 years through your tax burden. No direct payments! In short, a can't lose if you could use the money! Here are some frequently asked Q & A:
Who is eligible to claim the $7,500 tax credit?
First time home buyers purchasing any kind of home-new or resale-are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after April 9, 2008 and before July 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs.
What is the definition of a first-time home buyer?
The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.
How do I claim the tax credit? Do I need to complete a form or application?
Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. No other applications or forms are required. No pre-approval is necessary; however, prospective home buyers will want to be sure they qualify for the credit under the income limits and first-time home buyer tests.
What types of homes will qualify for the tax credit?
Any home purchased by an eligible first-time home buyer will qualify for the credit, provided that the home will be used as a principal residence and the buyer has not owned a home in the previous three years. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats.
If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $7,500 are available for some taxpayers whose MAGI exceeds the phaseout limits. The credit becomes totally unavailable for individual taxpayers with a modified adjusted gross income of more than $95,000 and for married taxpayers filing joint returns with an AGI of more than $170,000.
Does the credit amount differ based on tax filing status?
No. The credit is in general equal to $7,500 for a qualified home purchase, whether the home buyer files taxes as a single or married taxpayer. However, if a household files their taxes as "married filing separately" (in effect, filing two returns), then the credit of $7,500 is claimed as a $3,750 credit on each of the two returns.
Are there any circumstances for which buyers whose incomes are at or below the $75,000 limit for singles or the $150,000 limit for married taxpayers might not be able to claim the full $7,500 tax credit?
In general, the tax credit is equal to 10% of the qualified home purchase price, but the credit amount is capped or limited at $7,500. For most first-time home buyers, this means the credit will equal $7,500. For home buyers purchasing a home priced less than $75,000, the credit will equal 10% of the purchase price.
This tax credit is refundable. What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit. For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that taxpayer qualified for the $7,500 home buyer tax credit. As a result, the taxpayer would receive a check for $6,500 ($7,500 minus the $1,000 owed).
Does the credit have to be paid back to the government? If so, what are the payback provisions?
Yes, the tax credit must be repaid. Home buyers will be required to repay the credit to the government, without interest, over 15 years or when they sell the house, if there is sufficient capital gain from the sale. For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. The home owner does not have to begin making repayments on the credit until two years after the credit is claimed. So if the tax credit is claimed on the 2008 tax return, a $500 payment is not due until the 2010 tax return is filed. If the home owner sold the home, then the remaining credit amount would be due from the profit on the home sale. If there was insufficient profit, then the remaining credit payback would be forgiven.
As a part of the Housing and Economic Recovery Act of 2008, the government has made a vailable a tax credit of up to $7500 for first time home buyers. "First Time" is a flexible term, only meaning you can't have owned a primary residence in the past 3 years. It is in fact a loan, but only has to be paid back at the rate of $500 per year over 15 years through your tax burden. No direct payments! In short, a can't lose if you could use the money! Here are some frequently asked Q & A:
Who is eligible to claim the $7,500 tax credit?
First time home buyers purchasing any kind of home-new or resale-are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after April 9, 2008 and before July 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs.
What is the definition of a first-time home buyer?
The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.
How do I claim the tax credit? Do I need to complete a form or application?
Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. No other applications or forms are required. No pre-approval is necessary; however, prospective home buyers will want to be sure they qualify for the credit under the income limits and first-time home buyer tests.
What types of homes will qualify for the tax credit?
Any home purchased by an eligible first-time home buyer will qualify for the credit, provided that the home will be used as a principal residence and the buyer has not owned a home in the previous three years. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats.
If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $7,500 are available for some taxpayers whose MAGI exceeds the phaseout limits. The credit becomes totally unavailable for individual taxpayers with a modified adjusted gross income of more than $95,000 and for married taxpayers filing joint returns with an AGI of more than $170,000.
Does the credit amount differ based on tax filing status?
No. The credit is in general equal to $7,500 for a qualified home purchase, whether the home buyer files taxes as a single or married taxpayer. However, if a household files their taxes as "married filing separately" (in effect, filing two returns), then the credit of $7,500 is claimed as a $3,750 credit on each of the two returns.
Are there any circumstances for which buyers whose incomes are at or below the $75,000 limit for singles or the $150,000 limit for married taxpayers might not be able to claim the full $7,500 tax credit?
In general, the tax credit is equal to 10% of the qualified home purchase price, but the credit amount is capped or limited at $7,500. For most first-time home buyers, this means the credit will equal $7,500. For home buyers purchasing a home priced less than $75,000, the credit will equal 10% of the purchase price.
This tax credit is refundable. What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit. For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that taxpayer qualified for the $7,500 home buyer tax credit. As a result, the taxpayer would receive a check for $6,500 ($7,500 minus the $1,000 owed).
Does the credit have to be paid back to the government? If so, what are the payback provisions?
Yes, the tax credit must be repaid. Home buyers will be required to repay the credit to the government, without interest, over 15 years or when they sell the house, if there is sufficient capital gain from the sale. For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. The home owner does not have to begin making repayments on the credit until two years after the credit is claimed. So if the tax credit is claimed on the 2008 tax return, a $500 payment is not due until the 2010 tax return is filed. If the home owner sold the home, then the remaining credit amount would be due from the profit on the home sale. If there was insufficient profit, then the remaining credit payback would be forgiven.
Wednesday, May 21, 2008
Jackson Police: Keep an eye on empty houses
Wednesday, May 21, 2008
By Steven Hepker
Jackson police are asking residents to monitor abandoned homes in their neighborhoods for illegal activity, including drug use, metal thieves and squatters.
``With so many people leaving Michigan because of the economy, we have an abundance of vacant homes,'' Lt. Kevin Hiller said.
On Monday, officers arrested three people suspected of stripping copper from a vacant home in the 200 block of Damon Street.
``People who are stealing copper and other metals from vacant homes are doing it in the daytime because the electricity is off,'' Hiller said.
Copper has soared from 90 cents a pound in 2003 to $4 a pound this spring.
The high price of scrap metal has created long lines at scrap yards in Jackson, Jonesville and the Detroit area.
Much of the scrap being brought in is disabled farm machinery and yard and garage junk.
While the hot market is helping clean up the landscape, it also has emboldened thieves to steal car parts, cars, plumbing, air conditioners, boats and tools in Jackson in recent months.
Thieves are stripping vacant houses of copper water and gas lines and copper electrical wire.
``We would like people to keep an eye out for suspicious activity in their neighborhoods,'' Hiller said
By Steven Hepker
Jackson police are asking residents to monitor abandoned homes in their neighborhoods for illegal activity, including drug use, metal thieves and squatters.
``With so many people leaving Michigan because of the economy, we have an abundance of vacant homes,'' Lt. Kevin Hiller said.
On Monday, officers arrested three people suspected of stripping copper from a vacant home in the 200 block of Damon Street.
``People who are stealing copper and other metals from vacant homes are doing it in the daytime because the electricity is off,'' Hiller said.
Copper has soared from 90 cents a pound in 2003 to $4 a pound this spring.
The high price of scrap metal has created long lines at scrap yards in Jackson, Jonesville and the Detroit area.
Much of the scrap being brought in is disabled farm machinery and yard and garage junk.
While the hot market is helping clean up the landscape, it also has emboldened thieves to steal car parts, cars, plumbing, air conditioners, boats and tools in Jackson in recent months.
Thieves are stripping vacant houses of copper water and gas lines and copper electrical wire.
``We would like people to keep an eye out for suspicious activity in their neighborhoods,'' Hiller said
Monday, April 21, 2008
Property Tax Relief for Some Homeowners!
God news for those of you who own 2 homes and are selling 1 of them. If you moved to a new home recently and have a vacant home that is listed for sale, there may be some relief for you in the near future. Governor Granholm signed a bill recently that allows for homeowners in this situation to claim 2 homestead exemptions instead of the normal 1.
House Bill 4215, now Public Act 96 of 2008 sponsored by Representative Ed Gaffney (R-Grosse Pointe Farms) enacts that the seller can retain an additional exemption for up to three years on property previously exempt as the owner’s principal residence if the following circumstances are met:
the property is not occupied,
the property is for sale
the property is not leased or available for lease
the property is not used for any business or commercial purpose
House Bill 4215, now Public Act 96 of 2008 sponsored by Representative Ed Gaffney (R-Grosse Pointe Farms) enacts that the seller can retain an additional exemption for up to three years on property previously exempt as the owner’s principal residence if the following circumstances are met:
the property is not occupied,
the property is for sale
the property is not leased or available for lease
the property is not used for any business or commercial purpose
Friday, April 11, 2008
Top 10 Seller Short Sale Questions..Answered
Most Common Questions A Seller Will Ask You
Number 10
I can't make my house payments, but I do have an ability to pay back all or part of the negative equity. Also, I want to preserve my credit score...is a short sale right for me?
Probably, not. In cases where the seller can pay back all or part of the negative equity (usually to the 2nd lien holder), it makes sense for them to work out a repayment plan. The lender will then release the lien and allow the home to close.
Number 9
If I pay mortgage insurance and default on my loan, why wouldn't that cover the deficiency amount?
The mortgage insurance is not there for your protection, just the mortgage lender's.
Number 8
Do I have to have my home "Approved" by the lender prior to offering it for sale as a short sale?
No. Technically speaking there is no such thing as being "Short Sale Approved." The actual approval only happens with an accepted offer.
Number 7
I just missed a payment and I know I will miss more...how long does the foreclosure process take and is there time to do a short sale?
The foreclosure process takes differing times depending on your state. In the Midwest a foreclosure can take over a year. In California its taking 6+ months. Generally speaking a well priced short sale being processed by an educated short sale listing agent will sell and close in less than 120 days.
Number 6
Will I still have to pay property taxes if I do a short sale?
Property taxes will always have to be paid as part of any accepted short sale. Whether it's you or the lender, it depends on their policies and the specific agreement you reach while negotiating the short sale.
Number 5
I owe more than my home is worth and I can't make the payment. Do I have to somehow qualify for a short sale?
The simple answer is NO. If someone can't make their payment and they are otherwise insolvent, they qualify for a short sale. Note: insolvent simply means their total debts are great than their assets.
Number 4
Do I have to pay income taxes...I have heard that I will get a 1099. Will the loss the bank takes be treated as a taxable gain to me...the seller...is this true?
It WAS true, now it's not. Consult your Tax Attorney or Qualified CPA. Very recently the tax law was modified and now most people who do a short sale will have no taxes due.
Number 3
How do you, my listing agent get paid...who pays your commission?
The bank will pay the commission along with all the other usual closing costs.
Number 2
Do I have to miss a payment to do a Short Sale?
No. Late last year most major lenders started accepting short sale offers from sellers who have never missed a payment.
Number 1
I want to do a short sale and have a 2nd mortgage, does this make me ineligible?
No. Both of your lenders will need to be satisfied in some way to complete the short sale. If your first lender will be paid off by the sale, then you just negotiate the terms with the second lender. Most short sales do involve 1st and 2nd lien holders.
Number 10
I can't make my house payments, but I do have an ability to pay back all or part of the negative equity. Also, I want to preserve my credit score...is a short sale right for me?
Probably, not. In cases where the seller can pay back all or part of the negative equity (usually to the 2nd lien holder), it makes sense for them to work out a repayment plan. The lender will then release the lien and allow the home to close.
Number 9
If I pay mortgage insurance and default on my loan, why wouldn't that cover the deficiency amount?
The mortgage insurance is not there for your protection, just the mortgage lender's.
Number 8
Do I have to have my home "Approved" by the lender prior to offering it for sale as a short sale?
No. Technically speaking there is no such thing as being "Short Sale Approved." The actual approval only happens with an accepted offer.
Number 7
I just missed a payment and I know I will miss more...how long does the foreclosure process take and is there time to do a short sale?
The foreclosure process takes differing times depending on your state. In the Midwest a foreclosure can take over a year. In California its taking 6+ months. Generally speaking a well priced short sale being processed by an educated short sale listing agent will sell and close in less than 120 days.
Number 6
Will I still have to pay property taxes if I do a short sale?
Property taxes will always have to be paid as part of any accepted short sale. Whether it's you or the lender, it depends on their policies and the specific agreement you reach while negotiating the short sale.
Number 5
I owe more than my home is worth and I can't make the payment. Do I have to somehow qualify for a short sale?
The simple answer is NO. If someone can't make their payment and they are otherwise insolvent, they qualify for a short sale. Note: insolvent simply means their total debts are great than their assets.
Number 4
Do I have to pay income taxes...I have heard that I will get a 1099. Will the loss the bank takes be treated as a taxable gain to me...the seller...is this true?
It WAS true, now it's not. Consult your Tax Attorney or Qualified CPA. Very recently the tax law was modified and now most people who do a short sale will have no taxes due.
Number 3
How do you, my listing agent get paid...who pays your commission?
The bank will pay the commission along with all the other usual closing costs.
Number 2
Do I have to miss a payment to do a Short Sale?
No. Late last year most major lenders started accepting short sale offers from sellers who have never missed a payment.
Number 1
I want to do a short sale and have a 2nd mortgage, does this make me ineligible?
No. Both of your lenders will need to be satisfied in some way to complete the short sale. If your first lender will be paid off by the sale, then you just negotiate the terms with the second lender. Most short sales do involve 1st and 2nd lien holders.
Thursday, April 3, 2008
Governor Granholm Signs "Save The Dream" Legislation
Legislation is aimed to help local residents facing foreclosure
Surrounded by local lawmakers in a Jackson bank, Gov. Jennifer Granholm gleefully signed into law Wednesday a bill to help struggling homeowners avoid mortgage foreclosure.
The "Save the Dream" legislation, effective immediately, creates two refinancing options for some homeowners through the Michigan Housing and Development Authority. The package is designed to diminish the number of mortgage foreclosures sweeping the state.
Granholm made the presentation and signed Senate Bill 950, one of six bills in the package, in the lobby of Citizens Bank, 1712 E. Michigan Ave. She also made stops in Grand Rapids and Detroit.
Last year, Jackson County had a record 1,227 foreclosures, and it already has more than 200 this year.
"Jackson has been hard-hit by the struggling auto industry and the slowness of the economy," Granholm said. "We just want to provide people with help where they need it most."
The tools allow homeowners struggling with rising adjustable-rate mortgages or homeowners who have fallen behind on mortgage payments and are at risk of losing their homes to get a lower, 30-year fixed-rate loan.
To qualify for the programs, household income must be less than $108,000 and the home's purchase price cannot exceed $224,000.
The programs will be paid for by taxable bonds. Home-owners will be responsible for the full value of their refinanced mortgages.
Sens. Mark Schauer, D-Battle Creek, and Randy Richardville, R-Monroe, helped push the package through the Legislature and on Wednesday escorted the governor into the lobby. They represent portions of Jackson County.
"When people lose their homes in Michigan, they are Democrats, they are Republicans, it doesn't matter," Granholm said. "It's about Michigan. This is pro-Michigan legislation."
Richardville said the foreclosure crisis is the toughest issue facing Michigan households. Schauer said the problem "is devastating families, neighborhoods and communities across the state."
Schauer decried the thought that homeowners in trouble made their bed and should lie in it.
"That kind of thinking ignores the fact that this crisis affects all of us and that some homeowners were taken advantage of through no fault of their own," he said. "This will directly benefit the community."
Surrounded by local lawmakers in a Jackson bank, Gov. Jennifer Granholm gleefully signed into law Wednesday a bill to help struggling homeowners avoid mortgage foreclosure.
The "Save the Dream" legislation, effective immediately, creates two refinancing options for some homeowners through the Michigan Housing and Development Authority. The package is designed to diminish the number of mortgage foreclosures sweeping the state.
Granholm made the presentation and signed Senate Bill 950, one of six bills in the package, in the lobby of Citizens Bank, 1712 E. Michigan Ave. She also made stops in Grand Rapids and Detroit.
Last year, Jackson County had a record 1,227 foreclosures, and it already has more than 200 this year.
"Jackson has been hard-hit by the struggling auto industry and the slowness of the economy," Granholm said. "We just want to provide people with help where they need it most."
The tools allow homeowners struggling with rising adjustable-rate mortgages or homeowners who have fallen behind on mortgage payments and are at risk of losing their homes to get a lower, 30-year fixed-rate loan.
To qualify for the programs, household income must be less than $108,000 and the home's purchase price cannot exceed $224,000.
The programs will be paid for by taxable bonds. Home-owners will be responsible for the full value of their refinanced mortgages.
Sens. Mark Schauer, D-Battle Creek, and Randy Richardville, R-Monroe, helped push the package through the Legislature and on Wednesday escorted the governor into the lobby. They represent portions of Jackson County.
"When people lose their homes in Michigan, they are Democrats, they are Republicans, it doesn't matter," Granholm said. "It's about Michigan. This is pro-Michigan legislation."
Richardville said the foreclosure crisis is the toughest issue facing Michigan households. Schauer said the problem "is devastating families, neighborhoods and communities across the state."
Schauer decried the thought that homeowners in trouble made their bed and should lie in it.
"That kind of thinking ignores the fact that this crisis affects all of us and that some homeowners were taken advantage of through no fault of their own," he said. "This will directly benefit the community."
Monday, March 31, 2008
Credit Clampdown for Prospective Homeowners
As you may have heard, the Mortgage industry is getting pretty wary about clients whose credit scores are less than perfect. So what does it mean for you?
Well, for anyone with a mediam credit score below 680, that means some more scrutiny of your credit history from mortgage underwriters. Just in case you are wondering, about 42% of Americans have a credit score between 600-700. That is alot of people! Does it mean that you can't get a loan...no. Does it mean that if you have some "skeletons" in your financial closet you won't get some scrutiny...yes.
So what can you do about it? Check your credit score. There are a number of websites that allow you to check and monitor your score. Most of them will give you a 1 bureau report free and then charge you $10-15 per month to monitor your score and any changes to your credit. In this bloggers opinion, this is a good investment! I pay for monitoring myself and have found ut exceptionally enlightening to watch my score. I feel in actual control of my score and it's moving Northward in the credit ranks.
So, if you are thinking about buying a home in the near future, check that credit and get in control. Getting your score to at least 680 will save you time, money and stress!
Well, for anyone with a mediam credit score below 680, that means some more scrutiny of your credit history from mortgage underwriters. Just in case you are wondering, about 42% of Americans have a credit score between 600-700. That is alot of people! Does it mean that you can't get a loan...no. Does it mean that if you have some "skeletons" in your financial closet you won't get some scrutiny...yes.
So what can you do about it? Check your credit score. There are a number of websites that allow you to check and monitor your score. Most of them will give you a 1 bureau report free and then charge you $10-15 per month to monitor your score and any changes to your credit. In this bloggers opinion, this is a good investment! I pay for monitoring myself and have found ut exceptionally enlightening to watch my score. I feel in actual control of my score and it's moving Northward in the credit ranks.
So, if you are thinking about buying a home in the near future, check that credit and get in control. Getting your score to at least 680 will save you time, money and stress!
Tuesday, March 25, 2008
Restraints on Mortgage Lenders Fannie Mae and Freddie Mac are Loosened
Federally-backed mortgage lenders Fannie Mae and Freddie Mac got a reprieve from the government yesterday. Currently, the two companies together are required to maintain a nearly 20 Billion Dollar cash cushion at all times to ensure solvancy. The new measure would reduce that cushion requirement by 1/3 so that the lenders will have more cash to expand their roles in the tight housing market.
Monday, March 24, 2008
Forbes Magazine Notices Jackson!
Recently, Forbes Magazine notified Jackson officials that they have identified Jackson, MI as one of the "Best Small Metropolitan Areas to Live and Work". It is unclear when the list will appear online or in print, but this is clearly good for Jackson's image as it tries to position itself Regionally along with Lansing and Ann Arbor. Keep you eyes open for the article!
Wednesday, March 19, 2008
Fed Gets Agressive, Stock Market Responds
In an effort to calm investors and stop the country from moving further into a Recession, the Federal Reserve made an agressive .75 point cut in the prime interest rate yesterday. The stock market welcomed the news by surging up 420.21 points.
While this all sounds positive, how will it effect you? Here are a few speculations on that:
1. Credit card companies may lower your rates, but there could be up to a 3 month delay (it seems that reductions get passed on to you much slower than increases).
2. If you have an adjustable rate mortgage (ARM) you may see a slight reduction as the rate reduces. I wouldn't expect more than $25 - $50 in savings but it is something.
This is all assuming that the rate will stay low. It is now the lowest prime rate since 2004. I am pretty convinced that the rate will continue to go lower in an effort to "smoke and mirror" the economy into restarting.
The bottom line is that the Federal Reserve wants YOU to start feeling positive and euphoric again and to start spending again.
The best lesson that could be learned from all of this (in my opinion, anyway) is to spend less money and save more. The racing economy of the past 5 years just can't continue. Personal debt is out of control and that is what has lead to people being way over-extended. When this is all balanced out hopefully everyone will be a bit wiser about budgeting ther money. Until then, just be cautious. The economy will come back, it always does.
What are your thoughs?
While this all sounds positive, how will it effect you? Here are a few speculations on that:
1. Credit card companies may lower your rates, but there could be up to a 3 month delay (it seems that reductions get passed on to you much slower than increases).
2. If you have an adjustable rate mortgage (ARM) you may see a slight reduction as the rate reduces. I wouldn't expect more than $25 - $50 in savings but it is something.
This is all assuming that the rate will stay low. It is now the lowest prime rate since 2004. I am pretty convinced that the rate will continue to go lower in an effort to "smoke and mirror" the economy into restarting.
The bottom line is that the Federal Reserve wants YOU to start feeling positive and euphoric again and to start spending again.
The best lesson that could be learned from all of this (in my opinion, anyway) is to spend less money and save more. The racing economy of the past 5 years just can't continue. Personal debt is out of control and that is what has lead to people being way over-extended. When this is all balanced out hopefully everyone will be a bit wiser about budgeting ther money. Until then, just be cautious. The economy will come back, it always does.
What are your thoughs?
Monday, March 17, 2008
Citizens Fighting Assesments
This article was in the CitPat today. We have heard more and more about this issue. Is it effecting you? Is it fair?
Chris Hines paid $64,900 in 2007 for his fixer-upper, a modest Vandercook Lake home he bought off the foreclosure market.
The Bagg Avenue house has an attached garage, but Hines describes it as a 1,040-square-foot "dirt crawl space" that needs about $8,000 worth of work.
That's why he was shocked when he opened his assessment notice last month to find his home is valued at $124,400 and his property taxes increased about $500.
"If I wanted to pay that much in taxes I would have bought a nicer home," Hines said. "I'm fighting it all the way if I have to."
Hines is one of hundreds of disgruntled homeowners in Jackson County who went to boards of review this month to appeal their property taxes. Most boards are wrapping up deliberations, and appointments are no longer available.
Many of those who appealed, including Hines, will have to wait weeks until a final determination is made and a notice is sent in the mail. If a homeowner still is unsatisfied with the result, an appeal can be made to the Michigan Tax Tribunal.
Local assessors say some protests this year stem from confusion surrounding Proposal A, which was passed by Michigan voters in 1994. It limits property tax increases to the rate of inflation or 5 percent, whichever is less. It was designed to prevent taxable values from growing as fast as property values.
But many homeowners this year are seeing their property taxes increase even though assessed values are sliding in the midst of a slumping housing market. This irregular occurrence prompted a flood of phone calls to assessors and many appointments for appeals.
But a clause in Proposal A makes Hines' case distinctive.
A property's assessed value is 50 percent of what an assessor has determined to be the market value of the property. Many factors, including improvements and the number of houses sold in the area, are used to determine this value.
Under Proposal A, the tax cap is lifted the year after a home is purchased and the taxable value rises to become the assessed value. The problem is, in Hines' opinion, his home isn't worth $124,400.
Seeking a reduction, Hines brought pictures of his home and neighboring homes to the Board of Review on Tuesday to help prove his case. He was one of about 55 homeowners appealing in person to the Summit Township panel last week. The board, along with many others in the county, also accepts written appeals.
Though many townships said they didn't see a noticeable increase in appeals this year, Leoni Township residents filled all 96 available appointments and the township was to extend its deadline to accept written appeals.
Because new homeowners typically see their taxes shoot up, the township encourages them to make review appointments.
"It's the property owners' time to be heard," said Cary Stiles, Leoni Township assessor. "We're in charge of over 10,000 parcels. Take your one piece of 10,000 and really look at it."
Stiles said the board provides appealing property owners with a copy of their neighborhood's sales study.
She said the board asks the homeowners to provide any information relative to their appeal, which can include sketches, photos or written descriptions. The board reviews the information and makes a determination at a later date.
"We think everyone should have a fair shot at appealing their taxes," she said. "And we want to answer their questions."
Let us know what you think.
Chris Hines paid $64,900 in 2007 for his fixer-upper, a modest Vandercook Lake home he bought off the foreclosure market.
The Bagg Avenue house has an attached garage, but Hines describes it as a 1,040-square-foot "dirt crawl space" that needs about $8,000 worth of work.
That's why he was shocked when he opened his assessment notice last month to find his home is valued at $124,400 and his property taxes increased about $500.
"If I wanted to pay that much in taxes I would have bought a nicer home," Hines said. "I'm fighting it all the way if I have to."
Hines is one of hundreds of disgruntled homeowners in Jackson County who went to boards of review this month to appeal their property taxes. Most boards are wrapping up deliberations, and appointments are no longer available.
Many of those who appealed, including Hines, will have to wait weeks until a final determination is made and a notice is sent in the mail. If a homeowner still is unsatisfied with the result, an appeal can be made to the Michigan Tax Tribunal.
Local assessors say some protests this year stem from confusion surrounding Proposal A, which was passed by Michigan voters in 1994. It limits property tax increases to the rate of inflation or 5 percent, whichever is less. It was designed to prevent taxable values from growing as fast as property values.
But many homeowners this year are seeing their property taxes increase even though assessed values are sliding in the midst of a slumping housing market. This irregular occurrence prompted a flood of phone calls to assessors and many appointments for appeals.
But a clause in Proposal A makes Hines' case distinctive.
A property's assessed value is 50 percent of what an assessor has determined to be the market value of the property. Many factors, including improvements and the number of houses sold in the area, are used to determine this value.
Under Proposal A, the tax cap is lifted the year after a home is purchased and the taxable value rises to become the assessed value. The problem is, in Hines' opinion, his home isn't worth $124,400.
Seeking a reduction, Hines brought pictures of his home and neighboring homes to the Board of Review on Tuesday to help prove his case. He was one of about 55 homeowners appealing in person to the Summit Township panel last week. The board, along with many others in the county, also accepts written appeals.
Though many townships said they didn't see a noticeable increase in appeals this year, Leoni Township residents filled all 96 available appointments and the township was to extend its deadline to accept written appeals.
Because new homeowners typically see their taxes shoot up, the township encourages them to make review appointments.
"It's the property owners' time to be heard," said Cary Stiles, Leoni Township assessor. "We're in charge of over 10,000 parcels. Take your one piece of 10,000 and really look at it."
Stiles said the board provides appealing property owners with a copy of their neighborhood's sales study.
She said the board asks the homeowners to provide any information relative to their appeal, which can include sketches, photos or written descriptions. The board reviews the information and makes a determination at a later date.
"We think everyone should have a fair shot at appealing their taxes," she said. "And we want to answer their questions."
Let us know what you think.
Thursday, March 13, 2008
Foreclosure "Crisis" Overblown? Yes, says MSN.com
Excerpts from an MSN Article posted on 3/12/08
By Scott Burns (MSN.Com)
Sure, there are pockets of pain around the US, but it's not as if most Americans are losing their homes. More than 99% of homes aren't in foreclosure.
A recent list of year-end mortgage foreclosure rates in 100 top metropolitan areas drew a lot of attention. Released by RealtyTrac, a company that compiles data on home foreclosures, the list showed the number of foreclosure filings in each metro area, the percentage of homes being foreclosed and the percentage change from the previous year.
Though the report had some dismal news -- such as the nearly 4.9% foreclosure rate in the Stockton, Calif., area -- a close look at the data also provides some reassuring information. It tells me, for instance, that the foreclosure crisis is a regional problem, not a systemic one. It could become a systemic problem, of course, but we're a long way from that now.
This news will disappoint the gloom-and-doom crew and all those seeking the excitement of financial upheaval. But it may be time to temper our worry and take a closer look at some of the year-over-year foreclosure statistics:
Though the national rate of foreclosure increased by a whopping 79% between December 2006 and December 2007, the rate was still only 1.033%. Because about 30% of all homes are owned mortgage-free, this means that for all the noise about a crisis, only seven-tenths of 1% of all homes were in foreclosure.
In the top 100 housing markets, the average foreclosure rate was somewhat higher -- 1.38% -- and it was up 78% over the previous year. But if you rank-ordered the list of the top 100 areas, only 34 had foreclosure rates above the group average. Fifty-one areas had rates of 1% or less.
Where does Jackson fall in this equation? We certainly could be considered one of the "pockets of pain" that they refer to. With the major media outlets (including MSN.com focusing on the "Top 100" markets, how accurate is that for Jackson? How bad is it really? Probably not as bad as the media paints it generally, but worse than some areas.
Of course, no statistics in the world can minimize the pain of people here in our community that are going through the foreclosure process.
What are your thoughts? Is the foreclosure rate a "crisis" or just media hype?
Let us know what you think.
By Scott Burns (MSN.Com)
Sure, there are pockets of pain around the US, but it's not as if most Americans are losing their homes. More than 99% of homes aren't in foreclosure.
Though the report had some dismal news -- such as the nearly 4.9% foreclosure rate in the Stockton, Calif., area -- a close look at the data also provides some reassuring information. It tells me, for instance, that the foreclosure crisis is a regional problem, not a systemic one. It could become a systemic problem, of course, but we're a long way from that now.
This news will disappoint the gloom-and-doom crew and all those seeking the excitement of financial upheaval. But it may be time to temper our worry and take a closer look at some of the year-over-year foreclosure statistics:
Though the national rate of foreclosure increased by a whopping 79% between December 2006 and December 2007, the rate was still only 1.033%. Because about 30% of all homes are owned mortgage-free, this means that for all the noise about a crisis, only seven-tenths of 1% of all homes were in foreclosure.
In the top 100 housing markets, the average foreclosure rate was somewhat higher -- 1.38% -- and it was up 78% over the previous year. But if you rank-ordered the list of the top 100 areas, only 34 had foreclosure rates above the group average. Fifty-one areas had rates of 1% or less.
Where does Jackson fall in this equation? We certainly could be considered one of the "pockets of pain" that they refer to. With the major media outlets (including MSN.com focusing on the "Top 100" markets, how accurate is that for Jackson? How bad is it really? Probably not as bad as the media paints it generally, but worse than some areas.
Of course, no statistics in the world can minimize the pain of people here in our community that are going through the foreclosure process.
What are your thoughts? Is the foreclosure rate a "crisis" or just media hype?
Let us know what you think.
Friday, February 22, 2008
Savvy alternatives to tax refund loans!
Don't let the urge to splurge -- or the need for a new refrigerator -- tempt you into expensive borrowing so that you can lay your hands on your refund a few days sooner.
Article By Bankrate.com
Just discovered you'll be getting a tax refund? Don't let your enthusiasm to spend that unexpected money get the better of you.
Thanks to today's technology, there's really no need to pay extra for a refund anticipation loan just to get your hands on your tax money a tiny bit sooner. If instant cash is more a desire than a need when considering a quick refund, consider these alternatives:
Go electronic
Abandon the traditional paper return sent via the U.S. mail and file from your computer. Last year, more than 73 million taxpayers filed their returns electronically. You'll get the money almost as quickly as you would with a refund anticipation loan, and you won't pay loan fees or interest.
In fact, you may not need to pay for anything. An Internal Revenue Service partnership with tax preparers and software companies offers free online tax preparation and e-filing to some taxpayers. The IRS says that whereas paper filers could wait up to eight weeks for their refunds, most electronic filers can expect their tax checks to show up in their mailboxes in half that time or less. The agency also points out that the error rate is less than 1% for electronic filers.
Direct deposit
Electronic filers who opt for refund direct deposit do even better(.pdf file). More than 61 million people got their refunds this way last year, an 8% increase from the year before.
The IRS says the money generally shows up in taxpayer bank accounts in 10 to 14 days. Even if you file the old-fashioned paper way, having your refund deposited directly into a bank account cuts the time you have to wait for your tax cash. Plus, it's added protection against lost or stolen refund checks sent through the mail.
Use store financing
If you want your refund to finance a must-have new appliance, store interest rates usually will be better.
Many stores offer free financing for limited periods. By then, the refund should have arrived, and you can use it to pay off the store credit -- and pay no interest at all.
Impatience usually wins
Ultimately, a refund anticipation loan is a personal preference, not a fiscal issue for taxpayers.
"Theoretically, with electronic filing and quicker turnaround on refunds, the need for tax-anticipation loans has become obsolete," says John L. Stancil, an associate professor of accounting and tax at Florida Southern College in Lakeland. "However, my observation is that they appear to actually be on the increase, as people become more and more impatient to get their refund.
"One sample I saw from a major company who provides these loans through tax preparers disclosed an annual percentage rate of 264% on the loan. All year long, taxpayers have made the government an interest-free loan, and now they are paying 264% to get their own money back a few days quicker."
Companies that offer refund loans, such as H&R Block, are well aware of such impatience, and that's why the loans survive even as electronic filing increases.
The tax-preparation giant notes on its Web site, "Taxpayers choose refund anticipation loans because they can receive money in one to two days, compared to waiting up to 15 days for a tax refund to be directly deposited into their existing bank account or three to eight weeks for a mailed IRS refund check."
That pitch definitely appeals to those who value speed over cost.
Recently, larger tax-preparation companies have been offering these impatient customers refund anticipation loans on easy-to-use prepaid debit cards. The ease of a debit card coupled with the draw of an "instant refund" tempt customers looking for a speedy return.
With all the pluses of these promises, many customers fail to see the charges incurred for their impatience. These expenses include tax-preparation fees, account fees and finance charges, as well as the fees of the debit cards, which include charges for ATM withdrawals and balance inquiries.
But if you can squelch your refund appetite for just a few days, then you -- and your bank account -- will be better off.
Article By Bankrate.com
Just discovered you'll be getting a tax refund? Don't let your enthusiasm to spend that unexpected money get the better of you.
Thanks to today's technology, there's really no need to pay extra for a refund anticipation loan just to get your hands on your tax money a tiny bit sooner. If instant cash is more a desire than a need when considering a quick refund, consider these alternatives:
Go electronic
Abandon the traditional paper return sent via the U.S. mail and file from your computer. Last year, more than 73 million taxpayers filed their returns electronically. You'll get the money almost as quickly as you would with a refund anticipation loan, and you won't pay loan fees or interest.
In fact, you may not need to pay for anything. An Internal Revenue Service partnership with tax preparers and software companies offers free online tax preparation and e-filing to some taxpayers. The IRS says that whereas paper filers could wait up to eight weeks for their refunds, most electronic filers can expect their tax checks to show up in their mailboxes in half that time or less. The agency also points out that the error rate is less than 1% for electronic filers.
Direct deposit
Electronic filers who opt for refund direct deposit do even better(.pdf file). More than 61 million people got their refunds this way last year, an 8% increase from the year before.
The IRS says the money generally shows up in taxpayer bank accounts in 10 to 14 days. Even if you file the old-fashioned paper way, having your refund deposited directly into a bank account cuts the time you have to wait for your tax cash. Plus, it's added protection against lost or stolen refund checks sent through the mail.
Use store financing
If you want your refund to finance a must-have new appliance, store interest rates usually will be better.
Many stores offer free financing for limited periods. By then, the refund should have arrived, and you can use it to pay off the store credit -- and pay no interest at all.
Impatience usually wins
Ultimately, a refund anticipation loan is a personal preference, not a fiscal issue for taxpayers.
"Theoretically, with electronic filing and quicker turnaround on refunds, the need for tax-anticipation loans has become obsolete," says John L. Stancil, an associate professor of accounting and tax at Florida Southern College in Lakeland. "However, my observation is that they appear to actually be on the increase, as people become more and more impatient to get their refund.
"One sample I saw from a major company who provides these loans through tax preparers disclosed an annual percentage rate of 264% on the loan. All year long, taxpayers have made the government an interest-free loan, and now they are paying 264% to get their own money back a few days quicker."
Companies that offer refund loans, such as H&R Block, are well aware of such impatience, and that's why the loans survive even as electronic filing increases.
The tax-preparation giant notes on its Web site, "Taxpayers choose refund anticipation loans because they can receive money in one to two days, compared to waiting up to 15 days for a tax refund to be directly deposited into their existing bank account or three to eight weeks for a mailed IRS refund check."
That pitch definitely appeals to those who value speed over cost.
Recently, larger tax-preparation companies have been offering these impatient customers refund anticipation loans on easy-to-use prepaid debit cards. The ease of a debit card coupled with the draw of an "instant refund" tempt customers looking for a speedy return.
With all the pluses of these promises, many customers fail to see the charges incurred for their impatience. These expenses include tax-preparation fees, account fees and finance charges, as well as the fees of the debit cards, which include charges for ATM withdrawals and balance inquiries.
But if you can squelch your refund appetite for just a few days, then you -- and your bank account -- will be better off.
Tuesday, February 19, 2008
5 mortgage moves for 2008
Knowing when and how your adjustable-rate mortgage will reset to a higher interest rate should be your first priority. It can help you determine whether -- and when -- refinancing is the right move.
Published by Bankrate.com on 2/19/08
In 2003, when mortgage rates dropped below 5.5% for a time, it was the Year of the Refinance. The years 2004 through 2006 constituted the Era of the Exotic Mortgage, when home buyers were eager to get any type of loan so they could grab houses before prices were out of reach. Then came 2007, the Year of Reckoning, when home prices went down and the foreclosure rate went up.
And 2008 will be the Year of the Refinance again, but for different reasons than those that drove the refi boom of 2003. Five years ago, low rates spurred people to refinance. In 2008, homeowners will refi because their adjustable-rate mortgages will hit their reset dates, sending rates skyward.
Know when your ARM resets
It's bad form to get caught by surprise when your adjustable-rate mortgage, or ARM, resets. Here's how to not let it happen to you.
First, you have to know what "reset" means. By definition, the rate on an adjustable-rate mortgage goes through at least one adjustment. Those adjustments are called resets. In recent years, the most common kinds of adjustables have been 3/1 and 5/1 ARMs.
With a 3/1 ARM, the initial, introductory rate lasts three years. Then, on the 37th month, the loan is reset for the first time and the rate is adjusted. Typically the rate is reset every 12 months after that. With a 5/1 ARM, the introductory rate lasts for five years and the first reset is at the 61st month.
To check on the reset date, pull out your copy of the loan contract from your well-organized home filing system. On the first two or three pages, there should be a section that details when the rate changes and how the new rate is determined. Look for a little headline that says something like, "Change dates."
The first reset date, and the timetable for subsequent resets, should be in that section.
Find out what your ARM's rate would be if it were reset this month
Just so you'll have an inkling of what you'll be facing, find out what would happen if the rate were to reset now. This step isn't necessary if the reset is a long way off. But if the rate is going to change in 2008, this is something to keep an eye on.
Go back to that loan contract. In the section that discloses the rate's change date, there should be an explanation of how the lender will calculate the new rate. The ARM's rate will be based on an index and a margin. The index is an independent interest rate that is widely known -- the yield on the one-year Treasury note, for example, or the six-month London Interbank Offered Rate (LIBOR).
The margin is a percentage that's added to the index. Let's say that your index is the one-year LIBOR, and that today it's exactly 5%. (It's not; we're just being hypothetical here.) And let's say your margin is 2.25%. If your ARM were to reset today, the new rate would be those numbers added together, or 7.25%.
The margin will be stated right there in the loan paperwork, although it might not use the word "margin" to describe it. As for the index, you can find many indexes online or in the business section of a newspaper.
Once you know the new rate and the amount you owe, figure your monthly principal and interest with an online mortgage calculator.
Home Affordability Calculator Yearly gross income $
Monthly debt payments $
Cash avail. for purchase $
Know if you should refinance sooner rather than later
To refinance, your house has to be worth more than the amount of the refinanced loan. Your equity is the difference between the house's market value and the amount you owe. If the house is worth $200,000 today and you owe $180,000, that $20,000 difference is the equity. With a $200,000 house, that would be 10% equity.
The more equity you have, the easier it's going to be to refinance. If you have less than 5% equity, it might be difficult to qualify for a refinanced mortgage. Difficult, but not impossible -- if you have a decent credit score. Preferably, you will have 10% equity; ideally, you'll have 20% or more. If your home has been losing value in this down market, you probably are aware of it from reading the newspapers, gossiping with neighbors and occasionally checking Zillow.com. In cases where the percentage of equity is in the single digits while home prices are falling, it might be a good idea to refinance months before the reset date. Wait too long and you might not be able to refi because you owe more than the house is worth.
Get ready to document your finances
During the housing boom, many home buyers eagerly got low-documentation and no-documentation (low-doc and no-doc) mortgages, in which they stated their incomes and assets, but didn't have to provide paperwork to document their personal finances.
Experts believe that most of these borrowers exaggerated their incomes because that was the only way they could get approved for their loans. Had they been required to submit W-2s and tax returns, they would have been turned down for loans because of insufficient income.
In 2007, the rising foreclosure rate was blamed partly on these borrowers. Most of them got ARMs, and they were able to scrape by and make their monthly payments during the introductory rate period. But when the ARMs reset, these borrowers found themselves falling behind. That trend will continue in 2008.
Spurred by self-preservation, lenders have cracked down, and now they're demanding documentation of income and assets from most borrowers. Don't be surprised if a lender wants not only W-2s and tax returns, but also bank and brokerage statements.
If you lied about your income to qualify for an ARM and now you can't refinance because of documentation requirements, you're not going to get any sympathy. When you signed the promissory note, you swore under penalty of perjury that you were telling the truth.
Buying? Bring a down payment
House prices are falling in many major markets. Your lender doesn't want to give you a big pile of money for a house that's going to be worth less than the loan balance in a few months. So your lender is going to want a cushion. The down payment is that cushion.
During the boom years, it was easy to buy a house with a down payment of 5% or 3% or even with no down payment at all. Those deals aren't as common anymore.
"I think we're going back to where 10% is going to be the standard for a down payment," says Mitch Ohlbaum, president of Legend Mortgage Corp., in Los Angeles.
What are your experiences?
Published by Bankrate.com on 2/19/08
In 2003, when mortgage rates dropped below 5.5% for a time, it was the Year of the Refinance. The years 2004 through 2006 constituted the Era of the Exotic Mortgage, when home buyers were eager to get any type of loan so they could grab houses before prices were out of reach. Then came 2007, the Year of Reckoning, when home prices went down and the foreclosure rate went up.
And 2008 will be the Year of the Refinance again, but for different reasons than those that drove the refi boom of 2003. Five years ago, low rates spurred people to refinance. In 2008, homeowners will refi because their adjustable-rate mortgages will hit their reset dates, sending rates skyward.
Know when your ARM resets
It's bad form to get caught by surprise when your adjustable-rate mortgage, or ARM, resets. Here's how to not let it happen to you.
First, you have to know what "reset" means. By definition, the rate on an adjustable-rate mortgage goes through at least one adjustment. Those adjustments are called resets. In recent years, the most common kinds of adjustables have been 3/1 and 5/1 ARMs.
With a 3/1 ARM, the initial, introductory rate lasts three years. Then, on the 37th month, the loan is reset for the first time and the rate is adjusted. Typically the rate is reset every 12 months after that. With a 5/1 ARM, the introductory rate lasts for five years and the first reset is at the 61st month.
To check on the reset date, pull out your copy of the loan contract from your well-organized home filing system. On the first two or three pages, there should be a section that details when the rate changes and how the new rate is determined. Look for a little headline that says something like, "Change dates."
The first reset date, and the timetable for subsequent resets, should be in that section.
Find out what your ARM's rate would be if it were reset this month
Just so you'll have an inkling of what you'll be facing, find out what would happen if the rate were to reset now. This step isn't necessary if the reset is a long way off. But if the rate is going to change in 2008, this is something to keep an eye on.
Go back to that loan contract. In the section that discloses the rate's change date, there should be an explanation of how the lender will calculate the new rate. The ARM's rate will be based on an index and a margin. The index is an independent interest rate that is widely known -- the yield on the one-year Treasury note, for example, or the six-month London Interbank Offered Rate (LIBOR).
The margin is a percentage that's added to the index. Let's say that your index is the one-year LIBOR, and that today it's exactly 5%. (It's not; we're just being hypothetical here.) And let's say your margin is 2.25%. If your ARM were to reset today, the new rate would be those numbers added together, or 7.25%.
The margin will be stated right there in the loan paperwork, although it might not use the word "margin" to describe it. As for the index, you can find many indexes online or in the business section of a newspaper.
Once you know the new rate and the amount you owe, figure your monthly principal and interest with an online mortgage calculator.
Home Affordability Calculator Yearly gross income $
Monthly debt payments $
Cash avail. for purchase $
Know if you should refinance sooner rather than later
To refinance, your house has to be worth more than the amount of the refinanced loan. Your equity is the difference between the house's market value and the amount you owe. If the house is worth $200,000 today and you owe $180,000, that $20,000 difference is the equity. With a $200,000 house, that would be 10% equity.
The more equity you have, the easier it's going to be to refinance. If you have less than 5% equity, it might be difficult to qualify for a refinanced mortgage. Difficult, but not impossible -- if you have a decent credit score. Preferably, you will have 10% equity; ideally, you'll have 20% or more. If your home has been losing value in this down market, you probably are aware of it from reading the newspapers, gossiping with neighbors and occasionally checking Zillow.com. In cases where the percentage of equity is in the single digits while home prices are falling, it might be a good idea to refinance months before the reset date. Wait too long and you might not be able to refi because you owe more than the house is worth.
Get ready to document your finances
During the housing boom, many home buyers eagerly got low-documentation and no-documentation (low-doc and no-doc) mortgages, in which they stated their incomes and assets, but didn't have to provide paperwork to document their personal finances.
Experts believe that most of these borrowers exaggerated their incomes because that was the only way they could get approved for their loans. Had they been required to submit W-2s and tax returns, they would have been turned down for loans because of insufficient income.
In 2007, the rising foreclosure rate was blamed partly on these borrowers. Most of them got ARMs, and they were able to scrape by and make their monthly payments during the introductory rate period. But when the ARMs reset, these borrowers found themselves falling behind. That trend will continue in 2008.
Spurred by self-preservation, lenders have cracked down, and now they're demanding documentation of income and assets from most borrowers. Don't be surprised if a lender wants not only W-2s and tax returns, but also bank and brokerage statements.
If you lied about your income to qualify for an ARM and now you can't refinance because of documentation requirements, you're not going to get any sympathy. When you signed the promissory note, you swore under penalty of perjury that you were telling the truth.
Buying? Bring a down payment
House prices are falling in many major markets. Your lender doesn't want to give you a big pile of money for a house that's going to be worth less than the loan balance in a few months. So your lender is going to want a cushion. The down payment is that cushion.
During the boom years, it was easy to buy a house with a down payment of 5% or 3% or even with no down payment at all. Those deals aren't as common anymore.
"I think we're going back to where 10% is going to be the standard for a down payment," says Mitch Ohlbaum, president of Legend Mortgage Corp., in Los Angeles.
What are your experiences?
Thursday, February 14, 2008
A lifeline for delinquent mortgage borrowers? Maybe.
This article was published on 2/14 on Bankrate.com
Mortgage lenders desperately want past-due borrowers to open the mail and pick up the phone.
That's the gist of the latest public-private collaboration to address the mortgage crisis. This week, the federal government and six big mortgage servicers announced Project Lifeline, billed by Treasury Secretary Henry Paulson as "a targeted outreach to homeowners 90 days or more delinquent that may lead to a pause in the foreclosure process."
The initiative is more about the outreach than the pause. Industry experts say that delaying the foreclosure sale of a house is standard procedure when the borrower is willing and able to discuss a workout of some kind. So what Project Lifeline really amounts to is the targeted outreach.
"Project Lifeline is aimed at homeowners who face a real risk of losing their home, but have not yet addressed the problem," Paulson says, adding: "Our hope is that today's announcement will reach them, and they will reach out immediately for help."
In other words, Project Lifeline's goal is for seriously delinquent borrowers to stop ignoring the letters and phone calls from their mortgage companies, and instead call and ask for help.
The project is the offspring of a previous initiative, called the Hope Now Alliance, which focuses on past-due borrowers with subprime mortgages. Hope Now set out guidelines to quickly sort which subprime borrowers don't need help, which can stay in their homes with some help and which are in hopeless situations. Under Hope Now, some subprime borrowers can get the introductory rates frozen on their subprime, adjustable-rate mortgages.
Help for all kinds of mortgages
Project Lifeline reaches out to a broader swath of borrowers. It covers all residential mortgages, not just subprime loans. The project comprises six of the biggest mortgage servicers: Countrywide, Wells Fargo, CitiMortgage, Chase Home Finance, Washington Mutual and Bank of America.
They will send letters to their customers who are at least 90 days past due, offering to put off a foreclosure sale by 30 days if the borrower:
-Calls within 10 days of receiving the letter.
-Expresses a desire to avoid foreclosure and keep the house.
-Agrees to financial counseling, if the lender deems it necessary.
-Provides detailed financial information.
Then both sides would have a few weeks to reach an agreement of some kind. Options would include a workout, in which the borrower pays extra each month and catches up on the late payments over time, or a modification, in which the rate or terms of the loan are changed. In rare cases, a modification could even include some debt forgiveness if the borrower owes more than the house is worth
Band-Aid, not a cure
But none of this is new. The exact same options are available after the borrower is 30 days and then 60 days past due. Mortgage servicers say their biggest problem is that they can't get in touch with delinquent borrowers. In about half of foreclosures, the borrower never communicates with the lender, despite the mortgage company's efforts.
At the 90-day delinquency period, borrowers "probably have gotten multiple letters from the lenders at this point. They've probably gotten multiple phone calls from the banks," says Lisa Breier Urban, a real estate lawyer in New York City. "It's possible that the tone will be softer in the Project Lifeline letter that will be sent out, and perhaps that will enable the consumer to want to respond to it."
Urban says she thinks that any help that the federal government can give to homeowners is beneficial.
"That being said, I'm not really sure a 30-day grace period for people who are in foreclosure is sufficient time to work out the terms of a deal. To me, it sounds more like a Band-Aid than an actual remedy. You're giving people a 30-day grace period, but what if you can't work something out? What then?"
Presumably, the deadlines aren't airtight. Few lenders are going to hang up on a borrower for calling two weeks after getting the letter, instead of responding within 10 days. Bottom line, Paulson says: "These are homeowners on the brink of losing their homes. The way I look at it is, everyone we save makes a difference."
Consumer help still murky
There are no details on what kinds of mortgage rescue options will be offered. Floyd Robinson, president of Bank of America's consumer real estate division, says, "We'll look at the individual circumstances and what we believe is appropriate."
Urban says: "I would have liked to have seen a structuring or some sort of guidelines in terms of what they were going to offer the consumer."
Jim Carr, chief operating officer of the National Community Reinvestment Coalition, calls Project Lifeline "a small step in the right direction" and, like Urban, wishes it were more ambitious. The NCRC proposes that the federal government buy delinquent loans from lenders at a steep discount "and make them available to servicers to actually go in and do what needs to be done to make those loans work."
In some cases where homeowners owe more than their houses are worth, part of the debt should be forgiven and the loan refinanced, Carr says. The notion of "short refinances" has been championed by at least one mortgage broker as well as by Sheila Bair, the chairman of the Federal Deposit Insurance Corp.
What do you think?
Mortgage lenders desperately want past-due borrowers to open the mail and pick up the phone.
That's the gist of the latest public-private collaboration to address the mortgage crisis. This week, the federal government and six big mortgage servicers announced Project Lifeline, billed by Treasury Secretary Henry Paulson as "a targeted outreach to homeowners 90 days or more delinquent that may lead to a pause in the foreclosure process."
The initiative is more about the outreach than the pause. Industry experts say that delaying the foreclosure sale of a house is standard procedure when the borrower is willing and able to discuss a workout of some kind. So what Project Lifeline really amounts to is the targeted outreach.
"Project Lifeline is aimed at homeowners who face a real risk of losing their home, but have not yet addressed the problem," Paulson says, adding: "Our hope is that today's announcement will reach them, and they will reach out immediately for help."
In other words, Project Lifeline's goal is for seriously delinquent borrowers to stop ignoring the letters and phone calls from their mortgage companies, and instead call and ask for help.
The project is the offspring of a previous initiative, called the Hope Now Alliance, which focuses on past-due borrowers with subprime mortgages. Hope Now set out guidelines to quickly sort which subprime borrowers don't need help, which can stay in their homes with some help and which are in hopeless situations. Under Hope Now, some subprime borrowers can get the introductory rates frozen on their subprime, adjustable-rate mortgages.
Help for all kinds of mortgages
Project Lifeline reaches out to a broader swath of borrowers. It covers all residential mortgages, not just subprime loans. The project comprises six of the biggest mortgage servicers: Countrywide, Wells Fargo, CitiMortgage, Chase Home Finance, Washington Mutual and Bank of America.
They will send letters to their customers who are at least 90 days past due, offering to put off a foreclosure sale by 30 days if the borrower:
-Calls within 10 days of receiving the letter.
-Expresses a desire to avoid foreclosure and keep the house.
-Agrees to financial counseling, if the lender deems it necessary.
-Provides detailed financial information.
Then both sides would have a few weeks to reach an agreement of some kind. Options would include a workout, in which the borrower pays extra each month and catches up on the late payments over time, or a modification, in which the rate or terms of the loan are changed. In rare cases, a modification could even include some debt forgiveness if the borrower owes more than the house is worth
Band-Aid, not a cure
But none of this is new. The exact same options are available after the borrower is 30 days and then 60 days past due. Mortgage servicers say their biggest problem is that they can't get in touch with delinquent borrowers. In about half of foreclosures, the borrower never communicates with the lender, despite the mortgage company's efforts.
At the 90-day delinquency period, borrowers "probably have gotten multiple letters from the lenders at this point. They've probably gotten multiple phone calls from the banks," says Lisa Breier Urban, a real estate lawyer in New York City. "It's possible that the tone will be softer in the Project Lifeline letter that will be sent out, and perhaps that will enable the consumer to want to respond to it."
Urban says she thinks that any help that the federal government can give to homeowners is beneficial.
"That being said, I'm not really sure a 30-day grace period for people who are in foreclosure is sufficient time to work out the terms of a deal. To me, it sounds more like a Band-Aid than an actual remedy. You're giving people a 30-day grace period, but what if you can't work something out? What then?"
Presumably, the deadlines aren't airtight. Few lenders are going to hang up on a borrower for calling two weeks after getting the letter, instead of responding within 10 days. Bottom line, Paulson says: "These are homeowners on the brink of losing their homes. The way I look at it is, everyone we save makes a difference."
Consumer help still murky
There are no details on what kinds of mortgage rescue options will be offered. Floyd Robinson, president of Bank of America's consumer real estate division, says, "We'll look at the individual circumstances and what we believe is appropriate."
Urban says: "I would have liked to have seen a structuring or some sort of guidelines in terms of what they were going to offer the consumer."
Jim Carr, chief operating officer of the National Community Reinvestment Coalition, calls Project Lifeline "a small step in the right direction" and, like Urban, wishes it were more ambitious. The NCRC proposes that the federal government buy delinquent loans from lenders at a steep discount "and make them available to servicers to actually go in and do what needs to be done to make those loans work."
In some cases where homeowners owe more than their houses are worth, part of the debt should be forgiven and the loan refinanced, Carr says. The notion of "short refinances" has been championed by at least one mortgage broker as well as by Sheila Bair, the chairman of the Federal Deposit Insurance Corp.
What do you think?
Tuesday, February 5, 2008
Homeowners tax relief plan aims for major improvements
I found this article interesting. What are your thoughts on this plan for Lansing? Does Jackson have similar incentives? Would Jackson benefit from similar incentives?
Your Thoughts?
Published February 5, 2008
From Lansing State Journal ]
Mayor's strategy aims to go beyond routine fix-ups
A few years ago, a group of volunteers swooped in upon Denise McCune's Lansing property and did a gamut of home repairs for free.
McCune, 61, said there was no way she could have paid for the repairs on her own.
That is why Lansing Mayor Virg Bernero's proposal to extend tax breaks to typical home-owners has piqued McCune's interest. Bernero said during Wednesday's State of the City address that homeowners could receive 50 percent breaks on the increased taxes from "qualified improvements" and transformations of old, abandoned houses into owner-occupied homes.
"The tax break would be great, but again, you have to come up with the money to do (the improvements)," McCune said. "I don't have the money." And with Michigan's economy struggling, that issue is important.
City officials classify "qualified improvements" as additions and expansions that can cost thousands of dollars. "This goes beyond your general maintenance," acknowledged Bob Johnson, Lansing's Planning and Neighborhood Development director.
Roof repairs and new paint, which do not affect a home's taxable value, would not be considered, he said.
Still, some are applauding the residential tax break program Johnson said will be part of the spring budget negotiations between Bernero and the City Council.
"It's encouraging," said Joan Nelson, director of the Allen Neighborhood Center.
Older housing stock
A significant number of homes on Lansing's east side were built in the first half of the 20th century. "Old housing stock needs constant upkeep," Nelson said.
The mayor's housing task force told Bernero incentives were needed. "The housing stock is fairly aged," said member Lynne Martinez, who also is executive director of the Greater Lansing Housing Coalition. "Many people in the area are economically stressed, and there's a substantial number of rental properties."
Aid for neighborhoods
City officials hope the residential tax break program will inspire families to invest in Lansing and perhaps keep people in the city.
City Council President Brian Jeffries wants more specifics on how Bernero's proposal would work. But he likes the idea that the proposal could benefit and improve city property beyond Lansing's downtown. "This clearly is a program that is directed at the neighborhoods," Jeffries said. "The devil is in the details, and we haven't seen any of the details."
Friday, January 25, 2008
Tax Rebate Details Nearly Final....What will you do with it?
The eternal question.... to save or spend!
By: Matt Mansfield
Marketing Director, ERA Reardon Realty
As many of you may have heard on the news, a tax rebate check may be headed to your mailbox in early Summer. Good news for sure! You will most likely receive between $600 and $1,800 depending on your marital status, yearly earnings and if you have cheldren. NOW, the real question for our flagging economy is, "Will it help"?
That depends on you...
Lawmakers are counting on the fact that you and everyone else who gets the check will go and blow it as "fun money" on electronics, meals and vacations, etc. The history of tax returns and rebates does point to the fact that most of you have done exactly that in the past. This however is not the past.
If you want my advice, and I am not sure if you do, I would save the money. The economy is weak and jobs are unpredictable. Put the money in the bank, especially if you are living paycheck-to-paycheck. There are many online savings accounts that will pay 4-5% interest!
While spending the money on an X-Box 360 or a flat screen TV does feel good in the short term, here is a list of just a few things that "creep up" on us that you should most likely save the money for:
1. Loss of a job. If you unexpectedly lose your job you will need as big of a cushion as possible to tide you over. Enough said...
2. Medical BIlls. If you get injured, you could have hefty bills to pay. Even a trip to the Dentist can get pricy.
3. Car repair. You just can never see this one coming, and you need your car.
4. Gas Prices. We could see prices of $4 per gallon this year. Keep a supplemental "gas fund" in the bank.
5. Paying down credit cards. Paying some extra dough on those high interest credit cards can save you money each month in the form of a lower payment, not to mention help your credit score ;)
6. Prom, Dances, Cars, etc for Teenagers. If you have a teenager, these expenses never stop.
7. Excess Mileage on your lease. If you chew up your lease miles, don't roll them over into your next lease! Pay them off at the end of the term with your saved money. Financing negative equity is a bad idea.
8. Christmas! Don't put gifts on your credit cards next year. Bank some cash and pay all of your Christmas bills on time!
9. Downpayment on a new car. You never know when your car will die. Coming up with a downpayment on short notice can mean not paying other bills.
10. Downpayment on a house!If you are looking to move or become a homeowner for the first time this year, start banking that downpayment now!. With historically low interst rates it could be the best investment you could make!
So there you have it...the choice is yours. Spend or Save? Only you can decide. Me, I am going to try and save it, but one of those unexpected expenses will unboubtedly creep up in the near future and take it from me. That's exactly why it will be waiting in my online savings account.
What do you think? Let me know by clicking on the "Comments" link under this story.
Have a good one,
Matt
By: Matt Mansfield
Marketing Director, ERA Reardon Realty
As many of you may have heard on the news, a tax rebate check may be headed to your mailbox in early Summer. Good news for sure! You will most likely receive between $600 and $1,800 depending on your marital status, yearly earnings and if you have cheldren. NOW, the real question for our flagging economy is, "Will it help"?
That depends on you...
Lawmakers are counting on the fact that you and everyone else who gets the check will go and blow it as "fun money" on electronics, meals and vacations, etc. The history of tax returns and rebates does point to the fact that most of you have done exactly that in the past. This however is not the past.
If you want my advice, and I am not sure if you do, I would save the money. The economy is weak and jobs are unpredictable. Put the money in the bank, especially if you are living paycheck-to-paycheck. There are many online savings accounts that will pay 4-5% interest!
While spending the money on an X-Box 360 or a flat screen TV does feel good in the short term, here is a list of just a few things that "creep up" on us that you should most likely save the money for:
1. Loss of a job. If you unexpectedly lose your job you will need as big of a cushion as possible to tide you over. Enough said...
2. Medical BIlls. If you get injured, you could have hefty bills to pay. Even a trip to the Dentist can get pricy.
3. Car repair. You just can never see this one coming, and you need your car.
4. Gas Prices. We could see prices of $4 per gallon this year. Keep a supplemental "gas fund" in the bank.
5. Paying down credit cards. Paying some extra dough on those high interest credit cards can save you money each month in the form of a lower payment, not to mention help your credit score ;)
6. Prom, Dances, Cars, etc for Teenagers. If you have a teenager, these expenses never stop.
7. Excess Mileage on your lease. If you chew up your lease miles, don't roll them over into your next lease! Pay them off at the end of the term with your saved money. Financing negative equity is a bad idea.
8. Christmas! Don't put gifts on your credit cards next year. Bank some cash and pay all of your Christmas bills on time!
9. Downpayment on a new car. You never know when your car will die. Coming up with a downpayment on short notice can mean not paying other bills.
10. Downpayment on a house!If you are looking to move or become a homeowner for the first time this year, start banking that downpayment now!. With historically low interst rates it could be the best investment you could make!
So there you have it...the choice is yours. Spend or Save? Only you can decide. Me, I am going to try and save it, but one of those unexpected expenses will unboubtedly creep up in the near future and take it from me. That's exactly why it will be waiting in my online savings account.
What do you think? Let me know by clicking on the "Comments" link under this story.
Have a good one,
Matt
Thursday, January 24, 2008
Fix your finances in a day
Setting aside a vacation day to focus on personal money tasks could end your procrastination and save you -- or make you -- quite a bit of money. Here's how.
By Liz Pulliam Weston
Article published on MSN Money
Money blogger J.D. Roth of Get Rich Slowly floated a great idea a few months ago: taking a personal "Money Day" to fix whatever's wrong with your finances.
Roth was inspired to write about the idea after taking a few hours off work to finally close his checking account at a much-hated bank and open one at a consumer-friendlier credit union. (For more on why switching may be a good idea, read "Ditch your bank for a credit union.")
"It was one of the best financial decisions I've ever made," Roth wrote. "If I could solve one financial problem in a few hours, just imagine what I could do with an entire day."
Talk back: What would you tackle during a day off devoted to finances?
Think about it: Most of us have way too much to do and too little time to do it, so difficult or mundane tasks often fall to the bottom of our task lists. Because financial chores can be both difficult and mundane, it's easy to put them off indefinitely, even though doing so can cost us.
Wouldn't it be nice to stop telling yourself you'll fix your financial problems when you "have the time" and actually get it done?
You could continue trying to work such tasks into a regular day or use the 24/7 availability of many online resources to do it on a weekend. But Roth argued for taking vacation time from work and devoting an entire weekday to the task. Not only are you more likely to have access to all the resources you need, but using up a day of paid leave time helps up the ante -- you'll want to make sure the day pays off for you.
Focus on the biggies
Here are some chores you might check off your list:
Set up a high-rate savings account. Having a savings cushion is a great idea in any economy but particularly smart when a downturn may be ahead. Typical banks pay less than 1% on their FDIC-insured savings accounts, but online banks may offer several percentage points more. You can find the highest-paying institutions using the tool at MSN Money's banking center. Once your account is set up, you can arrange an automatic transfer from your brick-and-mortar checking account.
If your resolution this year is to firm up your finances, Liz Pulliam Weston has some tips to boost your credit scores.
Start tracking your spending. If you don't know where the money goes, find out. You can:
Carry a notebook and pen to write down every expenditure.
Use personal finance software such as Money or Quicken to download your bank and credit card transactions into your computer. (Both offer free trials, Money for 60 days and Quicken for 30.)
Try an online tracker like Wesabe, Geezeo, Mint or Quicken Online. The first three are free; Quicken Online charges $2.99 a month after a 30-day free trial.
Once you know where you're spending your money, it's easier to find places to trim so you can redirect the money into debt repayment or savings.
Microsoft Office Online: Learn how to use Excel to track your banking and spending
Get a better interest rate on your credit cards. If you have credit card debt, paying it off should be among your priorities. That's easier to do if your interest rates aren't in the ionosphere. Read "Get a better deal . . . with a threat" for tactics that consistently win rate cuts for folks who have good credit. If your credit is bad or you've already fallen behind on your minimum payments, you may need to make an appointment with a legitimate credit counselor (read "The consumer's guide to credit counseling") and/or an experienced bankruptcy attorney to discuss your options.
Find a better rewards card. If you pay off your credit card balances every month, then make your diligence pay off with a card that matches the way you spend and the way you like to be rewarded. Read "The 15 most rewarding credit cards" to see which plastic leads the pack.
Continued: Fine-tune your 401(k)
Roll over those old 401(k)s. Change jobs a few times and you can leave a litter of 401(k) accounts behind in your wake. See if you can transfer the old accounts into your current employer's plan (that means a call to Human Resources) or roll them into an individual retirement account. Any brokerage or mutual fund family will help you with the paperwork to transfer the money into an existing IRA or set up one. Not sure where to start? Charles Schwab, E*Trade or TD Ameritrade can be good discount brokerage options, or try Vanguard, Fidelity or T. Rowe Price.
Look at retirement planning
Re-balance your 401(k). Many people pick their 401(k) investment options more or less at random and then never alter their haphazard choices. This approach can leave you overexposed to risk, hurt your returns or both. It's smarter to pick an asset allocation that reflects your tolerance for risk and time until retirement, then periodically re-balance. (Re-balancing means moving your investments around to restore the mix of stocks, bonds and cash to your original target mix.)
You can find answers to many of your 401(k) questions in MSN Money's Fast Answers, and MSN Money's 401(k) Quick Check will compare your available funds' performance and risk records. Your company may offer advice on its own. (See "Even bad 401(k) advice is better than none.") If your company doesn't provide investment help, you can find you can get specific fund recommendations from FinancialEngines.com for $39.95 a quarter.
Or you can take the easy way out and put all your money into your plan's "life cycle" or "target date maturity" fund. These funds pick the investments and asset allocation, re-balancing as necessary. For target-date funds, look for names like Retirement 2015 or Retirement 2030, which are supposed to align with the year you expect to retire. (Here is a list of Morningstar top-ranked funds with target dates 2000 to 2014, from 2015 to 2029 and 2030 and beyond.) Life-cycle funds tend to keep a steady asset allocation over time and may be divided into "conservative," "moderate" and "aggressive" options, while the target-date funds typically reduce risk exposure over time. Vanguard, Fidelity and T. Rowe Price offer well-reviewed funds of this type; if your plan doesn't have one of their options, look for a life-cycle or target-date fund with an expense ratio below 1%.
Getting around to insurance, college, wills
Raise your deductibles. One of the easiest ways to save money on car, home and even health insurance is to agree to pay more out of pocket before your coverage kicks in. If you have no savings, you might want to skip this step for now, but read "3 costly myths about insurance" to understand why savvy consumers choose higher deductibles and pay the smaller expenses on their own as soon as they can.
You might even reconsider whether you need anything more than liability on your car at all. (See "Drop the insurance on your clunker.")
Get some insurance quotes. Shopping for insurance is a pain. There's no way around that. But because you can potentially save hundreds or even thousands of dollars, it's worth the effort at least every few years. You can get an individual online quote for auto insurance, life insurance, health insurance or homeowners insurance, or you can check out sites such as Insure.com and Insweb.com. Have your current policies nearby. Note which insurers have been advertising heavily in your area; they might be offering breaks as well.
Set up a 529 college savings plan for your kid. Your financial priorities should be saving for your own retirement and paying off any toxic debt (credit cards, payday loans, etc.). But as college savings expert Joe Hurley of SavingForCollege.com notes, it's also a good idea to get into the habit of saving for your children's future education, even if it's just $25 a month. Fortunately, 529 plans will let you start with that little (or even less), as long as you sign up for automatic monthly transfers from your checking account. Morningstar.com compiles a list of the best and worst 529 savings plans that can help you decide what to look for (and to avoid). If your state offers a tax deduction, you might want to start with its plan. If you don't get a tax break, you can't go too far wrong with the age-weighted plans run by Vanguard, T. Rowe Price, TIAA-CREF or Fidelity.
Draft a will. If ever a task was designed to encourage procrastination, it's creating a will. But our hard-wired reluctance to consult our own mortality can create a nightmare for those we love -- and sometimes for ourselves (read "3 legal documents you shouldn't live without" for details).
If you have minor children, you need to do this now. Read "Who will take care of your kids if you die?" for the reasons why it's so important to get over your inertia.
If your resolution this year is to firm up your finances, Liz Pulliam Weston has some tips to boost your credit scores.
Quicken WillMaker can help you draft the necessary documents. If your situation isn't complicated, it may be all you need. But if you have a lot of debt, a contentious family, a sizable estate -- say, $1 million or above -- or other complicating factors, make an appointment with an estate-planning attorney for help.
You may have more financial tasks on your list, and getting everything done in a single day may not be possible. So highlight two to four tasks that are the most crucial and knock those out first. When you're done, share the results of your Money Day -- or your plans for the next one --
By Liz Pulliam Weston
Article published on MSN Money
Money blogger J.D. Roth of Get Rich Slowly floated a great idea a few months ago: taking a personal "Money Day" to fix whatever's wrong with your finances.
Roth was inspired to write about the idea after taking a few hours off work to finally close his checking account at a much-hated bank and open one at a consumer-friendlier credit union. (For more on why switching may be a good idea, read "Ditch your bank for a credit union.")
"It was one of the best financial decisions I've ever made," Roth wrote. "If I could solve one financial problem in a few hours, just imagine what I could do with an entire day."
Talk back: What would you tackle during a day off devoted to finances?
Think about it: Most of us have way too much to do and too little time to do it, so difficult or mundane tasks often fall to the bottom of our task lists. Because financial chores can be both difficult and mundane, it's easy to put them off indefinitely, even though doing so can cost us.
Wouldn't it be nice to stop telling yourself you'll fix your financial problems when you "have the time" and actually get it done?
You could continue trying to work such tasks into a regular day or use the 24/7 availability of many online resources to do it on a weekend. But Roth argued for taking vacation time from work and devoting an entire weekday to the task. Not only are you more likely to have access to all the resources you need, but using up a day of paid leave time helps up the ante -- you'll want to make sure the day pays off for you.
Focus on the biggies
Here are some chores you might check off your list:
Set up a high-rate savings account. Having a savings cushion is a great idea in any economy but particularly smart when a downturn may be ahead. Typical banks pay less than 1% on their FDIC-insured savings accounts, but online banks may offer several percentage points more. You can find the highest-paying institutions using the tool at MSN Money's banking center. Once your account is set up, you can arrange an automatic transfer from your brick-and-mortar checking account.
If your resolution this year is to firm up your finances, Liz Pulliam Weston has some tips to boost your credit scores.
Start tracking your spending. If you don't know where the money goes, find out. You can:
Carry a notebook and pen to write down every expenditure.
Use personal finance software such as Money or Quicken to download your bank and credit card transactions into your computer. (Both offer free trials, Money for 60 days and Quicken for 30.)
Try an online tracker like Wesabe, Geezeo, Mint or Quicken Online. The first three are free; Quicken Online charges $2.99 a month after a 30-day free trial.
Once you know where you're spending your money, it's easier to find places to trim so you can redirect the money into debt repayment or savings.
Microsoft Office Online: Learn how to use Excel to track your banking and spending
Get a better interest rate on your credit cards. If you have credit card debt, paying it off should be among your priorities. That's easier to do if your interest rates aren't in the ionosphere. Read "Get a better deal . . . with a threat" for tactics that consistently win rate cuts for folks who have good credit. If your credit is bad or you've already fallen behind on your minimum payments, you may need to make an appointment with a legitimate credit counselor (read "The consumer's guide to credit counseling") and/or an experienced bankruptcy attorney to discuss your options.
Find a better rewards card. If you pay off your credit card balances every month, then make your diligence pay off with a card that matches the way you spend and the way you like to be rewarded. Read "The 15 most rewarding credit cards" to see which plastic leads the pack.
Continued: Fine-tune your 401(k)
Roll over those old 401(k)s. Change jobs a few times and you can leave a litter of 401(k) accounts behind in your wake. See if you can transfer the old accounts into your current employer's plan (that means a call to Human Resources) or roll them into an individual retirement account. Any brokerage or mutual fund family will help you with the paperwork to transfer the money into an existing IRA or set up one. Not sure where to start? Charles Schwab, E*Trade or TD Ameritrade can be good discount brokerage options, or try Vanguard, Fidelity or T. Rowe Price.
Look at retirement planning
Re-balance your 401(k). Many people pick their 401(k) investment options more or less at random and then never alter their haphazard choices. This approach can leave you overexposed to risk, hurt your returns or both. It's smarter to pick an asset allocation that reflects your tolerance for risk and time until retirement, then periodically re-balance. (Re-balancing means moving your investments around to restore the mix of stocks, bonds and cash to your original target mix.)
You can find answers to many of your 401(k) questions in MSN Money's Fast Answers, and MSN Money's 401(k) Quick Check will compare your available funds' performance and risk records. Your company may offer advice on its own. (See "Even bad 401(k) advice is better than none.") If your company doesn't provide investment help, you can find you can get specific fund recommendations from FinancialEngines.com for $39.95 a quarter.
Or you can take the easy way out and put all your money into your plan's "life cycle" or "target date maturity" fund. These funds pick the investments and asset allocation, re-balancing as necessary. For target-date funds, look for names like Retirement 2015 or Retirement 2030, which are supposed to align with the year you expect to retire. (Here is a list of Morningstar top-ranked funds with target dates 2000 to 2014, from 2015 to 2029 and 2030 and beyond.) Life-cycle funds tend to keep a steady asset allocation over time and may be divided into "conservative," "moderate" and "aggressive" options, while the target-date funds typically reduce risk exposure over time. Vanguard, Fidelity and T. Rowe Price offer well-reviewed funds of this type; if your plan doesn't have one of their options, look for a life-cycle or target-date fund with an expense ratio below 1%.
Getting around to insurance, college, wills
Raise your deductibles. One of the easiest ways to save money on car, home and even health insurance is to agree to pay more out of pocket before your coverage kicks in. If you have no savings, you might want to skip this step for now, but read "3 costly myths about insurance" to understand why savvy consumers choose higher deductibles and pay the smaller expenses on their own as soon as they can.
You might even reconsider whether you need anything more than liability on your car at all. (See "Drop the insurance on your clunker.")
Get some insurance quotes. Shopping for insurance is a pain. There's no way around that. But because you can potentially save hundreds or even thousands of dollars, it's worth the effort at least every few years. You can get an individual online quote for auto insurance, life insurance, health insurance or homeowners insurance, or you can check out sites such as Insure.com and Insweb.com. Have your current policies nearby. Note which insurers have been advertising heavily in your area; they might be offering breaks as well.
Set up a 529 college savings plan for your kid. Your financial priorities should be saving for your own retirement and paying off any toxic debt (credit cards, payday loans, etc.). But as college savings expert Joe Hurley of SavingForCollege.com notes, it's also a good idea to get into the habit of saving for your children's future education, even if it's just $25 a month. Fortunately, 529 plans will let you start with that little (or even less), as long as you sign up for automatic monthly transfers from your checking account. Morningstar.com compiles a list of the best and worst 529 savings plans that can help you decide what to look for (and to avoid). If your state offers a tax deduction, you might want to start with its plan. If you don't get a tax break, you can't go too far wrong with the age-weighted plans run by Vanguard, T. Rowe Price, TIAA-CREF or Fidelity.
Draft a will. If ever a task was designed to encourage procrastination, it's creating a will. But our hard-wired reluctance to consult our own mortality can create a nightmare for those we love -- and sometimes for ourselves (read "3 legal documents you shouldn't live without" for details).
If you have minor children, you need to do this now. Read "Who will take care of your kids if you die?" for the reasons why it's so important to get over your inertia.
If your resolution this year is to firm up your finances, Liz Pulliam Weston has some tips to boost your credit scores.
Quicken WillMaker can help you draft the necessary documents. If your situation isn't complicated, it may be all you need. But if you have a lot of debt, a contentious family, a sizable estate -- say, $1 million or above -- or other complicating factors, make an appointment with an estate-planning attorney for help.
You may have more financial tasks on your list, and getting everything done in a single day may not be possible. So highlight two to four tasks that are the most crucial and knock those out first. When you're done, share the results of your Money Day -- or your plans for the next one --
Monday, January 21, 2008
How to fix: Credit woes
America's middle class is facing a debt crisis. To solve it, the US needs to rein in credit card companies and home lenders.
By Richard Conniff, MSN Money
The numbers coming out of the credit crisis are astonishingly ugly: The average American household now spends 14% of its disposable income just paying interest charges on mortgage and consumer debt; some sources estimate that up to 2 million families will lose their homes through foreclosure over the next two years.
Where have we seen trouble like this before? Oh, right -- during the Great Depression.
This time around, things started back in 2001, when the middle class went on a credit binge, borrowing against the rising equity in their homes as if it were a third household income (because even two incomes no longer seemed like enough).
Predatory lenders encouraged the trend, often pushing families to refinance into mortgages with deceptively low teaser rates. Now the real cost of those loans is becoming crushingly evident as the teaser rates expire and real-estate values decline.
So how do we get out of this mess? And how do we keep it from happening next time? Here are some of the reforms that have been proposed recently:
Ban "universal default." Credit card companies say it's not enough to pay your credit card bill promptly; you have to pay all your other bills on time, too. (If you didn't hear them say it, that's because it was buried in the 30 or 40 pages of fine print in your contract.) Even if you're just a month behind with the phone company, for instance, your credit card issuer can automatically jack up your interest rate as high as 32.5%. Critics say some companies actually target borrowers who are likely to get in trouble, because that's where the profit is.
Credit card companies say they're just protecting themselves by charging more for people whose changing financial circumstances make them riskier bets. They also say they're invoking this type of treatment, called "universal default," less often these days. But the language still appears in about 45% of credit contracts, according to Joe Ridout of the advocacy group Consumer Action, and it remains an "underhanded and fundamentally unfair" way to take advantage of people "who believe they are playing by the rules."
A proposed reform would allow the penalty interest rate but would require that it be based solely on a borrower's experience with the credit company.
Mandate strong underwriting standards. Legislation now before Congress would limit no-document loans. These quickie loans were originally meant to help real-estate investors, the self-employed and other short-term borrowers who were willing to pay a little more in order to minimize the paperwork hassle of a full loan
application. But they became a tool for selling pricey loans to unqualified borrowers -- typically with 2 or 3 points tacked onto the interest rate.
Proposed legislation would also require lenders to make sure borrowers are qualified to pay not just the short-term teaser rate, but also the potential maximum interest rate.
Make brokers pay for predatory loans. Under another proposed reform, all mortgage brokers would be required to post a surety bond of $50,000 -- like the guy who trims the tree or fixes the plumbing -- and to provide proof of $500,000 in individual net worth. That way, brokers who sell predatory loans could be held individually liable for a borrower's excess costs if unfair terms cause the deal to go sour. Video: When a child gets sick
Other legislation would make it easier for borrowers to sue deceptive lenders. Right now, mandatory binding arbitration, a standard part of almost all credit agreements, forces borrowers into private arbitration forums that can function, says Linda Sherry of Consumer Action, as "kangaroo courts."
If these proposed reforms sound promising, Elizabeth Warren warns not to get your hopes up. Warren, a Harvard law professor specializing in credit and bankruptcy issues, says the likelihood of the House, Senate and White House all signing off on significant reform is "probably near zero" -- because the lending industry "can make lots of political contributions and hire all the lobbyists in the world." Besides, Warren says, the legislative process is too cumbersome and erratic. She believes it takes independent regulators to develop the expertise necessary to respond quickly to changes in the marketplace. Which brings us to her big idea:
Create a Credit Product Safety Commission. A regulatory agency for the credit industry would function, says Warren, like the Consumer Product Safety Commission -- the federal agency that alerts us when lead paint turns up in toys from China or when a crib poses a choking hazard for toddlers.
But is the credit issue important enough to warrant the creation of a new bureaucracy?
"Whoa!" says Warren. "I'll tell you how important it is. It's consumer credit that is bringing the middle-class American family to its knees. It's the tricks-and-traps pricing model that offers an extraordinary amount of credit to every American family, and then -- for every family that does not handle it with the care and precision of a surgeon -- jerks the legs out from underneath that family and leaves them in enormous trouble.
"Consumer credit is as much a product as car seats
and children's toys, and it's a product that affects a family's well-being. You cannot buy a toaster in America today that has a one-in-10 chance of exploding and burning down your house. But you can buy a mortgage today that has a one-in-10 chance of exploding and costing a family their home."
Moreover, Warren says, the lender often knows on signing that the borrower faces that kind of risk -- and doesn't have to disclose the knowledge.
"In my view, it's just a safety issue," says Warren. American consumers should not have to "walk into the marketplace saying, 'Gee, this is a place where I could forfeit my entire economic security because of tricks and traps that even a specialist lawyer would have a hard time understanding.'"
John Hall, of the American Bankers Association, argues that banks are already thoroughly regulated by the Federal Reserve, the Office of Thrift Supervision and the Office of the Comptroller of the Currency, among others. But Warren replies that those agencies focus on the soundness and profitability of lenders, rather than on the safety of consumers.
Bypass the credit industry with social lending. If reform proves impossible, the free market offers an intriguing alternative: Consumers wary of doing business with traditional lenders could do business directly with one another instead.
"Social lending" Web sites like Prosper, LendingClub, Zopa, Fundable and Kiva -- still a minuscule part of the credit business -- facilitate peer-to-peer (or P2P) loans by cutting out the middleman and sometimes offering more-attractive rates to the principals in a transaction.
Of course it's smart to proceed cautiously with any new approach. Potential lenders should note that different sites have different rules for diversifying your investment and minimizing risk; some emphasize the social good you can accomplish, while others are more business-minded.
But it's worth noting that the investors in these sites include some of the same smart people who helped launch Skype, eBay, PayPal and Google. So social lending could yet become a major force in middle-class lives.
By Richard Conniff, MSN Money
The numbers coming out of the credit crisis are astonishingly ugly: The average American household now spends 14% of its disposable income just paying interest charges on mortgage and consumer debt; some sources estimate that up to 2 million families will lose their homes through foreclosure over the next two years.
Where have we seen trouble like this before? Oh, right -- during the Great Depression.
This time around, things started back in 2001, when the middle class went on a credit binge, borrowing against the rising equity in their homes as if it were a third household income (because even two incomes no longer seemed like enough).
Predatory lenders encouraged the trend, often pushing families to refinance into mortgages with deceptively low teaser rates. Now the real cost of those loans is becoming crushingly evident as the teaser rates expire and real-estate values decline.
So how do we get out of this mess? And how do we keep it from happening next time? Here are some of the reforms that have been proposed recently:
Ban "universal default." Credit card companies say it's not enough to pay your credit card bill promptly; you have to pay all your other bills on time, too. (If you didn't hear them say it, that's because it was buried in the 30 or 40 pages of fine print in your contract.) Even if you're just a month behind with the phone company, for instance, your credit card issuer can automatically jack up your interest rate as high as 32.5%. Critics say some companies actually target borrowers who are likely to get in trouble, because that's where the profit is.
Credit card companies say they're just protecting themselves by charging more for people whose changing financial circumstances make them riskier bets. They also say they're invoking this type of treatment, called "universal default," less often these days. But the language still appears in about 45% of credit contracts, according to Joe Ridout of the advocacy group Consumer Action, and it remains an "underhanded and fundamentally unfair" way to take advantage of people "who believe they are playing by the rules."
A proposed reform would allow the penalty interest rate but would require that it be based solely on a borrower's experience with the credit company.
Mandate strong underwriting standards. Legislation now before Congress would limit no-document loans. These quickie loans were originally meant to help real-estate investors, the self-employed and other short-term borrowers who were willing to pay a little more in order to minimize the paperwork hassle of a full loan
application. But they became a tool for selling pricey loans to unqualified borrowers -- typically with 2 or 3 points tacked onto the interest rate.
Proposed legislation would also require lenders to make sure borrowers are qualified to pay not just the short-term teaser rate, but also the potential maximum interest rate.
Make brokers pay for predatory loans. Under another proposed reform, all mortgage brokers would be required to post a surety bond of $50,000 -- like the guy who trims the tree or fixes the plumbing -- and to provide proof of $500,000 in individual net worth. That way, brokers who sell predatory loans could be held individually liable for a borrower's excess costs if unfair terms cause the deal to go sour. Video: When a child gets sick
Other legislation would make it easier for borrowers to sue deceptive lenders. Right now, mandatory binding arbitration, a standard part of almost all credit agreements, forces borrowers into private arbitration forums that can function, says Linda Sherry of Consumer Action, as "kangaroo courts."
If these proposed reforms sound promising, Elizabeth Warren warns not to get your hopes up. Warren, a Harvard law professor specializing in credit and bankruptcy issues, says the likelihood of the House, Senate and White House all signing off on significant reform is "probably near zero" -- because the lending industry "can make lots of political contributions and hire all the lobbyists in the world." Besides, Warren says, the legislative process is too cumbersome and erratic. She believes it takes independent regulators to develop the expertise necessary to respond quickly to changes in the marketplace. Which brings us to her big idea:
Create a Credit Product Safety Commission. A regulatory agency for the credit industry would function, says Warren, like the Consumer Product Safety Commission -- the federal agency that alerts us when lead paint turns up in toys from China or when a crib poses a choking hazard for toddlers.
But is the credit issue important enough to warrant the creation of a new bureaucracy?
"Whoa!" says Warren. "I'll tell you how important it is. It's consumer credit that is bringing the middle-class American family to its knees. It's the tricks-and-traps pricing model that offers an extraordinary amount of credit to every American family, and then -- for every family that does not handle it with the care and precision of a surgeon -- jerks the legs out from underneath that family and leaves them in enormous trouble.
"Consumer credit is as much a product as car seats
and children's toys, and it's a product that affects a family's well-being. You cannot buy a toaster in America today that has a one-in-10 chance of exploding and burning down your house. But you can buy a mortgage today that has a one-in-10 chance of exploding and costing a family their home."
Moreover, Warren says, the lender often knows on signing that the borrower faces that kind of risk -- and doesn't have to disclose the knowledge.
"In my view, it's just a safety issue," says Warren. American consumers should not have to "walk into the marketplace saying, 'Gee, this is a place where I could forfeit my entire economic security because of tricks and traps that even a specialist lawyer would have a hard time understanding.'"
John Hall, of the American Bankers Association, argues that banks are already thoroughly regulated by the Federal Reserve, the Office of Thrift Supervision and the Office of the Comptroller of the Currency, among others. But Warren replies that those agencies focus on the soundness and profitability of lenders, rather than on the safety of consumers.
Bypass the credit industry with social lending. If reform proves impossible, the free market offers an intriguing alternative: Consumers wary of doing business with traditional lenders could do business directly with one another instead.
"Social lending" Web sites like Prosper, LendingClub, Zopa, Fundable and Kiva -- still a minuscule part of the credit business -- facilitate peer-to-peer (or P2P) loans by cutting out the middleman and sometimes offering more-attractive rates to the principals in a transaction.
Of course it's smart to proceed cautiously with any new approach. Potential lenders should note that different sites have different rules for diversifying your investment and minimizing risk; some emphasize the social good you can accomplish, while others are more business-minded.
But it's worth noting that the investors in these sites include some of the same smart people who helped launch Skype, eBay, PayPal and Google. So social lending could yet become a major force in middle-class lives.
Thursday, January 10, 2008
New Law Helps Ease Pain for Some Facing Foreclosure or Short Sale
On December 20 President Bush signed into law H.R. 3648, the Mortgage Forgiveness Debt Relief Act of 2007. While this piece of legislation is far from being a cure for all the ills caused by the recent and on-going meltdown in the real estate mortgage sector, it will certainly provide relief for some who are caught between declining home values and rising mortgage payments.
It has been widely noted lately that, in certain circumstances, parties undergoing foreclosure or short sales may also face tax bills on the "phantom income" generated by debt forgiveness. Here is a brief example: Suppose you had refinanced your home for $550,000 and that, now, when you have to sell, its value is only $500,000. Your lender might agree to a short sale, and discharge your mortgage debt even though the payoff was $50,000 short. The catch for you is that you might receive a 1099 from the lender, and be taxed on the $50,000 of debt forgiveness. You see why it is called "phantom income." (There are, in fact, generally good reasons for taxing debt forgiveness, but that is a whole other discussion.)
H.R. 3648 will provide relief from that kind of tax bite in certain specified situations. Beginning January 1, 2007 and lasting until January 1, 2010, certain discharges of mortgage indebtedness on a principal residence will be excluded from a taxpayer's gross income. As always, though, certain restrictions apply.
For one thing, the amount of indebtedness is limited to $2 million. For most of us folks, this will not present a problem.
Of greater relevance is the fact that, to be excluded, the debt discharged must be acquisition debt. That is, the mortgage must have been used to purchase the home. Suppose, for example, that you have lived in your home for twenty years, that you bought it back when it was "only" $200,000, and that, by now, you have refinanced it up to $650,000. Suppose, also, that your neighbor purchased his home just last year, and that he took out a $650,000 mortgage to finance the transaction. Now, both of you need to sell and your homes have decreased in value to $600,000. If you both are granted short sales by the lender, you will both have mortgage debt forgiveness of $50,000. Under H.R. 3648, his debt forgiveness will not be taxed because it was acquisition debt. Yours, however, will be. Bummer.
H.R. 3648 will also have relevance in situations where there is not a sale, but where the borrower and lender have restructured the loan and, along with other possibilities such as interest rate and/or payment reductions, the loan balance has been reduced. In such cases the debt forgiveness will not be taxed as ordinary income, but the amount of debt forgiveness will be applied to a reduction in the borrower's cost basis in the property. This way, it may subsequently be at least partially recaptured by the IRS in the form of capital gain tax.
Finally, we note that this tax exclusion only applies in situations where the debt forgiveness resulted from a situation related to a decline in the value of the property or to the financial condition of the borrower. You wouldn't benefit from it if your mortgage was reduced as a form of payment for services rendered to the lender (suppose you were the bank president).
H.R. 3648 won't solve all the problems out there, but it will certainly be of help to some. That is probably a good thing.
On December 20 President Bush signed into law H.R. 3648, the Mortgage Forgiveness Debt Relief Act of 2007. While this piece of legislation is far from being a cure for all the ills caused by the recent and on-going meltdown in the real estate mortgage sector, it will certainly provide relief for some who are caught between declining home values and rising mortgage payments.
It has been widely noted lately that, in certain circumstances, parties undergoing foreclosure or short sales may also face tax bills on the "phantom income" generated by debt forgiveness. Here is a brief example: Suppose you had refinanced your home for $550,000 and that, now, when you have to sell, its value is only $500,000. Your lender might agree to a short sale, and discharge your mortgage debt even though the payoff was $50,000 short. The catch for you is that you might receive a 1099 from the lender, and be taxed on the $50,000 of debt forgiveness. You see why it is called "phantom income." (There are, in fact, generally good reasons for taxing debt forgiveness, but that is a whole other discussion.)
H.R. 3648 will provide relief from that kind of tax bite in certain specified situations. Beginning January 1, 2007 and lasting until January 1, 2010, certain discharges of mortgage indebtedness on a principal residence will be excluded from a taxpayer's gross income. As always, though, certain restrictions apply.
For one thing, the amount of indebtedness is limited to $2 million. For most of us folks, this will not present a problem.
Of greater relevance is the fact that, to be excluded, the debt discharged must be acquisition debt. That is, the mortgage must have been used to purchase the home. Suppose, for example, that you have lived in your home for twenty years, that you bought it back when it was "only" $200,000, and that, by now, you have refinanced it up to $650,000. Suppose, also, that your neighbor purchased his home just last year, and that he took out a $650,000 mortgage to finance the transaction. Now, both of you need to sell and your homes have decreased in value to $600,000. If you both are granted short sales by the lender, you will both have mortgage debt forgiveness of $50,000. Under H.R. 3648, his debt forgiveness will not be taxed because it was acquisition debt. Yours, however, will be. Bummer.
H.R. 3648 will also have relevance in situations where there is not a sale, but where the borrower and lender have restructured the loan and, along with other possibilities such as interest rate and/or payment reductions, the loan balance has been reduced. In such cases the debt forgiveness will not be taxed as ordinary income, but the amount of debt forgiveness will be applied to a reduction in the borrower's cost basis in the property. This way, it may subsequently be at least partially recaptured by the IRS in the form of capital gain tax.
Finally, we note that this tax exclusion only applies in situations where the debt forgiveness resulted from a situation related to a decline in the value of the property or to the financial condition of the borrower. You wouldn't benefit from it if your mortgage was reduced as a form of payment for services rendered to the lender (suppose you were the bank president).
H.R. 3648 won't solve all the problems out there, but it will certainly be of help to some. That is probably a good thing.
Monday, January 7, 2008
Mortgage Interest Rates Down Again!
30-year fixed rate at 5.57%; 10-year Treasury yield at 3.87%
Monday, January 07, 2008
Source: Inman News
Long-term mortgage interest rates were down again Friday, and the benchmark 10-year Treasury bond yield dipped to 3.87 percent.
The 30-year fixed-rate average sank to 5.57 percent, and the 15-year fixed rate slid to 5.11 percent. The 1-year adjustable rate was down at 5.38 percent.
The 30-year Treasury bond yield edged up to 4.38 percent.
Rates and bonds are current as of 7:15 p.m. Eastern Standard Time.
Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.
Monday, January 07, 2008
Source: Inman News
Long-term mortgage interest rates were down again Friday, and the benchmark 10-year Treasury bond yield dipped to 3.87 percent.
The 30-year fixed-rate average sank to 5.57 percent, and the 15-year fixed rate slid to 5.11 percent. The 1-year adjustable rate was down at 5.38 percent.
The 30-year Treasury bond yield edged up to 4.38 percent.
Rates and bonds are current as of 7:15 p.m. Eastern Standard Time.
Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.
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