Mortgage rates lowest this year

National average for a 30-year fixed loan slips to 4.84
Mortgage rates fell to the lowest level of the year last week, as rates fell on US government securities. Fixed mortgage rates tend to be influenced by movements in the yield of 10-year Treasury notes.

The average rate on a 30-year fixed rate mortgage dropped to 4.84% last week from 4.93% a week earlier, Freddie Mac stated last Thursday. It was the lowest level since mid-December, when rates averaged 4.81%.

Bond yields sank after Germany’s move last week to curtail certain kinds of short-selling spooked investors, who shifted money from risky European debt to safer US securities. That also lowered mortgage rates.

Demand for safe investments is high on debt concerns in parts of Europe.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

The average 30-year fixed rate dropped to a record low of 4.71% late last year, pushed down by a campaign by the Federal Reserve to reduce borrowing costs for consumers. This program ended this spring, but rates have remained low, especially after fears that Greece’s government would default shook world markets.

Last week, the average rate on a 15-year fixed-rate mortgage was 4.24%, down from 4.3% the previous week.

Rates on five-year, adjustable-rate mortgages averaged 3.91%, down from 3.95% a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4% from 4.02%.

Rates do not include add-on fees known as points. One point is equal to 1% of the total loan amount.

The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 of a point for 30-year and 15-year loans, and 0.6 of a point for 5-year and 1-year loans.

First-Time and Move-Up Tax Credits Require Paper Trail When Filing Taxes

My boss shared this post by susanne On April 10, 2010. It is a good reminder to maintain documentation for any credit you may claim.

Living in a world of tax apps for iPhones and e-filing of tax returns, you do a double-take after finding out that the Internal Revenue Service wants paper from taxpayers filing for a home buyer credit.
“If I have a Form 5405 in my return, I have to paper-file, period,” said Don Schippa, president of Tax Research Services in Southfield, Mich. “They’re forcing you to file a paper return.”
Blame the IRS requirement on outrageous fraud committed last year in pursuit of the up-to-$8,000 credit for first-time home buyers, including one in which a 4-year-old supposedly bought a house. Last fall, the IRS said it was looking into more than 70,000 suspicious claims. It was obviously way too easy to cheat.
So, if you bought a house in 2009 hoping for one of two housing-related credits, get ready to file a Form 5405, submit a paper return and dig up more documents as proof that you qualify.
“Currently, the e-file system is not able to handle the wide variety of required and recommended supporting documents that would have to be scanned and submitted,” said Luis D. Garcia, IRS spokesperson in Detroit.
The IRS isn’t saying that you or your preparer should pull out a pencil and skip using tax software. Use software to avoid mistakes. Just print out the return and snail-mail it—along with all the required documents.
The painfully long list of rules associated with the credits for home buyers makes retiling the bathroom seem like a breeze. And there are traps. For example, if you own a home, you cannot buy another one, give it to a son or daughter and tell them to claim the first-time buyer’s credit.
However, a parent and child can be co-buyers. A parent could give a son or daughter money to buy a home, and then the offspring, if older than age 18 on the purchase date, could get the credit. But in another twist, a son or daughter who is still a dependent for tax purposes is not eligible to claim the credit.
Tax credits will still be available for some home purchases in 2010. Here are some of the rules you need to know:
-One tax credit designed to spur home sales offers up to $6,500 for some homeowners who buy a new house but have lived in another home for five consecutive years. The five years can be within an eight-year period ending on the date you bought the home on which you’re claiming the credit. So technically you did not have to be living in the old house when you bought the new one. This credit for longtime residents could apply to a home bought Nov. 7, 2009 through April 30, 2010. The buyer must have a contract in place by April 30, and the deal must close by June 30. You must move into the newly purchased home, Schippa said, but you do not have to sell your old home. “That’s kind of a funny twist to it,” he said. The $6,500 credit is not available for the purchase of a second or vacation home.
-A first-time buyer of a principal residence is allowed a refundable tax credit for 10% of the purchase price—up to a maximum of $8,000. This credit is for individuals and couples on purchases between April 8, 2008 and April 30, 2010. There are several versions of the credit, depending upon when the home was purchased. The latest version does not require that money from the credit be paid back.
Taxpayers with higher incomes can now qualify for the credit. Both home buyer credits are phased out for taxpayers with modified adjusted gross incomes between $125,000 and $145,000—or between $225,000 and $245,000 for joint filers. The IRS noted that the new law raises the income limits for homes purchased after Nov. 6, 2009.
You’re not going to get a tax break, though, if you bought a multimillion-dollar mansion. No credit is available if the purchase price of the home exceeds $800,000.
The refundable credits mean that individuals can get a check from the government whether or not they have an actual tax liability.
For homes bought this year, the credit can be claimed on the 2009 or 2010 return.
As for documentation, when you send in the tax return, include a copy of the closing contract (HUD-1 Settlement Statement), the most recent monthly mortgage statement, occupancy permit (if newly constructed) and at least two of the following showing name and address: current driver’s license or other state-issued ID, pay stub or bank statement from within the past two months, or current automobile registration.
Long-term residents who are claiming a credit must prove how many years they lived in the old home and attach a Form 1098, Mortgage Interest Statement (or substitute statement), property tax records or homeowner’s insurance records.
When new home buyers have a shot at getting thousands of dollars, it can pay to learn the rules—and supply the proper paperwork.

Mortage lenders Pursue homeowners even after foreclosure

I felt this was a very important article.

By Les Christie, staff writer , On Wednesday February 3, 2010, 3:21 pm EST
As terrible as it is to lose your house to foreclosure, at least it’s a relief to put your biggest financial headache behind you, right?
Wrong.
Former homeowners may still be on the hook if there’s a difference between what they owed on their mortgage and what the bank could sell it for at auction. And these “deficiency judgments” are ticking time bombs that can explode years after borrowers lose their homes.
It can even happen to people who got their bank to approve them selling their home for less than it is worth.
Vanessa Corey, for example, short sold her Fredericksburg, Va., home in April 2008. She and her husband built the house in 2004, but setbacks, both personal (divorce) and professional (housing bust), made it impossible for the real estate agent to keep her home. So she negotiated the short sale and thought that was the end of it.
“My understanding was that the deficiency was negotiated away,” she said. “Then, last November, I got a letter from a lawyer telling me I owed my lender $65,000. I had to declare bankruptcy. There was no way I could pay it.”
Many homeowners are now in the same boat. And not just those who took out bigger loans than they could afford or who did so called “liar loans” where they didn’t have to verify their income.
Because of falling home prices, borrowers who always paid their mortgage but who have run into unforeseen circumstances — like unemployment or a job transfer — can no longer sell their homes for what they owe. As a result, they are being forced to short sell or foreclose and are getting caught up in deficiency judgments.
“After the banks foreclose, it’s very common now to have large deficiencies with houses not worth the balances owed,” said Don Lampe, a North Carolina real estate attorney.
Lenders mostly declined comment. Although Corey’s lender, BB&T did indicate it was pursuing more deficiency judgments.
“They follow the rise and fall of foreclosures,” said the spokeswoman, who would not discuss Corey’s account.
Can they come after you?
Whether banks can and will pursue deficiency judgments depends on many factors, including what state the borrower lives in and whether there’s a second mortgage or other liens. But if borrowers ignore the possibility of deficiencies, it could haunt them.
“Once they have a judgment, they can pursue you anywhere,” said Richard Zaretsky, a board-certified real estate attorney in West Palm Beach, Fla. “They can ask for financial records, have your wages garnished and, if you fail to respond, a judge can put you in jail.”
In the case of foreclosure, lenders can pursue deficiencies in more than 30 states, including Florida, New York and Texas, according to the U.S. Foreclosure Network, an organization of mortgage law firms.
Some states, such as California, are “non-recourse” and don’t allow deficiency judgments. But, even there, if the original loan was refinanced, some or all of it may be subject to claims.
Deficiency judgments on short sales and deeds-in-lieu can happen in many more places. In these cases, extinguishing the debt is often a matter of negotiating with the bank.
But even when lenders are willing, many borrowers may not be aware that they have to ask for release. So, if you are pursuing a short sale, be sure your attorney asks the bank to release you from any further obligation.
“People shouldn’t have a false sense of security that a deficiency judgment may not be later sought,” Zaretsky said.
He expects many will be filed over the next few years, based on the fact that banks have sold many of these accounts to collection agencies and other third parties, at discount.
“The parties who bought those notes wouldn’t have paid money for them unless they had the intention of acting,” Zaretsky said.
Ticking time bomb
What can be scary is that the judgments don’t have to be obtained immediately. Lenders or collection agencies may wait until debtors have recovered financially before they swoop in. In Florida, the bank can wait up to five years to file. Once the court grants a judgment, the lender has 20 years there to collect, with interest.
It doesn’t have to be a large amount of debt for a lender or collection agency to come after borrowers. Richard Varno and his wife short sold their Nashville home back in 2004 after he lost his job.
It wasn’t until 2008, when the second lien holder asked him for $25,000, that he realized he still was liable.
“I told them, ‘Hey, you guys released the title,’” he said. “As far as I know, I’m off the hook.”
He wasn’t. Releasing title does not necessarily end the debt. It’s complicated because of variations in state law, but, generally, a mortgage has two parts: a pledge of collateral, represented by the home, and a promise to pay off the loan.
Lenders may release property liens in order to facilitate short sales without releasing borrowers from their obligations to pay under the promissory notes. The secured debt can convert to an unsecured one after the sale.
Zaretsky had one client who was so relieved to have arranged a short sale that he signed every paper his real estate agent shoved at him, even a confession that clearly stated he still owed the debt.
“He had no idea what he was doing,” said Zaretsky. “All the lender had to do was go to court to convert the confession into a deficiency judgment.”
Lenders are also very inconsistent. One of Zaretsky’s short-sale clients was ready, willing and able to pay, but the bank did not even ask; another lender always reserves the right to pursue the deficiency.
Strategic defaults
Sometimes lenders go after borrowers walking away from their homes if they have other assets, according to Florida real estate attorney Larry Tolchinsky.
“Banks are pulling credit reports to see if it’s a strategic default,” he said. “If you’re behind on all your other payments, you’re okay. But if you’re not, they’ll come after you.”
If borrowers have any doubts about their risks, they should seek legal advice. Or, at least, call non-profit organizations such as NeighborWorks for advice. According to Doug Robinson, a NeighborWorks spokesman, its counselors always try to negotiate away deficiencies when they facilitate short sales or deeds-in-lieu.
“We don’t favor any short-sale contracts that leave any deficiency that can be pursued,” he said.
Robinson himself knows what can happen. He paid off a deficiency after his own New Jersey house went through foreclosure 11 years ago.

Planning on getting an FHA loan?

If you are planning on buying your home using FHA, you need to be aware of changes in the works that will cost you more money if you wait. The office of Housing and Urban Development (HUD) is implementing several changes for loans guaranteed by the Federal Housing Authority (FHA).

Coming just weeks before the April 30 deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board’s mortgage backed securities purchase program (which has kept home loan rates artificially low for over a year), these FHA changes make it even more important to act now to save big.

Here are a few reasons why:

On April 5th, the cost of required up-front mortgage insurance for loans guaranteed by the FHA will increase from 1.75% to 2.25%. For a borrower purchasing a $200,000 home with a $7,000 down payment, the up-front mortgage insurance will increase by $965. Up-front mortgage insurance is typically financed in the final loan amount so the impact to a monthly payment will be minimal but overall, the increase is still borne by the borrower both upfront and monthly.

Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these “seller concessions” can increase the amount of cash a buyer will be required to pay at closing by $6,000 for a home purchase of $200,000.

There is only one way to avoid being affected by all of these costly changes that lie ahead – submit all FHA mortgage applications by the last week of March.

Find more information for buyers on my website.

Note: The above information is compliments of Mortgage broker, Cameron Lewis. Find his information on my website.

Shopping for mortgage rates

Before you make a decision on a major purchase like a car or refrigerator, you usually research the item and then shop for the best deal. However, most people do not do this when they are shopping for a mortgage for their home. Many folks will head to their local banker, but banks do not always have the best deal, but people tend to trust their banker. Others will ask their friends who to use. Bottom line is that most people do not shop for the best rate, but will work with the first lender they contact.

In my normal reading, I came across an article written by Bill Ladewig, a mortgage officer in California. I felt that his tips on how to shop for mortgage rates to be invaluable, even for experienced home owners. Hence I decided to send his comments to my database and to publish them on my blog.

Comments from Bill Ladwig, the FHA guru

FIRST, Two VERY IMPORTANT Rules:

1. Mortgage Rates, Points and Lender Fees are interdependent parts of every rate quote. If any part is missing the Quote is worthless.
2. Do not fall for “I must have your credit report and financial information before I can quote you a my rate” because this an absolutely outrageous lie. Move to the next lender no matter who just lied to you.

Also a good lender will interview you to determine what your goals are. A good lender will try to help you to determine the appropriate loan for you.

Important Mortgage Rate Shopping Tips.

1. Know your credit score before you begin shopping. Loan availability and the cost of your loan depend on your credit score. Most conventional lenders require a 720, or better, mid score, above 80% loan to value, and most FHA and VA lenders require a minimum 620 to 640 mid credit score. Do not allow any lender to run your credit until You select them as your lender. Credit reports run by several lenders will lower you credit score. If you do not already know your credit score, there are several Internet companies that will provide them free. Google search for: “Free Credit Score” [I discuss this issue in the mortgage center on my website].

2. Shop all lenders on the same day and time period. Mortgage Rates change every day, sometimes several times a day.

3. Insist that each lender price the exact same Rate. You pick a rate to shop. The rate does not really matter as long as it is currently available because you are looking for a lender for the lowest total cost for the rate you are shopping. Once you establish the lowest cost lender you can zero in on a rate-point-fee combination that works best for your situation.

All lenders offer a range of rates and points for each of their loan types. Rate and points are interrelated, lower mortgage rates cost more points… higher rates cost fewer points. Create a “Rate Baseline” by asking each lender for the same mortgage rate and then compare their points and fees for that rate.

4. Shop for a specific loan type, because each type is priced differently. i.e: FHA, VA and Conventional loans, conforming and jumbo have different mortgage rates. Insist that each lender quote rates for the same loan type. Some lenders may present you with other options but insist they also provide a quote for the loan you are shopping for to establish a pricing base line.

5. Shop each lender for the same mortgage rate lock time period. You must ask every lender to tell you the lock period for the rate they are quoting. Mortgage Rates increase incrementally for each longer lock periods. I suggest shopping rates for a 30-day lock period. Lock periods can vary but most lenders provide locks for 15, 30 and 45 days. Some lenders quote their 15 day, least expensive price, which is not available until after the loan is approved. If you find a lender initially quoting a 15-day rate, it would prudent to eliminate that lender from your short list.

If the Loan to Value is greater than 90% and the spread between the interest rate and APR are less than 0.75% the APR has been misstated.

6. Insist the lender provide a detailed Good Faith Estimate before you complete an application. You have a right to know to know the price of the loan before you apply. A few lenders, even some large well-known lenders, falsely claim rates cannot be quoted until they have all your personal information. This is an absolutely bogus sales technique, these lenders know that borrowers do not want their personal information spread all over town and their credit score lowered by several credit reports AND they know once a borrower provides their personal information they are likely to stop shopping. Do not apply to any lender before you receive a Good Faith Estimate.

7. Will the lender allow you to lock your mortgage rate today? You should be able to lock your rate on the day you submit your signed application as long as the signed application is received by the lender prior to 3:00 PM PT. Most lenders stop locking loans at 4:00 PM PT this time is not universal so check with each lender for their lock cutoff.

More more information on real estate and mortgages, please check my website, http://liveinashevillehome.com.

Local foreclosure rates rise

Today, the Asheville Citizen-Times announced that the foreclosure rate for the Asheville area was up sharply in May over May 2008, but is still below the state and national rates. According a national research firm, First American CoreLogic, .7% of outstanding mortgage loans in Asheville were in foreclosure. The rate for North Carolina is .9% and the national rate is 1.5%.
There were 1825 foreclosure filings in Asheville in the past 12 months. This was 500 more filings than in the previous 12 months.
These numbers indicate that the recession is not over yet in this area. In fact, the jobless rate for the 23 counties in Western North Carolina are predicted to keep rising during the second half of 2009. An average unemployment rate of 11.9% is predicted for this year. The unemployment rate is predicted to peak at 13% in the first quarter of 2010.
This is gloomy news.

Update on 1st-time buyer’s credit

Everyone’s Dream – $8000 Housing Credit Turns Into $8000 Cash

On May 29, the Obama administration made it easier for many Americans to realize their dream of home ownership. The previously announced $8000. credit for first-time home buyers can now be turned into cash at closing. The buyers, however, must be using Federal Housing Administration mortgage financing (FHA).

The $8000. credit (or 10% of the home’s price, whichever is less) has been monetized and can be accessed before closing. Short term loans through approved lenders are available under certain conditions. These loans allow individuals to get cash for to increase their down payment, “buy down” their interest rate, or pay closing costs.

The program will make a huge impact as the FHA handles about 25% of new mortgages. The $8000. credit has already boosted the housing market. This new development is expected to interject new life into the economy.

Who Qualifies For The Program?

You Must Be A First-time Home Owner Using FHA Financing

The term “first-time” owner isn’t meant in the literal sense. If you haven’t owned a principal residence within 3 years of the purchase, then you are considered a first-time home owner. If you build a home after January 1, 2009 and occupy it before December 1, 2009, you can also be eligible for this program.

Your Income Must Fall Within A Certain Range

The income limit for single taxpayers is $75,000 MAGI (modified adjustment gross income). The income limit for married taxpayers filing a joint return is $150,000. The credit amount is gradually reduced as incomes rise over $75,000 (single) and over $150,000 (married). The credit ceases to exist at an income of $95,000. (single) and $170,000. (married).
.You Need To Invest In Your Home

Purchasing a home is a huge investment. The Department of Housing and Urban Development requires a sign of commitment on your part. If you obtain FHA loans through private lenders, you (through savings, gifts, or other) must invest at least 3.5% down payment. If you obtain FHA loans through a state housing agency “tax credit monetization” program, you are eligible to receive a bridge loan to cover the entire down payment.

How To Get The Credit

Start Now

Your closing must occur by November 30, 2009 to be eligible for this credit. This program was only announced in recent days. Every lender may not be ready yet for the process. Many companies, however, are ready for your business. You need to seek out a lender at the very first opportunity. Home sales don’t close overnight! You must start now to ensure that you meet the deadline.

Have Your Paperwork In Place

Your lender has to prepare for your business. You have to be ready to meet their requirements as stipulated by FHA guidelines.

Complete IRS Form 5405

Your lender will require a completed IRS Form 5405. You can file for this credit on your 2009 tax return. You can also make amendments to your 2008 income tax return.

Proof Of Eligibility For Total Credit

Your lender needs to know if anything will reduce or cancel out your credit. You have to provide proof that you have no outstanding judgements, unpaid taxes, or other obligations.

Confirmation From Your Employer

Your lender needs to be certain that your credit won’t be affected by wage garnishments.

Should I Take Advantage of This Credit?

The National Association Of Home Builders estimates that the credit will be responsible for an extra 160,000 home sales across America. This program can help speed up the process of home ownership. The credit and the market makes it tempting to become a home owner. Owning a home is a big commitment. Is the dream right for you? Only you can make that decision!

Buyer should be aware of new appraisal law

At the start of what seems to be a great season for house-hunters, a new law has created difficulties for home buyers, their Realtors and other real estate professionals in an already beleaguered market.

The Home Valuation Code of Conduct, or HVCC, became law May 1. In the details of the law, Fannie Mae and Freddie Mac, quasi-government institutions and purchasers of most mortgages, won’t provide funds for mortgage loans unless the appraisal follows a few new guidelines.

One of the main rules prohibits mortgage brokers from ordering appraisals directly from, or having any contact with, a licensed real estate appraiser. This includes approaching them with relevant information. Instead, lenders are required to use third-party “appraisal management” companies that oversee the appraisal and any communication.

One of the largest problems this has created is when a loan officer improperly qualifies the buyer or runs into a new underwriting rule that declines their loan. Previously, the loan could be repackaged and sent to a new source without delay or ordering a new appraisal. Under the new law, appraisals are captive to the lending source, cannot be transferred, therefore a second appraisal fee must be paid by the buyer, or a third, if the loan is especially difficult to place.

Other problems this law has created in the current real estate market are:

• The value of a house is a mystery until the appraisal is received; checking with another appraiser ahead of time has proven to be no guarantee value will be met.

• Valuation may come in low due to out-of-area appraisers being unfamiliar with local market activity. They may not have the expertise or understand how to properly evaluate in Nevada County, creating delay for escrows.

• In some cases, appraisal assignments are given on a “first come, first served” basis, replacing professional expertise with the ability to be first to reply to an appraisal request. This sets the bar of professionalism very low.

• The rebuttal process is cumbersome and inefficient, creating more delay to escrows

and frustration for everyone involved.

Pre-approval for loan

If you are looking for a home, the best insurance you have today is making sure you are properly qualified by your loan officer before you go look for a home. How do you know? Just ask to see your approval. Make sure to discuss this law with them.

Jeff Kuns is the owner of Mortgage Advisors Group, a mortgage lender in Nevada City, and co-author of the book, “Borrow Smart, Retire Rich.” He can be reached at 478-1271 or through www.thewealthsteps.com.

Tips for finishing a basement

In the Western North Carolina area, basements are prevalent due to the topography. A basement makes it easy to add great livable space to your home. In this area I have noticed that most basements have outdoor entrances and full windows so you do not have the feeling of being in a dungeon.

These tips should be considered by buyers who are considering buying a house with a finished basement. To save money, many homeowners will not get building permits and the required inspections, as they do the work themselves. If the work is not done properly, you can have problems with mold and moisture. People forget that we get a lot of rain in this area.

- Use treated wood in the basement walls to prevent wood rot.
- Consider using an alternative to regular drywall to prevent mold growth.
- Leave room for air to circulate behind finished walls and prevent mold growth. About 2″ is recommended.
- Make sure downspouts are directed away from your house to prevent the ground from getting saturated and water leaking into the basement.
- Have the dirt around your house graded so that it is slightly higher at the foundation and runs away from the house.
- Put in plenty of lights to keep the basement bright and as non-dungeonlike as possible.
- Opt for for carpeting or hardwood for sound deadening and warmth.
- A bedroom can be added only if there is an egress window, meaning that it is large enough to escape from in a fire.

People in this area also can not forget about radon gas. Radon inspections are usually conducted in the lowest finished, livable space. Hence if the basement was unfinished when the home was purchased, any radon test would have been performed on the first level. Radon is common in this area and is in most basements. When the homeowner tries to sell his home with the finished basement, it is possible that the buyer’s radon inspection will find elevated levels of radon which the buyer would want the seller to fix.

For more home improvement tips, check the seller section on my website www.liveinashevillehome.com.

Hot news for First-Time Buyers!

Earlier this year, the government approved an $8000 credit for first-time buyers if they close on a house by December 1, 2009.  A first-time buyer is an individual who has not owned a house in the past 3 years.  The income restriction is $75,000 for a single or $150,000 for a couple to obtain the entire credit.  The other requirement is that you must keep the house for 3 years as your primary residence or you will have to pay the credit back.   To get the credit you had to file an amended 2008 return.

The biggest problem first-time buyers have is coming up with the down payment.  The original plan required folks to borrow the money from family and repay them when they received their credit.

Now U.S. housing officials are working on a plan that would essentially allow some first-time buyers to purchase homes by paying little money upfront. Rather, they would be able to put an $8,000 income tax credit for first-time buyers towards their down payment on loans backed by the Federal Housing Administration. The idea is to allow home buyers to “monetize” the tax credit.

The FHA is finalizing a program that would allow approved lenders, non-profits, and state and local governments to fund short-term loans that could be used as down payments to be repaid once the borrower received the tax credit. Once they received their tax credit, they would pay off the short-term loan and put equity into their home.

For more real estate news and information, visit my website
(http://liveinashevillehome.com)