USDA Loans Make "Rural" Homes More Accessible

Zero-down loan programs are few and far between these days, but one that remains available might be of interest to you – especially given some changes that make it more accessible.

USDA Guaranteed Rural Development loans offer 100% financing with no monthly Private Mortgage Insurance. Seriously, I said NO monthly PMI. While there are some geographic limitations for this program, if you are interested in eligible properties, you should take notice.

Income restrictions for this program are based on the number of people living in your household, however these limits were loosened beginning April 20, 2009, which means more people may now qualify and be able to afford higher value homes under this program. Previously, the income limits were based on the exact number of people living in the home. For example, the limit for two people was different from the limit for one person; the limit for three people was different from the limit for two people, etc. As of April 20, the household income limitations are grouped into two categories: 1-4 Person Households and 5-8 Person Households. This is great news!

It means that higher income earners with fewer people in the household may be more likely to qualify.In non high-cost counties, where 1-4 people reside in a home, the income limit will now be $70,750. In homes where 5-8 people reside, the limit is $93,400. While these figures serve as a guide, there are certain situations in which people can earn more and still qualify.

Now just because you see the word "rural" in the program name, it doesn't mean we're talking farmland here. No, you don't have to raise cattle or chickens to qualify. Rural generally is defined as areas that are not densely populated and have fewer neighborhoods – but you might be surprised at how many neighborhoods qualify. To check eligibility on a property you may be interested in, email me or visit the following web site:

Is this property eligible for USDA Guaranteed Rural Housing financing?

I am very excited about what this can represent to you. More buyers will have the ability to buy a home without a down payment and that could be you. Also, when it comes to USDA Rural Housing loans, the seller can pay closing costs up to 6%. When you combine these benefits with the available tax credit of up to $8,000 for eligible first time home buyers, buying that "house in the country" – or even the suburbs – is suddenly a lot easier.

To learn more about this program, email or give us a call at 678-648-5626. This is a great opportunity and I hope you can take advantage of it.

Stop Paying Your Landlord's Mortgage!

It's staggering when you think about the cost of living, especially if you're a renter and not a home owner. If you are currently paying $1,000 a month for rented housing, then over the next three years, your property management company will effectively have reaped $36,000 of your hard earned cash! You're paying their mortgage when you could be building equity in your own property.

What if I don't have the money to buy a home right now?



There are many loan programs available that offer low and no down payment options. Some programs even permit gift money as a down payment. Also the government is offering up to an $8,000 tax credit for first time home buyers through December 1, 2009 and Georgia is offering an $1,800 tax credit through November 30, 2009.



There are many benefits of home ownership to consider, most of all, tax deductions. Let's take a look at how advantageous this can be as a homeowner:



How much is tax deductible?



Tax deductions vary, but the IRS has laid out solid rules. They also have several tax publications full of helpful information worth taking the time to read. Publication 530, Tax Information for First-Time Homeowners, is very thorough, as is Publication 936, Home Mortgage Interest Deduction. For quick reference, you can refer to Tax Topics 505, Interest Expense, and 504, Home Mortgage Points.



These publications often refer to local and state guidelines, so you may want to consult a CPA to answer all the questions that arise from reading these materials. Here are a few tips you should know up front:



Real Estate taxes are deductible on a primary residence. Real Estate taxes are paid at settlement or closing, or through an escrow account.



Mortgage interest is deductible on a loan to purchase, build or improve your home. Your lender will provide you with a Mortgage Interest Statement (Form 1098) to list the total interest paid during the year. This should include any deductible points paid for that year.



Pre-paid interest is deductible in the year it is paid. At the close of a real estate transaction, borrowers usually pay for the interest on their loan that falls between the closing period and the first of the next month. Mortgage payments are made "in arrears" so when a loan is closed mid-month, there is interest due to the new lender which must be paid in advance.



If you are building a home, the interest on the construction loan is deductible. The construction period cannot exceed 24 months prior to the date that you move in if you claim this as your primary residence.

Email or call me at 678-648-5626 to discuss your specific needs and we'll find the program that's right for you. We have a variety of low down payment and no down payment programs available.

The Federal Reserve and Mortgage Rates

Understanding What Causes Interest Rate Movement

Consumers are often misled when it comes to the subject of the Federal Reserve and how it affects mortgage interest rates. Often the media is the culprit causing the confusion. Many times, the Fed has taken action that caused mortgage interest rates to move in a direction other than what consumers expected, because the media provided weak reporting on the subject.

The Federal Reserve affects short-term interest rate maturities, the Fed Funds rate, and the Overnight Lending rate. These factors have a direct impact on the Prime rate. If you took only this into consideration, you may mistakenly conclude that changes made by the Fed will cause a similar movement in mortgage interest rates. However, mortgage interest rates are dictated by the trading of mortgage-backed securities, which trade on a daily basis. The real dynamic at the heart of interest rate movement is the relationship between stocks and bonds.

Stocks and bonds compete for the same investment dollar on a daily basis. There is literally only so much money to be invested. When the Federal Reserve feels that interest rates need to be decreased in an effort to stimulate the economy, this reduction in rates can often cause a stock market rally. When the market becomes bullish, the money to invest in stocks comes from the selling of mortgage-backed securities.

Unfortunately, selling mortgage-backed securities to fuel stock market rallies causes interest rates to go up, not down.

Historically, there have been many times when the Federal Reserve has increased interest rates. Stocks then sell off in fear that the increase will affect corporate profit margins, and the liquidated stock assets need a place to park until the next rally comes along. The safe haven is found in mortgage-backed securities which cause mortgage rates to drop.

The daily ebb and flow of money is what matters most when it comes to the movement of mortgage interest rates. I make it a point to continuously monitor interest rates for my clients, and advise them of opportunities to manage their mortgage debt at a better rate. This is the foundation of my business model as a Trusted Advisor.

Email or call me at 678-648-5626 to discuss your financing needs.

Building A Referral Network

How to Reach Out to Those Around You

Everyone has heard the expression, "It's not what you know but who you know." Of course this isn't entirely true, but having a successful referral network can lead to a significant increase in satisfied clients with minimal effort on your part.

Have you ever gone into a large home improvement store, trying to find a certain item, only to come face-to-face with a wall of similar products? It can be overwhelming. Imagine if you had an expert right there to tell you what you need to know. Now imagine a team of experts throughout the store, all ready to assist you. This is what a successful referral network should be.

Choose Your Partners Wisely

It is important to select your referral partners carefully. When you recommend someone, your client is trusting your opinion. It only takes one bad experience to sour a relationship. On the other hand, a positive experience will stay in a person's mind and encourage them to return to you for additional advice. Be sure that you are confident about the quality of work your referral partner can provide.

Get To Know Your Network

It is easy to remember that Mr. Smith is a CPA or Ms. Taylor is a financial planner. But what is it that makes them stand out? It's helpful to sit down with other professionals and learn about their unique selling proposition. By taking the time to learn about their specialties, you will be able to provide a more qualified referral. You may also use this opportunity to identify how you work with clients and why your services are worth recommending.

Referral Reciprocity

By teaming up with other professionals outside of your field, you are providing your clients with an extra level of service. Not only will they appreciate it, they will also remember you the next time they need a reliable source. In addition, your referral partners will keep you in mind when their clients are looking for a professional.

Please email or call me at 678-648-5626 if you would like more information about building your referral network!

Image courtesy: Photocromo

Trigger Leads: Don't Be Exploited by the Credit Bureaus

While it's an illegal breach of privacy for real estate agents or mortgage originators to sell your credit information, it is perfectly legal for credit companies to do so. For a price ranging anywhere from $25 to $100, your name and certain specifics about your credit report - including your address, phone number, mortgage history, and even your FICO score range - are sold by the credit bureaus to mortgage companies. The result is an onslaught of unsolicited phone calls and junk mail as soon as you apply for a home loan.

Unfortunately, no legislation exists to prevent credit bureaus from profiting at your expense. As a "trigger lead", you are simply at the mercy of any number of marketing campaigns designed specifically to discredit the mortgage professional you've come to know and trust.

That's why, prior to applying for any loan program, I suggest that you visit http://www.optoutprescreen.com/ to opt-out of future credit bureau solicitations and avoid this problem altogether. Not only will you avoid the hassle of telemarketers, but by opting out you could potentially add 10 to 15 points to your credit score!

In addition, if you do happen to receive phone calls from solicitors, ask them to place your name and number on their Do Not Call list. All telemarketing companies have their own internal Do Not Call list that they must abide by. Be sure to take down the name of both the company and the individual who made the call, and to let the solicitor know that you're doing so. This way, you will have grounds to seek action against them, should they call again.

As you embark on what is likely the largest financial transaction of your life, you should place yourself in the hands of a professional - not some transactional loan officer who purchased your information from the credit bureaus. Remember, only a limited number of sources exist for lenders to obtain mortgage money, so it's extremely unlikely that a borrower will find an unbelievably low rate without an unbelievably high cost.

If, however, you are curious about the programs these mortgage companies have to offer, then listen to what they have to say. Once they've offered you a rate that seems too good to be true, ask them a question or two from the following list.

1. Where did you get my information? Who gave you permission to call me, and how much did you pay for my information?

By asking this series of straightforward questions, you demonstrate that you're not an uninformed or unsuspecting mortgage applicant who can be easily victimized.

2. Why should I be willing to speak with you when you weren't referred to me by someone I trust?

This question demonstrates that you're interested in a long-term relationship with a trusted advisor.

3. How are mortgage interest rates determined, and what impacts the rates that you are offering me today?

Many unprofessional and uninformed individuals believe that home loan rates are based on the 10-Year Treasury Note. This, however, is not true. Mortgage interest rates are actually based on mortgage-backed securities or mortgage bonds. In fact, many times these securities trade in opposite directions, and anyone who's looking at Treasury Notes to determine the lock on your loan will provide you with inaccurate information.

Asking this question will demonstrate that you're aware of the fact that mortgage rates can change frequently, even hourly, depending on economic news and market volatility. If they can’t share this information with you, what else might they be leaving out?

4. What impact does the Federal Reserve have on the rate I will be paying for my first mortgage with you?

The answer here is that it does not. The interest rate that you pay is impacted by the bonds and securities markets. When the Fed changes short term rates, the "Fed Funds Rate" or the "Discount Rate", only rates for items such as Home Equity Lines of Credit (HELOCs), credit cards, and other similar loans are directly impacted.

5. What are the specific closing costs associated with the rate and program you're offering me today?

Many times, interest rates will be quoted with origination fees or discount points included in order to deliver the attractive interest rate being offered. While in some cases your situation may warrant paying these fees to get a better rate, you should always be made aware of these fees and options up front. Also, be aware of any fees disguised as a "Funding Fee." In some cases, these fees have been hidden in order to deliver what seems like an exceptionally low rate with "no points or fees."

If you have any questions about this, or any other part of the mortgage process, please email or call me at 678-648-5626. I'll be happy to assist you in any way I can.

Financial Markets and the Impact on Mortgage Rates

As mortgage rates have risen in the past few weeks, here is an interesting discussion on CNBC’s Squak Box in the importance of keeping mortgage rates low.

Frederick Mishkin, former Federal Reserve Board governor and CNBC’s Rick Santelli point out the primary issues with our current economic policy:

1. Inflation – everyone is waiting with “baited breath” for inflation to impact mortgage rates
2. Controlling fiscal policy as the Fed’s balance sheet has ballooned.

The Federal Open Market Committee meeting on the 23-24th should allow us an inside look at the Fed’s next steps in easing the credit crisis and responding to the most recent rise in mortgage rates.

Why A Short Sale?

A Unique Selling Proposition for Real Estate Agents


While a short sale may be a last resort for many homeowners facing foreclosure, it also represents a great opportunity for potential home buyers and real estate investors. This blog post is designed to help answer a few basic questions about the substantial risk and reward involved in this extremely complex and often drawn out process.

What is a Short Sale?


A short sale is a legally-binding agreement to allow a home to be sold for less than the amount that is owed. And, while short sales are not by any means common or easy, because of increasing inventory levels and foreclosures in some parts of the country, lenders are much more eager to negotiate with borrowers who are having trouble paying their mortgages. For potential home buyers and real estate investors, a short sale also offers a great opportunity to purchase property at a significant discount.


However, don't expect a lot of help from the lender without first providing a sales contract from a qualified buyer and all the information required by the lender's loss mitigation department.


Of course, lenders are not looking to bail out "flippers" or other borrowers who simply overextended themselves. In most cases, a borrower must have suffered a serious financial hardship that directly caused him or her to default on the mortgage: the loss of a job, a serious illness, or the death of a loved one.


A written declaration and supporting documentation demonstrating financial hardship will definitely be required by the lender. This may include pay stubs, tax returns, and liquid asset statements, among other documentation.


Key Considerations to Keep in Mind


It's important to note that the difference between what is owed on a mortgage and the final amount the lender collects after the costs of the sale, including real estate commissions and possibly other charges don't simply disappear in a short sale. In the past, this deficiency or "canceled mortgage debt" was considered taxable income to the borrower. However, thanks to the Mortgage Forgiveness Act of 2007, the tax burden for qualifying canceled mortgage debt (as high as 35%) for primary residences only has been temporarily waived until the end of 2009.


If there are multiple liens against the property, all lien holders will have to be involved in the negotiation process, not just the first lien holder. Therefore, communication and patience are essential components of any short sale. This is why an experienced real estate agent and mortgage professional become so valuable to this process.


Email or call me at 678-648-5626. Let's discuss how we can market short sales and other foreclosure alternatives to potential buyers and sellers as a unique selling proposition that clearly separates us from the competition.

June 11th Bankrate.com Mortgage Trend Index

The June 11th Bankrate.com Mortgage Trend Index is available with the analysts predicting that rates will move up.

Here are the analysts’ predictions for mortgage rates in the next 30 days:

· 57% predict mortgage rates will increase
· 29% predict mortgage rates will decrease
· 14% predict mortgage rates will remain unchanged

Cameron Findley, Chief economist, LendingTree.com states, “When rates rise, people pay attention. But when they fall, banks are traditionally slow to react. Unless the market experiences some non-traditional Fed intervention in the coming weeks, the debt market sell-off is expected to level out. The supply side of U.S. government debt continues to rise with $65 billion in two-year/10-year/30-year notes this week, but considering that other economies are doing poorly as well, quantitative easing is not limited to the shores of the USA.” As rates continue to rise, I would watch for a new level of intervention by the Fed in the coming weeks.

As a reminder, this mortgage trend index is for conventional rates only and does not include Jumbo, FHA, or VA mortgage rates. Email or call me at 678-648-5626 for your free mortgage consultation and information regarding current mortgage rates.

Image source: Bankrate.com

Are You Ready to Refi? New Appraisal Rules Could Impact You

In the last several years, significant changes have impacted financing for residential real estate. The issue I would like to bring to your attention today could impact the property value that will be used to underwrite your loan.

The Home Valuation Code of Conduct (HVCC), currently in effect as of May 1, 2009, governs the way in which appraisals must be ordered for all residential real estate transactions, where the loans are sold to Fannie Mae and Freddie Mac.

The purpose of this new regulation is to ensure that the value of the home - on which a mortgage is being issued - is arrived at both independently and objectively.

While I have traditionally been able to order appraisals directly from local appraisers whom I know are familiar with the neighborhood or region, this legislation will prohibit this practice and will instead randomly assign an appraiser, who may or may not be someone in the immediate area. The new legislation also eliminates my ability to discuss the property with the appraiser.

As a result, the task of providing information that will help the appraiser arrive at an accurate value now falls upon the homeowner. Here are a few tips to help you prepare for an appointment with the appraiser. First, you might wish to get in touch with your Realtor, or give me a call so that I can refer one familiar with your area. They generally can provide you with a list of recently sold properties that would be deemed comparable to yours. You can also go online to property valuation websites, such as eppraisal.

Be prepared to furnish the appraiser with any notes or other information that you believe would be beneficial in arriving at an accurate value. This could include information about your house or a potential comparable sale. If you have done improvements on your home since you purchased it, you might want to prepare a list and provide receipts for them, if available.

If any issues occur in arriving at a fair value for your home, I will work with you to resolve them. While I don't expect any problems, being prepared is always a best practice. Email or call me at 678-648-5626 to discuss your financing options.

The Price of Procrastination

Everyone Wants a Lower Price, But What About the Impact of Interest Rates?

When shopping for a home, the natural tendency of any buyer is to want to pay the lowest price possible. It's important to keep in mind, however, that the sales price is not the only factor that determines what your monthly payment will be. In fact, the impact of higher interest rates can easily nullify any benefit of waiting for a lower price.

Why Should I Rush to Buy?
While you may have heard discussions in the media about the decline of property values in many markets, the rate of decline appears to be stabilizing.

That being said, it would not be unreasonable for you to want to hold out for an additional decline of 10%, hoping to capture the best possible price. However, as property values have declined in many areas to 2003 levels or lower, waiting longer to pull the trigger could be a mistake. Many markets are reporting that lower property values have been bringing out investors and the result has been multiple offers on many properties. Properties priced correctly are not declining and, in fact, are creating a lot of interest.

Interest Rate Complacency
The problem is that many home buyers have been lulled into a sense of complacency because of extremely low interest rates. Since the Federal Reserve initiated its program of buying mortgage-backed securities, which control the rates people pay for their home loans, rates had been range bound, bouncing between 4.50% to 5.00% for a 30-year fixed-rate loan.

But do not be confused by this. These rates are artificially low! Historically, interest rates have been above 6.00%. And any rate obtained below this number is a great deal, especially on homes with price tags from 2003!

Markets are Unforgiving
The last two weeks of May showed just how unforgiving the markets can be for people who choose to procrastinate. In just five days, interest rates from many lenders increased anywhere from .50% to 1.00% as fixed-income investors demanded more for their money.

For anyone who was waiting for prices to drop even more, a 1.00% increase in your interest rate would bring a higher monthly principal and interest payment on a home, even if the price of that same home had fallen an additional 10% in value.

If you're waiting for home prices to fall even lower, be aware that while holding out for a lower price may help you win the battle, you could lose the war in terms of monthly payments and overall affordability. With the Federal Reserve scheduled to end its buying of mortgage-backed securities this year, rates only stand to go higher for those that wait. In fact, interest rates are already on the rise and could go higher from here.

Clock is Ticking on Free Money
If you, or someone you know, is planning on purchasing a home this year, be aware that you must take possession before 12/01/2009 to be eligible for a tax credit of up to $8,000. In a survey conducted in March by Move.com, nearly 50% of home buyers are currently unaware that this free money exists in the marketplace. And since over 50% of all buyers are first-timers in today's market, this could impact a lot of people who aren't in the know.

If you have questions about this update, email or give us a call at 678-648-5626. I can show you how waiting for the lowest price could really cost you more in the long run.

June 4th Bankrate.com Mortgage Trend Index

The latest Bankrate.com Mortgage Trend Index is available with the experts predicting that rates will move up. As a reminder, this mortgage trend index is for conventional rates only and does not include Jumbo, FHA, or VA mortgage rates.

Here are the predictions for mortgage rates in the next 30 days:

· 42% predict mortgage rates will increase
· 33% predict mortgage rates will decrease
· 25% predict mortgage rates will remain unchanged

Greg McBride, CFA, senior financial analyst Bankrate.com states, “While the Fed is likely to accelerate or increase their mortgage-bond and Treasury purchases, the announcement may not come until the June FOMC meeting three weeks away.” Although rates change frequently, I would expect rates to remain above 5.00% until the meeting of the Federal Open Market Committee on June 23-24.

Email or call me at 678-648-5626 for your free mortgage consultation and information regarding current mortgage rates.

Image source: Bankrate.com

Pending Home Sales Jump in April

The National Association of Realtors released the Pending Home Sales Index with homes under contract moving up nearly 7 percent.

It was the single biggest monthly increase since 2001 and it was the third consecutive month that the report showed a gain. The report is an imperfect measurement because it takes into account homes that are under contract but have not closed. Some estimates suggest that only 80% of homes under contract actually close.

In this Bloomberg News piece, NAR Chief Economist Lawrence Yun points out a few keys for the increase:

1. The $8,000 first time home buyer tax credit
2. Historically low mortgage rates
3. Lower home prices nationwide
4. Consumer confidence is up sharply

With homes more affordable nationwide, we should continue to see a seasonal increase.

For more information regarding financing your home purchase, or refinancing with today’s historically low rates email me or call 678-648-5626.

Good News - Existing Home Sales Increase!

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In this “Squawk on the Street” report, CNBC reports on the latest news from the National Association of Realtors.

The report included the Existing Home Sales Report. Existing home sales rose 2.9 percent in April indicating that the housing market is again showing signs of improvement. Annual home sales outpaced the anticipated 4.66 million homes and home sales were up in the majority of the reported regions. Even as prices decline, sales including condos are up. Condo sales increased 6.4 percent.

Lawrence Yun, National Association of Realtors chief economist, stated, “Most of the sales are taking place in lower price ranges and activity is beginning to pick-up in the mid-price ranges, but high-end home sales remain sluggish.”

The good news for many home owners is that, depending on the local housing market, as sales continue to increase home prices should follow.