Real Estate Lingo Defined : Tax and Insurance Escrow

Published on December 8, 2011 by

Escrow taxes and insurance

Every homeowner has agreed and contracted to a great financial responsibility when purchasing a home. The fiscal responsibilities go much further then simply making your mortgage payment. Additionally you are required to pay real estate taxes as well as insurance premiums.

Failing to pay your taxes or insurance premiums may result in huge penalties including foreclosure and violating your mortgage agreement. There are primarily two ways which homeowners pay their taxes and insurance bills.

One straight forward way is to pay the bills as they come due. Often it's annually or semi-annually. Depending on your home and where you live the bills could be quite a bit and may require special consideration for budgeting your money to cover the costs.

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The other very popular option and very simple is to simply “escrow” your payments. Your lender has the right to pay you bills for you and will do so by collecting your insurance and taxes at a even monthly payment. Many mortgages will also require that your taxes and insurance are collected in a separate escrow account to ensure that your responsibilities are met.

Your escrow payment will be in addition to your mortgage payment that only includes principle and interest. If you have any questions simply ask your loan officer or your bank if you've already closed on your loan about setting up an escrow account to simply your budget and funds.

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Should I Refinance My Home To The Lowest Rate Available?

Published on October 11, 2011 by

Mortgage interest rates are at record breaking lows. Many homeowners are wondering if they should refinance and there is lots of advice and rules of thumb to pay attention to and it can be overwhelming and difficult to make the best choice for yourself.

The NBC’s The Today Show recently provided a clip that addresses some of the concern and topics of refinancing with the current low interest rate. Refinancing will always have costs associated with it. Advertisements of no cost loans simply means one is not getting the lowest rate available to cover the costs involved in refinancing. Understanding all of the variables and option is difficult.

Some of the key points raised include :

  • The lowest rates come with the highest costs. Consider a slightly higher-rate option from your bank.
  • Falling home values may make it harder to qualify for a refinance in the future. Your best time to act may be now.
  • If you’re many years into a 30-year loan, you can consider switching to a 15-year mortgage to avoid “resetting” your term.

After all of the advice given in the clip and when asking around you simply need to make sure that your time frame for breaking even on the cost to refinance to a lower interest rate is reasonable to how long you plan to keep your home. Most homeowners will benefit from a refinance if they plan to stay in their home for at least two years.

If you have a VA Home Loan many of the concerns that are voiced are not applicable to you. The great benefits of a VA Loan make it extremely easy for you to refinance and streamline your loan to a lower interest rate. If you have any questions you can get a free consultation by calling 866) 825-6261.

Mortgage Interest Rates Fall Below Four Percent

Published on October 7, 2011 by

Freddie Mac PMMS average rates

Who would have ever thought mortgage interest rates would go below 4%. Couple years back when rates went below 6% we thought we were in record territory. The graph above shows how the rates have dropped over the past couple of years.

Not only are 30 year fixed rates breaking records but the 15 year fixed rate and adjustable rate mortgages too are record lows. There is also a great advantage and spread between the ARM vs the Fixed rates making it even more enticing. ARM’s are now below 3% so if you’re one of the average homeowners and won’t keep your mortgage for more then five years then now is the time to capitalize on huge savings with an adjustable rate mortgage.

With interest rates so low the home buying and affordability is at all time highs and there has never been a better time to purchase a home. The low interest rates are also maximizing the purchase power of every dollar. Interest rates have dropped due to the following reasons and will likely continue on the short term:

  • U.S. economics is poor and under performing
  • Uncertainty in the Eurozone consisting of multiple countries
  • The Federal Reserve’s economic stimulation

If you have a VA Loan you are in a great position to capitalize on the low interest rates since the guidelines and requirements are so minimal. In fact much of the refinance market currently may be credited to the VA Loans due to about every other loan making it nearly impossible to refinance at this time.

If you are interested in taking advantage of the low interest rates whether it’s for purchase or refinance then contact a loan officer toll free (866) 825-6261 and get your free consultation today.

Home Values Rose For the 4th Straight Month

Published on October 5, 2011 by

First lets make sure that we say the data driving the title of this blog entry is coming from the Federal Home Finance Agency's Home Price Index. With that being said many in the know will realize that the information is old and outdated and not the most accurate.Home Price Index from April 2007 peak

According to the latest data it shows home prices have increased in the month of July by .8%. This makes it four months in a row that the report has shown an increase in home prices when most places that we experience and visit likely don't reflect an increase in home values.

The graph to the right is reflecting that a floor has been identified and that the housing recovery is in progress. The problem with the data is that it's extremely flawed and doesn't account for 1/3 of the homes sold due to mortgage guidelines being so strict and so many properties being purchased with cash which are very likely at very significant discounts. The data is flawed due to the following reasons below:

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  1. Only homes backed by Fannie Mae or Freddie Mac are included in the index. In today's market, because of the FHA's popularity, that leaves 1 of 3 homes “uncounted”.
  2. Only existing home sales are counted, new home sales are not counted.
  3. The data comes with a 60-day delay. The October market is different from July's.

Ultimately we all can recognize that home values have dropped about 17% from their previous highs. The best way to make all of the information relevant to your specific situation is to simply contact a realtor and loan officer in your area and find out what values are doing and what opportunities may be available to you. If you have questions and would like a free obligation simply call (866) 825-6261.


Conforming Mortgage Loan Limits Dropping

Published on October 4, 2011 by

Conforming Loan Limits lowered in 2011

With the drop in home values nationwide it is making an impact on future loan values as well. High-cost areas across the country are calculated based on average home sales price in the area. With values dropping 14% or more the maximum loan amounts too are dropping.

Starting on October 1, 2011 the loan limits above $417,000 in high cost areas is dropping. The previous maximum loan size as dropped over 14%. The previous loan limits were in place in 2008 and calculated prior to the home values plummeting.

This change is extremely important to those that need to live in the high cost areas such as New York and Los Angeles and other similar high cost areas.

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Now instead of the previous $729,750 loan limit you are now subject to a maximum loan size of $625,500. Now this should not make a huge impact since the home values have decreased which means you can purchase the same home now as before with the lower value and still fit in the lower loan limits.

You can see the complete list of high-cost areas online. If you have any questions simply contact a loan officer and find out first hand for free. There is no cost or obligation to visit with a loan officer. If there is a cost simply walk away and find another.


Looking at Mortgage Rates This Week : October 3, 2011

Published on October 3, 2011 by

Jobs report due this week

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Mortgage interest rates continue to get lower and lower as the economic outlook around the world and specifically in Greece continue to look worse and worse. Even with continue consumer spending in the U.S. you are starting to see a more dismal economic outlook.

The whole Eurozone is looking worse as well and it's obviously due to the expected greek default and you have other countries to be concerned about including Italy, Spain, Ireland and Portugal.

This week you have a few things that should impact interest rates such as the jobs report and the unemployment rate. Interest rates are extremely low so if you have a mortgage contact a loan officer and see if there is an opportunity to capitalize on the low rates or look to maximize your purchase power in this buyers market. If you have any questions contact a loan officer for a free consultation.


Low Interest Rates Don't Increase Home Sales

Published on September 30, 2011 by

Pending Home Sales graph

The Feds continue to lower interest rates and keep interest rates in hopes that it will stimulate the economy and hopefully improve the housing market. When it comes to home sales this past month proved not to be effective.

While interest rates likely need to remain low to really spur economic recovery there must be something more to the solution to increase home sales going forward. In addition to extremely low interest rates perhaps there needs to be some kind of incentive to purchase homes at this time.

We all know that the banks are making it very difficult to refinance and to purchase or in other words for them to lend their money. Finding a way to reward those buyers out there that don't fall in the category of the rich and international.

The home sales are being split into two different categories even more often as the economy and housing market continues to struggle. The rich and international are having a buying frenzy that will likely result in additional revenue and wealth on their part and the rest of us are struggling to make ends meet and not catching any breaks.

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If you have any ideas on how we could improve the outlook for those on “main street” then please share your ideas. Perhaps if you buy a home in the next year and you don't make more then $250,000 a year you could get a tax credit for 10% of the purchase price? That is one suggestion that may benefit “main street”.


Latest Data Supports Some Housing Value Improvements

Published on September 29, 2011 by

Case-Shiller monthly change (June - July 2011)

The latest data from Case-Shiller Index was released and it reflects that majority of the cities measured are reflecting and improvement in the value of homes. The index showed a .9% increase in values and only a couple of the 20 cities measured were lower in Las Vegas and Phoenix, with Denver remaining flat.

Does this mean that home values nationwide have hit a floor? Well as much as many of us would like to think so it may not be the case. Foreclosures started to pick up again and the lack of jobs and improvements in the economy simply are not supporting the idea of a recovery right now.

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The index is not always the most detailed or accurate data as well as many find multiple faults with the data. Regardless of whether or not you think the data is valuable one can start to recognize that we are seeing signs of improvement and hopefully for all of us it will continue to improve.

If you have any questions about any opportunities that may be available to you with the low home values and low interest rates then simply contact a loan officer today by calling toll free (866) 825-6261. You may be able to save thousands of dollars with a VA Streamline refinance or increase your purchase power on a VA Home Loan by working with the Best VA Loan Specialist's in the country.


New Home Sales Continue to Slide

Published on September 28, 2011 by

New Home Sales August 2010 - August 2011

The number of new homes continues to slide in sales. The sales continue to slow and there were under 300 thousand new homes sold. The housing market is in trouble and will likely continue to be for the near term as well.

The new home sales are falling and the inventory is not being replaced. Builders are not building much during this time when so many homes are distressed and providing huge savings to the buyers and making up almost one third of the housing sales.

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The current inventory will take a bit more then 6 months to sell out with the current demand and sales. That is a very short amount of inventory but with the distressed homes providing such discounts it makes it very difficult for builders to want to take the risks right now.

If you are looking to take advantage of the buyers market know that interest rates are providing an improvement in your purchase power. If you have any questions call toll free for your free consultation (866) 825-6261.

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Realtor Reports Higher Sales and Lower Supply

Published on September 27, 2011 by

Existing Home Sales Aug 2010 - Aug 2011

According to the latest data shown above the supply of homes for sale is continuing to drop and get to a more reasonable and normal level. Realtors are trying to communicate to everyone that the housing market is rebounding and that sales are increasing and supplies are dropping. While it may be true that sales increased there is still very little sales activity and while the supply is dropping there is still plenty of homes available for sale.

Distressed homes continue to be a major part of the housing market and sales. Almost one third of homes sold currently are distressed. Home sales continue to put along at a slow pace and the builders are not anxious to bring new supply to market.

So while things are improving they are far from good. There is also some increase in foreclosures recently with the current activity of accountability for the housing mess.

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Other noteworthy facts from the August Existing Home Sales report :

  • There are currently 3.58 million existing homes for sale nationwide
  • 29 percent of home buyers paid cash in August
  • Real estate investors bought 22% of homes in August, up from 18% in July

In addition to distressed homes being a major part of the purchase market it is also helpful to know that almost 30 percent of buyers are cash. This definitely supports the idea that its a great market for the rich and international buyers. If you are not rich and are looking to purchase a home know that the low interest rates have increased your purchase power significantly. Rates are so low that you should also consider refinancing any existing mortgages you may have outstanding.