Each week, government-led Freddie Mac publishes a weekly mortgage rate survey based on data from 125 banks across the country.  According to this week’s results, the relative rate of a 5-year ARM in the North Georgia Mountains…well in all of Georgia is extremely low versus its 30-year fixed-rate cousin.

Consider this comparison:

• In April 2009, the two products ran neck-and-neck with respect to rates
• In April 2010, the two products are split by 0.99 percent

On a $200,000 home loan, that’s a difference of $117 per month to a mortgage payment.

Adjustable-rate mortgages aren’t suitable for everyone, but they can be a terrific fit given your individual circumstance.  For example, any one of the following scenarios could warrant a 5-year ARM:

1. Buying a home with an intent to sell within 5 years
2. Currently financed with a 30-year fixed mortgage with plans to sell within 5 years
3. Interested in low payments and comfortable with longer-term interest rate and payment uncertainty

Additionally, homeowners with existing ARMs may want to refinance into a brand-new ARM, if only to extend the initial change date on the current note.

Before opting an ARM or a fixed, Contact Me, or give me a call at 706.994.8686 and I will put you in touch with a loan officer within my team about how adjustable-rate mortgages work, and what longer-term risks may exist.  The savings may be tempting, but there’s more to consider than just the payment.

This is a “BIG DEAL!” Most Buyer’s and Seller’s are absolutely scared to death right now of a Short Sale agreement. Rightfully so in my opinion. These Banks and Servicing Institutions have got to get it together. I have been fortunate enough to have been apart of many Short Sale transactions that were closed in a relatively acceptable amount of time.  However on the other hand, I have had the misfortune of being party to several that have not only been an embarrassment to all parties involved, but nothing more than total aggravation and frustration. Let me give you just one example and you decide for yourself.

I currently have a Short Sale contract where I am representing the Buyer for a Cabin for Sale in Blue Ridge, GA. The contract was entered into on July 24, 2009.  The list price of the Cabin For Sale was $340,000. An agreement was reached by both parties of $300,000. After many months of sitting and waiting to hear something, anything from the Bank, we finally received a notice that they would not accept the Short Sale on the contracted price, but counter offered to use in the amount of $350,000. They highly encouraged a counter offer, of any kind from my client. So, after speaking with my client, we decided that we would counter offer $305,000 to show the Bank our good faith in the transaction. Another couple of months passed and we again finally received word from the Bank that they had yet another counter offer at a price of $389,000. I was in disbelief. Not only was this last counter offer higher than their first counter, but it was more than what was owed on the home to begin with. As a result of the ridiculous manner in which this Bank had handled this transaction, the Seller to my understanding is now filing for Bankruptcy, and will eventually lose the home through Foreclosure. I am currently searching for another property for my client.

Am I to feel sorry for these Banks? Do you?

Not sure what a Short Sale is? Click Here for a simple explanation.

I certainly hope that I haven’t ruined your day…..go out and Make it an AWESOME day!

The White House says the President will sign it into law today.

The up-to-$8000 tax credit’s expiration date has been pushed forward to spring, requiring home buyers to be under contract by April 30, 2010, and to be closed by June 30, 2010.

The program’s basic eligibility requirements remain the same:

• Buyers can’t purchase the home from a parent, spouse, or child
• Buyers can’t purchase the home from an entity in which they’re a majority owner
• Buyers can’t acquire the home by gift or inheritance
• All parties to the purchase must meet eligibility requirements

The new law includes some notable updates, however.

For one, the definition of “first-time home buyer” has been expanded to include most homeowners with at least 5 years in their current home.  “Move-up” buyers like these are now eligible for IRS tax credits, but with a cap at $6,500.

This means that you don’t have to be a true first-time home buyer to claim the “first-time home buyer tax credit”.

Other eligibility changes include:

• The subject property’s sales price may not exceed $800,000
• The subject property must be a primary residence
• Income thresholds raised to $125,000 for single-filers and $225,500 for joint-filer

And remember, the First-Time Home Buyer program grants a tax credit as opposed to a deduction.  This means that a tax filer would receive a cash payment of $2,000 from the U.S. Treasury if his “normal” tax liability totals $6,000 and he was eligible for all $8,000 available under the new law.

The complete list of qualifying criteria is posted on the IRS website.  Be sure to review it with a tax professional to determine your eligibility.  Then mark your calendar for April 30, 2010.

It’s 5 months away.

The government’s First-Time Home Buyer Tax Credit  expires December 1, 2009. 

If you expect to use the program in conjunction with a home purchase, therefore, you may want to consider yourself officially “on the clock”. 

Assuming a 60-day window between contract and closing, there are now 77 days left to find a home and go under contract for it.

The First-Time Home Buyer Tax Credit refunds up to $8,000 at Tax Time for qualified home buyers.  A few of the program’s qualification criteria include:

• Home buyer must not have owned a primary residence in the past 36 months
• The home may not be purchased from a family member
• The household adjusted gross income must be below $95,000 for single tax filers and $170,000 for joint tax filers

The tax credit itself is limited to $8,000 or 10% of the purchase price, whichever is less. 

Remember, though: The refund is a true tax credit — not a deduction.  This means that a taxpayer owing $8,000 to the IRS and claiming the $8,000 First-Time Home Buyer Tax Credit would owe the IRS nothing on April 15, 2010.

The Fed also reiterated its plan to support the mortgage market to the tune of $1.5 trillion.

In its press release, the FOMC noted that the U.S. economy is not slowing with the same speed versus just two months ago and that financial markets, in general, are improving. 

These are two signs that the country may be emerging from recession, if it hasn’t already.

The news isn’t all good, however.  The Fed made a point to highlight the potential hazards the nations faces on its path to economic recovery:

• The prices of energy and commodities have been rising
• Job losses are still mounting nationally
• Businesses are reducing capital expenditures

Also in its statement, the Fed acknowledged a plan to hold the Fed Funds Rate near zero percent “for an extended period” and a re-commitment to the U.S. Treasury and Mortgage Bond markets.

Market reaction to the Fed’s press release has been muted. 

With no new stimulus and no new “tools” to spur the economy unveiled, Wall Street is business as usual.  Mortgage rates are unchanged post-FOMC today.

The FOMC’s next scheduled meeting is August 11-12, 2009.

When: June 13  8:00 A.M. – 5:00 P.M.

June 14 10:00 A.M. – 5:00 P.M.

Where: Meeks Park in Blairsville, Georgia

[youtube]http://www.youtube.com/watch?v=wYCp3bx4ZJQ[/youtube]

The stage is set and if you listen you will hear the sounds of bagpipes, drums and sounds of Scotland come alive as the marching bands get the games underway. Be sure to visit the Clan tents, pitched along the Butternut Creek and pick out your favorite kilt. Visit the genealogy tent and find out if you might have a little Scottish in ya. You don’t want to miss seeing the competition of the cabor toss or who can run the kilted mile the fastest. Hungry? Visit one of the Scottish food vendors for a taste of Scotland.The Festival will feature an entire area designated exclusively for children’s events and activities with a fun as well as an educational twist.  Children’s crafts and events make this festival fun for everyone in the family.

Please visit the Blairsville Scottish Festival site for more details and information.

**Voted Top 20 Event By The Souteastern Tourism Society**

Since Memorial Day, conforming mortgage rates have jumped by more than 1.125 percent, adding thousands of dollars to the annual cost of homeownership.

To the casual observer, the moves may seem random.  There’s a reason this is happening, however. 

It starts with inflation.

As an economic force, inflation erodes the value of the U.S. Dollar.  Left unchecked, it drives up the Cost of Living as each dollar “buys less” at the supermarket, gas station, or anywhere else.

But with respect to mortgage rates, inflation’s impact is more immediate.  Because inflation devalues the dollar over the long-term, it renders long-term mortgage bonds a less attractive investment for traders. 

If bond investors are repaid in U.S. Dollars, after all, it would make the investment worth less if the dollar is in an inflationary freefall. 

Therefore, in situations when inflation is likely to present, we find that traders often sell out of their mortgage bond positions which, in turn, drives down the bond prices.  Then, because bond yields move in the opposite direction of bond prices, rising rates are the inevitable result.

Lately, Wall Street is fearing inflation for a number of reasons:

1.  Job losses are slowing, adding to consumer spending expectations

2.  Gas prices have risen 41 days in a row

3.  The federal government is increasing the money supply

These 3 factors — plus a few others — are all coming to a head around the same time and traders are getting defensive with their portfolios.  As a result, they’re selling their mortgage bond positions and it’s driving mortgage rates higher.

Rates may continue to trek toward 7 percent through July and August, or they may retreat toward 5 percent.  We can’t know for sure.  What we can know, though, is that volatility in rates should continue until the economic picture gets more clear. That could be next week, or next year.

For now, be ready to lock at a moment’s notice.  Mortgage rates are changing quickly.

Tighter mortgage guidelines since late-2008 are forcing home buyers to make bigger downpayments.  Anecdotally, the change has led to a surge in buyers taking gifts of cash from family members.

If you’re among those accepting a cash gift from family, it’s important to know that you can’t just deposit the money in your bank account. 

There is a proper way to accept a cash gift and it requires 3 distinct steps:

1.  Complete and sign an acceptable gift letter

2. Document the gifter’s withdrawal of funds with teller receipts

3. Document the giftee’s deposit of funds with teller receipts

See, mortgage lenders pay close attention to gifts-for-downpayments.  For one, lenders have to make sure that downpayment cash is “clean” (i.e. not laundered).  And, secondly, they want the gift to really be a gift and not a loan-in-disguise.

This is why lenders will often require that a signed, dated letter accompany the home loan application. 

As an example:

I am the [relationship to recipient] of [name of recipient] and this letter serves as evidence that I am gifting [name of recipient] [amount of gift] to be used for the purchase of the home at [complete address of property].

This is a gift — not a loan — and there is no expectation of repayment.

Signed,
[Signature of gifter]

To further appease lenders, gift recipients should make sure that gift funds are not commingled at the time of deposit.  If the gift is for $12,000, for example, the bank’s deposit slip should indicate that a $12,000 deposit was made — nothing more, nothing less. 

Don’t add a random $50 check to the deposit, in other words.  If you have a separate deposit to make, make it as a subsequent transaction with its own receipt.

It’s also worth noting that gifting funds between family members can create both legal and tax liabilities.  If you’re unsure about how donating or receiving a gift may impact you, call or email me directly.  If I can’t help you with your questions, I can refer you to somebody that can.

The dollar value of one point is one percent on the loan size.  Discount points appear on Good Faith Estimates and HUD-1 Settlement Statements on Line 802.

Historically, each 1 point paid by a borrower lowers an offered interest rate by a quarter-percent.  Since the late-2008, however, this relationship is skewed.

Depending on market conditions, 1 point paid by a borrower can lower a mortgage rate by up to 0.875 percent.

As an example of how points work, a $200,000 home loan may be offered at 5.500 percent with 0 points.  With 1 discount point paid at closing — $2,000 – the mortgage rate may lower to 5.125 percent.

In addition to lowering your interest rate, discount points may be tax-deductible, too.  Therefore, be sure to provide your home settlement statements from the previous calendar year to your accountant during Tax Season.

I recommend calling Tracie Griffith with First Community Mortgage located in Blue Ridge, GA. Tracie has always taken very good care of my customers and clients lending needs. So, if you have any questions about a Home Loan, or further information on Discount Points, please give her a call at 706.632.5800. Please let her know you found her on “The Porch!”  Oh by the way, if you haven’t found that North Georgia Mountain Cabin, please Contact Me or give me a call at 706.994.8686 for all your Blue Ridge, Blairsville, Ellijay, or Hiawassee Real Estate needs. I would greatly appreciate it.

Make it a GREAT day!