Tax Advantages of Homeownership – Popular Tax Incentives

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Have you recently bought a home?  Do you know that you have now entered a world of tax advantages exclusive to only homeowners?  The feeling is great that Uncle Sam rewards those that choose to purchase their homestead and of course as your Realtor, I want to make sure you know all there is to know about what you stand to gain from this exclusive status of homeowner.

Though the best person to offer advice and consultation would be a CPA or a certified tax consultant, the information below will help you to plan and be prepared for what lies ahead during tax season.

Purchase of a New Home

If you have purchased a new home in 2011 – then this year when you file your taxes you can deduct three things; any mortgage points that were paid as part of the purchase, prepaid mortgage interest and pro-rated property taxes.

There are a few conditions on the mortgage point deduction, like the fact that the points must be for the primary residence of the homeowners.  Also, the amount of money spent by the homeowner toward the purchase of the home at closing needs to be greater than the amount that is charged in points.  Since lenders sometimes inflate the loan amount to accommodate the points, it is important to be aware before filing taxes since in that scenario the points amount would not be tax deductible.

Depending on what day you close on your home, you will most likely be charged pre-paid interest on your loan and that amount will be deductible. For example, a home that closes on the tenth day of the month will have twenty days of prepaid interest, all deductible when you file your taxes the following year.

In the same way, the amount of property taxes that make up for the time you will be taking possession of the home might have been covered in the previous property tax payment made by the seller.  If that happened the amount owed by you would have been charged as part of your closing costs – a deductible amount.

Refinancing An Existing Home

Mortgage debt is broken down into two types; home acquisition debt and home equity debt.  As the name suggests, home acquisition debt is the amount you paid to purchase your home.  During a refinance, however, your new loan amount that is utilized to pay off your previous mortgage is considered home acquisition debt with anything above and beyond that amount being qualified as home equity debt.  Interest accrued in both types of mortgage debt is tax deductible, however home equity debt has a tax deduction ceiling of $100,000.

Yearly Tax Breaks for Homeowners

Each year, until you are paying interest on your home mortgage, you will be eligible for a tax deduction on up to $1,000,000 of mortgage debt.  This can be debt you have taken on for the purpose of acquiring a new primary residence, to build or renovate an existing property as well as a second home you may have.

Home Equity Debt Interest Tax Advantage

If you use the debt acquired through your home equity to improve upon your primary residence (no limit) or for any other reason (limit of $100,000) it is possible that the interest on that loan could be tax deductible.  This is an ideal scenario for homeowners with some equity to borrow against that equity and pay off high-interest credit cards or vehicle loans – debt that carries interest that cannot be deducted.

Tax Exclusions on Forgiven Debt or Alternatives to Foreclosure

If you are able to secure a mortgage workout for your primary residence or if you are a homeowner who has received debt forgiveness, you may qualify for federal income tax exclusion on that forgiveness.

Energy Conversation Tax Incentives

With a growing emphasis on green living and energy conservation, there are a number of tax incentives offered to homeowners in exchange for demonstrated energy saving measures taken in the home.
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In terms of buying and selling homes, there is always the opportunity to donate items from your home to charitable organizations – all tax deductible of course.  There are myriad tax advantages of homeownership and after additional research, chances are you may find more nuances that could suit your own situation and maybe even provide a greater benefit than the ones listed here.

Five Priceless Holiday Gifts You Can’t Afford Not to Give This Season

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Well folks, we did it!  We made it through 2011 and we are on our way to bigger, brighter and better things to come, come 2012!  It has been my sincerest of pleasures to have been with you along the way – whether to provide a helping hand in your real estate endeavors, assist you with mortgage and finance planning or just plain be there when you needed me.

To all my friends, colleagues, clients and family – here’s to another wonderful year!

Since the relationships in our lives are among the priceless aspects of our lives – I thought I’d leave you with a list of five priceless holiday gifts this season.  Be generous.  Liberally give of these gifts.  For as they say, what you give will likely come back to you in volumes!

From my family to yours – Wishing You a Very, Merry Christmas and Happy Holiday Season!

The Gift Of Knowledge

There is nothing more precious than providing someone you love or care about with the lifelong ability to get up, stand up and be something.  Education allows us to do anything we can set our minds to do and it is the consistent reasons for many of the world’s great people!

The Gift Of Memories

The hustle and bustle of our lives as they get busier by the minute has slowed down the amount of time we actually spend on the relationships that matter.  Giving the gift of memories is a lasting pleasure that will always be with us and future generations.  Take time to read a book with a child or elderly parent.  Walk through the park, hand in hand, and talk about how things are going.  Share an ice cream cone in the middle of winter.  Anything goes.

The Gift Of Love

We take so much for granted and love is definitely one of those things.  To share and express and declare our love, whether through a simple hug or a monumental form of expression – the gift received of knowing you are loved is absolutely one of the most priceless and timeless gifts ever to be given.

The Gift Of Faith

Sharing your belief in someone, their ability to be who they are and offering the strength of knowing that they are surrounding by support and encouragement is second to none.  Who doesn’t need to know that they are valued and trusted and revered?  And who won’t remember that gift for a lifetime?

The Gift Of Warmth

Unemployment lines, colder winter season, harsher economic times – all are good reasons to be concerned with the warmth of anyone who doesn’t have the peace and comfort of a roof over their head.  How about consider donating to homeless shelters?  Volunteering to assist those who are having a very difficult time keeping warm this season is one of the most selfless and wonderful acts of giving there is.  And you will walk away feeling warm yourself too!

Managing Holiday Finances So Things Stay Within Reason During the Season

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Why is it that ordinary, everyday stuff that we see 11 months of the year and don’t need to have – all of a sudden become THE hot ticket item during the holidays and we now HAVE to have it?  Have you noticed how during the holidays that electronics, new gadgets, fancy toys and big-ticket items just seem to beckon us and persuade us that life can’t go on without them?  You know the items.  Big screen TVs, the latest video game boxes, and smart phones that are smarter than most computers and more.  One of this year’s hot ones is the iPad2 (is it because Steve Jobs passed on and now everyone wants a piece of him? Nope.)  It’s the holidays.

Unfortunately, for many Americans, this impulse can and is very dangerous because they simply cannot afford these items.  Yet they continue to rack up their credit cards, put things on layaway, or spend irresponsibly without considering where the bills will come from the following season.

Here are some tips to help you avoid all that and stay in the black this holiday season.  It’s not as hard as it sounds and can be achieved with some basic acts of self-control.

How To Prevent Going Into the Red In the First Place

The single easiest way to prevent heavy indebtedness at the end of year, is to manage your finances throughout the rest of the year.  Chipping away at a larger expense is far easier if done in installments and before heading toward the next holidays – you need to make sure that the previous holidays (and anything else outstanding) is paid off or begun to be paid off first.

Pay yourself first each month.  After listing all expenses that are unavoidable, including savings, examine if you are left with any room to breathe.  Begin a holiday shopping fund and build it throughout the year, but do not take on any more debt and do not deviate from your plan.

If You Are In the Red, What to Do Next

Don’t overdo the gifts this year.  Bake cookies, wrap them up nicely and write a beautiful hand-written letter telling the person receiving the gift what you appreciate about him or her.  Donate your time to a charity in someone’s honor.  Or give to the poor in their name.  Make a coupon book for each month of the coming year – in which you offer your services and special treats such as “good for one massage” or “get out of cooking dinner today”.

Ways To Get Through the Holidays and Stay in the Red

The big “B” word usually does it for responsible citizens that don’t go underwater during the holiday season.  Budgeting your holiday expenses is a key step in making sure that you don’t overspend.  However, unless you set a specific budget and then stick to it, you may as well forget it.

Remember that the ultimate meaning of your gift(s) is not the material itself but rather the thoughtfulness.  Grandma was right – it’s the thought that counts, not the number of dollar bills you shelled out at the register.

Using creativity to make gifts that involve your own personal touch is far more endearing than any store-bought item.  A handmade item that your loved one will keep close to heart for years will likely cost less money but also shows that your time spent on the gift means you were generous of your own time in the process, something more and more rare these days.

Center the holidays on family, traditions and activities that bring the two together.  Your loved ones should be able to remember the gift you gave them and if you bring out a homemade board game that has personalized touches involving the whole family – then they will surely remember that for years.
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Many Americans tell themselves they won’t overspend past a certain amount, but then when it comes down to the big Black Friday sale or the sales leading up to Christmas or Hanukkah, they break down.  With just a bit of careful planning and a lot of self-control – you can and will get through the holidays without swimming in a sea of debt by the time the New Year rolls around.

New Changes to the HARP Loan Program Means More People Getting Much-Needed Help

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The announcement made recently by the Federal Housing Finance Agency about proposed changes to the Home Affordable Refinance Program (HARP) could mean that many more homeowners will get much-needed assistance during this difficult economic time.  Homeowners that are underwater have traditionally turned to HARP loans to help them refinance their homes, being able to keep them rather than losing them to foreclosure.  Here are the main differences between the old and the new programs and how they will potentially affect homeowners going through times of strife.

No More Glass Ceiling for HARP

With the old program there was a limit to how much borrowers could borrow with respect to the home’s loan to value.  This posed a problem for many people that owed far more on the home than it was valued – given the steep decline in housing values during the past two or more years.

New changes to the program will allow homeowners to refinance no matter how foregone the situation is with respect to more money owed on a property than its market value.  The elimination of the 125 LTV ceiling for fixed-rate Fannie Mae or Freddie Mac backed mortgages is by far the most impactful proposed change to the program.  This change will quite possibly help millions of people avoid undergoing foreclosure.

Fewer Fees or Better Yet, No Fees For Some

As per the current HARP loan process, risk-based fees are assessed and applied to loans to protect the lender.  Considering borrowers’ credit profile, the lower the credit scores, the higher loan to value and that translates to greater risk to the lender.  Fees that are traditionally associated with this risk are a huge burden for buyers.

With the expected new HARP guidelines there will be no more risk-based fees for homeowners that refinance their home into short-term mortgages and fewer fees for others.


No Longer A Need For a Property Appraisal

The cost of getting an appraisal done on a home can get quite expensive and adds up when you factor in all the other costs of getting into a new home.  Most home purchases entail having an appraisal done on the home – at the buyer’s expense.

The changes that are looking to be implemented soon for people seeking assistance through HARP will include eliminating the requirement of a new property appraisal.  The only thing that buyers need to be wary of is that there must be a reputable AVM estimate in lieu of the appraisal.

The Absence of Warranties That Put Lenders In a Stronghold
Lenders are at a huge risk when borrowers default on their loans and as a protective measure Fannie Mae and Freddie Mac guarantee those loans but not without a long list of warranties that protect the creditor.  At present, refinance loans that have these warranties or stipulations on them cause lenders to comb through each application very carefully before considering an approval.

With the proposed changes taking place, the warranties will be waived, reducing secondary exposure to lenders of buying back the loan in case of default or even indication of default.  The change will make it far easier for homeowners to obtain the refinance loan they seek to help get them out from underwater.

More Time For Homeowners to Get Afloat

The HARP loan program began in April of 2009 and after an extension in March of this year (2011) the deadline was extended to June 30, 2012.

According to the list of projected enhancements to the program, the program’s deadline will be extended to December 31, 2013 – giving more homeowners more time to avail this opportunity.

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There are a few important things to mention regarding the upcoming announcement expected on Tuesday November 15th.  First, not only does the HARP loan apply only to homeowners that have a mortgage owned by Freddie Mac or Fannie Mae, the mortgage being refinanced must have been obtained on or before May 31, 2009.  Second, this applies only to homeowners who have not previously refinanced their home.

It is also important to note that these are projected changes – and they can change at any time contingent upon policy at Fannie Mae and Freddie Mac.

A Guide to the Smart Divorce: Ensuring Your Finances Are Not Ruined In the Process

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Divorce is probably one of the most difficult experiences to endure – right up there with death and taxes.  But it doesn’t have to be that way.  In fact, many couples that decide to call it quits make the conscious decision to do it smartly, resulting in better financial health all around.

At a time when everyone involved, especially the couple, is going through the extremely painful experience of splitting up an entire life as they know it – the last thing that may be on their minds is to smartly manage the financial aspect of their lives.  But without proper preparation the consequences can be dire, having lasting negative impact on the parties and of course their children.

You Can Never Be Too Prepared

As emotionally draining as divorce is for most people going through it, it is critical to remain as functional as possible and to make decisions with a clear mind.  There are hundreds of areas that need attention and often they are overlooked in the painful whirlwind of divorce proceedings, post-divorce emotional downfalls and the obvious re-establishment process.

Couples typically have their eyes on the key aspects of divorce settlement; the house, the car(s), pets, custody of any children and major assets.  But when you delve in deeper into each, there are myriad angles through which things must be considered.

Going Through Each Item, One By One

Follow the checklists linked below to help guide you through each item needing to be done.  There are lists that guide you as to the steps to take prior to initiating a divorce.  Some of the things on this include listing all current debt, identifying the contents in safety deposit boxes or creating your own savings account.

The checklist of items to take care of when initiating a divorce includes things like deciding which parent will take the child tax exemptions and revoking any power of attorney documents that authorize your spouse to legally act on your behalf.

After the divorce is final, it is important to do things like change insurance beneficiary information if applicable, and change your name on all accounts.  There are other vital things to take care of, also mentioned here.

We’ve provided a comprehensive list of documents that you need to prepare in connection with the divorce or of things that are affected by your divorce. The obvious ones are birth and marriage certificates plus not-so-common documents are included as well.

Once you have successfully obtained your divorce there will be some other areas where you will need to report your name change.  Some of them can involve long processes, such as passports or a will on file with your attorney.

The checklists are linked here.

How You Handle It Now Will Affect Your Finances Later

Make sure to cancel any joint credit accounts and charge cards, remove one party from applicable debts/liabilities unless they are legally dissolved and equally split up plus also sell the house or get any refinancing done prior to divorce.  This will ensure a smoother transition in the end when it is often difficult to communicate with your former spouse after divorce proceedings are complete.

All too often couples going through the difficult time of divorce fail to realize the importance of being financially savvy and making decisions that help everyone overall.  Any oversights prior, during and after the process only lead to regretful situations that cannot be rectified after the fact.  In my experience over the years, I have often dealt with people who neglected to attend to important financial obligations during the divorce.  An example of this is failing to separate a car loan.  The result can be very damaging if there is one responsible party suffering the irresponsible person’s management of his/her payments.

Another very interesting and little known fact about divorce when it comes to property ownership – is that unless both parties agree, a refinance cannot take place on a home. Because the child support order is a lien on the property, you need the ex-spouse to sign the subordination. As with everything else mentioned here and on the corresponding checklists – preparedness can and does help you avoid some of the financial pitfalls of divorce.  You just have to be savvy enough to know what you need to do and do it before it’s too late.

Last but not least – ALWAYS CONSULT WITH AN ATTORNEY!

Read the full eight page document here.

Images from: http://www.freedigitalphotos.net/images/view_photog.php?photogid=2125

11 Reasons Why A Mortgage Application Might Be Rejected

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Credit Scores

With the heavy regulations and guidelines placed on lenders these days, they are extremely careful about approving loans for those people with borderline credit ratings.  It is very important for a buyer to know and understand their credit rating prior to applying for a mortgage.  The minimum requirement for an FHA loan is a FICO score of at least 620  with the minimum 3.5% down payment for the application to even be accepted by the lender.  Conventional loans have an even greater minimum credit score requirement.  If your credit suffers from some damage, be sure to actively repair it before applying for a mortgage so that the chances of approval are greater.

Delinquent Credit Obligations

Anytime a borrower has late payments showing up on his or her credit report, where they have paid their bills 30, 60, 90, 120 and sometimes even 150 or more days late, it creates delinquent credit obligations.  With a frequent occurrence of delinquent credit obligations the person’s credit scores are severely damaged and mortgage options become highly limited.  There is some room if this is something that has occurred in the past.  Recent occurrences hurt credit scores the most but even then there may be some lending options for those borrowers.  Underwriters are very wary of a pattern of bills being paid in a delinquent manner.

Bankruptcy Previously Filed

Depending on when the bankruptcy was filed, it can hurt a homebuyer in that it is a clear indication of a borrower’s lack of responsibility and ability to manage his or her own finances.  Most lenders are not concerned with bankruptcies that occurred five to seven years ago if a borrower has re-established credit..

Previous Foreclosure

For homeowners who have not been able to maintain their mortgage payments on a previously-owned property, the chance of being approved for another loan will not come so easily.  Understandably, mortgage consultants are extremely wary of those people who have previously foreclosed on a home.  That is not to say that it would be entirely impossible to obtain a new loan.  In some cases where there was a demonstrated hardship that has been overcome, borrowers may be able to obtain a loan – however not without proof of financial stability and viability.

Loan To Value – Appraised Value Versus Amount Owed Is Too High

Loan to value is the equation that depicts the amount owed on a home versus the value of the property, the higher the loan-to-value, the greater the risk to the lender.  The typical FHA maximum loan-to-value for home purchases is 96.5%.  However for a FHA guaranteed refinance, the ratio is either 85% or 97.75%.  The typical conventional loan-to-value guideline dictates a value of above 80% and requires mortgage insurance or a 2nd mortgage.  Most lenders will not go above 95% loan to value for conventional loans plus the lower the credit score the lower the loan to value restrictions.

Debt ratios – Too Much Debt Versus Income

The amount you earn versus the amount you owe and the corresponding ratio is called the income-to-debt ratio.  The standard expectation practiced by banks is that the amount owed should be no more than approximately 45% percent of total gross income.  The types of debt they take into consideration in this case are student or personal loans, credit card debt or other monthly financial obligations such as car payments.  You can use this calculator to figure out your debt to income ratio and whether you need to work on it prior to applying for a mortgage.

Unstable Work History

Lenders need to be able to verify income that they can count on.  If you have an unstable income history that is not verifiable or consists of several short-lived durations, it demonstrates the inability to maintain long-term employment.  The mortgage loan officer will be looking for demonstrated reliability when it comes to making payments month after month.

Funds To Close – Not Enough Documented Funds

If an applicant does not have enough funds on hand to close on the property, it raises a red flag for lenders.  In addition to a down payment, you will need funds to cover a lending fee, appraisal fee, closing costs, earnest money and documentation and/or processing fees.

Tax Returns – People Have Outside Businesses That Lose Money

In light of the recent tightening of lending practices, increased scrutiny and intense attention to detail during the mortgage application process – lenders are now requiring tax transcripts to be obtained directly through the IRS.  This corroborates that the buyer is being truthful and that the tax documents provided are consistent with those obtained from the IRS.

Owning Too Many Properties

The liability of owning one or more properties can lead up to a significant amount of risk for lenders and end up being too close for comfort.  Unless there is a sizable amount of income that demonstrates the ability to maintain the properties, most mortgage underwriters would rather avoid dealing with the risks at hand of engaging with multi-property owners.

Insufficient Funds – Overdraft Charges On Bank Statement

It goes without saying that evidence of insufficient funds would turn away a mortgage loan consultant because it clearly shows the lack of responsibility on the part of the applicant.  Frequent overdraft charges is yet another serious delinquency that would scare away any creditor, let alone one considering lending such a large amount for a home purchase.

Once-In-a-Lifetime Mortgage Interest Rates You Can’t Afford to Miss!

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First, we need to understand exactly what is happening in the mortgage lending industry – and then we’ll tackle why it is going on. So many real estate professionals, homeowners, investors and business-savvy individuals are dumbfounded at the historically low level of mortgage interest rates available on the market today. We are talking about rates that have not dipped this low since the 1950s!

What’s Going On In the Mortgage Industry?

What types of rates are we seeing in the market today? Well, for starters, the 15-year fixed rate loans that many savvy homeowners of existing homes are tapping into for refinances are yielding incredible rates as low as the low 3’s. Thirty-year fixed rate mortgages are available to qualified buyers at rates that are in the low 4’s. Depending on the amount of money put down on the property, income and credit status plus other factors that lenders are cracking down on, the rates can fluctuate up or down. There is no way to tell whether this decline in rates will continue or whether as we dip into yet another recession we witness even more volatility in the market, but there certainly is speculation.

Why Is All This Happening?

As the economy continues to alarmingly dwindle in both the US market and Europe, US Treasury bond yields remained low resulting in a decline in mortgage rates for two weeks in a row. Regardless of the low rates however, in light of the economic downturn, the number of new home purchases is dismal. The majority of loans being taken out tapping into the historic rates has been refinance applications; as much as one fifth.

Your Last Chance to Refinance

If you are currently in a home, this may be your last chance to refinance while getting such incredible rates on your mortgage. As the mortgage industry continues to tighten its belt and implement stricter guidelines to approve applications, it is essential for you to meet with a mortgage professional to ascertain whether refinancing your existing mortgage is an option for you. It can result in savings as much as about $1,800 each year on extra finance charges.

Potential Homebuyers and Investors Have It Made

This could not be a better time to invest in a new home, whether as your primary residence or as an investment property. With housing prices as low as they are coupled with the unprecedented low interest rates, this is a buyer’s or investors golden opportunity. As anyone in the real estate industry knows, just a few years after such a bust – things usually do stabilize and when they stabilize property values will jump back in the right direction. The best part of this scenario is that the interest rates left behind and locked in will be the incredibly low rates we are seeing today.

Things Are Looking Up

Anyway you look at it, as long as you can endure the sometimes grueling and often difficult mortgage application process these days, it is definitely worth it. There was a 21% increase in new home sales from August 2011 versus August 2010, marking a notable and promising positive trend. Clearly the outlook is slowly going in the right direction.

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At the end of the day, you have to give something to get something and despite the growing concerns over our economic outlook both in the US and in Europe, home sales are happening and people are able to avail the amazing opportunity that is presenting itself in light of these historically low mortgage interest rates. At the very least, every homeowner should visit a mortgage professional to learn what, if any, options there are in their particular situation with which they can potentially come out on top through this whole episode.

Thanks to http://www.freedigitalphotos.net/images/view_photog.php?photogid=721 for the free digital images.

Self-Employment Second Jobs Are Becoming More and More Mainstream for Many Americans

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Just a few days ago when President Obama addressed Congress with his aggressive $450 billion plan to improve the jobs outlook in America the feeling was upbeat despite bipartisan push and pull that typically occurs on such occasions. Surprisingly, the general consensus is a positive one and that is a good thing for most Americans who are struggling to get by in this economy.

But like so many other proposed bills coming from the White House, no one knows the extent of which the plan, if approved, will be implemented – and how soon. So in the meantime, we will just have to keep on keeping on and get by in any way we can. And one of the age-old traditions of dealing with it when the day job just isn’t cutting it is moonlighting.

Overcoming Financial Hurdles By Moonlighting

There is a new breed of moonlighting these days, though, that looks further into the future for those embarking on new endeavors to stay financially afloat throughout this challenging time. Now more than ever, people are starting up their own businesses, independent consultant work and other entrepreneurial enterprises. In fact, only two days ago if you were to search the word “moonpreneurs” on Google, you would have found nothing – but after this article appeared on DailyFinance.com, there seems to be a lot of buzz about it. Moonlighting entrepreneurs -- or aptly coined “moonpreneurs” are people interesting in pursuing their own long-term interest to pump up the cash flow as a means to supplement their existing jobs.

Freelancing Picks Up Speed

Just ten years ago, though it was very much there, the company Elance was a barely-known enterprise. Now there are over a half-million contractors registered on the site, working for companies and individuals also registered on the site. In the past decade, people looking for avenues of extra income, globally, have found innumerable success through this online project and jobs portal.

Independent consultancy is also picking up in industries ranging from finance to fitness, organizational planning to catering – you name it – cater to a carefully built clientele; one that works well with smaller businesses or individuals.

How Does One Go About Becoming a “Moonpreneur”?

Depending on your talents, there are myriad ways to approach your part-time self-employment. There is a plethora of areas that many people are tapping into ranging from freelance writing, editing and translation to web development and graphic design. Legal consultancy and financial planning are also areas that work well under the freelance model. The benefit of pursuing a business in these disciplines is that they have the potential to grow independent of your day job and they can ultimately provide a fair amount of stand-alone income. Second jobs are not entirely taken on by a lot of people for the sake of financial peace of mind – they are also sometimes a way to practice a hobby or do something that they love. Excellent examples are comedians like Dan Nainan, artists, musicians – and the possibilities are limitless.

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The concept that touches people from all backgrounds is highlighted in the DailyFinance.com article that mentions engineer-turned-comedian Daniel Nainan who moonlights as a comedian to supplement the income from his day job. Nainan says, "The average American who works full-time watches something like 30 hours of television per week. Cut back on television and partying and you'll find the time to spend on a second job."

With some careful planning, diligence and dedication – and of course a skills set that is marketable, you can succeed at building your own secondary stream of income to help get you through these strained financial times. Who knows where things will lead in the future?

If You Want a Piece of Cake, Go to a Bakery – NOT a Mortgage Lender

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Let’s face it folks, buying a home (however perfect a time it is to be doing that nowadays) is NOT a simple process.  In fact, unless you’re completely straight as an arrow and have absolutely nothing spectacular or noteworthy about your life and financial existence, maybe – just maybe – you may be able to get off easily.  But for the rest of us, we usually have a fair amount of explaining to do.

Mortgage Consultants Are Paid Well

Well, that’s just a guess really but here’s how I see it: they get paid 10% to do paperwork and 90% to ask questions.  Seriously.  Maybe the job title ought to have the word “detective” in there somewhere.  They will ask you if you were the one who got that teaching degree that you “say” will be your source of income in the coming years.  They will want to know why there was a sudden surge of cash deposits in your account (I guess saying you got a cash bonus from the boss lady may not sit too well with them).  Your motivation to buy a new home will be questioned.  I had one client living in a cold area and wanting to move to a warmer climate who was asked by the mortgage people what his motivation was for moving.  He took a picture of his car’s thermometer showing sub-zero temperatures – and they accepted it! You might even be asked for DNA samples.

Ok, so I’m exaggerating a bit here, but you get the idea.  The point is that mortgage consultants will review and comb through every little detail that they feel pertains to your ability (or inability) to pay off their loan.  And they should!  We don’t need more foreclosures bogging down our economy.  Let them do all the detective work they need.

Lining Up Your Ducks In a Row Will Ensure You Win the Game

What can you do to head off some of the questions you may get asked?  Easy – be prepared for anything and everything and have ample supporting documentation to corroborate what you are stating.  Make sure you have all your paperwork ready, down payment funds secured and in one place, where they can easily be traced back to their original (and legitimate) source.  Try to anticipate any idiosyncratic questions you may get from the lender, based on your application and/or circumstances.  One particular area that causes a lot of grief for applicants of a mortgage is the unexpected outcome of an appraisal that yields a home value far less than the sellers or buyers anticipated.  This is especially difficult during refinance application processes.  By having a Comparative Market Analysis done in advance, for instance, you can remain on top of the game by knowing what to expect before it occurs.

A Few Important Things to Keep in Mind:

DON’T TAKE IT PERSONALLY – STAY REALISTIC

If you are asked for clarification on something that may seem obvious to you, relax and comply.  The lender is looking to loan a huge sum of money and needs to be sure you are credit-worthy in every sense of the word.  Be realistic of your expectations of the process.

BE READY TO SHOW STEADY EMPLOYMENT

Nowadays it is imperative to have at least two years of gainful employment demonstrating your ability to pay the mortgage on time and regularly but also the sustainability of your profession and job in particular.  Huge variances in income over the course the past two years does not demonstrate the ability to consistently pay on a mortgage.

HAVE TWO YEARS OF TAX RETURNS ON HAND (W2s TOO)

You will need to show that Uncle Sam gets his cut each year – for at least two years.  Tax returns are just another way to strengthen your case and support your income as reported on the mortgage application.

ESTABLISH A SOLID TRACK RECORD SHOWING PAST RESIDENCE

Lenders are increasingly finding it important to show a proven residence history where the buyer either rented for at least two years or lived in one location for that long.  Someone in the military, for instance, may not be treated the same way as a regular citizen looking to establish long-term residence in a locale.

REMAIN TRANSPARENT AND TRUTHFUL

If you have large deposits that are unaccounted for – you will obviously raise flags.  To keep things simple, be prepared to answer questions about your finances.  Large balances on revolving credit should be explained if they occurred due to a particularly difficult financial time.
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Does the thought of all this make you nervous?  Are you one of those potential homeowners ready for a mortgage but are scared of the fire you might have to walk on to get to the other side?  If you feel you might be a complex case, or even if you just want the good doctor on your side of the table, contact the Mortgage Doctor for some insight on your financial and mortgage health.

Remember, there is nothing more solid and more empowering than buying and owning your own home and nothing more freeing than to be able to refinance and reduce your payments.  I’m having fun by exaggerating the process but the point is that as long as you are prepared for whatever comes your way and you realize that it’s all just a process, most of you WILL come out on top and succeed.

How to Cook Grilled Tuna

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The best way to serve Fresh Tuna is as rare as you can stand it! Ever wonder why there are so many sushi bars across America now?

Being Mid-westerners, we are more comfortable with seared tuna. So sear it in a pan, or on a grill – just don’t cook fresh tuna past the ‘medium’ mark – just like Nebraska ribeye steak.

The method is simple: Season, Lubricate, and then Sear.

Seasoning: simply use salt & pepper, or go where you heart takes you. Got a favorite seasoning salt? It will do just fine. Kick it up with some red pepper, and add some garlic and onion – chopped, powdered – whatever. Just be reasonable.

Marinades are excellent, too; think Teriyaki, or with chopped onion and garlic (and herbs, if you like) in olive oil.

Just remember, that using seasonings or marinades that you already have in the kitchen simply makes life easier.

Lubricate: the easiest way is to spray with Pam, or similar. It’s great to brush with olive oil, but do that before seasoning – that way the spices will stay on the fish.

Sear: Pre-heat your grill or sauté pan. You want it HOT – but only cook for 1-2 minutes per side.

Always an option: a Teriyaki marinade, with a side of soy sauce and Wasabi (Japanese horseradish) is a great way to eat fresh grilled tuna – sliced is nice.
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Stop in at either fish market: 18th & Leavenworth, plus 119th & Pacific.

Also, we’d love to see you at both of our restaurants: Shucks (inside the west Omaha fish market)

NEW additional SHUCKS Fish House location: 168th & Center (Shops of Legacy)

Plus try Bailey’s Breakfast & Lunch; next to Bronco’s, 120th & Pacific.

Five Hot Investments To Consider That Would Yield High Returns Despite a Government Default

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It could happen.  The US could default on its debts.  Don’t laugh, because it could very well become a reality – something that more and more financial experts are starting to speculate on.  As we approach the new deadline of August 2nd set by U.S. Secretary Tim Geithner to raise the debt ceiling, in case of a default the Uncle Sam would most likely be handled like any other bad boy on the debt block.  They’d suffer the same reduced credit ratings as the average consumer but of course on a major, major scale.  But the bigger question that looms in the air is what happens to the rest of us if the country’s financial outlook ends up hanging really low in the shadow of a US default.

We’ve all seen what happened with the bailout and how that maneuver backfired – but what about this:  what if, just what if the US does end up defaulting on its debts the way a large part of the Auto Industry did?  Well, I’ve got a few suggestions.  Here are some ways to invest where you could still manage to yield decent returns.  Government default or not.  Here they are, in no particular order:

Silver

Tried and true, you can’t go wrong with good old silver.  The main reason that silver is a safe investment choice for many is that there is a reasonably high demand for the precious metal and it is fairly easy to obtain, being relatively affordable.  Ounce for ounce, silver is significantly more affordable than gold at about forty dollars each ounce but since trading generally takes place on a smaller scale, it’s doable.

Gold

For millennia gold has been a solid investment, anyway you look at it.  For the sheer reason that its price continuously rises year over year.  One of the reasons that gold is a good investment choice is because we simply don’t have endless supply of the in-demand precious metal.  That alone is reason enough for its price to continue to spike – even double in a reasonably short time.

Foreign Currency

Investing in a foreign currency fund is one way to earn good money and fast.  The protection received from operating within the boundaries of a fund are insurmountable since they offer the knowledge and expertise of those managing the fund while also significantly reducing the risks involved if one is not well-versed in this market.  Since the foreign currency market is so fast-paced, it’s wise to also collaborate with a broker so you can get real time and up-to-date information.

Funds from Canada

Staying in North America but investing in another country is not such a bad idea when you consider the alternatives.  With a bustling economy that is expected to rise, any investment made into Canada is likely to yield solid returns.

High Dividend Stocks

Companies with very solid earnings work well for private investors because they almost always end up paying high dividends.  Knowing that these companies will mostly likely not default, gives investors peace of mind and protection.  With strong returns as high as over five and a half percent (AT&T), it’s a safe bet that these companies will maintain their obligations.
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Keep in mind that the suggestions above do not promise huge returns and I wouldn’t expect them to be super cheap either but the main thing is that they will most likely hold their value.  The nice thing about these investments is that anyone can tap into them.  With more and more investors unwilling to maintain the status quo as far as their portfolios, there’s good cause for concern and preparation in case the US debt ceiling is reached come August 2nd.  This wouldn’t be the first time but when it happened in 1995, no specific measures were taken to adjust the debt ceiling until the following season the next year.  If history repeats itself this year, who knows if we can rely on the same actions by Congress or whether we’ll actually need to resort to buying silver, gold or foreign currency.

Five Ways To Spend Less, Get More For Your Buck And Do It In Less Time

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Tax Appeals – What Do You Have To Lose?

Think you may be paying too much property tax?  Chances are that if you feel your property taxes are way too high, in fact higher than they should be, you can get it rectified.  Here’s what you need to do:  file a tax appeal.  Once the county assessor makes a determination that your home has been over valued according to other homes in the area, he or she will reduce the assessment significantly.  You can expect to see as much as almost a twenty percent reduction in your property taxes.

Want To Rent Jet Skies Rather Than Pay Exorbitant Rates On Vacation Accommodations?

A great way to beef up your wallet while you’re on vacation is to carefully plan your accommodations well in advance.  Many families opt to stay in rental properties that are privately owned and rented out during most months of the year.  Though it can be vastly more expensive to rent furnished homes or condos in some areas like coastal regions, especially during peak summer months – the real savings surface with just a little savvy and time-sensitive tweaks.

If You Know What You’re Doing – Do It Yourself!

Why hire expensive contractors to do the work around your house (and outside) if you can manage it yourself?  The amount of money saved can add up to more than enough to go on a vacation to rest those tired, achy muscles.  But the charm in doing something to your own home is unparalleled.  The key is to be sure that you are qualified to do the job you’re taking on.  If that’s set, YOU’RE all set.

Some Pay Way, Way Less (Car Insurance)

One of those regular expenses we will always have to pay is car insurance and nothing hurts more than to dish out more cash than you need to.  All it takes is a phone call, some investigative work and a close look at your circumstances.  Surprisingly, some areas of the country – and even some areas within a particular region or state have hugely varying rates. If you are spending time in two or more different places during the year, have crossed a certain age, or if your travel mileage and usage has significantly reduced – you may be eligible for deep discounts or reductions in premium.  It doesn’t hurt to ask.

Ask And You Shall Receive

It’s a novel concept but it DOES work.  Just think of the myriad discounts you can get when you ask if they have any promotions, discounts, specials or affiliation advantages? Another great way to save some extra cash is to negotiate with your cell phone company.  Again, you’ll never know what that salesperson may or may not be able to do unless you ask them.  Online stock trading can be done with less if you call and ask them for a discount.  Hotels can upgrade you to a better room, just for being a frequent flyer member of a partner airline.  The possibilities (and savings) are endless!
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All it takes is a little innovation, some drive and the ability to get up and do what needs to be done when it needs doing – and you can easily walk away with thousands (or more) of savings every year.  Do you have any great money saving tips?  Post a comment below.  We’d love to get in on the fun.

Seven Ways A Home Remodeling Job Can Take a Turn For the Worst

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Unless you’re a “Do-It-Yourself” guru chances are that, like most people, when it comes to a remodeling project for your home you are going to have to rely on the services of a professional.  We’re here to tell you that it is not as simple as picking up the phone, inviting someone over to do the work and “voila!” everything’s perfect.  In fact, if you are not careful there are major repercussions of a bad remodeling job that can take years and thousands of dollars to recuperate.  Here are seven things that wreak havoc – and if avoided can mean a successful renovation project in your home.

Choosing the Wrong General Contractor

This is the single biggest mistake committed by those looking to save some money, want to speed up the process or simply don’t know any better.  Ill-informed homeowners who are hasty in selecting a GC run the risk and often suffer major consequences after having chosen someone who isn’t properly licensed, has a bad history of performance, lacks experience or is unscrupulous.

Before hiring a GC make sure you check them out, trust them and feel comfortable with them.

Not Being Precise in Specifications

Unless the job is extremely simple, there will be intricate details to iron out before beginning the project.  For the GC to provide an accurate quote on their services, they will need a clear picture of exactly what is expected of them.  A common mistake made by property owners is to allow the contract to be written in basic terms.  This leaves a lot of guesswork and gray area – plus consequently a lot of leeway for the contractor to decide what and how the work will be performed.

Account for every last detail on the contract, in advance.

Revolving Door Plans
Unless plans are outlined in advance in a clear-cut manner that leaves no room for major blunders, there is always the potential of major mess-ups.  One surefire way to confuse the GC and cause a lot of damage (both monetary, time and the relationship with the contractor) is to constantly change plans.

Carefully consider what you want done, plan it thoroughly in advance and stick to the plan.  

Underestimating the Costs

One of the easiest ways to ensure a renovation project “goes under” is to miscalculate the amount of money it will cost to have everything in the plan completed.  Underestimating costs leads to an unending cycle of trying to keep up and it can ultimately end up in total project breakdown.  If there is not enough money to complete a job for which the costs were not accurately assessed, it can mean unfinished projects that sit there for weeks or months till funds can be generated.

Thoroughly research how much everything will cost; get multiple quotes on service, materials and labor.

Losing Focus

Not keeping your eye on the tasks at hand that were established to begin with is one of the best ways to let things wander out of control and end up in a whirlwind of unfinished projects that have little to no direction.  An example of losing focus is if the original project is to replace kitchen appliances and install backsplash tiling and halfway through the project the homeowner decides to change the countertops too.  Had this been determined in advance, the GC would most likely have removed the old counter tops, made new assessments and measurements regarding the backsplash and then proceed.  The wasted time, money and energy that would go into changing plans in the middle would be significant.

Know what you want to have renovated, plan it in advance and don’t deviate from the project.  

Forgoing Quality for Savings

To put it simply, if you are cheap you will end up with cheap results.  A lot of homeowners make the mistake of skimping out on quality to save a few dollars but in the long run it ends up costing them a lot more.  Whether it means having to redo the same renovations later after they don’t last long enough or less-than-perfect results, using cheap materials or a bad contractor is a major mistake that many people make when remodeling their home.

Check with your GC, research the varying levels of quality available for materials – and buy the best quality you can afford. 

Ignoring Things Below the Surface

Cosmetics and aesthetics are indeed a huge part of renovations but too often that is the only thing that property owners and bad contractors worry about.  By not looking beyond what is visible and ignoring the important foundations of the project, the risk of breakdown are imminent.  Not only does this translate to a huge waste of money if and when the project needs to be repaired or redone, but also the functionality of the remodel is impaired.

Ensure that all aspects of the project are performed using top quality workmanship, materials and specs. 
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There is a lot of information on the Internet, in home improvement department stores and through quality contractors.  A great way to avoid a lot of mishaps is to use known vendors that have long-standing relationships with your local Realtor.

How NOT To Save Your Hard-Earned Money, By Wasting It Away on Useless Stuff

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It’s typical to hear of all the ways one can save.  Let’s have some fun this time and look at some ways NOT to save.  Yes, with our economy the way it has been lately, maybe this isn’t the smartest of approaches to dealing with our current financial woes – but hey, there is something to be said about having a good time, right?  So if you can ignore the potential negative and long-term impact of constantly and regularly socking away unnecessary expenditures on things that you can do without, have fun!

Contribute to the View That America’s the World’s Fattest Nation 

That’s right.  The rest of the world looks at us, wide with wonder, at just how BIG we are.  And why should we stop there?  By constantly eating out, not only will you be able to throw away all that extra cash of yours for no reason at all, but you’d also be upholding the supersize reputation that we as a nation have worked so hard to build.
Amount Wasted Each Year:  About $2500

Put Up a Health Front – So What If It’s Not Real?

So if you eat out, you have to at least pretend that you work out, right?  What better way to throw away perfectly good large bills than to get a gym membership that you don’t plan on using?  The monthly fees will automatically be deducted so you can sit back and worry not about your cash going to the “right” hands.
Amount Drained:  As much as $900 each year

Spend Lots on Lotteries – Wishing For Those Pipe Dreams to Come True

If Bob from upstate won $360 million on the Super Lotto, you can too.  Never mind the months and years of lottery tickets you’ll need to buy for half a chance at even winning a thousand bucks, let alone a cool million.   The point is, why not blow several hundreds bucks each year on this endeavor so at least people know you have pipe dreams? What’s the most that can happen? By the time you’re balding and can barely drive you just might be able to afford that Porsche after all.  Not too bad.
Total Frivolous Spending:  $500-$1000 a year

Worry More About Social Symbolism Rather Than Actual Social Status

Go ahead and smoke cigarettes like a chimney – they’re cool right?  And do it while sipping on the most expensive of gourmet coffees that cost more than most people’s lunch costs.  Though some people will be able to see through the superficial-ness of the whole thing, the rest will think you’re a cool cat.
Money That You Don’t End Up Saving:  A whole HECK of a lot

Convenience is Cool But [Spending] Cash Is King

Why bother driving down two extra blocks when you can access your bank account through some other, out-of-state bank and be done with it in ten minutes less?  Another great way to sock away those unnecessary fees is by using ATMs that are not of your own bank or the ones that are set up in a way that make you spend $5 for each transaction, within the transaction.
How This Stacks Up: $500 per year

Pay For More Than What You Need

There are couples with no kids who have bought mini-vans, couch potatoes with memberships at the ‘Y’ and non-sports junkies who hold season tickets for the best seats in the house.  Bundled communication packages are the same too where you pay for your Internet, cable TV and phone all in one but you don’t really need all that they give you.  Why not join the bandwagon, go ahead and purchase those all-important but totally useless packages that yield you a whole lot more bang for your buck but for stuff that you just have no need for.
If you go for the communication package, Expected Out-of-Pocket: Over $1200 or more annually

Find Stuff To Fill Up Your Storage Space With

Having a ton of stuff is a good thing.  No one likes to see empty storage spaces – those look best with boxes and boxes of piled up stuff that you’ve bought on impulse and used maybe once or twice in this lifetime.  What kind of stuff are we talking about here?  That super duper blender that looked five times bigger on TV than in real life but once you got it at home you realized all you can really blend in it is maybe a HALF a smoothie.  The pair of must-have shoes that “instantly” make you 6-feet tall without looking like you’re wearing heels.  The magic piece of cloth that fixes everything and anything and absorbs 20 gallons of water in 20 seconds.  (Okay, slight exaggeration there).  ALL home-based exercise equipment.  But the point is that if you really want to waste good money, this is the best way to do it.  Engage in a phone call with one of those “operators standing by”, rattle off your credit card number and they’ll even charge you for shipping and handling too.
Total Amount In the Hole:  Limitless
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So, while most people who make the effort NOT to waste extra cash here and there are able to manage summer vacations, buying that second car or extra computer, or putting a way a chunk of funds for their kids’ college, you will be the better for it – because you had a good time.  Never mind that you wasted thousands in the process.  It goes with the territory, right?

Now, seriously though, for tips on how to not waste money and beat inflation, look for future blog posts where I’ll tackle the subject again and provide some great (realistic) ideas on how to be more consumer-savvy and cost-conscious.

Classic Marinated Grilled Salmon

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Don't worry mortgage rates are still attractive. But it is summer and I wanted to have some fun. This week I met up with Greg Lindberg the owner and a great chef at Absolutely Fresh  Seafood Company and Shucks Fish House Oyster Bar and we did  a cooking video and posted the instructions below so you can enjoy it this summer. Check out the video if you want to know how a pro grills salmon.

Classic Marinated Grilled Salmon
by Greg Lindberg

4 fresh salmon fillets
SPTT (salt & pepper to taste)
Spray oil (Pam, or similar brand)

PRE-HEAT GRILL, and clean that bad boy!

Spray salmon fillets liberally with oil. Sprinkle on salt and pepper.
Place on hot grill, and cook for about 4 minutes per side. If the salmon has skin on it, it’s easiest to place the skin side UP first; when you flip it, the skin will stick to the grill, and come right off the fish for you automatically.

Enjoy with a Pinot Noir, rice and vegetable.

Stop in at either fish market: 18th & Leavenworth 345-5057, plus 119th & Pacific 827-4376.

Also, we’d love to see you at both of our seafood restaurants: Shucks (inside the west Omaha fish market) 827-4376. Shucks Fish House & Oyster Bar is open 7 days a week. 11-9 Mon-Thurs, and 11-10 Fri/Sat. Sunday is 12:00 – 8:00

NEW additional SHUCKS Fish House location:
168th & Center (Shops of Legacy)

and Bailey’s Breakfast & Lunch; next to Bronco’s, 120th & Pacific 932-5577. Open 7 days a week, 7:00 a.m. to 2:00 p.m. Breakfast all day.

Four Important [New] Guidelines That Mean Stricter Criteria For Mortgage Applicants

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At a time when almost everyone is trying to stay afloat in the sea of homeownership, there are a lot of factors that continue to anchor these consumers to a place that hinders their progression forward.  In some cases, people have lost their homes because of a job relocation, or worse, being laid off.  In others, the value of the home they may have purchased several years ago, has dropped considerably.  No matter what the reasons are, despite a difficult period for the real estate industry in general, potential and existing homeowners are still in the market to buy or move up to a better home.

Getting a mortgage is simply not as easy as it was just a few years ago.  Now, Fannie Mae and Freddie Mac, the two main organizations that back mortgages issued by banks, have tightened the belt on some mortgage-application guidelines.

The Number Of Unsold Condos Can’t Exceed One-Third

No matter how well qualified you may be for a loan, until and unless seventy percent of the condominiums in the community you are considering to make your own are sold, the banks simply will not issue a mortgage.  This wasn’t always the case; prior to the housing bust, in 2009 the same maximum was more like fifty percent.  The reason for this is that banks do not want to assume the risk of properties in communities where a sizable number of units have not yet sold and still belong to the developer or building community.

Income-Debt Ratio Can’t Be Too High

At one point, there was a lot more leniency with this aspect of the mortgage qualifying application.  Before things got out of control in the real estate industry, the total debt payments relative to income was fifty-five percent or less, in order to still be considered a worthwhile investment.  Now, Fannie Mae and Freddie Mac consider the same ratio with a maximum figure of forty-five percent.

Since buying a home and consequently, qualifying for one is not black and white, this rule makes it very difficult for some potential home buyers who are operating on multi-incomes yet are able to comfortably sustain their income to debt ratio.

Rebuilding Your Financial Health Takes Time

Distress sales have been on the rise, particularly for the past several years since the real estate bubble burst with such a bang.  Until as late as the first quarter of 2010, homeowners who succumbed to foreclosures were given five years before they are able to finance a new home.  The time frame allotted now, is a far more substantial seven years.  For individuals and families who strive and successfully achieve a strong financial rebuild soon after the financial derailment caused by a foreclosure, this is bad news.

Missed Payments Mean Missed Mortgage Opportunities

Like everything else, the belt keeps getting tightened even more on the rules and regulations to follow when signing up for a new mortgage.  Back in the day, just a few years ago, it used to be that consumers could afford to miss a payment here or there, as long as it was not a regular occurrence and as long as it was not a significant sized loan.  Now, however, even one missed payment is bad news because the bank will automatically tack on an extra five percent of the balance to the debt-to-income ratio, instantly rendering the perceived ability to pay back the money owed as less-than-optimal.
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Regardless of homeowners’ individual circumstances, more and more often the criteria followed by banks seeking approval from Fannie Mae and Freddie Mac, is putting a major crunch on potential homeownership.  By keeping these guidelines in mind, it may be possible to avoid being rejected for a mortgage – and slowly but surely the real estate industry can creep back up to where it was just a short while ago.

A Home Renovation Loan: Is It For You?

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Thinking of buying a home that isn’t quite your dream home? Or do you want to remodel your existing home but need attractive financing to do so? Did you know there are home loan programs in place to give you the financing you need and get your home, new or existing where you want it to be?

What are the Benefits of Remodeling a Newly Purchased Home?

It might seem rather counter-productive to purchase a new home, only to remodel it immediately. There are some distinct advantages to this approach of home buying, however, if you are up for a bit of a challenge, with a bit of creativity thrown in.

Here are some distinct benefits it offers:

• Offers a low down payment and flexible mortgage terms (either fixed- rate or adjustable-rate).
• Low down payment as little as 3%.
• Renovation amount is based on completed value as determined by a “what if” value appraisal with renovations completed.
• Depending on the program and loan to value, mortgage insurance may be required
• Renovations are available for primary residences, as well as second homes and investment properties.

Buying a property that needs a little work can be a great way to get something at a great price and custom make it to fit your unique needs. Having a loan to help you with this task makes it easier to make your new home a "Dream Home."

Home Loan for Renovations on Property You Already Own

You may currently own property that could use some remodeling or updating. Sometimes it’s easier to fix up what you already have than to start completely from scratch with a new property.

This type of renovation loan is based on the completed “what if” value of the property. You will also be able to improve your home utilizing a lower first mortgage interest rate. In addition, you can finance mortgage payments for up to 6 months to cover non-occupancy costs during construction.

There are a few things to keep in mind when you take out a home renovation loan on property you currently own:

• It permits you to do nearly any type of repair you need or wish to do.
• Renovation loan amounts up to 50% of the “what if” completed value of the property.
• Maximum loan amount may not exceed Fannie Mae's conforming loan limits.

• Loans are fixed-rate mortgages, fully amortizing with terms between 15 and 30 years.

This type of loan is available to primary residences, second homes and investment property types.

Remodeling Homes Equals a Healthier Housing Market

It might appear on the surface that home remodeling is nothing more than some spackling and paint brushes, but it actually symbolizes much more. During the past few years when the economy dipped, so did home renovations. This was due partly to negative equity, partly to a lack of home buying, and just an overall lack of confidence in investing in housing in general.

The fact that home remodeling is making a resurgence is a positive sign for the housing market, and is a positive sign overall for the economy in general.

10 Websites to Determine Your Home Value

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There are a number of online tools to determine your home’s value. This can be great information, even during a less than wonderful housing market. The most recognized among these is Zillow.com, but there are also several alternatives online that may offer a more accurate value than Zillow.

1.) Zillow.com. This is the most recognized home value online estimator out there. It has a relative easy user interface and is fairly accurate on its estimates.

2.) Real Estate ABC is a good alternative to Zillow, and in some cases provides an even better home value estimate. One unique feature is that it offers a list of possibly comparable homes for you to select from to be included in the valuation. The thought behind this feature is the fact you know what homes in your neighborhood are comparable to your own.

3.) Eppraisal This site provides home values as well as demographic data about the neighborhood, including education, finances, and employment of the home it is appraising.

4.) Reply has a simple user interface and provides a confidence rating for each appraisal it provides, based on the factors to generate the appraisal. These are based on features from comparable homes.

5.) Yahoo! Most people don’t realize that the popular search engine also has a good home value appraisal component to its website. It generates its home values by using Zillow, Eppraisal and Reply. This makes is easy to see and compare the 3 different appraisals of your home.

6.) HomeGain provides both market and census data in addition to the home value it offers.

7.) CyberHomes is very similar to many of the other home appraisal websites already listed. The values it provides are relatively accurate.

8.) Property Shark’s is not one of the best home value tools out there. The database is very limited.

9.) HouseFront is another alternative with what appears to be reasonably accurate home values.

10.) Rentometer doesn’t provide the actual value of the home, instead it provides the estimated rent you would pay if you were to rent the home. This can be valuable information to have, as it can contrast with other sites how much you would actually be investing in a new home, rather than just spending it on rent each month that offers no return on your investment.

In addition to the above free options to appraise your home, there are also many websites that charge a fee for the information or require you to enter your personal information so a local real estate agent can contact you.

Keeping an eye on the value of your home can be important, even during these tougher economic times. There are still fluctuations in the market but there still remain certain times that are better selling times than others.

Why Do Mortgage Rates Fluctuate?

Have you ever wondered why mortgage rates change from time to time? You check one day and get one rate and check the next and get a slightly different rate. Mortgage companies and borrowers are subject to potential daily and even hourly shifts in the market. Mortgage rates fluctuate on the simple principal of supply and demand. So why does this happen?

Interest Rates

Interest rates have a dramatic impact on mortgage rates. The higher the interest rate on a home loan, the higher the monthly payments will be. This is why it’s important for home buyers to be certain that their mortgage broker is working with them to receive the lowest interest rate possible on their loan.
In addition, adjustable interest rates can have a devastating effect on one’s mortgage payments. While the interest rate and monthly payments may initially be low, once the interest rate begins to increase, the monthly payments will as well. This can leave homeowners overwhelmed and unable to make their monthly mortgage payments.

Inflation

A major factor that influences mortgage interest rates is inflation. A higher inflation rates is often related to a growing economy. When the economy grows, the Federal Reserve increases the interest rates to slow down the economy and reduce inflation. Inflation is seen during an upward price change of goods and services. In a strong economy, there is higher demand for them, so producers of the goods and services people want, can raise prices. A stronger economy therefore results in increased mortgage rates.

Changes in Treasury Bonds

In order for the nation to pay its debt, the U.S. federal government will sell notes called treasury bonds. They will sell these in an auction style, thus the going rates of treasury bonds largely depend on supply and demand. Treasury bonds are a popular investment choice since the U.S. Government guarantees it. On the downside, the returns of this type of investment are also very low.

Treasury bonds directly affect mortgage rates since investors usually invest their money in a fixed rate treasury bond, and lend you money on a slightly higher rate. The investor’s profit comes from the difference between treasury bond rates and the interest rate they’re giving to you. If the treasury bond rates are higher, they offer you a higher mortgage rate and vice versa.

Economic Conditions

Even in the worst of times, the federal government is still highly unlikely to even consider defaulting on its loans. However, when the economy is in a depression, individuals are at a much greater risk to lose a job and not be able to repay their mortgage. As a result, the mortgage rates will rise much more than the price of other securities because the risk involved in a mortgage has increased.

In addition, interest rates are what controls money flow in the economy. Higher interest rates may curb inflation, but they also slow the economy. Lower interest rates tend to stimulate the economy, but could eventually lead to inflation. There is a delicate balance between decreasing interest rates to stimulate the economy and increasing them to prevent inflation.

There are a number of factors that go into mortgage rates. Each of them plays their own part in the raising or lowering of the rates. Watching, as an informed consumer, and acting at a time when the rates are lowest, is the best way to make a good, informed decision.

Investing During Tough Economic Times

The recent economic issues our country has faced have left many scratching their heads about whether or not investing their money is the right thing to do. Or, should it just be buried away somewhere until the financial storm blows over?

Here are a few things to consider when investing during hard economic times. And, you will note that there are still ways to invest smartly, just remember research and a thorough understanding of what you are getting yourself into is now more important than ever.

A Look at the Past for Hope in the Future

It is easy to get so focused on what is happening today with the economy and forget many of the financial storms the US economy has weathered, even in the last 100 years.

For a review, here is what our economy has pulled through and become much stronger as a result in the last 100 years:

• Great Depression of the 1930’s
• World War I & World War II
• Rapid inflation of the 1980’s

Despite all of these incredible challenges of the 20th century, the standard of living dramatically increased for Americans during this same time span. Also, the DOW Jones Industrial, the most widely followed stock market index in the world, rose from 66 to 11,497 during this same time span. It was actually during the tough economic times the great fortunes were made.

Recessions Provide a Time to Invest Inexpensively

Many experts say a recession can be the best time possible to begin investing because asset prices are at rock bottom lows. You can buy stocks, bonds, mutual funds, real estate, or other types of investments for pennies on the dollar from what you could just a few years back. Many investors are forced to dump their assets. This allows you, the new investor, to pick up some great deals you might not be able to afford during normal economic times.

As with any type of investing, this takes courage. Many times your portfolio will fall even lower after the investment is made. To avoid a financial disaster, experts recommend you go into the market through a “dollar cost averaging,” a technique designed to reduce market risk, and not put all of your money in at once.

Build a Healthy Overall Portfolio

It is more important than ever to build a strong overall portfolio to maximize your gains and minimize your risks. This can take years and should be done with ample research.

Although volumes could be written about this, to get your portfolio as healthy and diverse as possible you should follow these basic steps:

• Contribute the maximum amount to your employer’s 401k
• Pay off (or greatly reduce ) your high interest debts
• Fund a ROTH IRA

• Buy a home
• Build a 6 month emergency fund
• Pursue several investment options (stocks, bonds, mutual funds, CDs, etc)
• Invest in yourself (education, develop skills, start a new business)
• Save for your child’s education.

Stay the Course

Ask any boat captain and they will tell you they’ve had to weather many a storm. The best they can do is just to head in the direction they want to go and wait for the storm to die down. The same is true when it comes to investing. When you have a plan in place, follow it.

If you already have a plan in place for your investments from several years back, continue to follow it. Wealth is not built in a day. If you are just now beginning to invest, don’t let any financial woes our country is experiencing deter you from your goals. Start with a good plan in place and know the great economic times of the past will eventually return and we will be financially stronger as a result of the hard times.

Study the Habits of the Rich

Habits make up 90% of what we do every day. It only makes sense that good habits lead to good things and bad habits lead to less than desirable outcomes. The habits the wealthy establish in their financial practices not only help them acquire wealth, but also allow them to keep the wealth they have. They have a few habits in common that keep them in the upper elite when it comes to money.

Habit #1: Pay Yourself First & Save/Invest The Money

Those who have a considerable amount of money know they are the reason they have the money in the first place. As a result, they make sure they are taken care of in the long run so they can continue to earn more money.

It may seem there is never quite enough money to allot some for yourself. However, by taking money out first and investing it in a place where it can earn passive income for you (in the form of interest, real estate, or whatever else you choose), you are ultimately making more money for yourself for years to come. The best strategy is to take 10% off the top of your earnings and reinvest it into something that allows the money to grow even more.

Saving money is not as much about accumulating a large amount of money quickly, it is more about getting into the habit of saving money and watching it build over time.

Habit #2: Become Frugal

We often associate the term “frugal” with people who deny themselves anything and everything to save money. This doesn’t have to be the case, though. Those who are smart with their frugality simply cut costs in areas that aren’t as important as other areas.

For example, maybe buying the name brand of every food product is not as important to you as taking an annual family vacation. Therefore, you should buy the cheaper brands of food so you can spend your money on something that’s really important to you: the family vacation.

Frugality is a matter of prioritizing your expenses. Analyze each expense and make sure you are spending your hard earned money on the things that are truly important and help you reach your long term goals.

Habit #3: Look After Your Business

Recognize your business is the way you make money. Treat it with respect. Even if you don’t like your job, you should recognize the fact it pays your bills and allows you to save for the future.

Make sure you have a vision for where you want your business to go. This gives you the momentum to move further along to your ultimate goals. Having these anticipated milestones gives you a target to aim for and reminds you of exactly what you are doing with your business each day.

Habit #4: Take Educated Risks

Making money can be a risky business, but the wealthy recognize the risk factors that are involved to achieve their financial objectives. The difference between someone who is just a risk taker and someone who takes educated risks is the ability to recognize opportunities that have an upside potential that far outweighs the potential loss.

Learning to take educated risks comes as a result of studying situations closely and then having confidence in your ability to judge correctly. Do as much research as possible to understand the exact risks, as well as the large potential for payoff. Then take the risk.

Habit #5: Give Back

One great thing about money is the ability to help others with it. In addition, giving back follows the principle: the more you give, the more you receive. How is this possible? Most believe the more we give away the less we have. Instead, giving back creates a bit of a paradoxical effect.

Wealthy businessman Junior Murchison once said, “Money is like manure, if you spread it around it does a lot of good. But if you pile it up in one place, it stinks.” Giving money away creates a bit of good karma. It also reminds your subconscious there is enough money for everything. A poverty mindset seeks to hold on to every bit of money possible, a wealthy mindset seeks to give it away and reap those unique rewards.

Habit #6: Invest in Yourself

Millionaires make investments on themselves. Why? They recognize the fact that by making themselves better they increase their potential for income. They often seek out opportunities to learn and grow as a human and as a businessman.

When you are open to learning new information in this rapidly changing economy, you understand someone is doing things better than you. This leaves plenty of room for growth. This can also be applied in your network of peers. If you see someone who does something better than you, ask them to teach you. The potential of this investment is multiplied many times over.

While the wealthy may not “have it all figured out,” we can learn a considerable amount simply by studying the habits they use when it comes to their money. By utilizing these habits in our own life, we can also potentially find a path to great financial wealth.