LivingMalibu.com » Money Talk http://www.livingmalibu.com Malibu Real Estate-Malibu Homes For Sale Tue, 18 Jul 2017 20:51:46 +0000 en hourly 1 http://wordpress.org/?v=3.3.2 Timing Is Key When Locking A Loan For Your Malibu Home Purchase. http://www.livingmalibu.com/timing-is-key-when-locking-a-loan-for-your-malibu-home-purchase/ http://www.livingmalibu.com/timing-is-key-when-locking-a-loan-for-your-malibu-home-purchase/#comments Wed, 31 Oct 2012 23:54:12 +0000 ritasimpson http://www.livingmalibu.com/?p=2473

Borrowers shopping for a mortgage are obliged to select a lender before the price is “locked.” As a result, borrowers in shopping mode are vulnerable to lowballing — the practice of quoting a price below the market as a way of influencing the shopper’s selection.

Borrowers who have already selected a lender but have not yet ...]]>

Borrowers shopping for a mortgage are obliged to select a lender before the price is “locked.” As a result, borrowers in shopping mode are vulnerable to lowballing — the practice of quoting a price below the market as a way of influencing the shopper’s selection.

Borrowers who have already selected a lender but have not yet been locked are vulnerable to an overcharge at lock, explained to them as being caused by “changes in the market price.” And borrowers who have been locked may overpay if the property appraisal comes in higher than the valuation used to price the loan, and the lender conveniently ignores it.

Importance of posted prices

These lock scams all involve a deviation between a lender’s posted price and the price quoted to or charged the borrower. The posted prices are those the lender will accept, and which are delivered to its loan officers, telemarketers and other employees or agents authorized to offer the lender’s products to the public. Scams involve these employees or agents quoting less than the posted prices when they are attempting to corral borrowers and more than the posted prices when they lock.

Borrowers can avoid lock scams by obtaining direct access to posted prices. They then can’t be lowballed by loan officers, and they can’t be fooled about the market price when they lock.

It isn’t easy, however, because with some notable exceptions, lenders do not want the public to have such access.

The growth of the Internet has made it possible for any lender to make its posted prices available to borrowers, but very few do. In general, lenders view their websites as a way to stimulate potential borrowers to contact a loan rep. For this reason, the prices that borrowers can access on most individual lender sites are incomplete, meaning that they do not take account of all the factors that affect the price of a specific transaction.

Furthermore, in many cases the site won’t provide any prices at all unless the borrowers identify themselves. This guarantees that they will be contacted for a sales spiel.

Channels through which borrowers can access posted prices

A group of lenders allow borrowers to access complete prices on their websites without identifying themselves. Borrowers can shop these Upfront Mortgage Lenders (UMLs) without fear of lock scams. However, this requires that they access multiple sites, all of which are formatted differently, and they must do it on the same day because prices are reset every day.

Much more convenient are third-party networks on which multiple lenders post complete prices, allowing borrowers to comparison shop at one site. These sites are not all created equal, by a long shot.

Make sure the prices you try to lock have not lapsed

A word of warning about using any website, single-lender or multi-lender, to avoid lock scams. Mortgage prices can be locked only during normal business hours when the lock desks of lenders are open. Ordinarily, this is between about 10:30 a.m. and 5:30 p.m. EDT. Within these hours, posted prices are lockable by a borrower who has been cleared to lock.

This means that the price a borrower sees on a site at 9 a.m. EDT is the price that expired at 5:30 p.m. the previous day. The price that borrower can lock is the one that will appear about 10:30 a.m. Similarly, the price a borrower sees in shopping on the weekend is the one that expired at 5:30 p.m. on Friday. That borrower must wait until Monday morning to see a lockable price.

Borrowers using multi-lender sites who have not understood these constraints have sometimes tried to lock prices that had lapsed, and when they were unable to do so, have complained that the lenders on the site were not honoring their posted prices.

Check your mortgage price if the appraisal comes in high

Locks that are issued before the property is appraised usually are conditional on a minimum appraised value. If the appraisal comes in below the minimum, the mortgage price will be raised. But if the appraisal comes in significantly higher, the borrower might deserve a price reduction, yet might not get it.

To check this out, the borrower receiving a favorable appraisal should check current pricing on the site to see whether the higher property value would result in a lower mortgage price than the lower value that had been assumed when the mortgage was originally priced. If the answer is “yes,” the borrower should petition the lender to reduce the price accordingly.

Jack Guttentag is professor of finance emeritus at the Wharton School of the University of Pennsylvania.

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Tax Exemptions May Change http://www.livingmalibu.com/tax-exemptions-may-change/ http://www.livingmalibu.com/tax-exemptions-may-change/#comments Sat, 27 Oct 2012 01:07:29 +0000 ritasimpson http://www.livingmalibu.com/?p=2465

End is nigh for certain tax exemptions Currently, any debt forgiven by a lender in a short sale, loan modification, or foreclosure is exempt from federal taxation.  However, that exemption is scheduled to expire Jan. 1, 2013.

Making sense of the story

Borrowers will have to count mortgage relief from lenders as income on their federal tax returns, ...]]>

End is nigh for certain tax exemptions
Currently, any debt forgiven by a lender in a short sale, loan modification, or foreclosure is exempt from federal taxation.  However, that exemption is scheduled to expire Jan. 1, 2013.

Making sense of the story

  • Borrowers will have to count mortgage relief from lenders as income on their federal tax returns, if the exemption is allowed to expire.  That means, for example, a borrower would have to pay taxes on a $100,000 reduction in principal owed on a loan, or a $20,000 write-off in the amount owed after a short sale.
  • An extension of the tax exemption – established under the Mortgage Forgiveness Debt Relief Act of 2007 – is a strong possibility.  But given that Congress will have to grapple with serious fiscal issues after the November elections, there is no guarantee the exemption will emerge from those negotiations intact.
  • The Debt Relief Act exemption applies only to canceled mortgage debt used to buy, build, or improve a primary residence, not a second home.  The maximum exemption is $2 million.
  • Reinstating the tax would undercut the the effect of the National Mortgage Settlement reached earlier this year in the federal government’s investigation into banks’ mishandling of foreclosure documents.
  • Under the terms of the settlement, five of the biggest mortgage lenders must put some $17 billion toward debt relief that enables borrowers to stay in their homes. Smaller portions are reserved for short sales and refinancing.

Read the full story

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Financing Your Malibu Home? http://www.livingmalibu.com/financing-your-malibu-home/ http://www.livingmalibu.com/financing-your-malibu-home/#comments Wed, 24 Oct 2012 02:50:25 +0000 ritasimpson http://www.livingmalibu.com/?p=2440

So you decided to take advantage of the historic low interest rates and the bottom of the market? Here are some tips from the pros to make sure your credit score is the best it can be and assure you can finance you Malibu Home Purchase.

1-If you have a $5,000 credit card limit and owe ...]]>

So you decided to take advantage of the historic low interest rates and the bottom of the market? Here are some tips from the pros to make sure your credit score is the best it can be and assure you can finance you Malibu Home Purchase.

1-If you have a $5,000 credit card limit and owe $4,500 that will “ding” your FICO score while owing under $1,000 will probably not matter.

2-If you make the payment 30 or more days after it is due your FICO will get whacked and 60 days is deadly.

3-If you finally manage to pay off a credit card you have had for years that will improve your FICO unless you then close it.  Bad move as closing it lowers your score.

4-Money in the bank?  Always a great goal and essential for buying a home and a good night’s sleep.

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Home Equity Conversion Mortgage Is “Complicated”… http://www.livingmalibu.com/home-equity-conversion-mortgage-is-complicated/ http://www.livingmalibu.com/home-equity-conversion-mortgage-is-complicated/#comments Fri, 28 Sep 2012 00:35:41 +0000 ritasimpson http://www.livingmalibu.com/?p=2379

Home Equity Conversion Mortgage (HECM) has great potential value to senior homeowners planning their retirement. The value is realizable, however, only with the adjustable-rate HECM that provides multiple options for receiving payments.

Many borrowers are electing the fixed-rate HECM, which requires that they draw the full amount of their borrowing power in cash, leaving nothing for ...]]>

Home Equity Conversion Mortgage (HECM) has great potential value to senior homeowners planning their retirement. The value is realizable, however, only with the adjustable-rate HECM that provides multiple options for receiving payments.

Many borrowers are electing the fixed-rate HECM, which requires that they draw the full amount of their borrowing power in cash, leaving nothing for the future. Here is an excerpt from an article written by Jack Guttentag is professor of finance emeritus at the Wharton School of the University of Pennsylvania.  I believe it will offer insights into what to pay attention to if considering a HECM:

“Part of the received financial wisdom of older generations was that your mortgage should be paid off by the time you retired. That way, no part of reduced retirement income had to be used to pay the mortgage. But too many are retiring today while still burdened with a mortgage, and some are paying it off with a reverse mortgage.

That uses a reverse mortgage to make the best of a bad situation. It replaces debt that must be repaid in monthly installments with debt that doesn’t have to be repaid until the borrower dies or moves out of the house permanently.

The downside is that the cost of the HECM, which includes mortgage insurance and other upfront fees, will usually exceed the cost of the forward mortgage. Further, the senior who must use all or most of the proceeds from a HECM to repay a forward mortgage loses the ability to draw spendable cash from the HECM in later years.

Purchase a house

Some seniors want to become homeowners for the first time — a “better late than never” decision. Others are homeowners now but want to sell their current home and purchase a different one, perhaps smaller or located closer to family.

These are lifestyle decisions that may be well-considered and sound, or they may be hasty and ill-conceived. I have seen both types, but the only general rule I know for avoiding bad decisions is not to act in haste, and consult those who play a role in the plan. It is a particularly bad idea to move in order to be closer to family without first discussing it with them. They could be planning a move of their own!

Given the senior’s decision to buy a house, using a HECM for that purpose beats the alternative of buying with a forward mortgage and paying it off later with a HECM. The advantage is that it requires only one set of settlement costs instead of two. But the downside is the same as that associated with using a HECM to pay off a forward mortgage: In both cases, the HECM is not available to ease the financial burdens of retirement.

Supplement income pending house sale

Seniors planning to sell their house in a few years who need additional funds in the meantime can use a HECM or a home equity line of credit (HELOC). While HELOC borrowers must pay interest on the amounts they draw, over a short period they can increase their draw by enough to cover the interest so that the net cash withdrawal is comparable to the draw on a HECM credit line or term annuity.

The advantage of the HELOC is that the upfront costs are lower — in some cases, zero — and the interest rate in most cases will be lower than the HECM rate plus the HECM mortgage insurance premium. This means that, assuming the borrower withdraws the same amount of cash on both, after any given period the HELOC debt will be lower than the HECM debt. That is the case for using a HELOC to meet short-term needs.

But the HELOC has significant disadvantages that in many cases will shift the balance of advantage to the HECM.

1. The HELOC borrower must qualify based mainly on income and credit, as with any forward mortgage. Many seniors won’t qualify for a HELOC.

2. If the senior changes her mind about selling the house and decides she wants to remain, she is in trouble if she took a HELOC because the HELOC must be paid off. The HECM doesn’t.

3. The borrower using a HELOC as a source of additional cash is dependent upon being able to draw against the unused portion of the credit line. But the lender can cancel the unused line at any time, and will if a question arises about the borrower’s credit, income or property value. This is not a risk with a HECM.

 

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Malibu Condo Sales Could Benefit From New FHA Financing Rules http://www.livingmalibu.com/malibu-condo-sales-could-benefit-from-new-fha-financing-rules/ http://www.livingmalibu.com/malibu-condo-sales-could-benefit-from-new-fha-financing-rules/#comments Sun, 23 Sep 2012 22:37:08 +0000 ritasimpson http://www.livingmalibu.com/?p=2362

Here’s some encouraging news for condominium unit owners, sellers and buyers: The biggest source of funding for low-down-payment condo mortgages, the Federal Housing Administration, has revamped controversial rules that caused thousands of buildings across the country to lose their eligibility for FHA financing.

The revised guidelines, which were issued Sept. 13 and took effect immediately, should make ...]]>

Here’s some encouraging news for condominium unit owners, sellers and buyers: The biggest source of funding for low-down-payment condo mortgages, the Federal Housing Administration, has revamped controversial rules that caused thousands of buildings across the country to lose their eligibility for FHA financing.

The revised guidelines, which were issued Sept. 13 and took effect immediately, should make it easier for large numbers of homeowner associations to seek certification by the FHA. The certification process is intended to provide the FHA, a government-run mortgage insurance agency, with key information about a development’s legal, physical and financial status. Without approval of an entire development — regardless of whether it’s a small complex in the suburbs or a massive high-rise in the center city — no individual unit can be financed or refinanced with an FHA mortgage.

The agency’s previous rules were criticized as heavy-handed, costly and not in touch with the economic realities of some parts of the country. For example, the rules prohibited FHA insurance of units in buildings where more than 25% of the total floor space was used for commercial or nonresidential purposes. Yet many condominiums in urban areas have lower floors devoted to retail stores and offices that generate revenues that help support the entire project. Many of those buildings suddenly found themselves ineligible for FHA financing for residents. The revised rules allow exceptions of up to 35% commercial use, and provide for additional case-by-case exceptions to 50% or higher.

Among other key rule changes:

• Greater flexibility on investor ownership. In existing developments, one or more investors are now allowed to own up to 50% of the total units provided that at least half of the units are owner-occupied. The previous rule required that no more than 10% of units could be owned by a single investor.

• The previous treatment of unpaid condo association dues was raised to 60 days from 30 days. Under the revised rule, condo communities where no more than 15% of unit owners are 60 days late on payment of dues can be approved for FHA loans.

• Clarification of certain insurance requirements that many communities found burdensome.

More details

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Gain Clarity On The New 3.8% Sale Tax On Property Sale http://www.livingmalibu.com/gain-clarity-on-the-new-3-8-sale-tax-on-property-sale/ http://www.livingmalibu.com/gain-clarity-on-the-new-3-8-sale-tax-on-property-sale/#comments Sat, 23 Jun 2012 19:46:41 +0000 ritasimpson http://www.livingmalibu.com/?p=1787

Rumors spread, but lets make sure we understand the facts: This false statement has been going around creating not only confusion, but also unnecessary anguish.

Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it?  That’s $3,800 on a $100,000 home,and it’s all because of the ...]]>

Rumors spread, but lets make sure we understand the facts: This false statement has been going around creating not only confusion, but also unnecessary anguish.

Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it?  That’s $3,800 on a $100,000 home,and it’s all because of the health care bill…

The confusion started with the passage of the Patient Protection Affordable Care Act which calls for high income households to be subject to a 3.8% Medicare tax on investment income starting 2013.

The claim that a 3.8 percent tax on all home sales is inaccurate and needs to be corrected. The truth about the bill is that if you sell your home for a profit above the capital gains threshold of $250,000 per individual or $500,000 per couple then you would be required to pay the additional 3.8 percent tax on any gain realized over this threshold.

Most people who sell their homes will not be impacted by these new regulations. This is not a new tax on every seller, and that correction needs to be made. This tax is aimed at so-called “high earners” – if you do not fall into that category you will not pay any extra taxes upon the sale of your home. It’s also important to note that the tax is calculated on  the surplus after the exclusion of the $250,000 capital gain for individual or $500,000 for couples. It is not calculated on the entire value of the Sale Price, as has been erroneously circulated.

Here is an explanation of the whole deal

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Know The Tax Deduction Rules For Your Malibu Vacation Home http://www.livingmalibu.com/know-the-tax-deduction-rules-for-your-malibu-vacation-home/ http://www.livingmalibu.com/know-the-tax-deduction-rules-for-your-malibu-vacation-home/#comments Tue, 05 Jun 2012 01:19:57 +0000 ritasimpson http://www.livingmalibu.com/?p=1717

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Visit houselogic.com for more articles like this.

Copyright 2012 NATIONAL ASSOCIATION OF REALTORS®

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Low Mortgage Rates Helps Malibu Real Estate Buyers http://www.livingmalibu.com/low-mortgage-rates-helps-malibu-real-estate-buyers/ http://www.livingmalibu.com/low-mortgage-rates-helps-malibu-real-estate-buyers/#comments Thu, 10 May 2012 23:18:15 +0000 ritasimpson http://www.livingmalibu.com/?p=1617

Low Rates Spur Demand for homes in Malibu.

Investors and Banks have increased appetite for Mortgage backed securities and Mortgage rates continue to slide and hit record lows …although banks are more reluctant to originate mortgages to borrowers with flawed credit they are nevertheless stepping up their purchases of loans that have been packaged into mortgage-backed ...]]>

Low Rates Spur Demand for homes in Malibu.

Investors and Banks have increased appetite for Mortgage backed securities and Mortgage rates continue to slide and hit record lows …although banks are more reluctant to originate mortgages to borrowers with flawed credit they are nevertheless stepping up their purchases of loans that have been packaged into mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac.

Rates on 30-year fixed-rate mortgages averaged 3.83 percent with an average 0.7 point for the week ending May 10, down from 3.84 percent last week and 4.63 percent a year ago, Freddie Mac said in releasing the results of its weeklyPrimary Mortgage Market Survey. That’s a new low in Freddie Mac records dating to 1971.

For 15-year fixed-rate mortgages, rates averaged 3.05 percent with an average 0.7 point, down from 3.07 percent last week and 3.82 percent a year ago. That’s a new low in records dating to 1991.

Rates on five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 2.81 percent with an average 0.5 point, down from 2.85 percent last week and 3.41 percent a year ago. Rates on five-year ARMs hit an all-time low in records dating to 2005 of 2.78 percent during the week ending April 19.

For one-year Treasury-indexed ARMs, rates averaged 2.73 percent with an average 0.5 point, up from 2.7 percent last week and 3.11 percent a year ago.

 

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Qualifying For Mortgages Today, Not A Cake Walk! http://www.livingmalibu.com/qualifying-for-mortgages-today-not-a-cake-walk/ http://www.livingmalibu.com/qualifying-for-mortgages-today-not-a-cake-walk/#comments Sun, 15 Apr 2012 21:45:13 +0000 ritasimpson http://www.livingmalibu.com/?p=1523

Shopping for a Malibu home? The mortgage scene is improving yet it can be very disheartening. Even though the profiles of successful borrowers may look challenging to match, many home buyers make it through the application gantlet with FICO scores and debt ratios that don’t quite meet the current benchmarks — often because their full ...]]>

Shopping for a Malibu home? The mortgage scene is improving yet it can be very disheartening. Even though the profiles of successful borrowers may look challenging to match, many home buyers make it through the application gantlet with FICO scores and debt ratios that don’t quite meet the current benchmarks — often because their full financial and credit-risk pictures are good enough to get them accepted by Fannie Mae’s or Freddie Mac’s automated underwriting systems.

So don’t fret  get the scoop and improve your chances of getting your Malibu home. You still may have a good shot. But know this about today’s mortgage standards: They’re arguably tougher than ever.

 

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Loan Modification is Stressful; Know Your Options http://www.livingmalibu.com/loan-modification-is-stressful-know-your-options/ http://www.livingmalibu.com/loan-modification-is-stressful-know-your-options/#comments Tue, 03 Apr 2012 21:24:24 +0000 ritasimpson http://www.livingmalibu.com/?p=1488

“Applying for a loan modification is a stressful process that can take several months without a lot of communication back and forth from the lender. The best way to ease that stress is to know as much as you can about your options and to understand what goes on behind the scenes to avoid simple ...]]>

“Applying for a loan modification is a stressful process that can take several months without a lot of communication back and forth from the lender. The best way to ease that stress is to know as much as you can about your options and to understand what goes on behind the scenes to avoid simple mistakes.”

Here are some need-to-know items:

  • Make sure a loan modification is right for you: Ask yourself if you are emotionally attached to the home, because a lender likely will extend the terms of the mortgage to 40 years to reduce the monthly payment. If you’re underwater on the mortgage—if you owe more than the home is worth—a modification probably is not the answer because of the years added to the note. If you’re not emotionally tied to the home, ask local realtors about options such as short sales.
  • A loan modification is not a refinance: A loan modification reduces your monthly mortgage payment without requiring any credit checks, appraisals, home equity or closing costs. The only qualification is financial hardship, which can include reduction in income, illness, divorce or any number of trying circumstances.
  • HAMP is not your only option: The government may want you to think that, but the fact is, more than 70 percent of modifications now are internal modifications made available by the investor holding the mortgage note. The only way to get an internal modification is to ask for one. Worth noting: HAMP bases its modifications on gross income (your mortgage must exceed 31 percent of what you make in a month) while internal modifications are based on monthly net (after-tax) income.
  • Be complete and thorough in your paperwork: Lenders receive thousands of faxes every day, so make sure your account number is on every page and that all questions and categories are filled out. A document manager who comes across an incomplete form may put it aside and move on to the next one. Just like that, the 30 days you may have to wait to hear from that manager becomes 60 or 90. It’s also best to follow up with the lender weekly.

“The process can be filled with stress, mistakes and misinformation, It was a journey to get your house. Be ready for the journey to keep it.”

For more information, visit www.consumereducationonline.com

 

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