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Posts from the ‘Personal Finances’ Category

Buying a home? Misc. fees could cost you thousands. Here’s what to expect.

CHOOSE A TRUSTED and RECOMMENDED MORTGAGE PROFESSIONAL! I read this article this past Sunday.  I was astounded that this even happened.  As a mortgage professional, it is my job to prepare an accurate Lending Estimate (formerly known as the Good Faith Estimate) for a borrower.  I’m responsible for quoting all closings costs, most of which aren’t even lender fees.  If I get it wrong, I/the lender am/is responsible.  The article does talk about Home Owner Associations in which the lender may or may not find out certain info.  Each lender will have their own requirements of what they want to know about a particular HOA.  So I recommend buyers and their attorneys vet the HOA about special assessments, budgets and reserves.  But closing costs?  This is my job; to disclose all costs associated with closing on a loan, refinance or purchase.

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by Danielle Braff Chicago Tribune

 

You’ve likely heard of closing costs when buying a home, but this umbrella term includes a whole host of expenses — from appraisal and attorney fees to transfer taxes and title insurance — that you may have to pay before you get the keys to your new abode. And the jig’s not up once you own. Depending on the type of property, you may be shelling out other unexpected sums, such as special assessments. If you’re planning to purchase a home, make sure you plan ahead for these often-overlooked fees.

That’s something Nors Beatriz, 54, wished she’d done before buying her first home, in Chicago’s Albany Park neighborhood, about 12 years ago.

The artist and jewelry-maker saved $20,000 for a down payment on a $235,000 home, but she wasn’t prepared to pay an extra $10,000 in closing costs. (According to online real estate marketplace Zillow, closing costs are typically 2 to 5 percent of a home’s purchase price.)

“There were so many more fees than I expected,” Beatriz said.

“I hired a lawyer who was supposed to look over the contract, but he never read it, and a couple months later, I found out that I had three mortgages — and they were balloon mortgages,” she said.

She struggled to get them consolidated, but then the market crashed, and her bank went out of business.

read more via http://www.chicagotribune.com/classified/realestate/ct-re-0910-unexpected-costs-20170906-story.html

 

 

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The Equifax Data Breach: What to Do

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by Seena Gressin Attorney, Division of Consumer & Business Education, FTC

If you have a credit report, there’s a good chance that you’re one of the 143 million American consumers whose sensitive personal information was exposed in a data breach at Equifax, one of the nation’s three major credit reporting agencies.

Here are the facts, according to Equifax. The breach lasted from mid-May through July. The hackers accessed people’s names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers. They also stole credit card numbers for about 209,000 people and dispute documents with personal identifying information for about 182,000 people. And they grabbed personal information of people in the UK and Canada too.

There are steps to take to help protect your information from being misused. Visit Equifax’s website, www.equifaxsecurity2017.com.

  • Find out if your information was exposed. Click on the “Potential Impact” tab and enter your last name and the last six digits of your Social Security number. Your Social Security number is sensitive information, so make sure you’re on a secure computer and an encrypted network connection any time you enter it. The site will tell you if you’ve been affected by this breach.
  • Whether or not your information was exposed, U.S. consumers can get a year of free credit monitoring and other services. The site will give you a date when you can come back to enroll. Write down the date and come back to the site and click “Enroll” on that date. You have until November 21, 2017 to enroll.
  • You also can access frequently asked questions at the site.

read more via https://www.consumer.ftc.gov/blog/2017/09/equifax-data-breach-what-do

 

Don’t leap into buying a home based on school district alone — dig into these details first

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Danielle Braff Chicago Tribune

When Marisa Dunn was trying to decide where to live, she considered three things: good health care, proximity to family and fantastic schools.

“We could travel for health care, we could travel to family, but we wanted to be in a school district that would provide the services our daughter would need, and would be good for future services,” said Dunn, 32, a labor and delivery nurse.

A year and a half ago, Dunn, her husband, Ed, and their daughter, Eleanor, who is nearly 3 and has Down syndrome, moved from Florida to Illinois. The trio resided with Dunn’s parents in Riverwoods for nearly a year while she delved into research on specific school districts before deciding where to settle.

After an extensive search, she chose Deerfield.

Then, the Dunns made some sacrifices to live in this relatively expensive suburb.

Instead of a four- or five-bedroom home, the family bought a three-bedroom ranch with a tiny kitchen, even though Dunn said she swore to herself that she’d never have a small kitchen again. She and her husband, a mechanical engineer, traded in their cars, too, in pursuit of more affordable auto payments.

“My husband gave up his beloved BMW sports car — that was his baby — for a Subaru,” Dunn said.

The Dunns aren’t unique. They join scores of other homebuyers placing an emphasis on school districts.

In a 2013 survey by Realtor.com of almost 1,000 prospective buyers, 3 out of 5
homebuyers said school boundaries would affect their purchasing decision; nearly 21 percent said they would pay 6 to 10 percent above budget to live within certain school boundaries and about 9 percent would pay 11 to 20 percent above budget.

But when several homebuyers want to purchase properties in the same school district, houses in those coveted areas become difficult to score. Competition can be stiff; even homebuyers without children recognize the value….

continue reading via http://www.chicagotribune.com/classified/realestate/

A majority of consumers are terrified of the mortgage process

The overwhelming majority (92 percent) of U.S. consumers recognize buying a home as a better financial decision than renting, a national survey from Sente Mortgage confirmed. The problem is that most (70 percent) do not know how or where to start the process.

But it’s not their fault.

The mortgage process is not a simple one. After all, its complexity was one of the causes of the sub-prime mortgage market collapse, along with why so few people saw it coming. And as Sente Mortgage’s research makes clear, that complexity could be scaring away prospective homebuyers.

A new fear of mortgages

Forty-four percent of survey respondents described the mortgage process as scary or intimidating; 30 percent were unsure what mortgage amount they could afford; 25 percent said that they did not understand the long-term financial impact of buying a home; and one in five admitted they did not have the financial education necessary to make a home purchase.

“The homebuying process is complex, and it’s clear that for many of today’s consumers, gaps in financial education are leading to some risky purchase behaviors,” said Tom Rhodes, CEO of Sente Mortgage. “Unfortunately, many of the most valuable resources available to buyers go grossly under-utilized, but with the right guidance and support, owning a home can be one of the biggest contributing factors to long-term financial success.”

An opportunity to show value

One of the valuable sources to which Rhodes was eluding is real estate agents.

Most people do not take or ask for mortgage advice – respondents were 11 percent more likely to ask for vacation advice than mortgage advice, and were twice as likely to compare options when buying a TV than when selecting a mortgage. But they trust their real estate agents. Fifty-one percent, in fact, rely on their agent to recommend a lender, and that creates an opportunity to show value.

For a potential buyer whose only holdup may be a fear of mortgages, an agent competent in the lending process could be the difference between purchasing and choosing to rent for another year.

via https://chicagoagentmagazine.com/2016/11/30/buyers-fear-mortgages-agents-opportunity/

 

Worried the Fed is going to raise rates? Read on…

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Recent market events have created the perfect scenario for mortgage rates to drop, and they just dropped down to three year lows! Call or email me today to start the conversation and see how much you could save!

Why Your Mortgage Lender Needs All That Paperwork

As a loan officer, I don’t just ask for paperwork to be a pain in the…

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QM that’s why. The Qualified Mortgage became a thing in January, 2014. Proposed, promulgated and made law of the land by the CFPB (Consumer Financial Protection Bureau) as a safe haven for lenders that played by the rules. Unveiled and delivered to the mortgage lending universe in tandem with ATR (Ability-To-Repay) underwriting guidelines, QM protects lenders from loan buybacks if they follow the CFPB “how to” directions for assembling a mortgage loan file.

QM is a good thing. So is ATR. Together they provide a standard; a common sense (most of the time), make sense approach and framework for determining borrower wherewithal and then providing a schematic for how to corroborate that wherewithal. If lenders stay in the QM/ATR lane and deliver audit worthy loans to secondary markets like Fannie Mae and Freddie Mac, then even if a loan goes bad, the lender will not be at risk of buying it back.

And remember for you history buffs, bad loan buybacks led to the great mortgage collapse almost a decade ago.

The primary weapon in the lender defense arsenal to fend off the dreaded buyback is verifiable proof, mostly in the form of documentation. Paystubs, W2s, 1099s, tax returns, bank statements, IDs, real estate contracts, evidence of this, evidence of that, letters of explanation, and on and on. Essentially any and every piece of information disclosed and used to make a mortgage credit decision, needs to have a bona fide and verifiable document trail that proves beyond a reasonable doubt that what you say and what you do is in fact what you said and what you did.

read more via http://www.forbes.com/sites/markgreene/2016/04/03/why-your-mortgage-lender-needs-all-that-paperwork/#1ff706a45b1d

 

 

Last-Minute Real Estate Tax Deductions For Homebuyers

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If you’re a homeowner, or looking to buy soon, here’s what you need to know about your tax burden for 2016.

Let’s face it: The last thing you want to worry about after that second glass of eggnog during this year’s holiday festivities is what you might need to deal with during next year’s tax season. But it’s well worth paying attention to real estate tax deductions now so that you can save later.

In the summer of 2015, a Senate committee approved many tax extender bill provisions into 2016. The bill extended a collection of tax-related deductions and credits that had expired, and this could give taxpayers a break through the end of 2016 if the bill is fully passed by Congress before the end of the year.

This act amends sections of the IRS tax code and can change what you’ll owe come April. Yes, the extenders bill is packed with many tax breaks targeted to special interests, such as the research and development credit, so you may be tempted to think the changes don’t apply to you — but they do!

If you own a home or are hoping to close on a home for sale in Santa Fe, NM, your tax picture for 2016 may look different than it did previously. Here are a few of the breaks up for consideration in Congress that could help lower your federal tax bill.

Mortgage debt forgiveness

When a mortgage lender writes off all or any part of a forgiven debt, the amount that is forgiven is “passed back” to the borrower as taxable for federal income tax purposes. The rule applies to all debt, including home mortgages. However, in 2007, in the midst of the housing crisis, Congress pushed through the Mortgage Forgiveness Debt Relief Act, which allowed for an exemption.

Under the rule, qualifying homeowners who have either lost their homes to foreclosure or qualified for some kind of repayment adjustment don’t have to pick up the forgiven debt as income on their tax returns. The rule was intended to be temporary but has been renewed several times, and Congress is currently debating whether it will renew this rule for 2016.

Deduction for mortgage insurance premiums

In a tough market, lenders are a bit more cautious. Buyers who financed homes in the last few years found that many lenders required private mortgage insurance (PMI) to protect the lender in the event of a default.

But here’s the rub: Even though the lender required you to purchase PMI as a condition of getting a mortgage, you couldn’t write it off. Unlike the interest paid on your mortgage, mortgage insurance payments are generally not deductible for tax purposes.

It was possible to claim and deduct PMI payments in 2015. If the tax extenders bill is approved and enacted through 2016, those who qualify and itemize may now claim a tax deduction for the cost of paying PMI for their homes.
– Read more at: http://www.trulia.com/blog/2015-real-estate-tax-deductions/#sthash.VD5ghDIL.dpuf

Source: Last-Minute Real Estate Tax Deductions For Homebuyers – Money Matters – Trulia Blog

3 Ways to Boost Your Credit Score (and 3 Ways to Damage It)

When it comes to taking the next step in your life, one of the most important numbers could be your credit score. After all, it can stand in the way of some of the biggest purchases you may want to make, like a car or a house.

First the basics, five factors comprise your credit score

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Not all debt is the same and some  is considered ‘good’ according to Scott Smith, president of CreditRepair.com. “Any kinds of car loan, home loan…those things actually provide you great credit history when you pay them off on time and fill those debt obligations,” he said.

Even credit card debt isn’t “necessarily wrong” said the credit expert. But Smith warned “you don’t want to have more than 30% utilization on that (account) and you do want to pay it down as often as possible.”

Scott Smith gave his assessment on the three Do’s and Don’ts of improving your credit score.

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read the 3 DONT’s via http://finance.yahoo.com/news/3-do-s-and-don-ts-of-improving-your-credit-score-175614971.html#

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More Money, More Problems: When a Big Down Payment Could Spell Trouble

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Hey, there’s nothing wrong with making a sizable down payment—if you’ve got the money to support it. Financial experts advocate putting at least 10% or 20% down, and we’ve got to agree: The more you can pay at the start, the easier managing your mortgage will be.

But there’s a caveat: Sometimes putting down a ton of cash can actually wind up compromising your quality of life or future savings goals. In some cases it can actually hinder your ability to close on that dream home you spent so long saving up for.

Here are five reasons you might want to dial down your payment.

You’ll flush your emergency fund

“Under no circumstances should buying a house be an emergency,” says Jeff Jones with Longview Financial Advisors in Huntsville, AL.

Raiding your emergency fund for the sake of a giant down payment isn’t smart—and it means you’re more likely to find yourself in a terrible position if you lose your job or wind up otherwise financially incapacitated.

Jones recommends building a three- to six-month emergency fund—the longer the better, especially if you have kids—and “not touching it unless it’s truly an emergency.”

And remember: Building this emergency fund comes firstbefore buying the house or even building your 401(k).

If your home-buying aspirations mean you’re skipping the safety net, you need to take a step back and save first. Don’t plunk down a huge down payment if it means leaving yourself vulnerable.

You won’t be able to cover closing costs

Don’t let the massive specter of your down payment make you blind to all of the other expenses that come with closing on a home, which can run about 3% to 6% of the purchase price.

If you’ve put all your money toward one massive down payment, you’re sure to be surprised by the myriad expenses—fees, taxes, the cost of an independent home inspector—all of which need to be paid once your sale is final.

 And, of course, the ultimate closing cost: moving itself.

It might not be much—maybe just the cost of pizza and beer for your buddies—but if you’re moving cross-country or even cross-city, costs can easily inch into the thousands, Jones says.

You might not be able to afford the mortgage

Ever heard the term “house poor”? It refers to buyers who have more house than they can afford, and are in over their head with mortgage and tax payments. Scary stuff.

Trust us—you don’t want to be one of those people.

While this is common among buyers who can offer only the smallest possible down payments, it’s also a potential problem for people who put down more than they can afford. If 20% down strains you, chances are good that the costs associated with owning that home are going to strain you, too.

Your home might be empty

Let’s face it, an empty home is hardly a home at all—and if you’ve spent all your money on the excessively massive down payment, your home might be empty for a while. What’s the purpose of buying a new home if you can’t afford the sofa sectional to put in it?

Especially if you’re moving from a smaller apartment into a home, there’s nothing sadder than an endless succession of empty rooms. It’s not that you need lavish accommodations—really, this is just another symptom of buying more than you can afford—but wouldn’t it be nice to at least put a bed in the guest room?

Retirement, vacations, college—all might be out of reach

So you’ve poured all your money into a down payment, and you’re squeaking by just to pay the mortgage. The potential result: no money left over for the other things that matter in life.

read more via http://www.realtor.com/advice/finance/when-a-big-down-payment-could-spell-trouble/?identityID=10250946&MID=2015_0807_WeeklyNL&RID=361386642&cid=eml-2015-0807-WeeklyNL-blog_2_big_down_payment-blogs_buy

Should You Refinance Even If You Plan to Sell Your Home?

Are you interested in refinancing your mortgage, but hesitant to do so because you’re thinking of selling your home at some point? Believe it or not, refinancing could still make sense. Here are several reasons why you might want to consider refinancing anyway.

Your financial circumstances could change

Let’s say you plan to sell your house in five to seven years. No matter how well you plan for the future financially, things happen. Job loss, illness, death—life inevitably gets in the way of your financial plans. Focus on the here and now, as long as you can financially justify refinancing your mortgage. The longer the horizon of selling the home, the more chances life has of getting in the way. If refinancing can save you money in the meantime, it may just make sense.

Because financial circumstances can change over time, for better or worse, it can be a good idea to calculate how affordable your house really is for you.

You could take advantage of lower interest rates

At publishing time, 30-year mortgage rates have edged their way up and are hovering just over 4%. The new outlook for mortgage rates points to continual increases, bringing the cost of debt up. Picture this, if you don’t sell the property or if there is a market correction—and you do not refinance for whatever reason—is your current loan rate and payment something that you can afford to carry for the long haul? If you could save money or better your financial position, it is probably worth investigating. Rates are even better on jumbo mortgage loans, as more investors are pouring into this particular market niche. So if you have a big mortgage on your home you may want to consider refinancing.

You’re facing a higher rate on your ARM or HELOC

With the increased likelihood of interest rates going up in fall 2015, the subsequent recasting of adjustable-rate mortgages and home equity lines of credit will affect millions of homeowners. Most adjustable mortgage loans were tied to the London Interbank Offered Rate, which closely trails the Fed Funds Rate, the rate at which the Federal Reserve uses to control the U.S. economy. If the Federal Reserve hikes interest rates, LIBOR will soon follow suit, and any homeowners within their adjustment period will experience a higher payment or a future higher payment when their adjustable-rate loans reset.

A HELOC works in a similar fashion to an ARM with a fixed period for the interest rate, followed by a rate reset. For a HELOC, payments are interest-only for the first 10 years of the 30-year term. After 10 years, the loan resets, and for the remaining 20 years the loan payment is principal and interest, so at the end of 30 years, the loan is paid off in full. The payment shock will happen after the first 10 years.

If you have a first mortgage on your home with a HELOC, it very well might make sense even if you plan to sell the home down the road, to roll the first mortgage and HELOC into one, saving money and continuing to make a manageable mortgage payment until you sell.

read more via http://www.realtor.com/advice/finance/should-you-refinance-even-if-you-plan-to-sell-your-home/?identityID=10250946&MID=2015_0807_WeeklyNL&RID=361386642&cid=eml-2015-0807-WeeklyNL-blog_3_refi_if_selling-blogs_own