Defending the Mortgage Interest Deduction: The Facts Ad

Defending the Mortgage Interest Deduction: The Facts Ad
Following the release of the Deficit Reduction Commission’s report, which recommends scaling back the mortgage interest deduction, the National Association of Realtors® is warning Congress of the potentially devastating effects of such change on American families and the economy. As part of this effort, NAR placed an ad, which appears at right, in several prominent Capitol Hill publications, including: Politico, The Hill, and National Journal.

It reads:

The Facts:
• Repealing the mortgage interest deduction (MID) is a form of tax increase. Families with children would bear more than half of the total increase.
• IRS data show that taxpayers in the 35 – 45 age group take the largest MID on average compared to any other age group of taxpayers.
• First time home buyers would be hurt the most if the MID is curtailed.
• Current data from the IRS show that 65% of the taxpayers who have claimed the MID made less than $100,000.
• The housing market has not emerged from the crisis that began in 2007.
Congress: The Facts Speak for Themselves
The 1.1 million members of the National Association of REALTORS® strongly oppose proposals to reduce the mortgage interest deduction (MID). Hard-working American families’ budgets are already stressed. Reducing or eliminating the mortgage interest deduction would pull even more money directly out of their wallets. If this crucial deduction is eliminated or reduced, home values will further erode. That’s something America simply can’t afford in this unstable housing market.

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Questions to Ask Your Mortgage Broker or Lender

Before you commit to a lender, ask these top 10 questions. If you don’t like the answers you receive, continue shopping for a loan until you find a mortgage broker / lender with whom you feel comfortable.

1. Which Type of Loan is Best?

Reputable lenders will find out more about you before throwing out loan options. You wouldn’t expect a doctor to suggest surgery before she assessed your medical situation, would you? Choose a lender who gathers enough information from you before she suggests a certain type of loan. Don’t be afraid to ask a lender to explain the pros and cons about:
•Fixed-rate loans.
•Adjustable-rate loans.
•Interest-only loans.
•Negative-amortization loans.

2. What is the Interest Rate & Annual Percentage Rate

The annual percentage rate (APR) is derived by a complex calculation that includes the interest rate and all the other related lender fees divided by the loan’s term. However, bear in mind that:
•Many lenders do not compute APR correctly.
•There is no way to accurately compute an APR rate for an adjustable loan.
•It does not account for early payoffs.
If your interest rate is adjustable, ask about its:
•Adjustment frequency
•Maximum annual adjustment
•Highest rate (Cap)
•Index
•Margin

3. What are the Discount Points and Origination Fees?

Each “point” is equal to 1 percent of the loan amount. Therefore, 2 points on a $100,000 loan cost $2,000.
•Sometimes lenders charge origination fees in addition to points.
•Points “buy down” the interest rate, meaning the more points you pay, the lower the interest rate.
•Points are also tax deductible, even if the seller pays some or all of the points.

4. What Are All the Costs?

All the costs of a loan include not only fees that go into the lender’s pocket but also related third-party vendor fees such as:
•Appraisal
•Credit report
•Lender’s title policy
•Pest inspection reports
•Escrow (where applicable)
•Recording fees
•Taxes
An estimate of these fees constitutes the Good Faith Estimate or GFE, which the lender is required by federal law to give to you.

5. Will the Lender Guarantee the GFE?

According to the Real Estate Settlement and Procedures Act (RESPA), lenders have three days after you’ve applied for a loan to give you the Good Faith Estimate, containing all the costs of your loan. Points to consider:
•Since lenders are not required to guarantee GFEs, this document is worth about the cost of the paper on which it is printed.
•However, there is a lot of pressure on lenders by consumers to guarantee their GFEs.
•If your lender refuses to stand behind its estimate, go elsewhere.

6. Do You Offer Loan Rate Locks?

Interest rates fluctuate and change daily. If you have reason to believe that interest rates are moving up, you might want to lock your loan. Lenders typically charge zero to one point to lock a loan rate and points. Ask your lender:
•Do you charge a fee to lock my interest rate?
•Does the lock-in protect all the loan costs?
•For how long will you lock this rate?
•Will you give me the loan lock in writing?
The alternative is to pay the prevailing rate and points on the day your loan funds.
7. Is There a Prepayment Penalty?

In some states, prepayment penalties are no longer allowed, so ask. Typically, prepayment penalties let the lender collect an additional six months of “unearned interest” if you pay the loan off early through a refinance of sale of the property. Be sure to ask:
•How much is the prepayment penalty?
•What are the terms of the prepay? Some are in effect only during the first 2 to 5 years of the loan.
•Would the prepayment penalty apply if I refinanced through you at a later date?

8. Are You Equipped to Approve Loans In-House?

Underwriters review loans and issue conditions before approving or rejecting a loan.
•Ask if a lender can handle its own underwriting.
•VA and FHA loans typically take longer to process, but some lenders meet government requirements to automatically approve or disapprove a loan without sending it to the VA or FHA.

9. How Much Time Do You Need to Fund?

Average loan processing time periods fall between 21 and 45 days. To properly write a purchase contract, you will need to include a closing date, and that date should be coordinated with your lender. Find out:
•What is your anticipated turnaround time?
•What obstacles could possibly hold up closing?
•How long after final application approval will the loan fund?

10. What is the Yield Spread Premium?

If your loan officer is receiving a yield spread premium (YSP), a commission paid directly by the lender to your representative, this fee will be disclosed on your settlement statement at closing. YSPs are a controversial matter because:

•Lenders say if borrowers are happy with the terms, the fact the loan officer receives a bonus is not relevant.
•Borrowers say if the loan officer did not receive a YSP bonus, the loan would have cost less.
•You should negotiate upfront; at closing is too late.

Remodeling And The Art of Home Owner Happiness: “Be Careful What You Wish For In Home Improvements”

•Remodels must meet a household’s daily needs, not those of a magazine or TV show
•How the family cooks, shops, eats, entertains and cleans up is critical to any successful remodel
•High-maintenance materials will not work with a busy, hectic schedule
•Select a kitchen layout and appliances that match your lifestyle
•Remodels must incorporate the homes essential architecture and remain consistent with existing architecture
•Flooring and cabinetry finishes must compliment existing materials and colors
•Will a French country or Tuscan kitchen look out of place with an existing contemporary?
•A renovation must not be in excess of the home’s true value
•A renovation must be proportionate because a $100,000 kitchen won’t turn a $400,000 home into a $500,000 home
•Overspending and over-improving a home can turn an exciting project into problem down the road

What are FICO Scores?

About credit scoresWhen you apply for credit – whether for a credit card, a car loan, or a mortgage – lenders want to know what risk they’d take by loaning money to you. FICO® scores are the credit scores most lenders use to determine your credit risk. You have three FICO scores, one for each of the three credit bureaus: Experian, TransUnion, and Equifax. Each score is based on information the credit bureau keeps on file about you. As this information changes, your credit scores tend to change as well. Your 3 FICO scores affect both how much and what loan terms (interest rate, etc.) lenders will offer you at any given time. Taking steps to improve your FICO scores can help you qualify for better rates from lenders.

For your three FICO scores to be calculated, each of your three credit reports must contain at least one account which has been open for at least six months. In addition, each report must contain at least one account that has been updated in the past six months. This ensures that there is enough information – and enough recent information – in your report on which to base a FICO score on each report.

About FICO scores
Credit bureau scores are often called “FICO scores” because most credit bureau scores used in the U.S. are produced from software developed by Fair Isaac and Company. FICO scores are provided to lenders by the major credit reporting agencies.

FICO scores provide the best guide to future risk based solely on credit report data. The higher the credit score, the lower the risk. But no score says whether a specific individual will be a “good” or “bad” customer. And while many lenders use FICO scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable for a given credit product. There is no single “cutoff score” used by all lenders and there are many additional factors that lenders use to determine your actual interest rates. However you can now see what interest rates lenders typically offer consumers based on FICO score ranges.

Other Names for FICO Scores
FICO scores have different names at each of the credit reporting agencies. All of these scores, however, are developed using the same methods by Fair Isaac, and have been rigorously tested to ensure they provide the most accurate picture of credit risk possible using credit report data.

Credit Reporting Agency FICO Score
Equifax BEACON® Score
Experian Experian/Fair Isaac Risk Model
TransUnion EMPIRICA®

More than one credit score
In general, when people talk about “your score”, they’re talking about your current FICO score. However, there is no one credit score used to make decisions about you. This is true because:

Credit bureau scores are not the only scores used.
Many lenders use their own credit scores, which often will include the FICO score as well as other information about you.
FICO scores are not the only credit bureau scores.
There are other credit bureau scores, although FICO scores are by far the most commonly used. Other credit bureau scores may evaluate your credit report differently than FICO scores, and in some cases a higher score may mean more risk, not less risk as with FICO scores.
Your credit score may be different at each of the main credit reporting agencies.
The FICO score from each credit reporting agency considers only the data in your credit report at that agency. If your current scores from the credit reporting agencies are different, it’s probably because the information those agencies have on you differs.
Your FICO score changes over time.
As your data changes at the credit reporting agency, so will any new credit score based on your credit report. So your FICO score from a month ago is probably not the same score a lender would get from the credit reporting agency today.

Young Home Buyers Will Lead Housing Market Recovery

RISMEDIA—Generation X—young families and adults ages 31 to 45—are likely to lead the home-buying recovery as it gets underway, according to real estate experts who spoke at an educational webinar produced by the National Association of Home Builders (NAHB) in partnership with Builder magazine.

These potential home buyers are most likely to think it’s a good time to get off the fence—and have strong opinions about the design features their new homes will include.
At 32% of the population of home-buying age—generally defined as those who are at least 30 years old, the Gen X population cohort isn’t the largest, but it’s the most mobile, said presenter Mollie Carmichael, principal of John Burns Real Estate Consulting in Irvine, Calif. “They are in full force with their careers and they need to accommodate growing families,” she said.

In sharp contrast, even though they constitute 41% of prospective home buyers, Baby Boomers continue to wait for the market to improve, and their decisions to delay retirement also delay their decisions to downsize into a smaller home, Carmichael said.

Most of the 10,000 buyers and potential buyers in 27 metro areas that the consulting company surveyed were optimistic about a new home purchase, with between 85% and 89% saying that it was a good time to buy a home. Only 13% said they thought home prices would continue to fall, further evidence that it’s “not all about price,” she said. “They want something compelling, from a design or personalization standpoint,” said Carmichael.

In addition, though the average home size is shrinking, a majority of prospective buyers said they would like a bigger home than the one they have. “These are first-time buyers or younger families looking for more room to grow,” she said.

Seventy percent said that they were willing to pay $5,000 more for a green home, but those responding to the survey said that they expected new homes to already have many green technology features. They also said they would pay a premium for dark wood cabinets, a separate tub and shower and a fireplace in the living room, and more preferred a great room over formal spaces.

And while community amenities are important to Gen X buyers, 46% said they prefer a home in a large-lot, suburban development, versus the 21% looking for a traditional or “walkable” neighborhood.

Webinar panelist Heather McCune, director of marketing at Bassenian/Lagoni Architects in Newport Beach, Calif., also emphasized that design will be important in generating sales in the emerging marketplace. “The notion of ‘build it and they will come’ no longer works. Design matters,” she said.

McCune said buyers are looking for homes with a connection between indoor and outdoor spaces, even in colder climates, to create the perception of greater home size, even if the space is only usable for part of the year. They also want more storage, an open floor plan and flexibility in the garage.

“While Gen X numbers are smaller than the birth cohorts before and after them, their numbers have been enlarged by steady immigration,” said NAHB Chief Economist David Crowe. “Gen X may wait longer than their predecessors to establish their own household or buy a home because of the recent recession impacts, but the trends are still likely to occur as they have for past generations.”

This webinar was one in a four part series entitled New Horizons: Setting a Course for Success in the New Market. The series was sponsored by Simonton Windows and ThermaTru.

For more information, visit http://www.nahb.org.

Tips for Homeowners

Homeownership brings with it great pride …and great responsibility, too. Here are some tips that will help you keep your home in top condition.

•Check smoke detectors & carbon monoxide detectors by pressing the test button. Be sure to change the batteries at the same time. Both smoke and carbon monoxide detectors are available at your local home store. Contact your local fire department for recommendations.
•Replace or clean your furnace filter. This will keep the air in your house cleaner, make your furnace more efficient, and help lower your heating bills.
•Check for damage to your roof. Winter’s snow, ice, and wind can wreak havoc on your roof. Inspect it for missing or broken shingles — using a pair of binoculars will keep you off a ladder! As the shingles age, the fine grains of stone get washed and worn off the surface. After 15 or 20 years, even the best shingles may need to be replaced.
•Inspect your vinyl siding. Check for cracks or damaged siding; replace or repair. The biggest threat to siding is the wind. Wind can catch seams and corners and tear lightweight vinyl or aluminum siding off the walls. This then allows water into the wall cavity, causing water damage.
•Clean up your yard. The winter leaves behind debris, so rake your yard and pick up branches and twigs. Raking the lawn will remove thatch and snow mold, exposing the grass to sun and rain.
•Fertilize your lawn. The grass is desperate for a dose of nitrogen in the spring. A little fertilizer will help it get off to a great start and strengthen it to withstand the stresses of the summer ahead.

Spring Into Home Repairs

Forget May flowers, for most homeowners April showers bring rust, clogged rain gutters and all manner of sticky doors and windows. To help you solve these troubles, here are some sure-fire solutions to common spring problems. They’re easy enough to tackle in a weekend so you can spend more time smelling those flowers.

Rain gutter repairs
Nobody likes to clean or repair gutters. However, there are a few ways to make the job easier. First, for clogged downspouts, try using barbecue tongs to reach in and pull the leaves out. This doesn’t always work but considering the alternative — using a hose to flush the clog out, getting wet and covered with gutter goop — it’s worth a try.
Second, to repair loose gutter nails try replacing them with extra-long lag screws. The lag screws tend to be stronger, hold better and can easily be installed with a cordless drill equipped with a nut driver bit.

Repairing cracks in concrete
Concrete always cracks, but that doesn’t mean you have to live with it that way. For most cracks less than 1/4″, applying concrete caulk is a good way to make repairs. Just clean the crack out with a high-pressure hose nozzle, let it dry and then apply the caulk into the crack.
For larger cracks, substitute concrete patch for caulk.
Large cracks or small, repair is necessary because water that finds its way into cracks will soften the ground underneath and cause more cracking. The situation worsens if the water freezes.

Sticky windows and doors
With all the wet weather that spring brings, wooden windows and doors can’t help but swell and stick. To repair a sticky door or window, first mark where it is sticking. Next, remove the door or window by taking out its hinge pins, prop it up securely and with a hand plane, carefully remove any excess material. Power planes will work, too, but there is a tendency to remove too much. When the wood shrinks back during the drier, warmer days of summer, the gap will be too wide.
For sliding windows, often the trim around them is the culprit and must be removed and reinstalled to allow for more movement. To do this, carefully remove the trim with a flat bar and pull the nails out backwards that is, grasp the nail point with pliers and pull. If the trim was installed properly with finishing nails, you should be able to do this without damaging the wood. When reinstalling, keep the fit snug but not as tight as it was. If you reinstall the trim too loosely, the windows will rattle when the wood shrinks again.
To keep windows and doors from sticking in the first place, make sure that they are sealed with a good coat of paint, including the tops and bottoms. But dont paint the channels where windows need to slide. Instead, use a light coat of linseed oil as a sealer.
Painting over water damage
The problem with water stains is that painting over them will not make them go away unless you use a primer-sealer first. When looking for a sealer, follow these basic guidelines: First, oil-based sealers usually work better than water-based. Second, choose a sealer that has a high amount of solids. Solids consist of pigments and other elements that do the actual covering of the stain. Paint, hardware and home centers carry primer-sealers (sometimes called sealer-primers) such as Kilz and Zinsser.
One other tip when using an oil-based sealer, consider using disposable brushes and rollers. Cleaning up after using oil-based products can be messy and often requires that you spend more on paint thinner than your brushes and rollers are worth.
Painting and repairing rusty fixtures
It used to be that the only way to do a good paint job over rust was to get out the naval jelly or wire brush and remove the rust first. Thankfully, paint additives are now available to help paint stick to rust while also neutralizing the rust and stopping corrosion from continuing under the paint.
If left untreated, rust will eventually cause your fixtures to lock up. Prevent this by keeping fixtures well lubricated. One of the most common mistakes people make is trying to lubricate outdoor fixtures with light oil or silicon from spray cans. Because these oils are so light, they often evaporate and/or dilute existing lubrication thereby making the problem worse. For fixtures like gate hinges and latches, use heavy grease. It will not evaporate and its heavy viscosity is the best thing for heavy-duty parts. Most auto parts stores have heavy grease.

Thank you Move-in for the info!