Philadelphia Area Mortgage Blog

This information on the $8000 Tax Credit for First Time Buyers was originally posted on my mortgage information blog.  I know the tax credit is generating a lot of inquiries so I am reposting the information here. This is a great incentive for those who may be looking to buy, but are still on the fence. 

 

If you are in the market to buy your first home you may be able to take advantage of a new federal tax credit for first time homebuyers.  Here are some facts about the tax credit:

 

• The tax credit is for first-time home buyers only, a first-time buyer is defined as someone who has not owned a home in the past three years .
• The tax credit does not have to be repaid. This is a change from last year's tax credit which was basically an interest-free loan, repaid over 15 years.
• The tax credit is equal to 10 percent of the home's purchase price up to a maximum of $8,000.   So someone purchasing a $60,000 home would only receive a $6,000 credit, while someone purchasing a $300,000 home would only receive the $8,000 maximum.
• The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
• Single taxpayers with modified adjusted gross incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.  Those with incomes over that amount may still qualify for a partial tax credit.

As you can see this is a great incentive for those who are considering purchasing a home this year, but are unsure if now is the right time to take the path to homeownership.  For more reasons why 2009 may be a great time to buy,  please read:

Why 2009 is the Time to Buy

Why 2009 is the Time to Buy - Part 2

 

Remember, before you even begin to look at houses you should contact a mortgage professional to get pre-approved for a loan,  so that you will be sure you qualify and so you will know exactly how much home you can afford. 

Please contact us with any questions or to get started today.

                                                                                                                                                          

Information courtesy of Pennsylvania Mortgage Professional Michelle Chamberlain.  For more mortgage related information visit www.mortgage411center.com.  For information of small business loan alternatives visit www.ezmerchantadvance.com.

 

 

Many homeowners today are finding themselves in a situation where they can no longer afford to pay their mortgage.  Perhaps they lost their job or because of the economy their income has been greatly reduced.  Perhaps they had an adjustable rate mortgage and could no longer afford to make the payments once their interest rate increased.  Or perhaps they simply bought more home than they were realistically able to afford.   If you are a homeowner in this situation, where should you turn? 

In my opinion there are a lot of folks out there that are in over their heads and may not be able to keep their homes no matter how hard they try.  However, I also think there are a lot of homeowners who can be helped, but they just do not know who to contact or what to do. To read more about the different options available if you can no longer afford your home click here. 

                                                                                                                                                        

Written by Michelle Chamberlain

Homeowners who would like more information on mortgages please visit www.mortgage411center.com

Business owners who like information on small business loan alternatives visit www.ezmerchantadvance.com.

 

 

 

No matter what your political persuasion, I don't think you can deny the power of the graph posted above.  Just wondering, who is going to make whole all the shareholders that lost their savings and retirement money in the stock market.  Why stop at bailing out homeowners who have lost equity? Will we be bailing out 401(k) plans next?

Next time, Keep the Change

I have a lot to say about the President's new plan to help homeowners who can no longer afford their home.  I am sure I will have even more to say once the full details of the plan are released.  This was originally posted on my own mortgage information blog but I am reposting it here.  Plus, I really like this bumper sticker. 

Via www.mortgage411center.com

 

On March 4, 2009 the complete details of the Homeowner Affordability and Stability Plan will be released. I have previously expressed my opinion on the plan, based on what has already been publicized, particularly objecting to the incentives and rewards included in the program to both banks and homeowners.  Though, this plan is predicted to help between 7 and 9 million homeowners keep their home, through low interest refinances, loan modifications, and even principal reductions, The President stated in his televised speech last week that the program will only be available to help "responsible borrowers". Though this statement was met with a round of applause  in the audience, it of course leads to the following question: Exactly who are the responsible borrowers?

First some facts:

1) It is estimated that about 93% of Americans are not behind on their mortgages. So this plan is geared toward only 7% of the population.

2) According to the fact sheet: This is a "new program that will provide the opportunity for 4 to 5 million responsible homeowners who took out conforming loans owned or guaranteed by Freddie Mac and Fannie Mae to refinance through the two institutions over time".

3) There are lenders and companies that are already successful in getting loans modified for homeowners without the intervention of the government and do not leave tax payers responsible with the tab.

My main problem with the plan is that the government should not be involved in the business decisions of banks and lending institutions and that the true responsible homeowners (the 93% who are not behind on their payments) should not be footing the bill.   However, that is only a matter of opinion.  The fact of the matter is that those who may truly need assistance may not be able to get it, and those who did make bad decisions may still be able to get bailed out. 

As stated above the President's new program is only available to homeowners with loans owned or guaranteed by Freddie Mac and Fannie Mae. Now I don't expect the average homeowner to understand the significance of that statement, and I would guess that our government doesn't really understand it either. However, the fact that the program is only limited to loans guaranteed by those two institutions means that that there will be no help to borrowers who have non-conforming loans also known as subprime mortgages.  Subprime mortgages were often given to borrowers with credit problems and carried higher interest rates.  While one can make the argument that perhaps these borrowers should not be helped out, one must also note that there are many cases of borrowers who were placed into so-called subprime mortgages when they really could have qualified for a conforming loan.   It has also been stated that the reason it is important to prevent foreclosures, is that even borrowers who are able to pay their mortgage suffer when foreclosures in their neighborhood cause declining home values.   Yet, this program does nothing to offer assistance to borrowers that perhaps have a much greater risk of facing foreclosure, which seems a little contradictory .

Furthermore, I notice that the statement equates Fannie Mae and Freddie Mac loans with responsible borrowers and conforming loans. This is misleading as well. A loan can still be considered "conforming" yet still be a stated income, low down payment or an adjustable rate mortgage. That is, it is entirely possible that a borrower who has a conforming mortgage was not really "responsible" and bought more home than he could afford.

As you can see determing the "responsible borrowers" is not as easy as the government's plan makes it out to be. However, even if we are operating on the assumption that only borrowers with conforming loans should be able to take advantage of the program, should all conforming borrowers be classified as responsible? Should a person who lost his job and wants to continue to collect unemployment checks be included as part of the responsible borrowers simply because he as a Fannie Mae loan? Should the Realtor or Mortgage Loan Officer whose income greatly dropped because of the economy yet refused to get a part-time job to make ends meet be helped out as well? What about those who took the path to homeownership even though they had no savings to rely on or emergency funds set aside in case the they lost their jobs or income?

Which leads me to wonder, why the sudden government interest in helping "responsible" people anyway.  Should we now overlook the fact the foreclosure problem in the housing market was caused in part by the government insisting that banks make loans to less than qualified borrowers?  Should we all be picking up the tab for other people bad luck or bad decisions?   One thing is certain, we are probably going to see a lot more of these bumper stickers going around:

 

You can get your sticker too at www.tngop.org

 

A few weeks ago I sent an email to US Senator Arlen Specter letting him know that I opposed the massive spending bill that was about to be voted on in Congress.  Specter was one of three Republican Senators who was considering voting for the bill and being a resident of Pennsylvania, the state which he represents, I wanted to let him know that I opposed this bill and that he should as well.  Today I finally received a response back from the Senator.  Here it is:

 

Dear Mrs. Chamberlain:

 

As a senior member of the Appropriations Subcommittees on Foreign Operations and Defense, I have been uniquely engaged in foreign affairs while serving in the U.S. Senate. The 110th Congress is faced with many important international issues: the reconstruction of Iraq, the spread of nuclear technology, state sponsorship of terrorism, human rights, and global epidemics. To examine the challenges faced by the U.S. internationally, I have traveled extensively and entered into dialogue with the leaders of friendly and adversarial countries alike. My experience has led me to the conclusion that active engagement, open dialogue, and the strategic use of America's position on the United Nations Security Council is critical to achieving international peace and security.

 

With respect to our foreign aid budget, I believe it is important for the U.S. to give valuable assistance overseas while keeping with our national interests. On December 18, 2007, I joined many of my Senate colleagues in writing to President Bush, to urge that in Fiscal Year (FY) 2009 the Administration's continue its past efforts to increase U.S. investment in the International Affairs Account.

 

I supported the FY08 Foreign Operations Bill. This measure included $1.03 billion for the Migration and Refugee Assistance account, with $45 million designated specifically for the Emergency Refugee and Migration Assistance Fund, a funding level that reflects America's fundamental commitment to helping those who have been forced to flee their native countries. I also supported the inclusion of $1.56 billion in funding for the Millennium Challenge Account, an innovative foreign assistance initiative that provides assistance to countries committed to pursuing healthy political and economic policies. Additionally, the bill included an important contribution of $550 million to the Global Fund to Fight AIDS, Tuberculosis and Malaria.

 

I believe that a U.S. emphasis on international diplomacy and development is critical to achieving global security. Rest assured that I will continue to advocate for dialogue with the international community and robust funding for vital U.S. international assistance programs.

 

 

Thank you again for contacting me. The concerns of my constituents are of great importance to me, and I rely on you and other Pennsylvanians to inform me of your views. Should you have any further questions, please do not hesitate to contact my office or visit my website at http://specter.senate.gov.

                                                           Sincerely,

Arlen Specter  

 

 

Honestly, do you think that whoever took the time to send me this canned response could have at least bothered to address my concern?  Could they at least have read it and pretended to care? Needless to say, guess who I will NOT be voting for next election?

 

                                                                                                                                                                        

Written by Pennsylvania Mortgage Professional Michelle Chamberlain

For mortgage information visit www.mortgage411center.com and www.aboveallmortgage.com.

For small business financing visit www.ezmerchantadvance.com.

 

 

 

 

 

 

 

We've all heard the saying "It takes money to make money" meaning that in order to sucessfully grow your business you have to be willing to invest in it.  Our federal government has recently taken this theory to heart with the passing of a massive government spending plan aka the Stimulus Plan in some circles and the Porkulus Plan and the Generational Theft Act in others.

The government's "it takes money to make money approach" is based on an economic theory of the spending "multiplier effect".   That is for every dollar the US government spends in a certain sector the economy will grow by a multiple of that amount.  Here are the spending areas that one economist states will give the government the most bang for the buck:

Extend Unemployment Insurance Benefits 1.64

Temporarily Increase Food Stamps 1.73

Issue General Aid to State Governments 1.36

Increase Infrastructure Spending 1.59

As you can see for every $1 the government spends to incease food stamps the economy will grow by $1.73.  So if the government spends $100 million dollars to increase the amount of food stamps, the economy will grow by $173 million. 

This should lead those of us who are protesting the amount of government spending to reconsider.  I mean why spend only a trillion or so dollars?  If it is so easy to spend our way to prosperity, let's just spend a gazillion dollars, which when the multiplier efffect is taken into account, willl take the term "economic superpower" to a whole new level.

While, I'm not an economic expert, I am guessing that this mulitplier effect can also be applied to small businesses as well.  For instance you may have found that for every dollar you invest in direct mail marketing you can grow your real estate or mortgage business by 1.49.  Or perhaps you know that for every dollar you invest in internet marketing your business grows by 1.32.   New office furniture or carpeting for the office may increase your revenue by 1.2. 

As you can see, what every small business owner needs to do is come up with their own stimulus plan, spend a few million on their businesses, and take full advantage of this spending muliplier effect.  Don't be afraid to spend even if it seems frivolous.  So if you've always wanted say, a frisbee golf course, go for it!   If all goes as planned ( and why wouldn't it?) , we should all be able to retire early to some foreign country where the cost of living is cheap.  (Probably since they haven't yet figured out how to spend their way to a prosperous economy).

Now I know what you are thinking:  I don't have a few million dollars lying around, and unlike the US government I can't just print my own money, so how can I get this stimulus plan to work for me? 

Well I listened to the president's address to Congress earlier this week, and he stated that in order to get this economy moving the banks need to start lending money again.  In fact he went as far as to say that "if we do not restart lending in this country, our recovery will be choked off before it even begins".   He also stated that our economy is based on credit, which is true, and if you overlook the fact that our credit based economy collapsed because of the fact that banks lent money to people to couldn't afford to pay it back, I don't see any reason why the banks would be unwilling to lend you a few million dollars in order to create a stimulus plan of your own.

However, in the event the loan officer at the bank turns down your application for a small business loan just remember "Yes We Can!".  And if all else fails, we will always have Hope and Change You Can Believe In.

cartoon courtesy of www.townhall.com.

                                                                                                                                                                             

Written by Michelle Chamberlain

For mortgage and business financing information visit:

www.mortgage411.com

www.aboveallmortgage.com

www.ezmerchantadvance.com

 

 

By now you are probably well aware of the massive spending stimulus bill that was just signed into law.   You also may have heard that the President also has a plan to help homeowners that cannot afford to pay their mortgage.  Known as The Homeowner Affordability and Stability Plan, the White House says that it contains 4 key goals:

1. Refinancing help for four to five million homeowners who receive their mortgages through Fannie Mae or Freddie Mac
2. New incentives for lenders to modify the terms of sub-prime loans at risk of default and foreclosure
3. Steps to keep mortgage rates low for millions of middle class families looking to secure new mortgages
4. Additional reforms designed to help families stay in their homes

This plan has sparked outrage from responsible citizens who see this massive mortgage entitlement plan as unfair to homeowners who pay their bills on time, and who live within their means.  What is really outrageous about this plan however, is the rewards and incentives which are built into the program.  Yes, not only is the government (read: taxpayer) subsidizing the lower interest rates and principal reductions which will be given to borrowers under the program in order to mortgage payments more affordable, but also extra incentives such as:

 "Pay for Success" Incentives to Servicers: Servicers will receive an up-front fee of $1,000 for each eligible modification meeting guidelines established under this initiative. They will also receive "pay for success" fees - awarded monthly as long as the borrower stays current on the loan - of up to $1,000 each year for three years.   

Incentives to Help Borrowers Stay Current: To provide an extra incentive for borrowers to keep paying on time, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.

 

Yes, you are reading that correctly.  The government will now pay lenders $1,000 up-front to modify a loan, despite the fact that the government is also subisidizing the interest rate and principal reductions.   This is supposed to be an incentive for lenders to participate in the program, but isn't the fact that the government is now subsidizing any losses the lenders would be taking by modifying the loans incentive enough?  The lender also gets a $1000 a year bonus for up to three years if the borrower remains current on the loan because... Um, I really don't know what the rationale for this is other than the fact that the government likes spending OPM (Other People's Money).

But that's not all.  The borrower also gets an incentive to stay current on the mortgage, in the form of a $1000 per year principal reduction on the mortgage for the next five years.  Excuse me, but what happened to the old days when the incentive to stay current on the mortgage was that you get to keep your house?  Are we actually paying people not to be deadbeats?  What's next?  Free gas for life as long as you make your car payments on time?  Free groceries as long as you promise to feed your hungry children?  At some point aren't we crossing the line between helping to fix the economy and just being plain old stupid?

                                                                                                                                                       

Written by Michelle Chamberlain and originally posted at www.mortgage411center.com.

To apply for a mortgage online visit www.aboveallmortgage.com.

For an alternative to a small business loan visit www.ezmerchantadvance.com.

 

Personally I hate it when everyone in the real estate business talks about how "It's a great time to buy!".  Of course they are going to say that, they are trying to sell you a house or a mortgage loan, or they somehow make their money in Real Estate, what do you expect them to say?   (Donald Trump are you listening? Have you ever once stated that it was NOT the time to buy???)  However, I do think that those who are saying it this time, taking into account the combination of low interest rates and low home prices, may actually be right.   Here's why.

As a mortgage professional, I am seeing a large increase in the number of homeowners looking to refinance their mortgage loan.  They have all heard about the current low interest rates and want to take advantage of them.  Right now, I have enough refinances to keep me busy for the foreseeable future.   I have no need to market to prospective homebuyers, but I am.  There are a lot of great incentives to buy right now and I don't want anyone to miss out on these opportunites.  To learn why read the previous post,  A New Home For the New Year - Why 2009 is the Time to Buy.

However, I am not the only mortgage professional who thinks it is time to buy. Tennessee Mortgage Professional Danny Thornton thinks it is Time to get off the fence, and shares with us the new commercial from the National Association of Realtors with the same message.  I like the commercial so much I have posted it on my own website and am sharing it here as well. 

My only complaint is that the commercial should have advised potential homebuyers to get preapproved for a mortgage loan, before talking to a Realtor.  What good is convincing potential homebuyers to get off of the fence and buy a home only to find out they don't qualify for a mortgage loan in the first place?

 

If you think 2009 is the time to buy and are ready to get off the fence and into your own home visit www.aboveallmortgage.com.

 

Since, I previously posted on making refinancing your current mortgage a goal for the New Year, I now would like to address why those who are looking to purchase a home should do so in 2009.  First, let's be clear, the real estate market of today is a lot different than it was a few years ago, where almost anyone could get approved for a loan, regardless of credit, income, or assets.  However, assuming your credit is in good shape, you have a steady income which you can document, and you have sufficient savings there is still money to lend.  If you are not quite ready to buy, I will be writing next about coming up with a plan to help realize your dream of homeownership.

Why should you buy in 2009?

1) Mortgage interest rates are at an all time low and lower rates mean lower payments.

2) Home prices have dropped making homes more affordable.  In some areas there are real bargains.

3) Excess inventory make this a buyer's market, and sellers may be more willing to negotiate.

4) First time homebuyers may be eligible for a tax credit of up to $7500 on homes purchased before July 1, 2009.

5) The combination of these factors actually make buying a home now a wiser choice than at the peak of the market when there was a frenzy to outbid other potential buyers on already overpriced homes, no additional incentives to buy, and the lingering fear that the bubble would one day burst.

6) Waiting for the market to reach the bottom is a bad idea.  The only way to know when we've truly reached the bottom is when home prices start to go back up. 

For those who are thinking about  buying but may still be "on the fence", you may need to ask yourself "Is It Time to Develop a Sense of Urgency?", and consider taking advantage of these opportunities before it is too late.  For those who are ready to act,  the first step to purchasing your new home is to contact a mortgage professional to learn more about the loan process, find out how much you can afford, and to get pre-approved.  Getting pre-approved before you start looking for homes will show that you are a serious and qualified buyer and will give you an advantage when you decide to make an offer on a home. 

 

Visit www.aboveallmortgage.com to take the first step to becoming a homeowner in 2009.

 

It's the New Year again and that means lots of promises and plans to change for the better.  If you are like most Americans you are probably telling yourself that now that 2009 has arrived you will either: lose a few pounds, get back into shape, take up a new hobby, get organized,  take control of your finances, or some other resolution that will probably become abandoned before Valentine's Day.  This year, why not start the New Year off right and cross one of these items off the list right now?  If you have resolved to take control of your finances, then refinancing your mortgage loan may be in order, and there has never been a better time to do so then now. (If you don't yet own a home and would like to make homeownership a goal for 2009, stay tuned.  I'll be covering that next.)

Why refinance your mortgage in the New Year?  The reasons are many:

1) Mortgage interest rates are at an all time low and lower rates mean lower payments.

2) If you still have an Adjustable Rate Mortgage (ARM) you can refinance and enjoy a low fixed rate.

3) If you have equity in your home you can get cash out to use for other purposes.

4) Mortgage guidelines are tightening so you may not qualify for a loan progam when you finally do decide to refinance.

5) No one knows if home prices will continue to decline and waiting to refinance may mean losing equity and not being able to qualify in the future as well.

Visit www.aboveallmortgage.com to learn more about the loan process and to apply online.  Then with that out of the way, you'll have the rest of 2009 to work on achieving you other goals.  Happy New Year!

                                                                                                                                                                                           

Written by Michelle Chamberlain, Above All Financial Services

Homeowners, get the mortgage loan you need at www.aboveallmortgage.com

Business owners, get the cash you need at www.ezmerchantadvance.com