Fannie Mae Cracking Down on Strategic Defaults

Fannie Mae announced plans Wednesday to get tough with strategic defaults.

Fannie said that borrowers who default when they are able to pay won’t be able to get another Fannie Mae mortgage for seven years. The current wait is five years. While that might sound like an empty threat, in an environment where Fannie Mae and Freddie Mac are providing most home financing, it may have some teeth.

Fannie also threatened to sue home owners who walk away from their mortgages in states where such deficiency judgments are legal.

The announcement attracted some criticism because of Fannie Mae’s refusal so far to allow hard-pressed borrowers to negotiate a lowering of their principal amount, which is something lenders are now agreeing to after prodding by the federal government. Critics contend the company should try principal write-downs before it penalizes borrowers for choosing to walk away.

Source: CNNMoney.com, Tami Luhby (06/23/2010)

Pay Off Your Mortgage Faster By Doing It Yourself

Have you heard of “biweekly mortgage payment” system for paying off your mortgage faster? When you arrange to set this up with your mortgage company, you begin making payments every other week. Making payments this way drives down the principal quicker than paying the mortgage amount each month. Instead of making 12 payments per year, you’ll make 26 payments. In effect this is like making one extra mortgage payment each year, which is how the principal debt is decreased faster.

However, instead of enrolling in a special service and paying a tone of fees you can easily do this yourself. Here’s how.

First, divide your monthly mortgage payment by 12. Add this amount to your regular mortgage payment each month, and at the end of the year you will have made the equivalent of one extra month’s payment. For example if your mortgage payment is $1200 each month, divide it by 12, which equals $100. Instead of paying $1200, pay $1300 each month.

Make sure that the terms of your loan allow you to make extra principal payments each month. Also, designate the extra payment as “principal” so that it goes toward decreasing the total amount owed. If you have a question or need more information, call me at 425-330-0663.

Good Advice from a burglar!

13 Things Your Burglar Won’t Tell You:

1. Of course I look familiar. I was here just last week cleaning your carpets, painting your shutters, or delivering your new refrigerator.

2. Hey, thanks for letting me use the bathroom when I was working in your yard last week. While I was in there, I unlatched the back window to make my return a little easier.

3. Love those flowers. That tells me you have taste … and taste means there are nice things inside. Those yard toys your kids leave out always make me wonder what type of gaming system they have.

4. Yes, I really do look for newspapers piled up on the driveway. And I might leave a pizza flyer in your front door to see how long it takes you to remove it.

5. If it snows while you’re out of town, get a neighbor to create car and foot tracks into the house. Virgin drifts in the driveway are a dead giveaway.

6. If a decorative glass is part of your front entrance, don’t let your alarm company install the control pad where I can see if it’s set. That makes it too easy..

7. A good security company alarms the window over the sink. And the windows on the second floor, which often access the master bedroom-and your jewelry. It’s not a bad idea to put motion detectors up there too.

8. It’s raining, you’re fumbling with your umbrella, and you forget to lock your door-understandable. But understand this: I don’t take a day off because of bad weather.

9. I always knock first. If you answer, I’ll ask for directions somewhere or offer to clean your gutters. (Don’t take me up on it.)

10. Do you really think I won’t look in your sock drawer? I always check dresser drawers, the bedside table, and the medicine cabinet.

11. Helpful hint: I almost never go into kids’ rooms.

12. You’re right: I won’t have enough time to break into that safe where you keep your valuables. But if it’s not bolted down, I’ll take it with me.

13. A loud TV or radio can be a better deterrent than the best alarm system. If you’re reluctant to leave your TV on while you’re out of town, you can buy a $35 device that works on a timer and simulates the flickering glow of a real television. (Find it at faketv.com.)

4 MORE THINGS A BURGLAR WON’T TELL YOU:

1. Sometimes, I carry a clipboard. Sometimes, I dress like a lawn guy and carry a rake. I do my best to never, ever look like a crook.

2. The two things I hate most: loud dogs and nosy neighbors.

3. I’ll break a window to get in, even if it makes a little noise. If your neighbor hears one loud sound, he’ll stop what he’s doing and wait to hear it again. If he doesn’t hear it again, he’ll just go back to what he was doing. It’s human nature.

4. I’m not complaining, but why would you pay all that money for a fancy alarm system and leave your house without setting it?

Smoking Can Kill A Home?

Smoking can kill a home . . or at least the sale of a home.  There is a house for sale near one of my listings.  I’ve been in it several times just to check it out and see how it compares to my listing. It’s a nice house in a nice neighborhood, popular with young families and such. This house has been on the market for a long time, longer than other houses in the area.  

The other day, I was thinking about why it is taking so long to sell this house, and it dawned on me. “It’s the smoking.” I guess the sellers have gotten so used to the smell that permeates their home, but other people, especially people starting families can easily be turned off by the smoke stench.  

Smoking is becoming less and less popular everywhere. People will always talk about the health problems that smoking can and does cause.  However, the secondary effects of smoking often are not considered. The odor is one of the more minor ones, but it can have a damaging effect on your personal effects, including your clothes, your car and of course your house.  

In your house, smoking odors can be especially bad. Smoke is easily absorbed by porous materials, and your drywall and carpet make ideal places for the smell to seep in. Smoke smell can last a while. Air fresheners just cover up the smell without really solving the problem. Where the smell is very strong, people have had to remove the carpeting and repaint the walls. In most cases though, careful application of sunlight can clear up even the worst smells. Ultraviolet light is very effective at destroying odors.  

Smoking can cause other problems besides bad smells. It is rare that there aren’t cigarette or ash stains in a house. Nicotine and smoke can also discolor paint, causing unsightly blotches and smears of color on otherwise clean walls.  

The seller of this house should limit smoking to outdoors while the house is on the market. They may also have to get the carpet shampooed and all of the drapes and upholstery cleaned to help remove the smell. Also, each time someone shows the house, they are going to remove cigarettes, ashtrays, lighters and any other evidence that a smoker has been on the premises. Perhaps they should bake cookies before viewings to help mask the smell.  

I don’t know if it will be enough, as he’s lived there for a while, and the smoke has had years to do its damage. Time will tell in the end. 

That Clunker Could Be Worth Money!

If you have an old clunker sitting in your driveway and you’re thinking about upgrading to a new vehicle, you’ll definitely want to look into the Government’s new Consumer Assistance to Recycle and Save (CARS) Act of 2009…as you might be able to get some cash for that clunker!

The CARS Act-also knows as “Cash for Clunkers”-was passed by Congress late last month and then signed into law by President Obama. Basically, the program is designed to get older, less fuel-efficient vehicles off the road by providing buyers with a trade-in voucher when they upgrade to a new, fuel-efficient vehicle. The program offers different voucher incentives depending on the type of vehicle you trade in, as well as the gas mileage of the new vehicle you drive off in. The voucher is good on either domestic or imported vehicles, and it can be applied towards either the purchase or the lease of a new vehicle.

Trading in a Car for a New Car?

If you’re considering upgrading your car, here’s a quick look at what you can expect:

IF you trade in an older car
AND that car gets 18 mpg or less…
AND you purchase or lease a new car that gets at least 22 mpg…
You can qualify for a $3,500 voucher that is applied to the price of the new car.

In addition, you can get an extra $1,000-for a total of $4,500-if you upgrade to a new car that gets 10 mpg better than the old car that you’re trading in.

Want to Upgrade an SUV, Truck or Minivan?

If you’re upgrading an SUV, truck or minivan, the numbers work out a little different:

IF you trade in an older SUV, pickup truck or minivan…
AND that vehicle gets 18 mpg or less…
AND you purchase or lease a new SUV, pickup or minivan that gets at least 2 mpg better gas mileage than the vehicle you’re trading in…
You can qualify for a $3,500 voucher that is applied to the price of the new SUV, truck or minivan.

In addition, the voucher increases to $4,500 if the miles per gallon of the new truck or SUV is at least 5 mpg higher than the old one you’re trading in.

What’s the Catch?

There are a number of provisions that must be met in order to qualify for the incentive. First and foremost, the vehicle that you’re trading in must have been built in the last 25 years-meaning, it’s a 1984 model or newer.

Second, it must only get 18 mpg or worse. Remember, the program is aimed at getting bad-mileage vehicles off the road. So, if your car gets 25 mpg, it’s not the type of car this program is targeting.

Additionally, the vehicle must be drivable, must be registered, and must have been insured for at least the past year. Essentially, you have to actually trade in a vehicle that you’ve been using, as opposed to a dead car that’s been stored on blocks for a couple of years while you tried to figure out what to do with it.

Should You Take Advantage of CARS?

Basically, this program is designed to replace older, less fuel-efficient vehicles with new fuel efficient ones. If your vehicle is fuel efficient, you probably don’t even qualify.

Additionally, if your vehicle has a trade-in value that’s greater than $3,500 or $4,500, the program doesn’t make much sense for you. That’s because the program requires your trade-in to be destroyed, since one goal of the program is to get older, gas-guzzlers off the road for good. That means, the dealership probably won’t add-in much additional trade-in value. In fact, you’ll probably only see a modest bump equal to the approximate scrap value of your vehicle. So, if you can get, say, $5,000 or more for your vehicle as a trade-in without the program, you’re probably better off going that route.

Don’t Wait Too Long to Act

The CARS program is supposed to run until November 1, 2009.UNLESS the funds that Congress set aside for the program run out before then, in which case, it’s all over. So if you’re considering this program, don’t wait too long – contact a dealer about your trade in and which new vehicle you’d like to purchase or lease.

The final rules and details of the program are expected to be released at the end of July. In the meantime, you may want to visit the government’s official CARS website at http://www.cars.gov for more information-including a FAQ page-and to see if your vehicle qualifies for the program.

How Many Feet Do You Have?

We are selling our house and the square footage on our tax record is more that it really is! Is a garage usually considered in the square footage in a home? It’s attached to the house.

Although a garage is attached to the home, it is not considered part of the home’s square footage. That is because only livable space is considered in the square footage calculation.  Calculating the square footage of a home is not as easy as it sounds. Neither real estate agents nor homeowners should attempt the calculation (at least not if you want a reliable figure). Rarely are houses perfectly square, which is one reason for the difficulty.

Appraisers map out the house on a piece of graph paper, calculate all the edges, come up with “mini-areas” for each rectangle – then add them all together.  Plus, there are other intricate rules. If there has been an addition to the house and the owner did not receive a building permit, then that section of the house may not be allowable as part of the square footage. The same with attic and basement conversions, lofts, and so on.

It’s best to rely on a licensed appraiser to calculate the square footage of your house. When a home’s square footage is advertised, the figure usually comes from previous sales, perhaps as far back as the builder. If it was wrong then, it probably is still wrong today.

Good Credit Reports – What Do They Look Like?

A credit report with good FICO scores is called a good credit report. Established by Fair Isaac Corporation which introduced mathematical formula to determine and evaluate credit scores. It is one of the most used tools to establish a person’s credit worthiness. It changes depending on many things, but the FICO scores considered as an average score on a scale of 850 is 723. A good credit report has a 750+ score.  Credit scores are a reflection of what and how much you are spending.

In a good credit report, it is important that it holds no dark areas and no red marks at all. These specifically are serious delinquencies such as late payments appearing in one or more than one accounts. Ideally, there shouldn’t be any record of accounts passed on to a collection agencies for the collection of past-due payments.

One or more recent accounts that are past due, appear on the credit report as a negative.  The amount of poor payment history is extremely important and can make a great credit report a bad one.

Credit scores also determine what interest rates you qualify for. A good credit report should not have any declined credit requests.  

Let’s face it.  It is almost impossible for most people to function in our world without credit. Who can pay cash for a house, a car or a lot of things we consider “must haves.”  A good credit report is important to rent an apartment, applying for a job, and even purchasing an insurance policy. Take care of your credit, it can help you achieve your financial goals.

Buyer Question:

Will is hurt my credit if I get pre-approved for a mortgage loan from multiple lenders?

A lot of people think shopping around for the best rate will hurt their credit. That used to be the case until a few years ago. The answer is no, it won’t hurt your credit as long as you do it in a small time frame and for the same type of loan, meaning all home loans or all car loans.

Under today’s strict mortgage guidelines, in a lot of cases a lender cannot even quote a firm interest rate unless they have your credit report and all 3 scores, since most rates today (FHA excluded) are tiered based on your score, therefore two separate borrowers one with a 739 credit score and one with a 740 may pay different rates.

It's Official-The $8000 First Time Home Buyer Tax Incentive Can Be Used for a Down Payment

The first time home buyer tax credit can be used for a down payment all over the country.

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said that the Federal Housing Administration is going to permit its lenders to allow homeowners to use the $8,000 tax credit as a downpayment.
According to Donovan, the FHA’s approved lenders will be permitted to monetize the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.
Call Dave today at 425-330-0663 to find out more about the program.

Is now a good time to buy?

The best thing I can do is help you answer this question is to point out some key factors you must consider, when deciding whether to buy a house now or wait until later.
Right now, mortgage rates are at their lowest point in decades. The average interest rate for a 30-year fixed mortgage has varied between 4.78 to 5.25% … and that’s a darn good! So that’s one thing home buyers have in their favor right now.
Home prices are also at record lows in this area, which is a direct result of the housing problems we just endured. Surplus is high too, so there are plenty of houses to choose from. Add to this the $8,000 tax credit for first-time buyers, and you have plenty of reasons to buy a house now instead of waiting until later. Low interest rates, low prices, plenty of inventory, and a tax credit of eight grand.

Also consider that rents, along with the cost of living, will always continue to climb. So no matter what conditions in the housing market are, the sooner you make the jump from renter to home owner, the quicker you begin to create and build up wealth for your family. After a few years, you will be able to leverage this investment and buy a larger house.

These are all good reasons to buy now. For answers to more questions about home buying, visit our website at http://www.themcfarlandgroup.net.