Michael's Blog

Making Home Affordable (Government Program)

The First Bexley Bank — Thu, 05 Mar 2009 21:14:28 -0600

I know you may be a little bit overwhelmed and frustrated right now with all the NOISE and confusion about all the new government interventions in the mortgage and housing markets. As a Certified Mortgage Planning Specialist^TM, I make it a priority to stay updated on developments in the mortgage markets that may impact my clients. I have spent a lot of time reviewing the latest Making Home Affordable government program, and here are some of my observations. If you think this information is useful, please pass it along. Feel free to forward this email to anyone you know that may be impacted!

The Making Home Affordable government program is divided into two parts:

•· Modification Program

•· Refinance Program

Part 1 - Modification Program

Believe it or not, the details of this program are still being worked out. Despite all the hoopla and fanfare surrounding this program, it remains 100% VOLUNTARY, and mortgage servicers (the companies that actually collect borrowers' mortgage payments) are not obligated by law to follow these rules and guidelines...YET. Oddly enough, if a financial institution has already received government funding, they are NOT obligated to participate. However, if a financial institution receives new or more government funding in the FUTURE, they WILL be obligated to participate.

In other words, the rules are still a bit sketchy and nobody really knows who will participate and how it will all work from a practical perspective. Most of what you read and hear about in the media will most likely be speculation at this point. In a nutshell, the program has three elements:

•· The government is offering financial incentives to mortgage servicers who modify loans for borrowers.

•· The government is offering financial reimbursement to investors if they allow servicers to modify loans and then take a hit on the borrower's re-default if the property declines in value after the loan modification

•· The government is offering financial incentives to borrowers who modify their loans and make their new payments on time

Vacation homes and investment properties don't qualify for the program; only primary residences are eligible. Only borrowers who have experienced some type of financial hardship can qualify. In other words, you will need to document that your financial situation is worse now than it was at the time that you originally got the loan. Your income needs to have gone down, and/or your expenses need to have gone up. Click on this link if you want to see if you qualify for at least the minimum requirements:

http://www.financialstability.gov/makinghomeaffordable/modification_eligibility.html

Remember, even if you do qualify under these minimum requirements, your servicer (the company where you send your payments) might not be participating in the program just yet.

Part 2 - Refinance Program

Here's how it works:

•· You need to be current on your mortgage payments (no late payments in the last 12 months)

•· Your mortgage balance cannot exceed 105% of the current value of your home

•· Your mortgage needs to be owned or guaranteed by Fannie Mae or Freddie Mac

Based on current market conditions, this might make sense for you if:

•· You have an adjustable rate, interest only, or balloon mortgage that you want to convert into a fixed rate; or,

•· You have a fixed rate mortgage where the interest rate is greater than 6%. In fact, contact me even if your rate is as low as 5.5%. I'll put you into my rate watch program and let you know when rates get to the point where you would benefit by refinancing.

Other Recent Developments

There have been many other recent developments in the markets, as well as new government legislation. Here are just a few recent items that may impact you or someone you know:

•· Home improvement tax credit

•· First-time home buyer tax credit

•· Reverse mortgages for home purchase transactions (age 62 or older)

•· Suspension of required minimum distributions for certain retirement accounts (age 70 ½ or older)

Let me know if you'd like to discuss any of these items in further detail.

Conclusion

I know that all the NOISE you are hearing about the mortgage industry and government interventions can be distracting and confusing. That's why I'm here for you! As a Certified Mortgage Planning Specialist^TM, my role is to help you make sense of all the chaos and confusion in the market, so that you can make smarter mortgage and home buying choices. Please send me an email or give me a call so that we can discuss how these and other recent developments may impact you and your situation!

Michael Reeve mreeve@firstbexleybank.com

New FHA Limits - $341,250 for Franklin and surrounding counties

The First Bexley Bank — Thu, 26 Feb 2009 13:39:24 -0600

FHA Mortgage Limits List - FHA Forward

Message: MORTGAGE LIMITS SUCCESSFULLY COMPLETED

Mortgage maximums as of Wednesday February 25, 2009
(1 records were selected, 1 records displayed.)

MSA Name	MSA Code	Division	County Name	County Code	State	One-Family	Two-Family	Three-Family	Four-Family	Last Revised	Limit Year
COLUMBUS, OH (MSA)	18140		FRANKLIN	049	OH	$341,250	$436,850	$528,050	$656,250	01/01/2009	CY2009

Four Ways the 2009 Economic Stimulus Plan Benefits Home Owners and Buyers

The First Bexley Bank — Tue, 17 Feb 2009 20:13:04 -0600

Four Ways the 2009 Economic Stimulus Plan Benefits Home Owners and Buyers

There are four primary sections of the 2009 economic stimulus plan that could be very beneficial if you own or are buying a home.

Benefit #1 - Expansion of Home Improvement Tax Credit

The tax credit for making energy efficient home improvements is now 30% of the cost of the improvements up to a maximum of $1,500. This means that if the improvements cost you $4,500, you would receive a tax refund of $1,500 when you file your tax returns. Eligible improvements include energy efficient exterior doors and windows, insulation, heat pumps, furnaces, central air conditioners and water heaters. Generally, your home improvement contractor and/or the manufacturer selling the improvements issues a certification that clarifies whether the improvements meet the necessary standards for energy efficiency. Most modern windows, furnaces, and air conditioners meet these requirements. If you've been holding off on making some of these improvements, now is a great time to get a move on it - especially with all the great deals that are being offered!

Benefit #2 - Expansion of First-time Home Buyer Tax Credit

The tax credit available to first time home buyers was increased from $7,500 to $8,000 for homes purchased between January 1, 2009, and December 1, 2009. Also, the credit no longer needs to be paid back as long as you live in the home without selling it for at least 3 years. The previous version of the credit expired on July 1, 2009, and required home buyers to pay the funds back over a 15 year time frame.

The income limitations remain the same ($75,000 for single tax payers claiming the full credit and $150,000 for married tax payers), as do most other qualification requirements. Also, the credit remains refundable. This means that first-time home buyers who owe less than $8,000 in taxes for the year are still eligible for the full $8,000 credit when they file their tax returns. In that case, the IRS will write you a check for the difference between $8,000 and your actual tax bill. In fact, the credit can be claimed on your 2008 tax returns that you file by April 15, 2009, even if you buy the home in 2009.

There is one catch, however: if you bought the home in 2008, the credit remains $7,500, and it still needs to be paid back over a 15 year timeframe beginning in 2011 when you file your 2010 returns.

Benefit #3 - Higher Reverse Mortgage Loan Limits

The loan limits for FHA-insured reverse mortgages have been increased to $625,500 across the entire country - not just the higher cost areas. The previous limit was $417,000 across the country. This is especially important because the FHA program is virtually the only game in town as private and jumbo reverse mortgage programs have nearly all evaporated.

This coincides with another little-known change in the reverse mortgage arena: the availability of reverse mortgages on home purchase transactions. This is a fantastic opportunity for senior citizens to buy a new home and live mortgage payment-free without having to wait for their old home to sell. Seniors could also use this strategy to buy a new home and turn the old home into a rental or otherwise wait for market conditions to improve before trying to sell the old home.

Benefit #4 - $729,750 FHA and Conforming Loan Limits Restored in High Cost Areas

The $729,750 maximum loan limit had been in force throughout 2008, but was reduced to $625,500 in 2009. The economic stimulus plan restores the $729,750 maximum. This makes higher cost homes more affordable - especially in the coastal housing markets that tend to have higher than average home values.

It is always advisable to consult with a Certified Mortgage Planning Specialist^TM (CMPS®) when navigating today's turbulent mortgage and real estate marketplace. As a CMPS® professional, I am committed, qualified and equipped to help you evaluate your mortgage options!

To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, by any person for the purpose of (i) avoiding tax-related penalties or (ii) promoting, marketing or recommending to another person any transaction or matter addressed in this communication. Also, it is important to note that I am providing this information to you as your mortgage planner, in order to make you aware of some of interesting ideas that may benefit you. I am not an investment, tax, or legal advisor, and this information does not constitute legal, tax or investment advice. I definitely recommend that you consult with properly licensed legal, tax and investment advisors for specific advice pertaining to your individual situation.

Michael Reeve, CMPS^®

The First Bexley Bank
2680 East Main Street
Bexley, OH 43209

614-237-2006 direct
x129 alternate
614-237-5427 fax
mreeve@firstbexleybank.com
http://www.bexleybankbank.com

Twenty Terms You Must Know and Understand Before You Sign Off On Your Mortgage

The First Bexley Bank — Fri, 05 Sep 2008 11:54:05 -0500

Buying a home is a major achievement in most everyone's life. Pride of ownership, tax breaks, equity and the ability to increase your wealth and net worth are just a few of the many benefits you'll enjoy with your new home. Your home purchase may also be one of the largest you will ever make.

During the emotional excitement of buying a home, you may encounter terms with which you are unfamiliar. For some, it can be a bit embarrassing to ask what they consider too many questions. Others may make a note of their questions but simply forget to revisit them. To ensure that you have complete confidence during your home loan process, invest a moment to read this report and become familiar with the concepts and terms you'll encounter. Knowledge is power and the more you know, the more successful your decisions will be, and the more soundly you will sleep at night having made them.

1. Adjustable Rate Mortgage (ARM) - Also referred to as a Variable Rate Mortgage - a mortgage in which the interest rate is adjusted periodically based on a pre-selected index. For example, consider a 5/1 ARM at 6.25% with 5/2/5 caps and a margin of 2.75 over the LIBOR index:

A. 5/1: the "5" means that the interest rate is fixed for five years. The "1" means that the interest rate adjusts one time every year after the first five years.

B. 6.25% means that the interest rate is fixed at 6.25% during the first five years. This is called the "initial start rate".

C. 5/2/5 caps:

1) The first number - "5" - means that the interest rate can adjust up to 5% over the initial start rate in the first year after the fixed period ends (year 6). This means that if the initial start rate is 6.25%, the interest rate can go up to 11.25% in year six (6.25% initial start rate + 5 = 11.25%).

2) The second number - "2" - means that in every year after the first adjustment in year 6, the interest rate can adjust up or down up to 2% annually.

3) The third number - "5" - means that the interest rate can never go up more than 5% over the initial start rate during the entire life of the mortgage. In this example, the maximum interest rate over the life of the mortgage would be 11.25% (6.25% initial start rate + 5 = 11.25%).
D. 2.75 margin - In this example, the margin of 2.75 over the LIBOR index means that after the first five years, the interest rate would be calculated by adding 2.75 to the LIBOR index at the time of the adjustment. LIBOR stands for "London Interbank Offered Rate". See your CMPS professional for more info on different types of ARMs and which index is better for your situation.

2. Annual Percentage Rate (APR) - An interest rate that reflects the cost of a mortgage as a yearly rate. This rate takes into account any points and fees (closing costs) and is based on the loan going to its full-term. APR can often be manipulated by lenders and it is often inaccurate with Adjustable Rate Mortgages. See your CMPS professionals for details.

3. Appraisal - A written report containing an estimate of property value and the data on which the estimate is based. Appraisals are prepared by a licensed appraiser who is independent of the seller, buyer, lender and real estate agent. The appraiser inspects the subject property and compares it with other similar properties that have sold in the area to determine the fair market value. The mortgage lender bases the loan-to-value ratio on the lesser of the purchase price or appraised value on a purchase transaction. If you are refinancing a property, an issue called "seasoning" may come into play. This affects which value the lender allows you to use when determining the mortgage balance. See your CMPS professional for details.

4. Assumption - An agreement between buyer and seller in which the buyer assumes responsibility for the seller's existing mortgage. This agreement could potentially save the buyer money because closing costs and the current interest rates, possibly higher, do not apply. In most residential mortgage transactions, this is not an option because the seller's existing mortgage normally has a "due on sale" clause that requires the seller to pay off the mortgage if the house is sold or if the ownership is transferred. This issue often comes into play with real estate investment strategies. See your CMPS profes sionals for details.

5. Buy-down - A method of lowering the buyer's monthly payment for a short period of time. The lender or homebuilder subsidizes the mortgage by lowering the interest rate for the first few years of a loan. This strategy can be very effective in today's market. See your CMPS professional for details.

6. Closing - Also referred to as settlement. The meeting at the conclusion of a real estate sale in which the property and funds are exchanged between the parties involved.

7. Closing Costs - the total points and fees that are associated with completing a mortgage transaction or a house purchase or sale. Often, a good negotiation strategy for both the buyer and seller is for the seller to pay closing costs on behalf of the buyer. See your CMPS professional for details.

8. Debt-to-Income Ratio - The ratio, expressed as a percentage, which results from dividing a borrower's monthly payment obligation on long-term debts by the borrower's gross monthly income.

9. Down Payment - Cash paid by the buyer at closing that makes up the difference between purchase price and the mortgage amount.

10. Earnest Money - Money given by a buyer to a seller as a deposit to commit the buyer to the future transaction. Earnest money is subtracted from closing costs.

11. Equity - The value an owner has in real estate over and above the obligation against the property. Equity is fair market value minus the current mortgage and other liens. Real estate equity should be managed just like any other investment. See your CMPS professional for details.

12. Escrow - Funds given to a third party which will be held to cover payments such as tax or insurance payments and earnest money deposits.

13. Fixed Rate Mortgage - A mortgage in which the interest rate remains constant and fixed throughout the life of the loan.

14. Loan-to-Value Ratio - The ratio between the amount of the mortgage loan and the appraised value of the property.

15. Market Value - The price that a property could possibly bring in the marketplace.

16. Origination Fee - A fee charged by a lender for processing a loan application. This is usually computed as a percentage of the loan and is used by some lenders as another name for "Points".

17. PITI - Refers to Principal, Interest, Taxes, and Insurance.

18. Points - Prepaid interest charged by the lender. One point is equal to 1 percent of the loan amount (on a $200,000 mortgage, 1 point = $2,000).

19. Private Mortgage Insurance (PMI) - Insurance that protects lenders against loss if a borrower defaults. This is required when the loan-to-value ratio is greater than 80 percent. The PMI payment may not be tax deductible and is usually added to the monthly mortgage payment. However, there are ways finance up to 100% of your home's value and avoid PMI. These strategies include "Piggyback Mortgages" and Lender Paid Mortgage Insurance. In today's market, Lender Paid Mortgage Insurance can often be the best strategy. See your CMPS professional for details.

20. Underwriting - The decision-making process of granting a loan to a potential homebuyer.

Michael Reeve, Vice President

First Bexley Bank

614-237-2006 x129

mreeve@firstbexleybank.com

The highest compliment I Can receive is the referral of your friends, family and business associates.

First-Time Homebuyer Tax Credit

The First Bexley Bank — Fri, 05 Sep 2008 06:47:16 -0500

One of the most exciting new provisions of the Housing and Economic Recovery Act of 2008 is the First-Time Homebuyer Tax Credit. The credit is designed to encourage first-time homebuyers to go ahead and make the leap to purchase their first homes. Combine this tax credit with the fact that home prices are at historical lows, and indeed it is an ideal time for many first-time homebuyers to purchase homes.

Here are some things to keep in mind:

The credit is available for homes purchased between April 9, 2008 and July 1, 2009
The credit amounts to 10% of the purchase price of the home not to exceed $7,500
A first-time homebuyer is defined as someone who has not owned a home in the last three years
Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit
The tax credit works like an interest free loan and must be repaid over a 15 year period

How does a tax credit work?
A tax credit is a special provision that reduces income tax liability on a dollar for dollar basis. When filing a tax return, you must include income items, deduction items and the number of exemptions, among other things, to figure your total tax liability. If your total tax liability ends up being $7,500, and you qualify for the full $7,500 tax credit, this credit would be applied and would wipe out all of the tax due. If your employer had already deducted the $7,500 from your pay checks throughout the year, you would receive a tax refund of $7,500.

Does the credit have to be repaid?
Yes, the credit does have to be repaid, so it is really more like an interest free loan. Homebuyers will be required to repay the credit to the government, without interest, over 15 years or when they sell the house, if there is sufficient capital gain from the sale. For example, a homebuyer claiming a $7,500 credit would repay the credit at $500 per year. The home owner does not have to begin making repayments on the credit until two years after the credit is claimed. So if the tax credit is claimed on the 2008 tax return, a $500 payment is not due until the 2010 tax return is filed. If the home owner sold the home, then the remaining credit amount would be due from the profit on the home sale. If there was insufficient profit, then the remaining credit payback would be forgiven.

Conclusion:
For more information about the first-time homebuyer tax credit or other changes resulting from the Housing and Economic Recovery Act of 2008, just give me a call. I would be happy to assist you with your mortgage in the purchase of your new home!

Michael Reeve, CMPS^®

Vice President

The First Bexley Bank

614-237-2006 x129 direct
mreeve@firstbexleybank.com

Housing and Economic Recovery Act - HR 3221

The First Bexley Bank — Wed, 20 Aug 2008 10:50:10 -0500

Washington has been busy lately. In one of the most rapidly approved bills in memory, the Housing and Economic Recovery Act was passed into law, and could have significant implications on the housing and mortgage industry. While there is a lot to share with you, I wanted to reach out to let you know a few things that could impact you or someone you know right away.

The first thing that stands to impact many homebuyers is the elimination of what is known as seller down payment assistance for FHA loans. Seller down payment assistance is where a home seller contributes money to a down payment assistance company who in turn provides a legal grant to the homebuyer. This has helped over 900,000 families obtain homeownership since 2000.

However, as the legislation is written, this will be eliminated for homebuyers effective October 1. There is currently some discussion as to when the hard date will be in effect, as to whether someone who is in process of buying a home will need to have their loan application in process.

That said, if you or someone you know needs the ability to implement down payment assistance as a tool to buy a home, get on it quickly. The clock is ticking.

The other really interesting piece that was included in this legislation is that for first time homebuyers, they have a window to qualify for up to a $7,500 tax credit. The tax credit will be 10% of the purchase price of a home, up to a maximum of the full $7500 credit. The tax credit will have to be paid back over a period of 15 years...but Washington just provided first time homebuyers a 15-year interest free loan to help them buy a home! There are other qualifying factors here, but I will save them for anyone that would like to know more.

The bill is 789 pages long and you can expect that I will be passing along other pertinent information as to how it may impact you. Or if you prefer, pick up the phone and give me a call. There is a lot that is being said in the media and I want to make sure you get all the information that could help you.

Michael Reeve, CMPS^®

Vice President

The First Bexley Bank

614-237-2006 x129 direct
mreeve@firstbexleybank.com

Alert! Your Name is Being Sold - Take Action Now!

The First Bexley Bank — Fri, 13 Jun 2008 08:32:28 -0500

Here's breaking news you need to know ... and you need to let all your family and friends know right away as well.

Your information ... a hot commodity

Having credit checked is an important and necessary step in the home buying process. But very few people realize that each time their credit is checked, the "inquiry data" that the credit bureaus (Equifax, TransUnion, Innovis or Experian) have on file have now become a commodity. This information is being sold by the credit bureaus to other lenders...and also to companies that sell and resell the same names and personal information.

That's right - the credit bureaus have found a way to increase their revenues at your expense....and without your permission.

These "inquiry leads" include name, address, phone numbers (including unlisted), credit score, current debt and debt history, property information, age, gender and estimated income. They are marketing personal, confidential information to competing creditors...and making millions. Your privacy is being sold, not just once, but over and over again.

And lenders that purchase these leads at a premium will then do everything they can to recoup their investment and turn a hefty profit. Super sneaky bait and switch tactics are being used to lure clients away from their reputable lender. Clients have even been called by disreputable lenders and told that the lender they had been speaking to previously "passed on" the information to them, because they knew that they'd be able to offer much better interest rates and terms. Ouch!

Just Say "No"

The consumer credit reporting industry has provided a way to "opt out" and remove your name from these lists. You can contact them by phone at 1-888-567-8688 or online at www.optoutprescreen.com You must opt out at least 48 hours prior to having your credit checked to make sure it is processed in time. You can choose a five year or lifetime option, and the lifetime option does require a signed form. If a credit report needs to be run prior to the 48 hour waiting period - at least you are aware and informed, and can be on the lookout for suspicious phone calls or mailers from someone who has purchased your data.

The good news is by opting-out you can make it stop right away and protect yourself from "pre-approved credit offers" arriving via mail, which is one of the leading causes of identity theft in the US.

Take Your Privacy Back

You certainly have the right to shop for the best professional to meet your lending needs - but this should be done when and how YOU choose, not being done without your consent or permission. In fact, we even provide a "Shopping Around" guide, so that you know how to make educated, informed choices when selecting your lender. Call us if you'd like a copy sent to you right away. But looking around should be on your terms, not being done as a sneak attack, because they think you won't know better. And unfortunately, these unsolicited marketing tactics are a nuisance and intrusive, but quite legal.

Please email me for the "Shopping Around" guide. mreeve@firstbexleybank.com

Take your privacy back. Take five minutes right now - opt out, and pass it on. Refuse to be a part of this system.

The above article is from Mortgage Market Guide, a service I subscribe to better serve my clients.