Wealth With Mortgage: Showing YOU How To Do MORE with YOUR money!

How Much Should You Rent Your Investment Property For?

Tyler Osby (Four Legacies Mortgage) — Tue, 28 Oct 2008 23:09:47 -0500

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You’re Not The Only One

It’s not uncommon to be a property investor and be ‘unsure’ of what market rent is. Honestly, market rents can change as quickly as our housing market changes. I’ll let you process how crazy that could be….

When deciding how much to charge for rent, most investors are trying to weight out two (painfully obvious) concerns:

What is the most rent that I can get out of this property each month to maximize my cash flow?
What amount of rent will keep my property occupied with a good tenant that won’t leave for a ‘better deal’.

Yea, there are many other questions going through an investors mind. The main obstacle though is finding a happy medium between maximizing cash flow but also keeping the property rented out to a good tenant.

Where Can You Go?

Believe it or not, there are a lot of resources online where you can do your ’shopping’ for comparable rents. I’ve found one in specific I’ll recommend:

Rent-O-Meter - This is a website designed to collect information while you’re searching for information. It’s been a great resource for myself and other investors I work with. I’ve also found it to be extremely point on in my market (I can’t say anything for others.. because I don’t rent outside of my market).

You’ll need the following information to get the comparable rents:

Property Address
Property City & State or Zip Code
Current Monthly Rent (What You’re Charging/Thinking of Charging)
How Many Bedrooms?
Units in Building (In case it’s an apartment complex)

From there, you’ll get your results.

What Do You Get?

You’ll get a map of the rental properties being used to give you a comparable rent schedule.
You’ll see a scale of the rents. Low-Medium-High. The needle represents where you lie in that scale.
Here are examples:

There Are Other Choices

Although I’ve come to really like Rent-O-Meter, I’ve also found success with other techniques. Here are a few other favorites:

Calling other property management companies in the neighborhood.
Looking on Craigslist.org to see what else is for rent and what they’re looking to rent places out for.
Newspaper advertisements.
Contacting local Realtors that have experience with investment real estate (I can connect you to someone on this one).
Contacting appraisers in town that may have experience inspecting investment properties (they have to do a comparable rent schedule on an investment property appraisal).
Join a local property investor association and ask around.

Make Educated Decisions

It’s not always easy to be an investor. However, with the right people and resources - it can be a pretty fun business to be a part of. Me and my team are always available for questions and if you need connected with someone, we can always help with that too!

As long as you take the time to examine what’s taking place in your local market, you’ll be able to make smart decisions and really avoid the ‘riskiness’ of real estate investment. At this point, hopefully it will be a simple calculated risk and you can move forward!

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Capital Gains Exclusion is a Changin'!

Tyler Osby (Four Legacies Mortgage) — Tue, 28 Oct 2008 23:07:12 -0500

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So, you remember that rule that capital gains exclusion rule that has become pretty much common knowledge?

Go ahead and get ready to change it.

The rule where if you sell a home after living in it for two years you could carry $250,000 (single person) or $500,000 (jointly filing) without getting hammered on capital gains. Well, throw that out the window. This new piece of legislation (694 pages) changes that tax code.

Sneaking It Under The Radar

The Housing and Economic Recovery Act of 2008 had a lot of great (highly publicized) components:

Increased funding for Fannie Mae and Freddie Mac.
Expanded loan limits in high cost areas.
Tax credit of $7,500 for first time home buyers (Haven’t owned a home in 3 years) - more on this later.

In a huge piece of legislation like this, it’s easy for things to roll under our radar.

This piece of legislation has a great example.

New Rules

So, the new rules are targeted at the savvy investors who were buying a property, living in it for two years, then moving on to the next property and keeping the old one as a rental.

Here’s the new formula (courtesy of Dan Green @ The Mortgage Reports & US Government):

As Dan Green put it, the new rule takes into consideration the actual usage as a primary residence over it’s qualified life.

An Example of Before Vs. After

Say you bought a home for $200,000 5 years ago. You moved out of it three years ago so you could buy your new home. You’re now selling the home you bought 5 years ago for $225,000.

Your Profit is $25,000.

Before:

You have no capital gains tax liability on this profit. It didn’t matter if you moved away from that property after two years and turned it into an investment property.

After:

Since you lived in the home 40% of the time, you’ll be responsible for capital gains on $15,000 of that profit. Big change huh?

Again….

That’s $0 considered capital gain vs. $15,000. Big change. This could cost a lot of investors some serious cash.

Now What?

Well, this new rule doesn’t mean that it’s no longer a great idea to buy a home and move every two years. What it does mean is that if you are planning on buying a home every two years, that when you sell it - you’re tax liability just increased big time.

When Does This Kick In?

If there is any good news in this post, it is that you’ll have until January 1st, 2009 until this comes into play. I can only suggest that if you’re falling into the large category of Americans that this effects, that you take action and implement a strategy that works for you. Is it the right time to sell? Only a real estate professional and tax professional can help you determine if now is the right time.

Wouldn’t you rather say you had the conversation and made a strategic decision instead of saying you had no idea?

Need Help?

If you need to connect with a professional for advice, I’d be happy to help!

Some of the advantages of being an active blogger is that I’ve accumulated connections not only in Iowa, but across the entire country!

Let me know what my team can do for you.

Reminder: We're NOT in a Great Depression

Tyler Osby (Four Legacies Mortgage) — Tue, 28 Oct 2008 23:04:49 -0500

See our daily updated blog at www.wealthwithmortgage.com!

There is doom and gloom everywhere.

Let me be candid, we are living scary times. I’m not refusing that. However, we ARE NOT facing anything like The Great Depression. I wish you’d get out of that line and realize that we’re in a different time.

Don’t believe me? Here are the facts.

Unemployment is currently 6.1% (source: US Department of Labor). I know, not sexy. Still….

During The Great Depression, unemployment peaked at 25%. Wow! Even towards the end of the 1930’s unemployment was about 15%.

Now, wouldn’t you agree that we have quite some way to go before things get to that point?

If you want my opinion (not like you have much of a choice, huh?).. I think things will get worse before they get better. In some sectors of the economy, much worse. However, this is not a Great Depression.

More interesting statistics to follow in the future… But seriously - Stop saying it’s The Great Depression. It’s not.

Original Photo Kudos

Mortgage Market Recap for the Week of October 20th 2008

Tyler Osby (Four Legacies Mortgage) — Tue, 28 Oct 2008 23:01:57 -0500

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Mortgage Rate and Market Recap for the Week of October 20th - 27th, 2008

Big News for Bonds

As we’ve talked about in the past, mortgage rates are based directly off of mortgage backed securities. These are much like stocks, being traded throughout the day. This is also why mortgage rates change throughout the day. If you’re curious what mortgage rates are going to do, it helps to be tuned into what mortgage backed securities are doing.

Last week PIMCO (the worlds largest bond fund) announced that they were raising their stake in mortgage backed securites to be the largest they’ve had in seven years. Obviously when investors saw PIMCO take this stance, they quickly followed. Mortgage rates improved early last week on this news.

Volatility Continued

Honestly, I’m sick of the word. Volatility. It’s all I say anymore..so, I’m open to alternatives. With that out of the way, mortgage rates did see improvements earlier last week after PIMCO’s news. However, as other news was digested by traders, mortgage rates ended up trading back to where they’d opened. There was a two day window to capitalize on the improvements we’d seen before the gains were lost again.

What Did Those Reports Say?

Each week, I put up an economic calendar of news coming out that following week. Here’s the what actually happened with those reports last week:

What Impacts Mortgage Rates?

If you’re looking to purchase or refinance a home, it’s important to know what moves mortgage rates. There are normally two major things that impact the direction:

Economic News. (Like the calendar above).
International News. (major events, pending legislation, war related news, etc).
Stock Market. (Money flows from equities (stocks) to bonds when it seeks shelter).

What Are Rates Based On?

It’s been mentioned before, but as a common reminder - mortgage rates are only based on one thing.Mortgage Backed Securities (MBS). The only way you have access to these is through live bond quotes.

Looking For Mortgage Rates?

If you’re looking for specifically what mortgage rates are doing, I’d be happy to help with a custom rate quote. Each scenario is different (there are 27 different factors a mortgage rate is determined by). If you or someone you currently know are looking for a mortgage, I’m here to help!

Information without obligation. That’s my policy. If you like what you hear, my team would love to help!

Mortgage Market Rate Watch for the Week of October 20th, 2008

Tyler Osby (Four Legacies Mortgage) — Tue, 28 Oct 2008 22:59:16 -0500

Visit our blog that's updated daily at www.wealthwithmortgage.com!

Mortgage Market and Rate Watch For Week of October 20th, 2008

What To Watch This Week?

The number one (and most obvious) thing to keep your eye on this week is the reactions to the Fed decision Wednesday. It is everyone’s expectation that the Fed will cut. I think the question is how much they will cut.

Remember, Fed Cuts Do NOT Equal Lower Mortgage Rates!

It’s commonly mistaken that mortgage rates move lower when the Fed cuts. Remember, the Fed Funds Rate (FFR) doesn’t directly correlate to mortgage rates. In fact, often times mortgage rates move higher upon Fed cuts because of fears of inflation. Wednesday is likely to be an extremely active day in the market. Expect big swings both ways in the market.

My ‘prediction’ is that on Wednesday, there may be an hour or so that you’ll be able to lock in a lower rate. However, long term rates will be moving higher.

Since there’s always a lot going on, I like to pick out the two most likely ‘market moving’ reports each week. If I had to pick a couple of reports to watch, they would likely be:

Fed Decision - Wednesday - Again, Fed cuts often mean higher mortgage rates. Perhaps more important than the impact in the Fed Funds Rate is the actual statement that will accompany it.
Core Personal Consumption Index - Friday - This always gives us a great explanation of where costs are headed for consumers. It also happens to be the Fed’s favorite way to measure inflation. Remember, higher inflation equals higher mortgage rates.

You Can Stay Updated!

I’ll be following things as they happen with live mortgage bond quotes and do what I can to keep everyone informed through Twitter. My clients always get the advice first, so I’ll try to filter though as quickly as I can.

**Here’s this week’s economic calendar:**

As a Consumer, How Do You Keep Posted on the News?

I’ll do my best to keep you posted throughout the week via Twitter. If you’re interested in finding out more about what effects mortgage rates and which direction they’re headed, feel free to follow me!

**Work With Mortgage Professionals In The Advice Business**

It’s important to recognize that advice is extremely valuable when looking for a mortgage. The right advice can literally save you thousands of dollars, while the wrong advice can cost you the same. Some mortgage professionals really don’t know what mortgage rates are based on, period. If you want to get the best deal, having a professional that can give you that type of advice is extremely important.

Why Am I Posting A Calendar?

I provide this weekly news update because too often when we’re shopping around, we ask the wrong questions. The first thing you’ve got to have your antenna up on is economic news if you want to have any idea what direction rates are moving.

So You Say, What Are Mortgage Rates Currently?

I get this question all too often. If I’m being fair.. and honest (which is my policy). I would be doing you a huge disservice to just quote a rate.

Truth be told, there are literally 27 different factors that go into a custom rate quote. There are also thousands of programs (constantly changing as well). It’s extremely important that you are educated on what is available and most importantly what is the best mortgage plan for you to personally implement.

It’s natural to have a list of questions. I’d love to help work through them with you and educate you on what you need to know about the mortgage process. I can help with everything from how to pre-qualified to what to do after closing (where I will continue working for you)!

It’s what we do, and it would be my honor to add you to our list of raving fan clients. If you’re currently looking for a mortgage loan or know someone that might have questions about one, please have them contact me. I’d be happy to assist them. It’s literally what I love doing! I promise to take great care.

Original Photo Kudos.

When the Fed Cuts, What Happens To Mortgage Rates?

Tyler Osby (Four Legacies Mortgage) — Tue, 28 Oct 2008 22:57:11 -0500

Visit our daily blog at www.wealthwithmortgage.com!

Let me save you some time and money.

The Fed does not control mortgage rates. Not at all. The Fed can do many things to influence the economy, but one of those things they control is NOT mortgage rates. Influence, yes. Control, no.

Let me explain.

What Does The Fed Control?

Now that I’ve established the Fed doesn’t control mortgage rates, it’s important to realize what the Fed does control.

Fed Funds Rate - This is the rate that banks are charged directly from the Fed for overnight funds. (More at Wikipeida).
Discount Rate - This is similar to the Fed Funds Rate (FFR), but often used to simply increase liquidity. (More at Wikipedia)

Since I’m not focusing on these two items, I’ll leave the extra reading to you.

What Does A Fed Movement Mean to Mortgage Rates?

Okay. Now what you came for. There are three moves the Fed can make in regards to the Fed Funds Rate each meeting.

Keep the FFR unchanged.
Decrease the FFR.
Increase the FFR.

Obvious, yes.

Now, let’s put our ‘Trader’ hat on and think about what these movements mean to the economy and markets in general. I promise this will all come together at the end…. PROMISE.

Unchanged means more of the same. If the Fed doesn’t see a need to step in and take action, you can expect the economy to do more of what it is currently doing.
Cutting rates means cheaper money. This also (often) implies that consumer spending will increase. When Americans spend more money, they also drive inflation higher. Remember that.
Hiking rates means more expensive money. Common sense would tell you this leads to decreased consumer spending. As the Fed makes money more expensive, the rules of supply and demand kick in and fears of inflation go away.

What’s Inflation Got To Do With It?

A valid question.

Now that we’ve established that mortgage rates are not based on the Fed Funds Rate, It’s important you know what they are connected to. The answer is mortgage backed securities. These are special bonds. If the value of a mortgage backed security increases one day, mortgage rates go down. If the value of a mortgage backed security decreases, mortgage rates go up. Make sense?

Remember, a bond is an investment that promises a certain return on your money each month. So, an investor puts their money in mortgage backed securities for that purpose. A certain return on their investment.

Now, the question Americans should be asking is “What does a Fed Cut mean to mortgage backed securities?” Well, I’m glad you asked!

If an investor knows that inflation will be a concern in the future, they’ll want more return on their money. Because after all, they want to continue getting the equivalent return on their investment. So, they actually push down the value of a mortgage backed security (by trading them in the market) and that results in higher mortgage rates.

Don’t Believe Me? Here’s a History!

I tell this to every client when we’re looking at locking an interest rate around a Fed meeting. It’s always the same conversation. “Yes Tyler, this makes sense, but I still don’t believe it.”

Well, here’s what I show them next. If this doesn’t prove my point, I’m not sure what will.

So, as the value of mortgage backed securities (MBS) go down, mortgage rates go up.

Roughly, every 25bps is equivalent to .125% in rate. Roughly.

So, you can see there have been some pretty big swings in mortgage rates shortly after the Fed’s actions.

Now You Know

No surprises any more. Fed cuts lead to inflation. Inflation leads to higher mortgage rates. If history has a way of predicting the future (which it normally does), you can expect a Fed cut to lead to higher mortgage rates.

Bond History Chart Courtesy of MortgageMarketGuide.com

Make Your Job Recession-Proof

Tyler Osby (Four Legacies Mortgage) — Tue, 28 Oct 2008 22:50:20 -0500

See our blog that's updated daily at www.wealthwithmortgage.com

Things Are Changing

It’s not something we often think about, but when unemployment is climbing in the US (currenlty 5.7%, nationally) we start thinking about the possibilities. Recent lay-offs locally have this weighing heavy on my heart, so I wanted to post on it.

Let’s face it, there is no such thing as a ’safe job’. Everyone is replaceable (at least that’s what my old employers used to tell me), and unless you’re an owner, things tend to fall down hill. So, what can you do to recession-proof your job? Well, let’s dig a little deeper and see what comes up.

Survey Says

According to JobFox, a leading job research company - there is a short list of jobs that seem to remain in high demand even though the economy hits some turbulance. These jobs included:

Sales Representatives (Specifically, salespeople who can actually sell)
Software Developers
Nurses
Accountants
Accounting Staff
Finance Executives
Administration Assistants

Okay, with that said - don’t go leaving your job to get one of these. It would be silly and probably not necessary.

How Do You Stay Off The Chopping Block Then?

Since I don’t think changing your job to one of the seven listed above, I figured I’d give a little advice on how to secure your current position. Here we go:

Make Yourself Invaluable - Go above and beyond your basic job responsibilities. You’ve got to do more than just show up for work on time and meet deadlines. Volunteer yourself for more responsibility. Be an asset to your company. Find ways to be more efficient and create more income for your company. Bring a more positive attitude to work, it will increase production. Just remember, it’s a lot easier to lay off people that are whiners.
Step Into the Limelight - A great way to be valuable is to be visible. Distinguish yourself in a positive way! Some people try to stay ‘under the radar’ when it comes to getting the job done. The problem here is your work can go unnoticed and you’ll be overlooked as a stellar employee. Get involved and show your company that you’re more valuable now than ever.
Improve Your Skills - Employers like people with great skills. Numb chucking skills, computer hacking skills, you get it. No seriously though, take a few classes. Depending on your line of work, you could also get additional certifications or an advanced degree. It’s easy to loose your job to someone that is more qualified or more educated.Honestly, ’sharpening the saw’ is always a great idea. If you are highly qualified, you might be leaving your current employer to go to someone that will pay you more for your hightly valued skills.
Network vs. Not Working - The cool part of becoming a student of your business is the opportunity to meet others. You’ll be able to meet other professionals at different points in their careers. Listen to these professionals, they will teach you things! Take time to join networking groups, get out and meet people (not at bars, but professional development opportunities). If headhunters are calling you, listen to them - you never want to close doors to opportunities like these. Creating these relationships NOW will make a job search much easier in the future, god forbid you have to.
Everything is Cyclical - It’s funny (in a sick way) that everything happens in patterns. Real estate markets are cyclical, job markets are cyclical and financial markets. Don’t worry when things get rough, that means things are about to get a whole lot better!

Take the Advice from the Mortgage Guy That’s Still In Business

Seriously. Think about it. Since 2005, 65% of the professionals in my industry have left the business. Most of these individuals left before lay-offs forced them out. It’s crazy to think about it.

I don’t want this blog post to be about me, but i pulled these suggestions from what I’ve been doing in the past year. By creating a different type of mortgage experience, we’ve created an easy way to stay in business. People dig it.

Need to Network?

If you’re personally looking to network, but don’t know where to start - please contact me. I’d love to help you out. I don’t want anyone to be scared of what’s happening in the market, I want Iowans to thrive in this market.

Original Photo Kudos

A Quote Worth Considering

Tyler Osby (Four Legacies Mortgage) — Sun, 24 Aug 2008 21:25:17 -0500

Tyler's Daily Blog is Found at WealthWithMortgage.com .

Also, If you have any questions, please don't hestitate to contact Tyler and his team!

Great Advice

I'm an advice guy. I've always enjoyed short, and to the point conversations (thanks Dad). Every once in a while I hear something that is such a powerful (yet, extremely obvious comment) and it's worth repeating.

Here It Is!

Are you ready for it? The quote I heard today was:

"To do as little as possible in the long run, Tyler, do as much as possible in the short run."

Go get it...

The Universe

Why Is The Universe Talking To You?

It's a valid question and one I have to cover before I make my point here. I subscribe to a super cool *FREE* daily e-mail called "TUT..A Note from the Universe". I don't get paid to mention them.. I'm probably not even on their radar, however, this is a very unique service and I thought I'd share it.

Wasn't that cool of me?

Each day I get a note from The Universe (or some really smart and sassy guy in a cubicle) and It's always motivational and makes you think.

Back to the Point

Yea, I did have one.

Financially, everyone wants to retire. They often want to retire sooner than later.

But guess what?... They want to buy the Escalade and throw it up on 30s (that's a big, big wheel..). They're ballin' right now. But what happens when they have to buy a Fiesta when they retire?....at 80. Not so sexy huh?

I'm not against living life and enjoying it at the same time. But live within your means. You may not live the super sexy lifestyle that gets you on the front of a magazine cover, but you'll be laughing all the way to the bank.

Application of this Information

If you haven't already considered what your long term plans are, you really should.

I'm not a financial planner (nor did I ever play one on television).... But I can connect you with someone who can help. If you don't start working hard now, you're much more likely to live a fruitful life long-term.

I'm Not a Motivational Speaker

As I'm writing this, I'm quickly realizing this is a little dorky.

The big 'takeaway' from this could be applied to many parts of your life, such as:

Financial
Significant Other
Work / Career
Reading?
Physical Health...

Ok, I've got to get back to work - but if you have any great examples of where you could apply this quote, post 'em in the comments.

Either way, this is great advice no matter how old you are. If you don't start today, you'll only have to work harder in the future!

See YOU on the beach....

Mortgage Market and Rate Forecast - Week of August 25th

Tyler Osby (Four Legacies Mortgage) — Sun, 24 Aug 2008 21:23:11 -0500

Tyler's Daily Blog is Found at WealthWithMortgage.com .

Also, If you have any questions, please don't hestitate to contact Tyler and his team!

Mortgage Market and Rate Watch For Week of August 25th, 2008

What To Watch This Week?

It’s going to be an extremely busy news week. It’s not often that a ‘big’ report comes out each day, but this week is one of those weeks! Besides all of the ‘economic news’ coming out this week, don’t discount what international news can do to the market. Last week’s Georgia and Russia news was a great example of this. If you’re not tuned into this news, feel free to follow me on Twitter. I’m always updating a few times throughout the day.

Besides all of the day to day market activity, there are also a bunch of economic reports coming out. If I had to pick two reports that would likely move the market this week, they would likely be:

Fed Minutes - Monday - The minutes from the FOMC meeting are released on Monday. This will give traders an opportunity to hear what really happens behind closed doors. This often is a market mover. Look for conversation on the Fed’s stance on inflation and how quickly they plan on taking action on it.
Core Personal Consumption Expenditures (CPE) - Friday - Not only is the monthly CPE report coming out, but so is the annual (year over year) report. CPE is one of the Fed’s favorite ways to measure inflation. This could be a big market moving report. You can also look into Thursday’s movement in the market to ‘price in’ trader’s opinions on where things will go.

You Can Stay Updated!

**Here’s this week’s economic calendar:**

As a Consumer, How Do You Keep Posted on the News?

**Work With Mortgage Professionals In The Advice Business**

Why Am I Posting A Calendar?

So You Say, What Are Mortgage Rates Currently?

I get this question all too often. If I’m being fair.. and honest (which is my policy). I would be doing you a huge disservice to just quote a rate.

Original Photo Kudos.

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Des Moines Iowa Real Estate Market Watch - Week of August 11th, 2008

Tyler Osby (Four Legacies Mortgage) — Sun, 24 Aug 2008 21:21:35 -0500

Tyler's Daily Blog is Found at WealthWithMortgage.com .

Also, If you have any questions, please don't hestitate to contact Tyler and his team!

What’s The Real Estate Market Doing?

Do you ever wonder how our real estate market is here in Des Moines? Unfortunately, we spend a lot of time listening to how rough things are in other cities around the country, but too often we don’t really consider what our real estate climate is like.

I’m a fan of having as much information available before I take action on any big decisions. I don’t know about you, but I think buying or selling a home is a pretty big deal.

As a blogger and mortgage professional, when I receive good information - I pass it on. Home listings and sales are an interesting set of information most of us don’t have super easy access to. Thankfully, I have a Realtor that hammers me with e-mails (Just kidding, I don’t mind them) on market updates and her opinion on where things are at.

Do YOU Need Help?

As a mortgage professional, I cannot sell real estate. I can however help you connect with a Realtor. If you are looking for some answers, I’d be happy to introduce you to someone who can help! No question is silly or too off the wall.

I can also reach out to my connections throughout the country if you’re looking for real estate outside of Iowa. So please, feel free to contact us, we’d love to help!

Why Should You Care About Statistics?

Whether you’re looking to purchase, sell or refinance a home - this stuff matters. These statistics are compiled from the Multiple Listing Service and cover the Des Moines, Iowa residential real estate market.

With her permission, I post the facts here so you can come up with your very own market opinion. Here’s this week’s market commentary:

“I have decided to start including numbers to show how the new construction market is performing. I’m working on getting these numbers as accurate as possible, but it can be difficult if all agents aren’t reporting their listings as “new construction.” Our sale pending numbers and solds last week have increased over our 2 month weekly average, but days on market is holding steady in that 90+ day range. You can also see that our total active listings has decreased below 6400 which is the first time in many weeks, last year at this time we had almost 6900 listings on the market!” - Heather Barglof, RE/MAX Real Estate Concepts

(Click to Hugisize)

What Does This Report Cover?

I really enjoy this chart because it gives a breakdown of:

Days on the Market
Price Per Square Foot
Number of New Listings
Number of Expired Listings
Number of Price Reductions
Pending Home Sales (by price)
New Home Sales (by price)
All Active Home Sales (by price)
Best of all, it compares this week vs. last week and last year!

This is a great chart. I’m not a Realtor and would never try to take the place of one. If you’re looking for statistics in your specific neighborhood (because your neighborhood is the only one that matters when you’re selling), I can help connect you with the right Realtor for the job!

We Love Great Information and Love to Give Great Information!

If you’re a super cool person and have any market statistics you think our readers would find valuable, please feel free to contact me. If it’s relevant, It’ll show up here!

If you’re looking for my professional opinion or looking for a comment (press related), please contact me here .

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Trying To Time The Real Estate Market? Don’t.

Tyler Osby (Four Legacies Mortgage) — Sun, 24 Aug 2008 21:18:45 -0500

Tyler's Daily Blog is Found at WealthWithMortgage.com .

Also, If you have any questions, please don't hestitate to contact Tyler and his team!

Trying To Time The Real Estate Market?

Don’t. You may think that you’re going to get a home while it’s at the ‘bottom’. Here’s the thing though, are you considering what your overall cost of ownership would be? More importantly, do you know what is going on in the mortgage market today that will impact you 60 days, 120 days or 12 months from now? If you don’t, step back and listen. You may think you get the real estate market, but I’d be willing to bet you don’t know what’s happening in the mortgage market.

So What’s Up?

It’s a great question. The mortgage market has seen a lot of changes in the past year. Now that we’re pretty much down to conventional loans (Fannie Mae and Freddie Mac) and FHA loans, they’re calling the shots. As you may have heard, the conventional lenders aren’t being extremely profitable right now (understatement of the YEAR). Since they’re seeing rougher times, they’re naturally passing that cost onto consumers. The good news is you still have time to beat the clock! Remember, home ownership is not all about the price of the home. It’s your overall cost of ownership and your home financing should be taken into consideration!

How High Will Rates Go?

I want to be extremely clear - mortgage rates are NOT moving higher because of inflation fears right now. They are moving higher because Fannie Mae and Freddie Mac are re-assessing risk. They’ve seen way too many deals go south and they’ve lost their shorts (and so have their stock holders). Fannie Mae recently announced (last Monday) that they will be increasing their ‘adverse market fee’ from .25% to .50%. For consumers, that roughly means about .125%-.25% higher interest rate. That is about $16 per $100,000 your borrowing. Over 30 years, that’s over $5,700! Do I have your attention yet?

It Gets Better

Yes, Fannie Mae and Freddie Mac often follow each other. So, count on Freddie Mac instituting the same increased fees in the next couple of months. Furthermore, Fannie and Freddie have been implementing credt score (FICO) based increases to interest rates. You could literally have a 1% higher rate than some consumers just because of your credit score. This credit score based system is likely to stay and likely to get even worse. That’s right, it will get worse before it gets better.

Still Don’t Believe Waiting is a Suckers Choice?

I’m going to put together a comparison. This is simply for demonstration purposes only, but it should drive my point home that your overall cost of ownership should be what you’re focusing on.

Assumptions:
Let’s assume that homes could drop another 5% and that would be the skeptics “bottom”. Let’s also assume in this scenario, there will be 20% down (only to make this the best case scenario for skeptics). Let’s also assume that in the future the new ‘adverse market fee’ from Fannie Mae has kicked in with a small credit score adjustment (this really is more than fair).

Today:
You decide you want to buy a home for $200,000.
You are financing $160,000 (80% of purchase price).
You can obtain financing at 6.25% for 30 Years, Fixed.

Your monthly payment (principal and interest) would be: $985

Billionaire Investor, Waiting For Bottom:
You have waited for the home to be bought for $190,000.
You’re financing $152,000 (80% of purchase price).
You can now obtain financing at 6.75% for 30 Year, Fixed.

Your monthly payment (principal and interest) would be: $985

They cost EXACTLY the same!

The Big(ger) Picture

The one thing that isn’t being addressed here is the availability of these programs. If you’re putting 20% down, you’ll always be able to get a loan (assuming you have a job, and some money in the bank). However, What If:

You’re short on cash?
You’re a first time home buyer?
You’ve got less than perfect credit?
Don’t have a credit score at all?
Need to use a roomate’s rent for income?
Want that home that’s currently on the market?
Your landlord kicks you out?
A dog had a square….?

My point is these things begin to matter. If you want to bulletproof your approval, you need to get started today. While there is still a loan you can get. I’ve had multiple potential homeowners come to me (in the past few months) and I’ve had to turn them down (when they were well qualified) and they could have qualified without a problem just 6 short months ago. That hurts.

There Is No One Size Fits All Answer, But There is a Way to Find Out!

If the answer was the same for everyone, there would be no need for professionals in this business (oh wait, that recently changed huh?)… Truth is, things have changed. Some Iowans are sitting on the sidelines waiting for the ‘bottom’ of the market, but have no idea how their financing impacts their plan.

If you or someone you know is looking to purchase…. or sitting on the bench, tell them to check this out. I think the comparison is about as ‘best case scenario’ you could use. Trust me, things could get much more different.

As always, if you’ve got questions and need answers, I’m here to help.

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Mortgage Market and Rate Update - Week of August 18th

Tyler Osby (Four Legacies Mortgage) — Sun, 24 Aug 2008 21:16:49 -0500

Tyler's Daily Blog is Found at WealthWithMortgage.com .

Also, If you have any questions, please don't hestitate to contact Tyler and his team!

Mortgage Market and Rate Watch For Week of August 18th, 2008

What To Watch This Week?

I’ve said it before, I’m going to say it’s true this week as well. Stocks will likely play a part in which direction things go this week. With oil prices on the decline, it also looks like the US dollar could be looking a little more attractive. This is also good for mortgage rates.

Besides all of the day to day market activity, there are also a bunch of economic reports coming out. If I had to pick two reports that would likely move the market this week, they would likely be:

Producer Price Index - Tuesday - This is always a great report to indicate the inflation in the wholesale side of business. Again, simple rule of thumb - if inflation is higher, mortgage rates will likely move in the same direction (there are exceptions).
Philly Fed Index - Thursday - This report is a summary of the tri-state area Pennsylvania, New Jersey, and Delaware. It is a summary of manufacturing in the area. Remember, strong economic news = bad for mortgage rates. The inverse is also true.

You Can Stay Updated!

**Here’s this week’s economic calendar:**

As a Consumer, How Do You Keep Posted on the News?

**Work With Mortgage Professionals In The Advice Business**

Why Am I Posting A Calendar?

So You Say, What Are Mortgage Rates Currently?

I get this question all too often. If I’m being fair.. and honest (which is my policy). I would be doing you a huge disservice to just quote a rate.

Original Photo Kudos.

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Mortgage Market and Rate Recap - Week of August 11th

Tyler Osby (Four Legacies Mortgage) — Sun, 24 Aug 2008 21:15:30 -0500

Tyler's Daily Blog is Found at WealthWithMortgage.com .

Also, If you have any questions, please don't hestitate to contact Tyler and his team!

Mortgage Rate and Market Recap for the Week of August 11th - August 17th, 2008

National News Matters

It may surprise some, but the national news of Russia’s invasion of Georgia really created movement in the market early last week. Mortgage rates worsened slightly on Monday, but luckily took a turn for the better for the ladder part of the week. This is just a quick reminder that you need to tune in to international stories like this if you want to understand why the markets are moving!

Inflation Came In High?

On Thursday, the Consumer Price Index (or CPI) came in higher than expected. In fact, it came in 5.6% higher than last year! That’s the highest year over year increase since 1991!! Surprisingly enough, mortgage rates continued to improve after this news! It just goes to show that if you’re only looking at one report and not the entire picture, it’s tough to predict where things are headed.

How Did Rates Improve?

This was the question of the day on Thursday. The ‘why’ behind it was falling oil prices! With oil prices hitting $147/barrel in July, the market is happy to see oil back down to $113/barrel. Since Thursday’s report was a ‘lagging indicator’ being a month old, traders thought with the declining cost of oil - next months figures would look much better (or less bloody).

What Did Those Reports Say?

Each week, I put up an economic calendar of news coming out that following week. Here’s the results from last week:

(Click to Hugisize)

What Impacts Mortgage Rates?

If you’re looking to purchase or refinance a home, it’s important to know what moves mortgage rates. There are normally two major things that impact the direction:

Economic News. (That’s these calendars).
International News. (major events, war related, etc).
Stock Market. (Money flows from equities (stocks) to bonds when it seeks shelter).

What Are Rates Based On?

It’s been mentioned before, but as a common reminder - mortgage rates are only based on one thing. Mortgage Backed Securities (MBS). The only way you have access to these is through live bond quotes.

Looking For Mortgage Rates?

Information without obligation. That’s my policy. If you like what you hear, my team would love to help!

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Fannie and Freddie Make Mortgages More Expensive

Tyler Osby (Four Legacies Mortgage) — Sun, 24 Aug 2008 21:13:46 -0500

Tyler's Daily Blog is Found at WealthWithMortgage.com .

Also, If you have any questions, please don't hestitate to contact Tyler and his team!

Re-Pricing of Risk…Again

Often when a lender feels like they’re taking on more risk than they Fannie Mae and Freddie Mac are going to be adding ‘adverse market fees’ to thier mortgages. This isn’t the first time we’ve seen this happen. Back in March of this year, Fannie Mae added a .25% ‘adverse market fee’ to all mortgages. Ultimately this ‘fee’ was built into the interest rate. Often resulting in a .125% higher interest rate for a client.

The new announcement by Fannie Mae this week announces that the adverse market fee will be increasing from .25% to .50%.

When Does It Kick In?

According to Fannie Mae’s announcement, November 1st 2008 will be when they require that fee for delivery. What that means is most likely you’ll see this kick in starting 30-45 days before that (because of the term of the lock)

What Are Mortgage Rates Based On?

It’s been talked about before, but It doesn’t hurt to mention it again. Let’s address the chain (assuming 1 being the first in the food chian).

Wall Street - They convert investors money into mortgage backed securities.
GSE’s (Fannie and Freddie)
Borrowers

Mortgage money ultimately comes from Wall Street. From Wall Street it sells to GSE’s (Government Sponsored Enterprises) such as Fannie Mae and Freddie Mac. From here Fannie and Freddie build in their margin for profit. That margin is now being increased to compensate for the rising risk on mortgages. Ultimately the cost gets passed on to the borrower (YOU) and a higher interest rate is paid.

Forget What You Thought Before

Before, mortgage rates were simply based on mortgage backed securities. Now, we’ve see additional fees added to mortgage rates. Not only is there a new adverse market fee, but there are also loan level price adjustments (LLPA’s) that are based on credit score. I’ll be covering that on another blog post.

Get Off The Fence If You’re On It

I’ve been saying this for months now. Mortgage bacekd securities may be holding steady (relatively), but mortgage rates can still increase with these new fees. It’s going to continue to get worse before it gets better. If you’re waiting to hit the ‘bottom’ for home prices, you need to take into consideration the increasing borrowing cost.

We’re here to help you sort through the options. If you have any questions, don’t hesitate to ask!

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Wondering What To Charge For Rent?

Tyler Osby (Four Legacies Mortgage) — Sun, 24 Aug 2008 21:12:05 -0500

Tyler's Daily Blog is Found at WealthWithMortgage.com .

Also, If you have any questions, please don't hestitate to contact Tyler and his team!

You’re Not The Only One

When deciding how much to charge for rent, most investors are trying to weight out two (painfully obvious) concerns:

What is the most rent that I can get out of this property each month to maximize my cash flow?
What amount of rent will keep my property occupied with a good tenant that won’t leave for a ‘better deal’.

Where Can You Go?

Believe it or not, there are a lot of resources online where you can do your ’shopping’ for comparable rents. I’ve found one in specific I’ll recommend:

You’ll need the following information to get the comparable rents:

Property Address
Property City & State or Zip Code
Current Monthly Rent (What You’re Charging/Thinking of Charging)
How Many Bedrooms?
Units in Building (In case it’s an apartment complex)

From there, you’ll get your results.

What Do You Get?

You’ll get a map of the rental properties being used to give you a comparable rent schedule.
You’ll see a scale of the rents. Low-Medium-High. The needle represents where you lie in that scale.
Here are examples:

There Are Other Choices

Although I’ve come to really like Rent-O-Meter, I’ve also found success with other techniques. Here are a few other favorites:

Calling other property management companies in the neighborhood.
Looking on Craigslist.org to see what else is for rent and what they’re looking to rent places out for.
Newspaper advertisements.
Contacting local Realtors that have experience with investment real estate (I can connect you to someone on this one).
Contacting appraisers in town that may have experience inspecting investment properties (they have to do a comparable rent schedule on an investment property appraisal).
Join a local property investor association and ask around.

Make Educated Decisions

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Des Moines Iowa Real Estate Market Watch - Week of August 4th

Tyler Osby (Four Legacies Mortgage) — Sun, 24 Aug 2008 21:10:13 -0500

Tyler's Daily Blog is Found at WealthWithMortgage.com .

Also, If you have any questions, please don't hestitate to contact Tyler and his team!

What’s The Real Estate Market Doing?

I’m a fan of having as much information available before I take action on any big decisions. I don’t know about you, but I think buying or selling a home is a pretty big deal.

Do YOU Need Help?

I can also reach out to my connections throughout the country if you’re looking for real estate outside of Iowa. So please, feel free to contact us, we’d love to help!

Why Should You Care About Statistics?

With her permission, I post the facts here so you can come up with your very own market opinion. Here’s this week’s market commentary:

““As you can see active listings are down over 400 from where we were last year at this time. This shows that inventory is declining but our sales, on average, still aren’t where they were last year.” - Heather Barglof, RE/MAX Real Estate Concepts

(Click to Hugisize)

What Does This Report Cover?

I really enjoy this chart because it gives a breakdown of:

Days on the Market
Price Per Square Foot
Number of New Listings
Number of Expired Listings
Number of Price Reductions
Pending Home Sales (by price)
New Home Sales (by price)
All Active Home Sales (by price)
Best of all, it compares this week vs. last week and last year!

We Love Great Information and Love to Give Great Information!

If you’re a super cool person and have any market statistics you think our readers would find valuable, please feel free to contact me. If it’s relevant, It’ll show up here!

If you’re looking for my professional opinion or looking for a comment (press related), please contact me here .

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Mortgage Market and Rate Watch - Week of August 11th

Tyler Osby (Four Legacies Mortgage) — Sun, 24 Aug 2008 21:08:10 -0500

Tyler's Daily Blog is Found at WealthWithMortgage.com .

Also, If you have any questions, please don't hestitate to contact Tyler and his team!

Mortgage Market and Rate Watch For Week of August 11th, 2008

What To Watch This Week?

There’s always a lot going on throughout the week. The good news is there are usually just a couple of things that are big market movers. The bad news is sometimes a report will come out that totally shifts things. Like last week when Fannie Mae announced they lost $2.3 Billion.

So, these are the two reports (If I had to pick) that will likely move the market this week:

Retail Sales - Wednesday - This will give us a feel for how consumer spending is coming along. If things come in stronger than expected, stocks will rally and money will fly from bonds to stocks (greedy traders). If things come in weaker than expected, count on mortgage rates to improve.
Core Consumer Price Index (C-CPI) - Thursday - This report happens to be one of the Fed’s favorite ways to measure inflation. If things creep up higher than expected, look for mortgage rates to increase. If it comes in on target or better, mortgage rates will likely hold or improve slightly. The big concern is things coming in too hot (that’s Tyler talk for high), then traders might quickly sell of mortgage backed securities. That would result in a higher mortgage rate for consumers.

You Can Stay Updated!

I’ll be following things as they happen with live bond quotes and do what I can to keep everyone informed through Twitter. My clients always get the advice first, so I’ll try to filter though as quickly as I can.

**Here’s this week’s economic calendar:**

(Click to Hugisize)

As a Consumer, How Do You Keep Posted on the News?

**Work With Mortgage Professionals In The Advice Business**

Why Am I Posting A Calendar?

So You Say, What Are Mortgage Rates Currently?

I get this question all too often. If I’m being fair.. and honest (which is my policy). I would be doing you a huge disservice to just quote a rate.

Original Photo Kudos.

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Mortgage Market and Rate Recap - Week of August 4th

Tyler Osby (Four Legacies Mortgage) — Sun, 24 Aug 2008 21:05:54 -0500

Tyler's Daily Blog is Found at WealthWithMortgage.com .

Also, If you have any questions, please don't hestitate to contact Tyler and his team!

Mortgage Rate and Market Recap for the Week of August 4th - August 10th, 2008

Inflation On The Rise

As I said, Monday’s PCE Index was an extremely important report for the week. Monday’s report brought the largest increase month over month for 27 years. Yea, it seems super rough - I’m not sure it was as bad as everyone made it out to be. Unfortunately my opinion doesn’t impact mortgage rates. Mortgage backed securities do, however. Traders spent the week moving money from bonds (MBS) to stocks.

The Fed Decides to Leave Things Alone

After Tuesday’s Fed Meeting, we found that the Fed has decided to keep things unchanged. The fed sees the concerns of inflation, but feels that it is too early to take any action in hiking the fed funds rate. Some economists think that the Fed will not move the Fed Funds Rate until the 1st or 2nd quarter of 2009. I personally feel (and it’s exactly that, a personal opinion), inflationary figures will continue to rise and the Fed will decide to take action sooner than later.

What Did Those Reports Say?

Each week, I put up an economic calendar of news coming out that following week. Here’s the results from last week:

(Click to Hugisize)

What Impacts Mortgage Rates?

If you’re looking to purchase or refinance a home, it’s important to know what moves mortgage rates. There are normally two major things that impact the direction:

Economic News. (That’s these calendars).
International News. (major events, war related, etc).
Stock Market. (Money flows from equities (stocks) to bonds when it seeks shelter).

What Are Rates Based On?

It’s been mentioned before, but as a common reminder - mortgage rates are only based on one thing. Mortgage Backed Securities (MBS). The only way you have access to these is through live bond quotes.

Looking For Mortgage Rates?

Information without obligation. That’s my policy. If you like what you hear, my team would love to help!

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Should You Pay Points on Your Mortgage?

Tyler Osby (Four Legacies Mortgage) — Mon, 11 Aug 2008 21:57:55 -0500

Original Post Found HERE

The Big Question

Should you pay points when getting your mortgage?

It’s a question that does not have one right answer (even though some people are convinced otherwise). To be able to determine if you should pay points, I think there are a few things you must know. This post is intended for you to determine what points are and most importantly if it makes sense for you to pay them. Don’t listen to anyone else. Make the decision for yourself. It’s easy once you understand it. Ready?… Ok, here we go!

What Are Points Anyway?

First thing’s first. You need to know what points are. Points are often referred to as:

Origination Fee
Broker Fee
Discount Fee
Buy Down Fee

Simply put, a point is one of two things (with few exceptions):

Compensation to the lender originating a loan.
A fee to secure a below market interest rate.

How Do Lenders Get Paid?

This is another post in itself, but it’s important to understand before we move forward. Mortgage bankers and brokers both get paid two different ways. Often times it’s actually a combination of the two.

1. Fees that are “closing costs” on the front end of the loan (also found on the good faith estimate).

Origination Fee
Processing Fee
Application Fee
Credit Report Fee (even though it’s really illegal to overcharge for it)
Commitment Fee

2. Servicing Release Premium From The Bank.

This is directly tied to the interest rate that you pay on the loan.
It is also called - Yield Spread Premium (YSP).
This is what allows lenders to charge ‘No Points’ and still make money. Trust me, they are notworking for free.

You Choose To Pay A Lender One Way or The Other
When borrowing money from a bank, you can structure the deal to do one of the following:

Get a market rate and pay a 1% origination fee.
Get a below market rate and pay discount points (and possibly an origination fee).
Get an above market rate and pay no origination fee (but look out for other front end fees as listed above).

Tricks Some Lenders Play

I’m not a negative guy - but I have to disclose some dirty little tricks I’ve seen other lenders around town do. Some lenders will propose a ‘No Points’ loan but then charge a $600 commitment fee or an extremely high processing fee. I’m not against ‘No Points’ loans, but make sure that when you’re comparing paying points vs. not paying points that you’re comparing similar deals.

If you’ve got a tricky situation and need a second opinion - please, feel free to call me. I look at this sort of thing every day. You can’t exactly fool a certified mortgage planning professional.

All Things Said, How Do You Know Which Makes Sense?

Here’s The Process:
Step One
In order for you to really know if it makes sense, you need to determine the answers to a couple of questions.

How long do you plan to live in this home?
How long do you plan to have this loan?

Step Two
Once you’ve determined how long you’ll be in the property, you’ve now determined your ‘Break Even Point’ (we will get there, just hold on).

Now you need to get two different good faith estimates with interest rates and monthly payments.

One with a 1% origination.
One with no points (and no other junk fees).

Step Three
Determine the difference between the two monthly payments. For example:

1. 30 Year Fixed Mortgage. Paying a 1% origination fee.
Example Rate is 6%. Loan Amount of 200,000.

Points Payment is $1,199 per month.

2. 30 Year Fixed Mortgage. Paying no points. No junk fees.
Example Rate is 6.25%. Loan Amount of 200,000

No Points Payment is $1,231 per month.

The difference between the two payments is: ($1,199 - $1,231) = $32

Step Four
Determine your break even point between the two.

If you paid points, it cost you $2,000 in this example. You also saved $32 per month. You determine your break even point by doing the following:

(Cost of Points) / (Monthly Savings By Paying Points) = Break Even Point (in months)
Example: $2,000 / $32 = 62 Months

Step Five - Final Step!
Go back to step one. If you said that you would be selling or refinancing your home before 62 months, you should go with the ‘no points’ option. If you think you’ll have the loan for longer than that, you should pay the 1% origination point. Easy enough?

Work With a Professional

As you can see, there is no right or wrong answer here. What does really get under my skin is when someone advises you to go one direction or the other before doing a break even analysis. I’m not going to point any fingers, but if you’re buying a home in Ames, Iowa (again, not pointing fingers) - but it is a market STANDARD to do no points loans.

I swear, potential clients seem convinced that their Ames lender is doing the loan for free. Realtors can often be firm on the ‘No Points’ loans in these situations. I respect that. All I ask is that you act as an educated consumer. You now understand how to determine what makes sense and what doesn’t. You’re not a nationwide statistic and you shouldn’t be treated like one (the average home loan is roughly 4 years). You know you better than anyone else (including your Realtor). Do the math, and tell me what makes sense.

How I Work

Every client I work with goes through this break even analysis to determine what makes most sense with their long term goals. It’s ultimately your decision. Either way, I’ll be very clear on how I get paid. No black box here. Transparency is king. Welcome to the new standard

The bar has been raised. Are you in?

If you’d like to have me take a closer look at your loan - I’d be glad to help! Remember, I do this every day of my life. You only have to worry about it a few times in a lifetime. I’m here to answer questions.

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Photo Kudos On Rabbit In The Hat

Original Post Found on WealthWithMortgage.com

The Fed Decides To Extend The Discount Window Terms

Tyler Osby (Four Legacies Mortgage) — Mon, 11 Aug 2008 21:52:45 -0500

The Fed announced today (Wednesday, July 30th) that they will be extending their discount window terms.

They will be increasing the now 28 days repay loans to 84 days for banking institutions. The first auction offering these terms is on August 11th.

Just another sign that the goverment is willing to do what it takes to releave as much stress on the financial system as possible!

More found on MarketWatch.com!

New Bill Impacts Capital Gains Exclusion

Tyler Osby (Four Legacies Mortgage) — Mon, 11 Aug 2008 21:50:37 -0500

So, you remember that rule that capital gains exclusion rule that has become pretty much common knowledge?

Go ahead and get ready to change it.

Sneaking It Under The Radar

The Housing and Economic Recovery Act of 2008 had a lot of great (highly publicized) components:

Increased funding for Fannie Mae and Freddie Mac.
Expanded loan limits in high cost areas.
Tax credit of $7,500 for first time home buyers (Haven’t owned a home in 3 years) - more on this later.

In a huge piece of legislation like this, it’s easy for things to roll under our radar.

This piece of legislation has a great example.

New Rules

So, the new rules are targeted at the savvy investors who were buying a property, living in it for two years, then moving on to the next property and keeping the old one as a rental.

Here’s the new formula (courtesy of Dan Green @ The Mortgage Reports & US Government):

As Dan Green put it, the new rule takes into consideration the actual usage as a primary residence over it’s qualified life.

An Example of Before Vs. After

Say you bought a home for $200,000 5 years ago. You moved out of it three years ago so you could buy your new home. You’re now selling the home you bought 5 years ago for $225,000.

Your Profit is $25,000.

Before:

You have no capital gains tax liability on this profit. It didn’t matter if you moved away from that property after two years and turned it into an investment property.

After:

Since you lived in the home 40% of the time, you’ll be responsible for capital gains on $15,000 of that profit. Big change huh?

Again….

That’s $0 considered capital gain vs. $15,000. Big change. This could cost a lot of investors some serious cash.

Now What?

When Does This Kick In?

Wouldn’t you rather say you had the conversation and made a strategic decision instead of saying you had no idea?

Need Help?

If you need to connect with a professional for advice, I’d be happy to help!

Some of the advantages of being an active blogger is that I’ve accumulated connections not only in Iowa, but across the entire country!

Let me know what my team can do for you.

New Bill Might Save Down Payment Assistance

Tyler Osby (Four Legacies Mortgage) — Mon, 11 Aug 2008 21:48:50 -0500

FHA Seller Financed Downpayment Reform and Risk Based Pricing Authorization Act of 2008

This new bill was proposed on August 1st. It is a new bill might bring life back to down payment assistance and non-profit companies such as Nehemiah and Ameridream. The bill is H.R. 6694 and currently looks like the only hope to keep down payment assistance around after October 1st, 2008.

Who Did It?

The bill was sponsored by U.S. Representative Al Green (from Texas). This new legislation was also co-sponsored by U.S. Representatives Gary Miller (of California), Maxine Waters (also of California) and Christopher Shays (Connecticut).

What Would This New Bill Do?

The Main Objective

This new bill would again allow Down Payment Assistance (a.k.a. DPA) be an allowable gift source for FHA loans. Currently, the recent passing of H.R. 3221 has left down payment assistance discontinued as of October 1, 2008.

The Big Obstacle

Obviously down payment assistance was included in the recent housing bill because it has been the source of many foreclosures. Specifically, loans with down payment assistance were 3-4 times more likely to be foreclosed on. Kind of wild.

Also, this doesn’t take into consideration many of the loans that have been originated after the popular Fannie Mae and Freddie Mac programs disappeared (it wasn’t long ago!).

Major Changes

In order for down payment assistance to even be considered to be reinstated, I think it’s obvious that there would have to be some changes to the way. Here’s what I read so far (actual numbers will likely change if this bill makes it through):

Down Payment Assistance:

FICO Scores over 680 get a ‘free pass’ to use Down Payment Assistance.
FICO Scores between 620-680 mortgage insurance is required (at least that’s how I read it)
They would like to allow borrowers with less than 620 FICO score, but they have to determine the mortgage can be insured without ‘resulting in need for an appropriation for a credit subsidy’.

Risk Based Pricing:

In all, the bill is requesting the authorization for risk-based pricing. This is the same type of risk-based pricing that Fannie Mae implemented in the first quarter of this year. If a borrower has less than a 680 FICO score (or 720 in some cases), you will pay a higher interest rate.

This goes back to risk vs. return. Basic rules of business.

Interpretation

Remember, this bill was just released over the weekend. I believe I’m the first person to write anything on it, so I’m interpreting the legal speak at my best. I’m not an attorney, I’m a mortgage guy. If you’re looking for an attorney’s summary, I can recommend someone

Ultimately, this bill will probably see some changes before it moves through and would be passed.

Who Cares?

You should. But if you know anyone who’s been looking at buying a home and cannot come up with the 3% required down payment. Many Americans (that are still managing to make their house payments) have purchase their home with little to no money down. If programs like seller down payment assistance disappear, you’re going to shore up a lot of potential buyers and kick them right out of the market.

Over the past year, over 32,000 Americans have called on Congress and the Bush Administration to keep downpayment assistance around. Some of the large supporters include:

National Association of Homebuilders
Labor Council for Latin American Advancement
U.S. Conference of Mayers
Congressional Black Caucus
Congressional Hispanic Caucus

Talk about a diverse group of supporters. It’s obvious that this impacts many Americans and I encourage YOU to take action and do what you can to support this bill. It’s a very big deal.

Want To Help Keep Downpayment Assistance Around?

Contact your local state representatives and let them know why you feel it’s good for Americans.

In the Meantime

If you or someone you know is looking at purchasing a home, let them know that they have until October 1st to close on a loan with down payment assistance. If they need help in getting qualifed of need a second opinion, let me know. My team and I would be glad to help!

Heavy Reading

If you’d like to see the actual bill, it can be seen here: Copy of HR 6694

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Get Ready for Smart Money Week Iowa!

Tyler Osby (Four Legacies Mortgage) — Tue, 08 Apr 2008 09:27:24 -0500

**Click Here to See the Original Post on WealthWithMortgage.com!**

That's right! Starting April 5th, Money Smart Week begins. Money Smart Week is a week long event focused on educating consumers on how to more effectively manage their money. We like to say teaching consumers how to keep more of what they make!

At Four Legacies Mortgage, we're huge advocates of financial literacy. This is why we have decided to sponsor this exciting week of financial education. As always, we'll be offering a jam packed week of free classes/seminars and we hope you can make it to one! Here is our personal schedule of activities for next week:

Monday, April 7^th at 7pm-8pm - Improving Your Credit Score - With everything that credit score influences now its more important than ever to understand how it is calculated and how you can take control of it. We promise to teach you how to improve inaccurate records, manage your debt so your credit score is at its peak and lead you to save thousands of dollars in unnecessary interest over your lifetime.

Tuesday, April 8^th at 4:30-5:30pm -How to Get Debt Free and Stay Debt Free Forever - With a national savings rate of -2% we think its more important than ever to know how to be debt free. We promise to show you how to pay off debt quickly and put you on track for an abundant life that you deserve.

Thursday, April 10^th at 7pm-8pm -Building Wealth Through Real Estate - Whether you're a seasoned homeowner or looking to buy your first home it is extremely important to own real estate right. We will show you how to let your money work for you and build wealth over time through the ownership of real estate.

Friday, April 11th at 4:30pm-5:30pm - How to Plan and Pay for College - With the average college education cost being $50,000 its more important now than ever to plan for college expenses. Whether there is a need 18 years from now or right around the corner - we will show you strategies that will fund your child's education.

If you can't make our activities, there are still a long list of activities to get involved in. Please get in touch with me if you've got anything I can help you out with!

All of our free classes are held at 939 Office Park Rd. in West Des Moines, Iowa. If you'd like to come out, we'd love to have you. Please RSVP if you're planning on coming out. We love to have a seat warmed up for you and a beverage ready for your arrival.

We hope to see you soon!

Forbes Ranks Des Moines #4

Tyler Osby (Four Legacies Mortgage) — Tue, 08 Apr 2008 09:24:06 -0500

**Click Here for the Original Post on WealthWithMortgage.com!**

In case you missed it - Forbes published the 10 Best Cities for Business and Careers. Des Moines ended up being ranked #4 in the nation for best metros!

It's not that surprising when you consider the numbers. We've had huge job growth (26,000 in the last five years), a low unemployment rate of 3.4% and our business costs are 10% below the national average! Take these numbers and an extremely low cost of living and you have one hot place for businesses to grow.

If you're an Iowan - you should be proud. If you're not an Iowan - you should seriously consider!

Here are the top ten metros:

Iowa continues to be a highly competitive place to raise a family and grow a business. If you're considering the move, you should get in touch with me!

**Click Here for the Original Post on WealthWithMortgage.com!**

Median Home Prices In Iowa - 2006 vs. 2007

Tyler Osby (Four Legacies Mortgage) — Tue, 08 Apr 2008 08:47:39 -0500

**Click Here to See The Original Post on WealthWithMortagage.com!**

Have you wondered what home prices in Iowa have been doing? I know as a homeowner, I have.

I was getting my car washed on Saturday, and picked up the Des Moines Register business section and found an interesting article that included median prices across the state in 2007 and their change since 2006. Here's a quick Tyler Osby summary of the chart I'm talking about...you can tell by the fuzziness. (I have to do this since the Des Moines Register isn't cool enough to put it on their 'online article')

Again, these numbers are based on median home prices. Statistics can be manipulated to look super sexy in one scenario and not so sexy in another. Take into consideration if there are many more higher priced homes (say the handful of homes in Des Moines worth over 1 Million) sell in 2006 and not in 2007 it could really hammer those numbers (at least for 'median home prices').

If you want to see some specific statistics ran, just let me know. I know plenty of people in the real estate business that like crunching numbers as much as I do.

I have to call the Register out on being a few weeks late with the article I based this chart on. The article was titled 'Down Payment Cost May Grow for Borrowers'. If you subscribe to my blog, you saw this coming weeks ago. Paula Lavigne, you're on notice (a little Stephen Colbert humor). If Paula does happen to find this though - I really enjoyed her story and it was well written and researched. Keep up the great work. I'd be happy to help keep you up on how the mortgage market is effecting Iowans. The easiest way is to just subscribe.

Here's the original article from The Des Moines Register.

**Click Here to See The Original Post on WealthWithMortagage.com!**