Hal's Mortgage Blog

Here’s a great story about baseball – and perspective:

A little boy was overheard talking to himself as he strutted through the backyard, wearing his baseball cap and toting a ball and bat. “I’m the greatest hitter in the world,” he announced. Then he tossed the ball into the air, swung at it, and missed.

“Strike one!” he yelled. Undaunted, he picked up the ball and said again, “I’m the greatest hitter in the world!” He tossed the ball into the air. When it came down he swung again and missed. “Strike two!” he cried.

The boy then paused a moment to examine his bat and ball carefully. He spit on his hands and rubbed them together. He straightened his cap and said once more, “I’m the greatest hitter in the world!” Again he tossed the ball up in the air and swung at it. He missed. “Strike Three!”

“Wow!” he exclaimed. “I’m the greatest pitcher in the world!”

Either way – he’s right. Isn’t perspective a wonderful thing?

Sincerely,

Hal Tennant

P.S. Have you had a recent experience that changed your perspective about something? I’d like to hear about it.

For the most part, the value of real estate has plummeted. But why have property taxes risen over the past few years? The short answer: Owners have not regularly appealed their tax assessment—and even fewer people know that they have the option to do so.

The Wall Street Journal reported that taxpayers have filed about 24,000 lawsuits (so far), protesting their assessments. The National Association of Realtors® also estimates that almost 60% of all homes are over-assessed. And the odds are that your tax bill has not been adjusted

downward—if the value of your home is declining!

First, check with your county tax assessor—that’s where it all starts! Each county has their specific set of rules and procedures that you must follow in order to appeal the assessment value of your home. They usually have a form for you to complete; a list of supporting documents that you will need to submit and only certain dates to present your case.

Second, find out how property values are assessed (Independent appraiser? County employee? Based on the sales price of neighborhood properties?)

Third, determine how often your county re-assesses the values. (Every year? Every 5 years?)

Fourth, review your assessment notice for errors—i.e. lot size, square footage, number of baths, size of garage, recent re-zoning in your area, new utility easements, etc.

Finally, make sure that you have applied for all the “property tax credits” that your county/state allows—such as a mortgage exemption; low-income residents; disability credits; old-age exemptions, etc. Get a list of exemptions from your Assessor’s office.

The American Home Owners Association (www.ahahome.com) sells a Property Tax Reduction Kit for around $30. It’s a good guide to follow—but you’ll still have to meet the requirements and rules of your local government’s tax officials.

The U.S. Senate has passed an amendment that would extend the closing deadline of the homebuyer tax credit by three months. Right now, qualifying homebuyers who were under contract by April 30 have until June 30 to close the deal. But because of the large volume of applications for lenders to process, concerns have begun to surface that some buyers may miss out on the tax break simply because of the backlogged pipeline.

The National Association of Realtors (NAR) says it has received reports that as many as a third of the buyers eligible for the credit have already been notified by their lender that they won’t make the June 30 closing deadline. The Senate’s amendment, approved Wednesday by a vote of 60 to 37, would give homebuyers and their lenders until September 30 to complete their transactions.

The extension was proposed by Senate Majority Leader Harry Reid, whose home state of Nevada still holds the title of one of the most distressed housing markets in the country.
Reid says not only did the tax credit make it easier for thousands of Nevadans to purchase their first home, it helped reduce the state’s overblown inventory of residential properties.

But a statement on his Web site warns, “There is growing concern that because of the time it takes for banks to complete transactions such as short sales, many of these home purchases would not be complete before the deadline through no fault of the homebuyer.” The measure granting an extension is part of a larger $140 billion jobs and tax bill currently under consideration by the Senate. A Senate vote on the full legislation is expected to come later this week or next week, and then it will be sent to the House for review.

“If Congress fails to act promptly, then prospective homebuyers might not get the benefit of the homebuyer tax credit, even though they have completed contracts,” NAR stressed in a recent letter to lawmakers.

The next step is the Senate. Since this is not considered a controversial bill, passage is likely. You may recall from my earlier post, this will appropriate $30 billion dollars for this program for 2010 and every year after. This will eliminate having to do it again next year and subsequent years thereafter.

Here's more good news. This program is not funded by taxpayer dollars. It is entirely self sustaining with dollars coming from the Upfront Premium, paid by the borrower at the close of the loan, which is held in reserve to offset any losses that might ensue from foreclosures in the future. 

Hearing some great things about Rural Development, here is the latest bill that is going in front of Congress http://budurl.com/rdbill502

A survey released by Fannie Mae on April 6 says that 64% of the public thinks yes. Most of those polled also thought it would be tougher to get a loan today. My answer to that is – maybe.

 
It’s true that the marginal buyer may find it tougher. The subprime days of 100% financing with a 580 credit score are gone. Don’t hold your breath waiting for them to come back either. However Government loans such as VA, FHA and USDA/RD are still available (funds are running short for USDA but hopefully Congress will appropriate more).

 
If you have a minimum of 620 credit score and steady employment, Government loans may be your best bet. Guidelines have tightened up a little bit and lenders have been slapped with more compliance regulations but rates are still low.

And don't forget about all those bargain homes for sale. So the answer is yes, It’s a Great Time to Buy a Home!

The window of opportunity for low interest rates is slowly closing. Since November of 2008 the Federal Reserve has been buying mortgage-back securities in an attempt to keep mortgage rates low. It has worked! Experts say rates could easily be .5% higher today without the Government feeding $1.25 trillion into the market over that period of time.

 
Recently however, they have been winding down their purchases. In fact, as of April 1, 2010, they will cease buying mortgage bonds altogether. Remember the law of supply and demand from your economics class? Take the Government demand out of the equation and what happens? The bond market declines causing interest rates to go up.

 
How much they will increase is a guessing game, but don’t be surprised if rates are somewhere between 5.5% and 6% by the end of the year. To put that in terms for the average home buyer, .5% increase in interest rate means an increase in payment on a $100,000 home of roughly $30/mo.

 
If you would like more info on this, give me a call.

Many homeowners signed up for the government mortgage assistance program and were one of the lucky few who got a loan modification. Now their credit score has plunged over a hundred points.

 
So why is this a big deal? Try getting a car loan or debt consolidation loan with subprime credit. Even worse – many employers check credit along with a job hunter’s application. Did you know that credit card interest rates and even your homeowner’s insurance rate are score based?

 
Is this unfair? Look at it this way. Credit scores are a numeric indicator used to estimate your likelihood of defaulting on a loan. The higher the score, the less likely to default. Consumers who enter into a relief program are already financially distressed, thus more likely to default.

 
If you or someone you know is considering this option just know that there are consequences that must be carefully considered. Sometimes the pitfalls are not obvious and no one tells you about them until after the fact.

A survey conducted by the National Association of Realtors found the following reasons why an open house may be a waste of time.

1. Low conversion rate - Realtors estimate that fewer than 1% of those attending an open house will buy that property. Furthermore, 54% of all recent buyers never attended an open house.
2. People who attend open houses aren't serious buyers - most are curious neighbors and "Lookey-Loos" or tire kickers. Many are six months or more from actually being ready to make an offer. You need to sell now.
3. Close to 90% of buyers start their search on the internet - they can see more home in 30 minutes than in a whole day of open houses.
4. Security - you may be opening your home to a burglar who is checking out the scene and will come back later when you're not home. Even worse, I personally know of a Realtor who was closing down the home she was sitting when a man arrived and asked if she would show it to him. She reopened it and once inside he attacked her brutally and then fled.

If you are a For Sale By Owner, an open house may be one of your only sources of marketing, just don't get your hopes too high.

If you have your home listed by a Realtor, you can understand why he/she may be reluctant to hold your home open. They may do so to show their good intentions and prove that they are willing to do whatever it takes, however be realistic if the results are less than you had hoped for.