Can you say Bye to MI?

For homebuyers, Mortgage Insurance (MI) is like going to the dentist office, necessary but no fun.

So how fast can homeowners drop MI? With home prices on the rise again, it is a great time to reference how and when MI can be removed from and realize a lower monthly mortgage payment.

Typically there is a two year seasoning, mortgage payments must be current for the last 12 month period AND;

• 78% loan to value (LTV) by principle reduction of original value – minimum 2 years of payments 

           OR

• 80% loan to value based on the current loan amount divided by the current value – minimum 2 years of payments

It is important to emphasize that waiving MI is always to be coordinated with the servicer of the loan. Each servicer will have specific instructions on how to have the MI removed.

For reference visit www.mgic.com/hpa specifically page 6 and 8 for more details and specifics.

Taking the time to research if you or someone you know can say goodbye to MI, could lead to a significant monthly savings that no one would want to pass up.

Tax Benefits 2011

As most everyone is aware, Congress and the President came to agreement on extending the Bush era tax code. The existing income tax code is basically being extended for 2 more years. This extension is perceived to be a good stimulus tool to try to help the economy continue to rebound. Time will tell as to its effectiveness. There are several changes in the new tax law that will help most individuals going into 2011. Some of the more important are: * reduce payroll taxes by 2% - this is an across the board cut for all taxpayers * estates are not taxable unless they exceed $5M * unemployment benefits extended for 13 months for the long term unemployed * reduction or elimination of the Alternative Minimum Tax for middle income taxpayers If you bought a home in 2008 and claimed the first time homebuyer credit ($7500) it is now time to begin to re-pay that credit. The first installment is due with your 2010 tax return and is re-paid over 15 years. The 2008 credit is different than the first time homebuyer credit that was offered in 2010. The 2010 credit does not have to be re-paid as long as you live in the house for at least 2 years. Due to a recent tax-law change, you may be able to claim an enhanced “residential energy credit” for qualified energy-saving improvements. While Congress discussed limiting or reducing the amount of tax benefit associated with mortgage interest the final bill made no changes. A taxpayer may deduct interest on a mortgage up to $1M on a 1st mortgage and $100,000 on a 2nd mortgage or home equity line of credit. This deduction will almost certainly be up for discussion again in 2 years. As always, it is important to consult with your tax adviser before implementing any tax saving or tax avoidance plans.

Condominium Lending Update

In 2008 and 2009, Fannie Mae and Freddie Mac greatly tightened guidelines for condominiums. In late 2009 HUD followed with the first update of their requirements in years. Most of the HUD reforms were adoptions of those of Fannie Mae. However, they did rescind their spot approval process which the industry had been using for years for existing properties. Now each condo project must be approved by HUD, or in some instances, a delegated lender. For those projects currently approved by HUD, they must meet some of the new guidelines before a loan can close with all the new guidelines being required at the time of the project recertification. There is also a limit on the number of loans that can be financed by FHA. This information is available on the HUD approved condominium website. Some of the guidelines that are currently causing issues with project approvals are: Litigation - If property is involved in litigation it should be for the collection of HOA dues. Fannie Mae will occasionally issue an exception for frivolous lawsuits. Delinquency - If more than 15% of the HOA are 30 or more days delinquent, then it won't get approved. Budget - It should show 10% of the income being set aside for reserve items. Special Assessments - will be looked at closely because the agencies want the budget to be adequate to pay the expenses and property repairs from the yearly HOA dues. 10% - No one group or individual should own more than 10% of the units which could include the developer if the units are not currently on the market, but are being leased out. Commercial Space - Fannie allows up to 20% and HUD allows 25%. Insurance - Required coverage is 100% replacement cost on the buildings, liability or at least 1 million dollars, and fidelity insurance, which is often referred to as employee dishonesty. This is for a 20 unit or more project, and requires 3 months of HOA dues for Fannie Mae and 3 months of HOA dues and the reserve account balance for FHA. Before listing a property, I think it would be a good idea to review a condo questionnaire to make sure the property can get financing. We will be glad to answer questions.

The City of Alpharetta, Georgia

As Alpharetta City Councilman, I recently had the opportunity to sit with Bob Strader of The North Group to discuss the city of Alpharetta, how it is faring in the current economy, what projects are going on, what’s happening with Prospect Park and Westside Parkway and the likleyhood of Milton County. Bob Strader is a Realtor whose focus is on merging technology and real estate. He specializes in helping buyers search for homes online and leveraging technology to maximize online exposure for home sellers. He lives in Milton, GA and is passionate about nurturing and growing the North Fulton community. Part 1 of our interview is posted below. To view the entire interview, please visit the post on the North Fulton blog: http://www.liveinalpharetta.com/blog/?p=1622

Interest Only Demise

Freddie Mac is no longer going to offer interest only products for loans after 6/13/2010. I expect Fannie Mae to follow Freddie’s footsteps and by Labor Day of 2010 the availability of interest only products will be slim. So if you or anyone you know wants to refinance to an interest only program, time is of the essence. It is too early to predict that interest only programs are going to be extinct but trends do suggest less availability.

Interesting Facts about 2009 from a Real Estate Perspective

As many of you know, I attend various Tuesday morning sales meetings at various real estate offices throughout Atlanta. Sometimes I have been asked to speak about the economy or what are the hot mortgage programs being offered; and other times, I simply attend to listen to the leaders of the office talk about the sales activity and what is effecting their business. This week, I attended the Keller Williams Community Partners meeting and listened to Gene Tuggle go over some very interesting statistics that made me say WOW….So, I thought I would share them with you….Facts About 2009…. 1. US Mortgage rates average 5.04% which is the lowest average since Freddie Mac tracked this statistic going back to 1971. 2. 2009 affordability….Most favorable on record. 3. 2009 US Home Sales ranked 4th highest on record. 4. 69% of first time homebuyers stated they “desired to own a home” as the primary reason they purchased a home. 5. Only 6% stated they purchased a home for the tax credit. 6. 90% of buyers used the internet to gather information during the home buying process. 7. 66% of home buyers interviewed only ONE agent. 8. 66% stated they would use their agent again. Interesting facts about 2009….From the numbers, things were not as bad as some have stated and 2010 is projected to be a better year than 2009!!! Some lessons can be taught with these figures. The one that jumps simply off the page to me is that 66% of home buyers only interviewed ONE agent. This is obviously where “prospecting” pays off. Always be asking your current and past clients, friends, vendors and even the person who is your waiter at your next visit to a restaurant if they know anyone interested in buying or selling a home. By the numbers, you have a 2 in 3 chance of getting that deal simply because you asked the question.

Bernanke Speaks...Uncle Sam Throws Another Treasury Auction(s)…..

Federal Reserve Chairman Bernanke will have two speaking performances this week starting with his semi-annual monetary policy testimony to the House Financial Services on Wednesday and then he will he will testify in front of the Senate Banking Committee on Thursday. While I don’t think the message from the two testimonies will differ that much, the market will be listening as to whether the Federal Reserve will continue their current position of keeping rates at current levels for an “extended period” of time. If Bernanke reiterates their commitment to keep rates low and the outlook on inflation seems to be in check for at least the next 12 months, look for rates to move marginally to lower levels. After last week’s rise in rates...any relief would be welcomed!!! In other news, Uncle Sam is throwing another HUGE treasury auction this week. Over $132B in bonds and notes will be auctioned this week starting today with $8B in 30 year inflation indexed bonds. $44B in 2 year notes will be auction tomorrow which should be received well. Wednesday Uncle Sam will auction $42B in 5year notes. Again, this auction is expected to be received well however...if this is not the case it will tee the ball up for a bad auction on Thursday for the $32B in 7 year notes which I believe is the “biggie” of this week's auction party. A poor showing at the 7 year auction will move rates notably higher. Keep your eyes on this auction...we need a good showing here to set the tone for rates for the next several weeks.