New regulations limiting mortgage brokers' compensation go into effect on April 1, and they might prove to be appropriate for an April Fools' Day. Though aimed at unscrupulous mortgage brokers, it seems the regulations will instead hit the nation's struggling housing market.
The Federal Reserve Board says that its regulatory goal is to "protect mortgage borrowers from unfair, abusive, or deceptive lending practices that can arise from loan originator compensation practices." The basic idea is to prevent loan officers from steering borrowers into riskier types of loans or a higher-than-average interest rate to make a higher commission."
http://www.dailyfinance.com/story/real-estate/new-mortgage-regulations-could-hurt-housing/19888351/
Saturday, March 26, 2011
Tuesday, March 22, 2011
Taxes & Your Home: Deducting Private Mortgage Insurance (PMI)
Sticking with the theme, here's an article by Miranda Marquit.
One of the tax deductions that many homeowners have been happy to take since 2007 has been the deduction for the premiums paid for Private Mortgage Insurance (PMI). The tax deduction was slated to expire at the end of 2010, but the tax package passed by Congress last December extended it through 2011. That means that you still have this year to claim PMI payments as a deduction on Schedule A of your Form 1040. (Yes, you have to itemize to take this deduction.)
What is PMI?
Private Mortgage Insurance is designed to protect lenders in the event that you default. You pay mortgage insurance premiums in order to help the lender recoup losses if you stop making payments. Most lenders require borrowers to purchase PMI if you don’t make a 20% down payment on the home.
PMI payments change each year, accounting for a percentage of the outstanding balance. The annual premium is usually 0.5% to 0.75% of the remaining balance. So, if you have a remaining balance of $150,000 on your home, your annual premium would be between $750 and $1,125 a year. That amount is usually divided by 12 and added to your monthly mortgage payment. When you reach the point where you have 20% equity in your home, you no longer have to keep making PMI payments.
Taking the PMI Tax Deduction
If you have been paying premiums, they are deductible on Schedule A when you itemize instead of taking the standard deduction. In order for your home to qualify, though, it has to have been bought after January 1, 2007. The PMI deduction only applies to mortgages made in the year 2007 and after. The mortgage also must be secured by your home.
If you are paying PMI on a mortgage not used for your home purchase, it must have been taken to “substantially improve” your home – so some home equity loans are eligible. The PMI deduction can also be used on one second home in addition to your primary residence.
Realize, though, that there are income limits to taking the PMI deduction. There are no dollar limits on the deductible amount, but if your adjusted gross income reaches a certain level, you cannot take the deduction. For every $1,000 of your adjusted gross income above $100,000, you have to reduce your deduction by 10%. Once your adjusted gross income reaches $109,000, you are no longer eligible for the deduction. This is another deduction aimed at helping middle class homeowners.
So, if you paid PMI in 2010, you can deduct it on your tax return this year, if you itemize. Additionally, what you pay in tax year 2011 can be deducted on next year’s tax return. However, after the end of 2011, you will no longer be able to deduct your PMI payments – unless the deduction is extended again. Be sure to consult with a tax professional before taking any credit or deduction on your tax return. You want to make sure that you are eligible for any tax breaks that you take.
Here's a direct link to the story.
http://blog.lendingtree.com/blog/2011/03/22/pmi-deductio/
One of the tax deductions that many homeowners have been happy to take since 2007 has been the deduction for the premiums paid for Private Mortgage Insurance (PMI). The tax deduction was slated to expire at the end of 2010, but the tax package passed by Congress last December extended it through 2011. That means that you still have this year to claim PMI payments as a deduction on Schedule A of your Form 1040. (Yes, you have to itemize to take this deduction.)
What is PMI?
Private Mortgage Insurance is designed to protect lenders in the event that you default. You pay mortgage insurance premiums in order to help the lender recoup losses if you stop making payments. Most lenders require borrowers to purchase PMI if you don’t make a 20% down payment on the home.
PMI payments change each year, accounting for a percentage of the outstanding balance. The annual premium is usually 0.5% to 0.75% of the remaining balance. So, if you have a remaining balance of $150,000 on your home, your annual premium would be between $750 and $1,125 a year. That amount is usually divided by 12 and added to your monthly mortgage payment. When you reach the point where you have 20% equity in your home, you no longer have to keep making PMI payments.
Taking the PMI Tax Deduction
If you have been paying premiums, they are deductible on Schedule A when you itemize instead of taking the standard deduction. In order for your home to qualify, though, it has to have been bought after January 1, 2007. The PMI deduction only applies to mortgages made in the year 2007 and after. The mortgage also must be secured by your home.
If you are paying PMI on a mortgage not used for your home purchase, it must have been taken to “substantially improve” your home – so some home equity loans are eligible. The PMI deduction can also be used on one second home in addition to your primary residence.
Realize, though, that there are income limits to taking the PMI deduction. There are no dollar limits on the deductible amount, but if your adjusted gross income reaches a certain level, you cannot take the deduction. For every $1,000 of your adjusted gross income above $100,000, you have to reduce your deduction by 10%. Once your adjusted gross income reaches $109,000, you are no longer eligible for the deduction. This is another deduction aimed at helping middle class homeowners.
So, if you paid PMI in 2010, you can deduct it on your tax return this year, if you itemize. Additionally, what you pay in tax year 2011 can be deducted on next year’s tax return. However, after the end of 2011, you will no longer be able to deduct your PMI payments – unless the deduction is extended again. Be sure to consult with a tax professional before taking any credit or deduction on your tax return. You want to make sure that you are eligible for any tax breaks that you take.
Here's a direct link to the story.
http://blog.lendingtree.com/blog/2011/03/22/pmi-deductio/
Will your home or mortgage hurt you at tax time?
http://blog.hsh.com/index.php/2011/03/will-your-home-or-mortgage-hurt-you-at-tax-time/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+hsh+%28blog.hsh.com%29&utm_content=Twitter
Most of us know that a portion of the interest paid on a mortgage is tax deductable — it’s one of this country’s shining examples of pro-homeownership policies.
But can or should every homeowner deduct their mortgage interest at tax time?
What if you sold your home last year, how does that sale affect your 2010 taxes?
How does a loan modification, foreclosure or refinance impact your upcoming tax bill?
HSH.com has put together an article that answers 10 common questions as they relate to homeowners during tax season. Time is running out to file your taxes, so be sure you’re aware of how your home and mortgage factor into what you owe by April 18.
Let’s take a look at some common 2010 tax questions and answers:
1. How much of my mortgage payment is tax deductible?
On a Schedule A, you can deduct the following:
•Interest on debt used to buy, build or improve your primary or second home (called acquisition debt), as long as mortgages totaled $1 million or less ($500,000 if single or married filing separately).
•Mortgage insurance (or funding fees for government loans) for loans taken after 2006 as long as your adjusted gross income does not exceed $109,000 for a married couple (half that for singles and those married filing separately).
•Property taxes on first and second homes. Starting in 2010, however, you must itemize your deductions to get this tax break.
2. I sold my home this year. Will I owe capital gains tax?
As long as the property was your principal residence for at least two of the last five years, you can exclude $250,000 of your profit ($500,000 for married couples) from your taxable income. If you profited less than the $250,000/$500,000 threshold, no extra form is required. You can do this as often as every two years.
For those with profits that cannot be excluded, you’ll report your gain on a Schedule D, Capital Gains and Losses. There are special rules for vacation homes. You may be able to exclude some or all of your gain.
3. I bought or refinanced a home this year. Are my closing costs tax deductible?
You can claim a deduction for real estate taxes you paid as part of your mortgage closing costs. The same goes for prepaid interest. It will be included on the 1098 form your lender sends you. What about points? The IRS has a flowchart that you can use to see when points are and are not deductible. In general, you must have paid points to build, buy or improve your primary residence in order to deduct the entire amount in the year they were paid. Otherwise they may still be deducted but on a prorated basis.
4. Does a mortgage modification affect my taxes?
If you modify your mortgage, one consequence might be that you pay so much less interest that you will save more by choosing the standard deduction rather than itemizing. Don’t just assume that itemizing is always best because you did it in the past.
5. Does a mortgage foreclosure affect my taxes?
The Mortgage Forgiveness Debt Relief Act of 2007 generally allows you to exclude income from the discharge of debt on your primary residence. However, this law does not cover investment properties and vacation homes, nor does it apply to forgiven home equity loans. You could end up paying income tax on this canceled debt. In addition, states’ rules for the treatment of forgiven mortgage debt vary, so check with a tax professional.
Be sure to read all “10 critical questions for homeowners at tax time.” (This article was written by HSH.com’s Gina Pogol.)
Most of us know that a portion of the interest paid on a mortgage is tax deductable — it’s one of this country’s shining examples of pro-homeownership policies.
But can or should every homeowner deduct their mortgage interest at tax time?
What if you sold your home last year, how does that sale affect your 2010 taxes?
How does a loan modification, foreclosure or refinance impact your upcoming tax bill?
HSH.com has put together an article that answers 10 common questions as they relate to homeowners during tax season. Time is running out to file your taxes, so be sure you’re aware of how your home and mortgage factor into what you owe by April 18.
Let’s take a look at some common 2010 tax questions and answers:
1. How much of my mortgage payment is tax deductible?
On a Schedule A, you can deduct the following:
•Interest on debt used to buy, build or improve your primary or second home (called acquisition debt), as long as mortgages totaled $1 million or less ($500,000 if single or married filing separately).
•Mortgage insurance (or funding fees for government loans) for loans taken after 2006 as long as your adjusted gross income does not exceed $109,000 for a married couple (half that for singles and those married filing separately).
•Property taxes on first and second homes. Starting in 2010, however, you must itemize your deductions to get this tax break.
2. I sold my home this year. Will I owe capital gains tax?
As long as the property was your principal residence for at least two of the last five years, you can exclude $250,000 of your profit ($500,000 for married couples) from your taxable income. If you profited less than the $250,000/$500,000 threshold, no extra form is required. You can do this as often as every two years.
For those with profits that cannot be excluded, you’ll report your gain on a Schedule D, Capital Gains and Losses. There are special rules for vacation homes. You may be able to exclude some or all of your gain.
3. I bought or refinanced a home this year. Are my closing costs tax deductible?
You can claim a deduction for real estate taxes you paid as part of your mortgage closing costs. The same goes for prepaid interest. It will be included on the 1098 form your lender sends you. What about points? The IRS has a flowchart that you can use to see when points are and are not deductible. In general, you must have paid points to build, buy or improve your primary residence in order to deduct the entire amount in the year they were paid. Otherwise they may still be deducted but on a prorated basis.
4. Does a mortgage modification affect my taxes?
If you modify your mortgage, one consequence might be that you pay so much less interest that you will save more by choosing the standard deduction rather than itemizing. Don’t just assume that itemizing is always best because you did it in the past.
5. Does a mortgage foreclosure affect my taxes?
The Mortgage Forgiveness Debt Relief Act of 2007 generally allows you to exclude income from the discharge of debt on your primary residence. However, this law does not cover investment properties and vacation homes, nor does it apply to forgiven home equity loans. You could end up paying income tax on this canceled debt. In addition, states’ rules for the treatment of forgiven mortgage debt vary, so check with a tax professional.
Be sure to read all “10 critical questions for homeowners at tax time.” (This article was written by HSH.com’s Gina Pogol.)
Sunday, March 20, 2011
"Point Banks" will not be allowed with new Fed Rule.
A mortgage industry proposal to create "point banks" that loan officers can tap to grant price concessions to borrowers will not be allowed by Federal Reserve Board staff. The days of the loan officer paying for a closing cost item at the closing tabel to save a deal are over.
The Fed's loan officer compensation rule does not allow loan officers to lower their commission to cover a concession – which led to an industry proposal to take 10 basis points from every loan transaction, put that cash in a "point bank" or use overages to offer borrowers a better deal.
The Federal Reserve staff concluded that overages are tied to the terms and conditions of the loans, which would violate its new compensation rule, which goes into effect April 1.
Taking 10 bps from every loan transaction amounts to spending the loan officer's previously earned compensation. That would violate the rule because the LO is bearing the cost of the price concession, according to Fed senior attorney Paul Mondor. "We have yet to hear a variation on the theme of point banks that we think really can succeed under this rule," Mondor said during Thursday's Fed webinar on LO comp.
This interpretation also makes it difficult for managers to penalize LOs for mistakes and errors. The Fed has ruled that mortgage companies cannot dock a loan officer's compensation if they incorrectly calculate closing costs and exceed the tolerances of the RESPA good faith estimate.
If RESPA "forces you" to lower the closing costs to the consumer – that's a pricing concession to the consumer, Mondor said. "A loan officer or originator cannot be made to bear that cost," he added.
The Fed's loan officer compensation rule does not allow loan officers to lower their commission to cover a concession – which led to an industry proposal to take 10 basis points from every loan transaction, put that cash in a "point bank" or use overages to offer borrowers a better deal.
The Federal Reserve staff concluded that overages are tied to the terms and conditions of the loans, which would violate its new compensation rule, which goes into effect April 1.
Taking 10 bps from every loan transaction amounts to spending the loan officer's previously earned compensation. That would violate the rule because the LO is bearing the cost of the price concession, according to Fed senior attorney Paul Mondor. "We have yet to hear a variation on the theme of point banks that we think really can succeed under this rule," Mondor said during Thursday's Fed webinar on LO comp.
This interpretation also makes it difficult for managers to penalize LOs for mistakes and errors. The Fed has ruled that mortgage companies cannot dock a loan officer's compensation if they incorrectly calculate closing costs and exceed the tolerances of the RESPA good faith estimate.
If RESPA "forces you" to lower the closing costs to the consumer – that's a pricing concession to the consumer, Mondor said. "A loan officer or originator cannot be made to bear that cost," he added.
Saturday, March 12, 2011
FHA concessions on seller concessions?
Here's an interesting article regarding FHA seller concessions from Inman News.
http://lowes.inman.com/inmaninf/lowes/news/138306
There's some good news brewing at the U.S. Housing and Urban Development Department that could save thousands of home sales in the months ahead. The final details aren't fully nailed down and a formal announcement is still more than a month away, but I can tell you about a broad outline taking shape that isn't likely to change.
It's all about seller concessions.
Last year the Federal Housing Administration announced that it intends to slash maximum seller contributions from 6 percent to 3 percent for purchasers using FHA-insured mortgages. Seller concessions or contributions are essential lubricants that make large numbers of FHA-financed home sales flow smoothly to closing. They make otherwise unaffordable deals doable.
Say you're negotiating on a house and the seller absolutely insists on getting a price of $150,000. Perhaps the buyer has struggled to come up with down-payment money and won't have the additional cash resources to pay for the settlement and loan origination expenses, which average about 4 to 5 percent in your area.
Under long-standing FHA rules, your seller is allowed to contribute money from the sale proceeds to help with your closing costs. A 6 percent contributions cap -- the current rule -- allows your seller to put as much as $9,000 into the pot, which would be more than enough to handle your closing costs and prepaids.
But a 3 percent ceiling -- the one HUD proposed last year -- would reduce that to $4,500, leaving you short and endangering the entire deal. A 3 percent cap would also make FHA's standard the same as what's typical in the conventional loan market, where both Fannie Mae and Freddie Mac permit nothing beyond that limit.
After hearing complaints from builders, REALTORS® and lenders, HUD is now planning to adopt a more nuanced approach. A formal notice is expected sometime in April, with the changes taking effect this summer.
The core of the policy revision: flexibility. Rather than an across-the-board 3 percent ceiling on all FHA mortgages, the new policy would permit higher seller contributions -- probably between 4 and 5 percent -- on smaller loan balances. Meanwhile, the 3 percent cap would be mandatory on all loan amounts above some yet-to-be-specified limit.
Alternatively, a dollar ceiling on all seller concessions might be available, such as a maximum of $6,000. On the smallest-balance mortgages, the dollar total permitted might even hit 6 percent. Loans on newly constructed houses, where abuses have been reported when builders use concessions to support artificially high sale prices, could have special restrictions.
Whatever the final version turns out to be, the net result should be much better for home sellers, buyers and real estate professionals than last year's threatened 3 percent cap for everybody. This would especially be the case in hundreds of local real estate markets where FHA is the main support for first-time and moderate-income home purchasers.
For example, in the seven Southeast states where Memphis-based Crye-Leike REALTORS® is a major player, FHA loans are used by 50 percent of all purchasers, according to Steve A. Brown, executive vice president. The key attractions, he said, are FHA's low down payments, relatively generous credit requirements and the 6 percent seller concessions limit.
"FHA is what's keeping us alive," Brown told me in an interview. "If they do a 3 percent across-the-board limit, that would knock out a lot of our sales. But if they go with some graduated deal tied into lower-priced homes, then we should be alright."
The average home price in the Memphis area is about $115,000; the average starter home is $85,000, according to Brown. He figures that a 4.5 percent cap on seller concessions would cover closing costs in most transactions, but a 3 percent limit would be a disaster.
"This economy is pretty darn fragile," he said. "People haven't had a raise in three years, prices keep going up on gas and food, plus you've got all those fixed fees" -- attorney costs, title insurance, loan origination and underwriting, among others -- "and none of them has gone down."
In the Minneapolis-St. Paul area, the situation is similar: FHA loans account for 35 percent to 45 percent of all transactions, according to John Anderson, broker at Twin Oaks Realty. The average home price is $163,000 -- somewhat lower for FHA transactions -- and settlement costs average about 4.5 percent.
"Ninety percent of our buyers are asking sellers to pay closing costs and prepaids," said Anderson. "This is a tight economy, and you can't turn to parents and grandparents any more for gift money because they're worried about their own" pension fund shortfalls and depleted savings accounts.
Many brokers agree with FHA that 6 percent contributions may be excessive in higher-end transactions; they top out above $43,000 in the most expensive housing markets. Brokers also concede that there have been abuses and games played in the past that have increased FHA's insurance fund losses.
An example: Say a prospective buyer wants a house that's listed for $100,000. The seller agrees to make a maximum $6,000 contribution to the closing costs but insists that the final selling price be adjusted up to $106,000.
But now the house has to appraise at $106,000, or FHA will be insuring a loan with an artificially inflated price with little or no borrower equity -- making it a prime candidate for future default and insurance claims. FHA says it holds appraisers and lenders responsible for sniffing out such frauds, but officials acknowledge they can't catch them all.
Will a tightened seller concessions policy put a better damper on such abuses? I have no doubt that a mandatory 3 percent cap for all higher-balance mortgages and loans on some new construction would limit the damage in dollar terms.
A graduated system for average-sized and low-balance loans might limit risks as well, while still allowing most home sales to get to closing. A set dollar limit for concessions -- say it's $6,000, hypothetically -- might also provide a flexible way to lower risk while still allowing the lowest-balance loans to enjoy seller contributions up to 6 percent.
In the meantime, the good news is that the widely feared, draconian 3 percent limit appears to be off the table. Something more flexible is coming that might just balance FHA's legitimate needs to safeguard its insurance fund while accommodating home sellers' and buyers' legitimate needs for affordable housing with agreeable financing terms.
Ken Harney writes an award-winning, nationally syndicated column, "The Nation's Housing," and is the author of two books on real estate and mortgage finance.
http://lowes.inman.com/inmaninf/lowes/news/138306
There's some good news brewing at the U.S. Housing and Urban Development Department that could save thousands of home sales in the months ahead. The final details aren't fully nailed down and a formal announcement is still more than a month away, but I can tell you about a broad outline taking shape that isn't likely to change.
It's all about seller concessions.
Last year the Federal Housing Administration announced that it intends to slash maximum seller contributions from 6 percent to 3 percent for purchasers using FHA-insured mortgages. Seller concessions or contributions are essential lubricants that make large numbers of FHA-financed home sales flow smoothly to closing. They make otherwise unaffordable deals doable.
Say you're negotiating on a house and the seller absolutely insists on getting a price of $150,000. Perhaps the buyer has struggled to come up with down-payment money and won't have the additional cash resources to pay for the settlement and loan origination expenses, which average about 4 to 5 percent in your area.
Under long-standing FHA rules, your seller is allowed to contribute money from the sale proceeds to help with your closing costs. A 6 percent contributions cap -- the current rule -- allows your seller to put as much as $9,000 into the pot, which would be more than enough to handle your closing costs and prepaids.
But a 3 percent ceiling -- the one HUD proposed last year -- would reduce that to $4,500, leaving you short and endangering the entire deal. A 3 percent cap would also make FHA's standard the same as what's typical in the conventional loan market, where both Fannie Mae and Freddie Mac permit nothing beyond that limit.
After hearing complaints from builders, REALTORS® and lenders, HUD is now planning to adopt a more nuanced approach. A formal notice is expected sometime in April, with the changes taking effect this summer.
The core of the policy revision: flexibility. Rather than an across-the-board 3 percent ceiling on all FHA mortgages, the new policy would permit higher seller contributions -- probably between 4 and 5 percent -- on smaller loan balances. Meanwhile, the 3 percent cap would be mandatory on all loan amounts above some yet-to-be-specified limit.
Alternatively, a dollar ceiling on all seller concessions might be available, such as a maximum of $6,000. On the smallest-balance mortgages, the dollar total permitted might even hit 6 percent. Loans on newly constructed houses, where abuses have been reported when builders use concessions to support artificially high sale prices, could have special restrictions.
Whatever the final version turns out to be, the net result should be much better for home sellers, buyers and real estate professionals than last year's threatened 3 percent cap for everybody. This would especially be the case in hundreds of local real estate markets where FHA is the main support for first-time and moderate-income home purchasers.
For example, in the seven Southeast states where Memphis-based Crye-Leike REALTORS® is a major player, FHA loans are used by 50 percent of all purchasers, according to Steve A. Brown, executive vice president. The key attractions, he said, are FHA's low down payments, relatively generous credit requirements and the 6 percent seller concessions limit.
"FHA is what's keeping us alive," Brown told me in an interview. "If they do a 3 percent across-the-board limit, that would knock out a lot of our sales. But if they go with some graduated deal tied into lower-priced homes, then we should be alright."
The average home price in the Memphis area is about $115,000; the average starter home is $85,000, according to Brown. He figures that a 4.5 percent cap on seller concessions would cover closing costs in most transactions, but a 3 percent limit would be a disaster.
"This economy is pretty darn fragile," he said. "People haven't had a raise in three years, prices keep going up on gas and food, plus you've got all those fixed fees" -- attorney costs, title insurance, loan origination and underwriting, among others -- "and none of them has gone down."
In the Minneapolis-St. Paul area, the situation is similar: FHA loans account for 35 percent to 45 percent of all transactions, according to John Anderson, broker at Twin Oaks Realty. The average home price is $163,000 -- somewhat lower for FHA transactions -- and settlement costs average about 4.5 percent.
"Ninety percent of our buyers are asking sellers to pay closing costs and prepaids," said Anderson. "This is a tight economy, and you can't turn to parents and grandparents any more for gift money because they're worried about their own" pension fund shortfalls and depleted savings accounts.
Many brokers agree with FHA that 6 percent contributions may be excessive in higher-end transactions; they top out above $43,000 in the most expensive housing markets. Brokers also concede that there have been abuses and games played in the past that have increased FHA's insurance fund losses.
An example: Say a prospective buyer wants a house that's listed for $100,000. The seller agrees to make a maximum $6,000 contribution to the closing costs but insists that the final selling price be adjusted up to $106,000.
But now the house has to appraise at $106,000, or FHA will be insuring a loan with an artificially inflated price with little or no borrower equity -- making it a prime candidate for future default and insurance claims. FHA says it holds appraisers and lenders responsible for sniffing out such frauds, but officials acknowledge they can't catch them all.
Will a tightened seller concessions policy put a better damper on such abuses? I have no doubt that a mandatory 3 percent cap for all higher-balance mortgages and loans on some new construction would limit the damage in dollar terms.
A graduated system for average-sized and low-balance loans might limit risks as well, while still allowing most home sales to get to closing. A set dollar limit for concessions -- say it's $6,000, hypothetically -- might also provide a flexible way to lower risk while still allowing the lowest-balance loans to enjoy seller contributions up to 6 percent.
In the meantime, the good news is that the widely feared, draconian 3 percent limit appears to be off the table. Something more flexible is coming that might just balance FHA's legitimate needs to safeguard its insurance fund while accommodating home sellers' and buyers' legitimate needs for affordable housing with agreeable financing terms.
Ken Harney writes an award-winning, nationally syndicated column, "The Nation's Housing," and is the author of two books on real estate and mortgage finance.
Saturday, March 5, 2011
How do you repair credit after a bankruptcy?
Think about these 5 tips for credit repair after bankruptcy.
One may try to sit back and do nothing about an after bankruptcy credit repair since the argument is always that the bankruptcy remains on one’s file anyhow for 10 years. What’s the point then of doing an after bankruptcy credit repair?
Bankruptcy is a word which no person desires to have to experience in a personal way in their own mature lives. For those people who do declare themselves bankrupt, they generally do it since they had run out of other choices. Someone’s reasons for having to declare themselves bankrupt may differ significantly, from losing a career to having medical issues to simply running up too much debts without being able to pay it down.
One of the things that the one who has announced bankruptcy normally wonders is just how much this course of action can have a poor impact on their long term credit rating.
After all, your credit rating is one of the most important things that decides the kind of financial loans or charge cards that you may be eligible for.
If you want help with credit repair after a bankruptcy, listed below are 5 suggestions that will help you repair your credit more quickly:
1. A bankruptcy can remain on your FICO report for a long time:
Needless to say that declaring bankruptcy may cause your credit score to instantly fall. And, it can stay on your credit history for 10 years.
2. You need to really be more creditworthy after your bankruptcy compared to what you had been before:
If you think about this, you are really more creditworthy just after your own bankruptcy release than you were in advance: in the end, you now have the monkey (your debt) off your back and you have more means compared to what you had before to repay what you owe.
3. After the discharge, each financial debt you borrowed from needs to return to 0 dollars on your credit history:
After your discharge, you’ve the right (confirmed by government law) to have the total amount of each debt that’s been released to show as $0 on your credit history. In fact, you possess the right to claim any cards that still present your old account balances.
4. You could in some instances maintain credit cards after bankruptcy:
The truth is, it is possible to retain one or more of your old (pre-bankruptcy) charge cards after your discharge. To do so, you’ll want to “reaffirm” the balance with them and start a new agreement. Many collectors will agree to get this done simply because they prefer to not need to have the loss.
5. You can purchase a home just after bankruptcy:
You can buy a house after announcing bankruptcy. Inside of 1.5 to 2 years after your release, a lot of people consistently can easily be eligible for a financial loan with similar loan terms as they could have if they hadn’t filed.
What’s vital at this stage is your earnings, your advance payment, and just how consistently you paid your mortgage (or rent) previously.
One may try to sit back and do nothing about an after bankruptcy credit repair since the argument is always that the bankruptcy remains on one’s file anyhow for 10 years. What’s the point then of doing an after bankruptcy credit repair?
Bankruptcy is a word which no person desires to have to experience in a personal way in their own mature lives. For those people who do declare themselves bankrupt, they generally do it since they had run out of other choices. Someone’s reasons for having to declare themselves bankrupt may differ significantly, from losing a career to having medical issues to simply running up too much debts without being able to pay it down.
One of the things that the one who has announced bankruptcy normally wonders is just how much this course of action can have a poor impact on their long term credit rating.
After all, your credit rating is one of the most important things that decides the kind of financial loans or charge cards that you may be eligible for.
If you want help with credit repair after a bankruptcy, listed below are 5 suggestions that will help you repair your credit more quickly:
1. A bankruptcy can remain on your FICO report for a long time:
Needless to say that declaring bankruptcy may cause your credit score to instantly fall. And, it can stay on your credit history for 10 years.
2. You need to really be more creditworthy after your bankruptcy compared to what you had been before:
If you think about this, you are really more creditworthy just after your own bankruptcy release than you were in advance: in the end, you now have the monkey (your debt) off your back and you have more means compared to what you had before to repay what you owe.
3. After the discharge, each financial debt you borrowed from needs to return to 0 dollars on your credit history:
After your discharge, you’ve the right (confirmed by government law) to have the total amount of each debt that’s been released to show as $0 on your credit history. In fact, you possess the right to claim any cards that still present your old account balances.
4. You could in some instances maintain credit cards after bankruptcy:
The truth is, it is possible to retain one or more of your old (pre-bankruptcy) charge cards after your discharge. To do so, you’ll want to “reaffirm” the balance with them and start a new agreement. Many collectors will agree to get this done simply because they prefer to not need to have the loss.
5. You can purchase a home just after bankruptcy:
You can buy a house after announcing bankruptcy. Inside of 1.5 to 2 years after your release, a lot of people consistently can easily be eligible for a financial loan with similar loan terms as they could have if they hadn’t filed.
What’s vital at this stage is your earnings, your advance payment, and just how consistently you paid your mortgage (or rent) previously.
How Did the Employment Report Impact Mortgage Rates?
Below is an interest rate related article for Mortgage News Daily.
http://www.mortgagenewsdaily.com/consumer_rates/201584.aspx
BY ADAM QUINONES
It was a volatile week for mortgage rates.
Monday and Tuesday saw rates near their best levels in nearly a month. Consumer borrowing costs then got beat up on Wednesday and Thursday, so much that we had to up the "Best Execution" 30-year fixed mortgage rate to 5.000%. That's where we last left you, just ahead of today's high risk event: The Employment Situation Report
CURRENT MARKET: The "Best Execution" conventional 30 year fixed mortgage rate has fallen BACK to 4.875%. For those looking to buy down their rate to 4.75%, this quote carries higher closing costs. The upfront cost of permanently buying down your rate to 4.75% is not worth it to many applicants. We would generally only advise the permanent floatdown if you plan to hold your new mortgage for longer than the next 10 years. Ask your loan officer to run a breakeven analysis on any origination points they might require to cover permanent float down fees. On FHA/VA 30 year fixed "Best Execution" is still 4.75%. 15 year fixed conventional loans are best priced between 4.125% and 4.25%, but 4.25% is more efficient in terms of the floatdown breakeven cost. Five year ARMS are best priced at 3.625%.
If the note rate line is moving up, the closing costs associated with that rate quote are rising. In December, closing costs rose rapidly. Mortgage rates did improve from those levels, but then moved sideways for 7-weeks. And then the range broke following the January Employment Situation Report and consumer rate quotes rose back to their December highs. As you can tell, borrowing costs have steadily improved since then but moved sharply higher this week before correcting today. This leaves home loan rate quotes just above one-month lows. Again.
OUR GUIDANCE LAST FRIDAY: The bond market is still in limbo in terms of an extension of the recent rally. Approach floating from a defensive posture, especially after Best Execution improved to 4.875% this week because it's going to take a sustained rally in the bond market before Best Execution reaches 4.75%. That means current market is likely as good as it gets for at least the next week. If you don't have more than a week to float your loan, you should be locking very soon. As you can see in the chart above, it's been almost a month since rates were this aggressive. And we wouldn't be surprised one bit if the market pushes back against the recent mortgage rates rally next week. Profit taking is a naturally occurring event whenever interest rates move lower.
NEW GUIDANCE: Phew! We dodged a bullet today. The conventional 30-year fixed Best Execution note rate has fallen to 4.875%. Consumer borrowing costs have almost recovered fulLy from the mid-week hiccup we experienced on Wednesday and Thursday. There is still work to done, but after reprices for the better were awarded today by lenders, we're just above one-month lows. BEYOND THAT...same exact guidance as last Friday!
READ MORE: LOAN PRICING STALLED
"Best Execution" is the most efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%. When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buydown costs.
Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the intense fiscal frisking that comes along with the underwriting process.
http://www.mortgagenewsdaily.com/consumer_rates/201584.aspx
BY ADAM QUINONES
It was a volatile week for mortgage rates.
Monday and Tuesday saw rates near their best levels in nearly a month. Consumer borrowing costs then got beat up on Wednesday and Thursday, so much that we had to up the "Best Execution" 30-year fixed mortgage rate to 5.000%. That's where we last left you, just ahead of today's high risk event: The Employment Situation Report
CURRENT MARKET: The "Best Execution" conventional 30 year fixed mortgage rate has fallen BACK to 4.875%. For those looking to buy down their rate to 4.75%, this quote carries higher closing costs. The upfront cost of permanently buying down your rate to 4.75% is not worth it to many applicants. We would generally only advise the permanent floatdown if you plan to hold your new mortgage for longer than the next 10 years. Ask your loan officer to run a breakeven analysis on any origination points they might require to cover permanent float down fees. On FHA/VA 30 year fixed "Best Execution" is still 4.75%. 15 year fixed conventional loans are best priced between 4.125% and 4.25%, but 4.25% is more efficient in terms of the floatdown breakeven cost. Five year ARMS are best priced at 3.625%.
If the note rate line is moving up, the closing costs associated with that rate quote are rising. In December, closing costs rose rapidly. Mortgage rates did improve from those levels, but then moved sideways for 7-weeks. And then the range broke following the January Employment Situation Report and consumer rate quotes rose back to their December highs. As you can tell, borrowing costs have steadily improved since then but moved sharply higher this week before correcting today. This leaves home loan rate quotes just above one-month lows. Again.
OUR GUIDANCE LAST FRIDAY: The bond market is still in limbo in terms of an extension of the recent rally. Approach floating from a defensive posture, especially after Best Execution improved to 4.875% this week because it's going to take a sustained rally in the bond market before Best Execution reaches 4.75%. That means current market is likely as good as it gets for at least the next week. If you don't have more than a week to float your loan, you should be locking very soon. As you can see in the chart above, it's been almost a month since rates were this aggressive. And we wouldn't be surprised one bit if the market pushes back against the recent mortgage rates rally next week. Profit taking is a naturally occurring event whenever interest rates move lower.
NEW GUIDANCE: Phew! We dodged a bullet today. The conventional 30-year fixed Best Execution note rate has fallen to 4.875%. Consumer borrowing costs have almost recovered fulLy from the mid-week hiccup we experienced on Wednesday and Thursday. There is still work to done, but after reprices for the better were awarded today by lenders, we're just above one-month lows. BEYOND THAT...same exact guidance as last Friday!
READ MORE: LOAN PRICING STALLED
"Best Execution" is the most efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%. When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buydown costs.
Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the intense fiscal frisking that comes along with the underwriting process.
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