Archive for the 'Money and Mortgages' Category
10 Tips to Rebuilding after a Bankruptcy
June 22nd, 2010 categories: Money and Mortgages
As a rule of thumb, bankruptcy is the least desirable option available to you when your finances have gotten out of control. However, if your finanacial situation has been going downhill for an extended period of time, your credit standing is probably so bad that filing for bankruptcy really won’t do much to make it worse, with one exception: A bankruptcy remains on your credit report for 10 long years. With this in mind, creditors will know that once you file bankruptcy, you cannot do so again for seven years.
If you or someone you know want to start rebuilding your financial life after bankruptcy, here are 10 Tips courtesy of consumer credit experts Approval Guard.
1. Plan your credit recovery. Take it slow and easy, do it right and don’t exceed what you can afford.
2. Learn more about how credit works through the Internet, counseling services or a service. Do it right and know what you’re doing.
3. If your credit report contains inaccuracies about debt that was discharged through your bankruptcy, contact the creditor or the credit bureaus to request a correction.
4. If you didn’t have enough savings to survive a setback, get serious about savings for an emergency fund. In the current economy you need at least 12-16 months.
5. If your problem was overspending, create a written budget and stick to it.
6. If your problem was related to medical bills, seek out a solution for insurance.
7. To re-establish a strong credit profile, you need a good history of payments from credit cards and installment debt such as autos, student loans or a home loan.
8. The rebuilding process requires you to use credit responsibly. Use only a small portion (30% or less) of your available credit line and ensure you make a payment every month.
9. When you start to re-establish your credit, consider a “secure” credit card. Such cards are usually backed by your savings account or money you place in escrow to cover 100% of your credit line in case you don’t pay your payment.
10. You may be able to apply for a home loan in as little as two years after the discharge of your bankruptcy, however, expect to pay higher fees and interest rates.
When you are ready to rebuild, make sure you understand credit and how to use it responsibly. Feel free to email me for further information and please forward these tips to family and friends to keep them in the know as well.
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Top 5 Ways to Use a Tax Refund
May 20th, 2010 categories: Money and Mortgages
Thousands of Americans are receiving income tax refunds from the U.S. government, with the IRS reporting an average refund of $2,940 this year. In the current economy, consumers can make strategic choices to make sure that refund pays off for them.
My clients often ask me about financial matters, including advice on smart ways to manage income tax returns. According to Freedom Tax Relief (www.freedomtaxrelief.com), many tax refund recipients might be thinking of creative ways to spend that cash as the economy starts to recover. But before getting carried away, they suggest thinking more long term.
Freedom Tax Relief suggests the following as the top ways to wisely spend an income tax refund:
1. Pay down credit card and other high-interest debts (including payday loans). Few investments can top the rate of return for eliminating debt. Paying off credit card debt at typical interest rates effectively makes an investment that returns 20% or more per year. The only caveat: Be certain you change your mindset as well. If you pay off debts, only to charge up the credit cards or sign for a new car loan a few months later, you have ultimately gained nothing. If credit card debt is your problem, cut up or freeze your credit cards to ensure you do not re-create the same problem you have left behind. Use a debit card for future purchases that require a card.
Ready to pay down your debt? List and pay secured debts first (mortgage, car). Mortgage payments should take absolute priority. Then list unsecured debts (credit cards, loans) in order of highest interest rates. Make minimum payments on all but the highest-rate card. Use every cent of available income to make large payments on the card with the highest rate. When that card is paid off, apply the big payment plus the old minimum payment on the next-highest rate card until it is paid off. Continue until all debt is eliminated.
2. Create an emergency fund. The Great Recession has pointed out the importance of an emergency fund. Those who do not yet have enough readily accessible money set aside to cover several month’s worth of expenses should consider a tax refund a prime opportunity to create a fund that ultimately includes 6-9 month’s living expenses. These amounts are not necessarily equal to salary. Instead, they should include only what the household would spend if it were in dire straits. House these savings in a money market fund or rolling CDs so that the money earns interest and cannot easily be spent- but can be accessed in an emergency.
3. Make sure you have adequate insurance. Everyone should have health, auto, and home or renters insurance. If dependents rely on breadwinner’s income, look into life insurance. Consider an umbrella policy to protect from additional liability. And if the household could not survive without an income, purchase disability coverage. This is a huge savings step- one trip to the emergency room or one minor accident can easily end up costing thousands or tens of thousands of dollars out of pocket.
4. Fund the future. Contribute to retirement savings, whether an individual or Roth IRA, 401(K) or other plan.
5. Invest in the home. Homeowners might consider using refunds to cover major or minor maintenance to make sure no bigger (and more expensive) problems arise down the road. In addition, these capital improvements can create additional equity in a home.
No matter how big or small the amount, and despite the temptation to celebrate and splurge, make your choice on what to do with any refund carefully, experts say. Take time to make sure your money works for you and helps build wealth.
For more information please email me and feel free to share this with anyone you believe will benefit from these tips. Also, don’t forget to become a fan of Kathy Villa Real Estate on Facebook by following the link on the left. I look forwarding to connecting with you!
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10 Tips for Downsizing Boomers
April 21st, 2010 categories: Money and Mortgages
1. Grab The Homebuyer Tax Credit
If you’re ready to move soon, there’s a $6500 tax credit for folks who have lived in their old home for 5 out of 8 years prior to closing on a new house. To qualify, you must have a binding contract to buy before May 1, 2010 and close before July 1, 2010. Watch out- there are income limits and other restrictions.
2. Consider A Short-Distance Move
While Sunny and exotic climates might beckon, research suggests that short-distance moves make retirees happier. Maintaining ties to your community- Church and friends and maybe family- will lead to a sense of well-being and security. Consider too the convenience of shopping, doctors, cultural venues and public transit, as well as recreation.
3. Investigate Taxes for Retirees
If you’re considering moving to a new state or city, compare local and state income tax rates, and whether some or all of your pension and Social Security will be excluded from taxable income. Also look into special homestead real estate tax exemptions for seniors. Don’t overlook car and boat taxes.
4. Consider Renting- For Now
Why own when in most of the best markets in the country right now, annual rents are 3% to 5% of purchase prices? If you’d planned to buy all-cash, opt instead to put your funds into 30-year triple-A rated muni bonds, yielding 4.4%. The income they generate will amply cover your rent in many markets- save any surplus bond income. This makes even more sense if you’re trying out a new location where you might want to buy later.
5. Look For Universal Design
If you do buy, look for a home built along universal design principles- wide doorways, flush thresholds, walk-in showers. That will allow you to age gracefully at home. It also will be a help if you’re younger and say, break your leg skiing. A lower level master bedroom and a lower-level bath are key.
6. Consider Multi-Generational Living
Multi-generational living arrangements have social as well as financial benefits. If you might be taking in a parent or a boomerang child at some point, look for a house with an “in-law suite” -a separate bedroom and bath and if possible, a kitchenette, too. Some privacy helps keep family peace.
7. Look for Security and High-Tech Features
Technology can make a retirement home more livable, increase resale value and make it easier for you to travel the world or safer to live alone. A home security system is a favored add-on. In a condo or gated community, look for convenient intercoms to announce visitors and even emergency call buttons.
8. Aim For Low-Maintenance
Folks 55 and up surveyed by the MetLife Mature Market Institute last year wanted help with gardening and a lot of other services, such as major and minor home repair, home-delivered meals, housekeeping and even laundry. You may enjoy these chores now, but check that services are available should you be unable to do it all.
9. Go Green, Senior Style
Consider saving energy (and drudgery) with remote control window blinds. Look for more conventional green features too, such as energy-efficient heating and cooling, solar hot water, or a new Energy Star refrigerator- or install them when you move in. These will pay off in lower utility bills later.
10. Consider Freeing Up Equity
The Center for Retirement Research at Boston College estimates that if boomers are ready to tap into their housing wealth with reverse mortgages, the percent whose retirements are “at risk” drops from 61% to a still high 51%. But reverse mortgages carry many fees. Consider buying cheaper housing now and investing the excess equity or using it to buy an immeidate deferred annuity.
If you or someone you know is looking to downsize and needs help with real estate needs, feel free to call or email me. Also, don’t forget to join others and become a fan of Kathy Villa Real Estate. We look forward to connecting with you!
courtesy of forbes.com
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This Market’s Target Buyer
April 17th, 2010 categories: Buyers, Money and Mortgages
When the market is skittish, prices and terms improve. Who benefits the most? Buyers with good credit, jobs, and the decision to buy now . Here’s a few good reasons to hurry:
- The overwhelmed Federal Housing Administration has announced changes to its policies that will take effect mid-year 2010. First the mortgage insurance premium will rise from 1.75% to 2.25% of all FHA-insured loans. Buyers must have a minimum FICO credit score of 580 to qualify for a conventional 3.5% down loan. Last, seller concessions such as paying for buyer’s closing costs will be reduced from six percent to three percent of the buyer’s loan. See Hud.Gov
- These proposed changes could stimulate buyers, along with first-time and move-up buyer tax credits, due to expire April 2010.
- In addition, prices are bound to attract buyers. The National Association of Realtors (NAR) 2009 Profile of Home Buyers and Sellers found the median prices of homes purchased in 2009 were nine percent lower than in 2008 and that 95% of those who financed purchased with a fixed-rate mortgage.
- Interest rates are expected to rise, but so far, falling stock prices and other economic jitters are keeping mortgage interest rates lower than expected. Right now, qualified buyers can still get a 30-year fixed rate loan around 5%.
So who is in the market for a home? Borrell Associates research says that the following demographics describe the next home buyer:
Market Homebuyer Demographics
- Average Market Household Income= $73,970
- Average Market Household size= 3.7
- Average Age=39.5
- Average Value of Current Owned Home= $285,388
- Average Years in Current Home= 8.5
Courtesy: Borrell Associates, copyright 2010
This buyer, a confident homeowner with equity and income, is looking for good deals. As evidence, consider what’s happening here in California, one of the hardest hit states during the housing “correction.” In December 2009, the state’s housing sales increased 1.7% and the median home price increased 8.4% over December 2008. Despite one of the largest inventories of foreclosed homes, California is down to a 3.8-month supply on hand, according to the California Association of REALTORS. A balanced market is widely believed to have six months of inventory on hand.
If you’re a qualified buyer, now is a good time to buy a home. Please feel free to call or email me to help you with this process. Also, don’t forget to become a fan of Kathy Villa Real Estate on Facebook. Follow the link on the left. We can’t wait to connect with you!
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FHA Lending Changes that Could Impact Real Estate Consumers
April 15th, 2010 categories: Money and Mortgages
Did you know that in 2009, the Federal Housing Administration (FHA) insured nearly 30% of the single-family mortgage market and that more than 50% of all first-time home buyers used FHA programs?
In today’s challenging credit climate, many home buyers and homeowners are turning to FHA for insurance, to purchase loans, and for refinancing options to get out of risky ARMs or subprime loans. I have access to information from the National Association of Realtors (NAR) regarding recent and upcoming changes to FHA’s single-family program that could impact the use of these important programs for consumers in the future. According to Jerome Nagy, senior regulatory policy representative at NAR, in order to replenish its dwindling reserves, FHA has implemented or proposed the following changes:
1. Mortgage Insurance Premium (MIP): FHA has increased the upfront MIP from 1.75% to 2.25% for borrowers while it awaits legislative authority to increase the annual premium. FHA stated it will decrease the upfront premium when they can increase the annual premium.
2. Credit Score Changes: FHA has proposed that borrowers with a credit score below 580 be required to make at least a 10% down payment. The minimum down payment will remain at 3.5% for all other borrowers.
3. Seller Concessions: FHA intends to propose a rule to decrease allowable seller concessions from 6% to 3%. NAR plans to argue against this decrease since closing costs differ greatly among states, and with fees on services (such ass appraisals) increasing, seller concessions can be a vital part of closing the transaction.
4. FHA Loan Limits: Current FHA loan limits are as high as $729,750 in high-cost areas, and are set to expire at the end of the year and revert to lower amounts, potentially putting a damper on a housing market rebound. A decrease of current limits would adversely affect 612 counties in 40 states and the District of Columbia, reports NAR, which is urging passage of legislation to make the loan limits permanent.
5. Condominium Rules: FHA is delaying implementation of “Mortgage Letter 2009-19″ and making temporary enhancements to the policy instead, such as eliminating the owner-occupancy requirement for FHA condo mortgages and reducing the number of units sold prior to FHA’s endorsement of a unit from 50% to 30%.
Please feel free to email me for guidance on the above programs and how changes might affect your particular situation. Also, please share this article with anyone you know who could be impacted by changes to FHA policy. Be sure to join others and become a fan of Kathy Villa Real Estate by clicking the link on the left. We’d love to connect with you!
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The Right Way to Manage Your Credit Cards
April 13th, 2010 categories: Money and Mortgages
While one in seven Americans has at least 10 credit cards, the average is four, according to a report from Experian. Usage on credit cards has dropped dramatically in the last two years as financially constrained consumers have reduced spending and begun paying off debt. The national average interest rate on credit cards as of November 2009 is 12.64%, which has declined 0.45% from six months earlier.
I know that mortgage-seeking clients are always asking for advice on how they can improve their credit profile, such as the number of credit cards they should have. According to the credit experts at ApprovalGuard.com, however, it’s not just the number of credit cards you have, but how you use and manage those cards.
Here are some critical tips for managing your credit cards in order to maximize your credit profile:
1. Use your credit cards regularly, but in small amounts, never exceeding 30% of your entire credit line. For example, if your card limit is $4000, set a self-imposed limit to keep your balance at $1,200.
2. Even if you pay your bills on time, coming close to your full balance each month affects your credit score negatively. Regularly maxing out your card limit is a bad habit in the eyes of credit-rating firms. It’s better to spread your credit charges out over two or three cards, keeping each balance at or below 30% of your total credit line.
3. Don’t get rid of old cards even if they have higher interest rates than ones you may get on newer cards. Credit rating firms like to see a well-established history, so utilize your old cards every so often for small purchases.
4. On the flip side, avoid getting new cards, if possible. When you add a new credit card, your credit score will likely suffer a temporary drop until you have established a payment history with that card.
Well-managed credit cards will assist you in establishing a stronger credit profile and better credit scores that can potentially lead to lower interest rates and terms when applying for home loans. For more information on scoring up your credit profile, please email me. Feel free to share this important article with your friends, colleagues and family. All of us can use some guidance in managing our credit in today’s economic environment.
P.S. Please join others and become a fan of Kathy Villa Real Estate on Facebook by clicking on the link to your left. We’d love to connect with you!
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How to Save Money on Your Homeowners Insurance
April 5th, 2010 categories: Money and Mortgages, Real Estate News
In today’s economy, homeowners need to save money wherever possible. If you’ve been the victim of damage this winter, thanks to Mother Nature, you may be confronting the not-so-pleasant, realities of your homeowners’ insurance policy. From high deductibles to lack of coverage to rising rates, many homeowners have been left to foot a big- unexpected bill.
Here are some of the ways you can save money when it comes to homeowners insurance. For starters, you may be able to save hundreds of dollars a year by shopping your homeowners’ policy around, so please email me if you need a referral or two. Also, here are some great, money-saving ideas from the Federal Citizen information Center:
* Increasing your deductible is an easy way to save money on a monthly basis. Even raising it by just a few hundred dollars can make a big difference in your premium.
* Ask your insurance agent about discounts. You may be able to get a lower premium if your home has safety features such as dead-bolt locks, smoke detectors, an alarm system, storm shutters or fire-retardant roofing material. Long-term customers and those over age 55 may also be offered discounts.
* Insure your house, not the land under it. After all, your land will still be there even if your home is damaged. If you don’t subtract the value of the land when deciding how much homeowners’s insurance to buy, you will pay more than you should.
* Don’t wait until you have a loss to find out if you have the right type and amount of insurance. Discuss with your insurance agent exactly what types of damage are covered, including natural “acts of God.” Many homeowners are caught off guard by this loophole.
* Purchase enough coverage to replace what is insured. “Replacement” coverage gives you the money to rebuild your home and replace its contents. An “Actual Cash Value” policy is cheaper but pays only what your property is worth at the time of loss – your cost, minus depreciation for age and wear.
* Consider any special coverage you may need for valuable and/or unique items, such as computers, cameras, jewelry, art, antiques, musical instruments, stamp collections, etc.
* Remember that flood damage may not be covered by a standard homeowners’ policy. If you live in an area prone to flooding, take advantage of the National Flood Insurance Program. www.Floodsmart.gov
Bottom line, make sure you are working with an insurance agent who is experienced and trustworthy. Feel free to share this information with someone you think will find it useful. Also please join our Facebook Fan Page on the left.
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Expand Outdoors, Increase Your Home’s Value
April 2nd, 2010 categories: Home Improvements and Design, Money and Mortgages, Real Estate News, Sellers
With many Americans experiencing a financial pinch these days, there is a growing trend among homeowners nationwide to look to the outdoor areas of their own property for not only relaxation and entertainment value, but to also expand their living space and thereby, increase their home’s value.
Through my national network of leading real estate professionals, I have learned that homeowners across the country are spending more time at home and showing an increased interest in outdoor living areas. By sprucing up your patios, porches and decks, you are making your home more livable now and more attractive to future buyers.
Stylish patios and outdoor rooms with comfortable furnishings and convenient cooking and eating areas provided new opportunities for recreation and relaxing family times. A recent survey by the Propane Education & Research Council, found that 35% of homeowners have a finished outdoor room and 34% say they are planning to design one in the next year or two.
Some of my clients are even foregoing expensive vacations in favor of putting in a swimming pool. The reality is, however, that you do not need to make a major investment to improve your outdoor living areas. Here are 5 quick additions that will make an immediate difference:
1. Outdoor lighting units
2. Gas grills with cooking and food preparation surfaces
3. Outdoor fire pits or fireplaces
4. Patio heaters
5. Mosquito/bug eliminators
In any market, financial planners all agree, real estate is the best investment one can make. Increasing the value of that investment with features that extend and enhance the family living area is always a wise decision. For more information and ideas, feel free to email me and be sure to join our fan page on Facebook if you haven’t already!
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Top 4 Questions Home Buyers Have About the Tax Credit
April 1st, 2010 categories: Buyers, Money and Mortgages, Real Estate News
As the April 15 deadline to file 2009 federal tax returns approaches, the National Association of Home Builders (NAHB) is providing answers to some of the questions home buyers are most frequently asking about the home buyer tax credit.
“NAHB’s website that provides information about the home buyer tax credit, www.FederalHousingTaxCredit.com, has received more than 8 million visits,” said NAHB Chairman Bob Jones, a builder and developer in Bloomfield Hills, Michigan. “We are doing everything we can to make sure home buyers are informed about this outstanding opportunity to benefit from buying a home before it expires April 30.”
Some of the more commonly-asked questions, and the answers, include:
1. How does a home buyer claim the tax credit?
The credit is claimed when the home buyer files or amends their federal income taxes. For qualifying homes purchased in 2009 or 2010, the taxpayer must complete IRS Form 5405 and attach a copy of the settlement statement. In most cases, the settlement statement is a properly executed Form HUD-1.
In circumstances where a HUD-1 is not provided, such as purchasing a mobile home or a newly constructed home, the IRS will accept an executed retail sales contract (mobile homes) or a copy of the certificate of occupancy (new homes).
2. Does the home buyer have to sell their current home in order to qualify for the $6500 repeat home buyer tax credit?
A home buyer does not need to sell their current home in order to be eligible for the repeat buyer credit. They can continue to own both homes, and rent or use their former home for something else, as long as it no longer serves as their principal residence. The taxpayer is required to use the new home as their principal residence, and live in it for at least 36 months, or they will have to repay the credit.
3. Do married couples both have to meet the eligibility requirements in order to claim the credit, even if they file taxes separately?
Both spouses must fully meet all the eligibility requirements for either the $8,000 first-time home buyer tax credit or the $6500 repeat buyer tax credit, regardless of if they file joint or separate tax returns. However, if an unmarried couple purchases a home and only one person qualifies, the eligible person may claim the full credit.
4. Do all home purchases need to be completed by April 30, 2010, in order to be eligible for the credit?
Under the federal law slated to soon expire, a first-time home buyer may receive up to $8000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30,2010 that close escrow by June 30,2010. (This deadline has been extended a year, to April 30,2011 for members of the uniformed services, Foreign Service or employees of the intelligence community who have been on qualified extended duty outside the United States for at least 90 days between January 1,2009 – April 30, 2010.)
Additionally, under a newly enacted California law, a homebuyer may receive up to $10,000 in tax credits as a first-time home buyer or buyer of a property that has never been occupied. The new California law applies to certain purchases that close escrow on or after May 1, 2010.
If you found this information helpful or have any questions, I welcome your comments below. Also, please become a Facebook fan of Kathy Villa Real Estate. We’d love to have you!
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The Time to Buy is Now!
March 18th, 2010 categories: Buyers, Money and Mortgages, Real Estate News
No doubt, you’ve heard a lot of negative news about the real estate market lately that has caused you to put any thoughts of moving on hold. I can tell you that just the opposite is true. In fact, I can give you 3 great reasons to put your home purchase into motion:
1. The extension of the 2009 tax credit is approaching it’s deadline of April 30, 2010! This is the incentive for first-time home buyers to get a tax credit of $8,000. Previous home-owners can also take advantage of the $6500 repeat buyer credit too! (Provided they have lived in the property for 5 consecutive years out of the last 8 years)
2. Mortgage rates are still low! Federal Reserve policymakers recently pledged to keep rates low for an “extended period.”
3. Great inventory of homes being offered at the lowest prices in years! Many savvy home buyers are taking advantage of all these great incentives out there. They are taking the most desired and best-priced homes right off the market!
If you or someone you know has been considering purchasing a home; the time is now! Don’t hesitate to email me or call me with any questions you may have. Also visit my Facebook page and click on “Become a Fan.” I look forward to connecting with you!
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