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Four Tips to Sell Your Home Quicker

Selling your home in this market may seem impossible, but there are several things you can do to help it sell more quickly than the others in your neighborhood.

With mortgage rates beginning to rise, many people are jumping into the house buying game before those rates go any higher. Some are even selling their homes to upgrade or even downgrade into something that is more affordable. Unfortunately, with the high inventory of homes due to recent foreclosures, it may be difficult to sell your home as quickly as you could before. Here are four tips for unloading your home so you can move on to another one.

• Go Less than the Competition
If you absolutely must sell your home in this market, you should set yourself up right now for a less-than-ideal price. In fact, you may have to go about 10 or 15 percent below the value and price of similar homes that have sold throughout your neighborhood. Determine the least amount of money you would accept for your home before you list it on the market. This helps you remove the emotional attachment you may have to the building, according to Palm Beach realtor Heidi Cole.


• Focus on the Curb Appeal
Even if you drop the price on your home below the neighborhood’s value, making it more attractive on the outside will help it compete against other houses that are up for sale around it. Plant some flowers, keep the yard mowed, give the home a fresh coat of paint and do other things that make it look nice from the street. The outside appearance is the best chance to get potential buyers to the inside because it gives them that all-important first impression that many buyers base their decision on.


• Target First-Time Home Buyers
First-time home buyers generally purchase about 50 percent of the homes that sell each year. With the federal tax credit for first-timers set to expire soon and the fact that most first-time home buyers do not have to unload another home first, this would be a great demographic to target when trying to sell your home. You can target this group by getting an online presence for your listing and use social networks like Twitter and Facebook to spread the word about open houses and other events designed to show off your home.


• Choose Your Words Carefully
There are literally hundreds of homes for sale in nearly any given area. As a result, you need to make your listing stand out from the rest. Make sure your listing is not ordinary and always pepper it with amenities that today’s homebuyer is searching for in a new home. Use words like “granite counters,” “pool” and others to attract attention to your listing and give it a better chance of selling. Also, use a wide-angle lens when posting pictures of your home to give it a more spacious appearance to attract potential buyers.

Tax Tips for Homeowners

Tax time is approaching quickly. Do you know the rules and deductions for homeowners?

With tax day approaching very quickly, everybody is looking for ways to save some extra money with legal deductions and other tax tips. If you are a homeowner, you probably already know that you can deduct the interest from your mortgage loan on your taxes. If you are doing your taxes this year or simply want to know about some legal write-offs, here are a few of them you should be aware of.

• You can write off the mortgage interest paid throughout the year on your first and second home as long as the two mortgage loans together do not equal more than $1.1 million. This is for married couples filing jointly. For individuals, the amount is cut in half.


• If you took out your home loan before October 14, 1987, many of the new tax rules do not apply to you when it comes to deducting mortgage interest and so forth.


• You can deduct the interest you pay on your second mortgage if the loan was taken out on or after October 13, 1987. The limit for this is $100,000.


• Property taxes are another deduction you can make on your income. However, you can only deduct the money you have paid for property taxes and not any money held in escrow if it has not been applied to your property taxes yet.


• Homeowners who use part of their home as an office can deduct a portion of the costs to pay for and maintain your home. You can deduct a percentage or insurance, repair costs and even depreciation as well.


• If you sold your home in 2009, you can keep the profits up to $500,000 for married couples filing jointly if the home was used as their primary residence for at least two of the last five years. Singles or married couples filing separately can keep up to $250,000 each when selling a primary residence.


• You can deduct some moving costs if you moved in 2009 as a result of a new job. To qualify for moving deductions, you must move within one year of starting a new job, you new home must be within 50 miles of your new job and other regulations.


• If you are a first-time homebuyer with low income, you may qualify for the mortgage tax credit which is equal to as much as 20 percent of the interest payments you made on the new home.

Tax guidelines and rules can be very confusing. Even if you know some basic guidelines like the ones above, it is probably best to consult with a qualified CPA to ensure you are doing everything correctly. A few simple mistakes could land you in hot water with the IRS so you don’t want to take any chances.

FAQs about the New Mortgage Aid Plan

There are many rumors and pieces of misinformation about the new plan to help troubled homeowners. Here are some FAQs about the new plan and some straight answers.

Earlier this month, the Obama administration released information about a new plan that is designed to help homeowners who find themselves in financial difficulty and cannot make their mortgage payments. We have posted several articles regarding this program as of late, but here are some simple and straightforward questions and answers that may help you make sense of this new program and what it does.

How many mortgage borrowers are in financial trouble?
Currently, there are about six million American homeowners who have missed two or more mortgage payments. According to experts in the industry, there could be between 10 and 12 million mortgage borrowers become the victims of foreclosure in just the next three years. There are even more homeowners right now that are “underwater” with their mortgage, meaning that they owe more on their homes than what their home is worth.

How many homeowners will the administration’s new plan actually help?
The current plan is designed to help between three and four million avoid foreclosure by the end of 2012. Although it seems impossible, officials are hopeful it will work out. More than 170,000 homeowners have already completed a loan modification to help them through their financial difficulties and more than one million homeowners have signed up for the federal government’s Home Affordable Modification Program (HAMP) since the beginning of 2009.

How will the new program work?
There are three ways in which troubled borrowers can receive financial help. Firstly, those homeowners who are unemployed may receive up to six months deferred payments on their mortgage loan. Secondly, banks and lenders will receive government money for reducing the principal balance on many home loans. Thirdly, lenders may offer refinanced loans to borrowers. These loans will be backed by the FHA for extra security.

When can I take advantage of this new program?
There is no specific date on which the new program will start, but officials in the Obama administration say it will be in the next few months.

What do I do if I am unemployed?
Jobless homeowners will be given more time to find a job and during that time, they will not be required to spend more than 31 percent of their income on their mortgage. If you find a job within that time period, your financial situation will be reevaluated and you may even qualify for a loan modification which could reduce your payments. The requirements insist that you have a mortgage less than $729,750, live in your home as your primary residence and also receive unemployment benefits. If you do not find a job in that time period, the bank may ask you to do a short sale or agree to a deed-in-lieu of foreclosure which allows you to simply hand the property back to your lender without a messy foreclosure process.

Are You Underwater? Or Staying Afloat?

Many Americans are underwater in the mortgages these days. Are you one of them?

With nearly 25 percent of all American homeowners in some sort of mortgage trouble, it’s no longer looked upon as dishonorable if you find yourself in this type of situation. You have plenty of company and you may have even more in the months and years to come. The group of people in the most trouble is those who are underwater on their mortgage and unemployed as well. They do not have equity as a financial resource to deal with their everyday expenses and if they find a job that requires them to move, they cannot sell their home for what they owe on it. For people like this, it seems to be cheaper to just pack up and leave the house for the bank than to do anything else with it.

This is what puts the Obama administration and the previous administration in such a quandary. There is no simple solution to the problem which fits for everybody. The loan modifications made a small dent in the problem, but sometimes they reward the irresponsible behavior that got the housing industry into the crisis that it finds itself today. The Treasury Department has a program – the Home Affordable Modification Program (HAMP) – which has already provided permanent financial help to more than 116,000 struggling homeowners. But when you think that they are more than 1.7 million still waiting for help, it does not seem like it is doing enough.

That is why this administration recently announced a plan to make an even bigger impact on the mortgage industry. According to the press release, this new plan only “refines” the existing program by offering more opportunities for forbearance for unemployed homeowners as well as incentives for lenders to reduce the amount of money owed on the balance of the home. Some critics say it does not do enough if the program does not require lenders to reduce the principal and, according to them, it only affects about one-quarter of the number of homeowners who are underwater in their mortgage payments. At best, the program refinements will prevent some foreclosures but it will not be a solution to the problem which essentially stems from government debt, a weak economy and other problems.

It seems like there is no recovering from this mess right now. It’s not something that the government can just throw a bunch of money at and be done with it. This is going to take years of work and homeowners are going to have to learn discipline when it comes to their finances. This is not to say that they do not exercise financial discipline, but there are many who knew that they could not afford a home and yet they signed up for the mortgage. Maybe there should be some type of education classes included with these programs so we are not simply putting a bandage on the problem but creating a real long-term solution to help prevent this type of crisis from happening again.

Chase Signs Up for Program to Assist Troubled Homebuyers

Chase has become the third bank to sign up for one of the government's plans to help distressed homeowners.

Last week, JPMorgan Chase & Co. became the third lender in the mortgage industry to sign up for a government program which assists homeowners who are in financial difficulties pay their house payments each month. The program does this by modifying home equity loans and working with second mortgages to lower payments, balances and making it generally easier for homeowners to keep their homes before going through the foreclosure process.

The program stems from the Obama administration’s loan assistance program which provided $75 billion to troubled homeowners. The plan was announced last spring, but Bank of America was the first housing lender to sign up with the program towards the beginning of 2010. Chase joined the program shortly after Wells Fargo jumped in last week as well.

The program, however, gives the lenders the opportunity to veto any efforts to modify a primary mortgage if the lender fears that the loan will not be repaid. Many people in the legislature are not happy with this part of the program. Representative Barney Frank from Massachusetts urged banks in a letter he sent out to allow borrowers to modify their primary loans. It remains to be seen what will exactly happen with this program, but it will probably be something that helps a number of troubled homeowners hold their heads above water…at least for the time being.

The basic idea of the new program is to allow troubled homeowners lower their monthly mortgage payments if they accepted a “piggyback” loan, which was essentially a second mortgage that required no down payment at a time when the housing market was going good. Even people with less-than-ideal credit got these second loans despite the fact that they were having troubles making payments on their first mortgage loan. With the new program, homeowners may have a better chance at modifying their primary loans to lower their monthly payments.

Soon after Chase made the announcement that it would be signing up for this program, shares of the lender’s stock rose by 20 cents to $43.65.

Mortgage Rates on the Rise

We've been talking about it for weeks. Now mortgage rates are starting to go up slowly. How high have they gone in the last couple weeks?

We’ve been sitting comfortably for several weeks with the lower mortgage rates that averaged below five percent. But those rates are beginning to rise as an increase for the second straight week has indicated.

The decreasing demand for homes is one of the reasons that the average rate for a 30 year mortgage loan with a fixed rate increased from 4.96 percent last week to 4.99 percent this week. According to Freddie Mac, a mortgage lending giant, the average rate for a 15-year fixed-rate mortgage this week went up by about .01 percent over last week’s ending average. As for five-year adjustable-rate mortgages, the average went up by about 0.05 percent this week to 4.14 percent. Finally, the rates for a one-year adjustable-rate mortgage went up by about 0.08 percent to 4.20 percent in the past week.

These mortgage rates do not include additional fees that home buyers can expect to pay when they get a new mortgage. These extra fees are typically referred to as “points” and one “point” is equal to one percent of the amount borrowed by the homeowner. For instance, if a home costs $200,000 with one point, the borrower would be paying $202,000 in addition to the fees and other charges.

Analysts are closely watching how the mortgage rates fluctuate while the Federal Reserve plans to end its program which was designed to support the housing industry with about $1.25 trillion in financial backing. If the rates continue to rise, home prices will go back up and the demand for homes will drop once again. That program ends this week and rates have continued to climb lately as a result.

According to Scott Brown, the chief economist at Raymond James and Associates, the Federal Reserve could step back into the situation with more money for bond. He says the Feds are reserving the right to do that if the mortgage rates start to get out of control. In February of this year, the number of new home sales dropped to an all-time low due to a variety of factors, including unemployment, foreclosures, blizzards and the downturned economy. Also, the number of existing home sales also fell for a third consecutive month. In the week that ended on March 19, however, the number of home applications increased by nearly three percent while the number of mortgage applications dropped by about four percent with a drop in homebuyers wanting to refinance as well.

Will Mortgage Lenders Quit Charging Overages?

If you have signed up for a mortgage in the last several decades, you may have been charged overages and other charges. Is the mortgage industry on the verge or reducing or doing away with these charges?

Have you ever tried to bargain with your mortgage lenders when it comes to fees, extra charges and overages? If not, you may be paying more than you actually have to pay. Jack Guttentag, a columnist with The Washington Post, recently wrote a piece that compared the United States mortgage industry and its practices to the practices of the carpet sellers at Middle Eastern bazaars. In the bazaars, customers and merchants often haggle on the price of a carpet before making the deal and the price that a consumer pays is typically proportional to his skills at bargaining. According to Guttentag, the same practices are used in the American mortgage lending industry.

Guttentag calls this the “price of innocence.” This figure is the difference between the lender’s actual posting price and the price the customer actually pays to the loan officer. For instance, if the lender posts a price of five percent with zero points but the loan officer charges the consumer five percent and one half point, the overage, or “price of innocence,” is the one half point. The loan officer generally receives one-half of the overage.

The overage is not a new phenomenon in the mortgage industry, but it is something that has not always been a part of the deal when a borrower signs up for a mortgage loan. During the 1920s, home buyers would deal directly with commercial banks or lenders when applying for a mortgage. They would work with a salaried employee who had no incentive to sell a home because the employee did not have any discretion over who would get approved and who would not get approved. Therefore, the employee could not adjust prices or do anything else to push the home buyer’s application through nor did they have any motivation to do so. However, after World War II, the secondary market began to arise and financial institutions were not as regulated as they were before the war. This led to the creation of mortgage companies, or as Guttentag refers to them, “mortgage lenders.” Over the years, these lending institutions wanted to charge fees for a huge profit for as long as the market could bear it. Through some more less-than-ideal approaches and practices in the lending industry, we ended up with the mortgage crisis that we have now.

Bank of America has seen the error of its ways and decided to do away with charging overages to customers who are buying a new home. One of the reasons is because of the problems already described in this and Guttentag’s article. The new revisions in the Federal Reserve’s Truth in Lending policy (which forbids lenders to share overages with loan officers) has also played a role in the bank’s decision. Hopefully, other mortgage lenders will follow the example. However, you will have to do your research because most lending companies will not announce that they are no longer charging overages the way that Bank of America has done.