Patty's Mortgage Blog

The new provisions include the following changes:

• Taxpayers must purchase their home, or be locked into a contract to close, before midnight on April 30, 2010. The closing must occur before midnight on June 30, 2010.
• The credit is allowed in full for those with incomes up to $125,000 ($225,000 if married filing joint). The credit is reduced for taxpayers with an income between $125,000 and $145,000 ($225,000 and $245,000 if married filing joint) and is not available for taxpayers with an income higher than $145,000 ($245,000 if married filing joint).
• Taxpayers (and their spouses) who have lived in their home for five consecutive years out of the eight years preceding closing on a new house may qualify for a reduced credit ($6,500 or $3,250 for those who file separately).
• The new home purchase price may not exceed $800,000

Introducing Kids to Money
Money gives people -- both young and old -- decision-making opportunities. Educating, motivating, and empowering children to become regular savers and investors will enable them to keep more of the money they earn and do more with the money they spend.

Ask a city kid where milk comes from, and the response is likely to be "the store." Ask a child where money comes from, and the reply may be "Mommy" or "Daddy."

If you have children aged six or older, it's time to start teaching them the basics of money and finance.

As soon as children can count, introduce them to money. An example would be to teach them the difference between a nickel, dime, quarter and a dollar.

Teaching kids how to manage money is one of the biggest challenges facing any parent. If you can teach your child the difference between needs and wants, how to budget and how to save, your child will know more than many adults and can avoid joining the millions of Americans who rack up huge credit card debt.

An allowance is a good first step in teaching your child how to manage money. Consider starting with a small amount as soon as your child is old enough to understand the connection between money and purchases.

When giving children an allowance, give them the money in denominations that encourage saving. If the amount is $5, give them 5-1-dollar bills and encourage that at least one dollar be set aside in savings. (Saving $5 a week at 6 percent interest compounded quarterly will total about $266 after a year, $1,503 after 5 years, and $3,527 after 10 years!)

Keeping good records of money saved or spent is another important skill young people must learn. To make it easy, use 12 envelopes, 1 for each month, with a larger envelope to hold all the envelopes for the year. Establish this system for each child. Encourage children to place receipts from all purchases in the envelopes and keep notes on what they do with their money.

Another example is to give your child a check register and have them write in all their expenses. This will teach them to understand where their money goes and teach them to balance a checkbook.

Keep in mind, there is no one dollar amount that's appropriate for all kids. The amount you decide on should be sufficient to provide your child with some extra money so he'll learn how to handle it. Many factors go into fixing an allowance. The 3 main ones are listed here:

· Your child's age.

· Your family income.

· What the allowance is supposed to cover.

Some parents think that giving their children allowances puts the parents in a position where their kids are often begging for raises or advances. Remember, allowance is supposed to be a teaching tool. Negotiation skills are an important part of that, which they're going to need for dealing effectively with friends, teachers and, eventually, their bosses.

Help children learn the differences between needs and wants. This will prepare them for making good spending decisions in the future. Setting goals is fundamental to learning the value of money and saving. Young or old, people rarely reach goals they haven't set. Nearly every toy or other item children ask their parents to buy them can become the object of a goal-setting session.

Take children to a credit union or bank to open their own savings accounts. Beginning the regular savings habit early is one of the keys to savings success.

Allow young people to make spending decisions. Whether good or poor, they will learn from their spending choices. You can then initiate an open discussion of spending pros and cons before more spending takes place.

Establish a regular schedule for family discussions about finances. This is especially helpful to younger children—school clothes, holidays and vacations are all examples of ways we as adults save.

I have included a few links to some great sites that offer FREE resources including interactive games to teach children about money and finance.

http://www.moneyfactory.gov/newmoney/main.cfm/learning/fun

www.usmint.gov/kids

http://www.sesameworkshop.org/home

http://www.giveme20.com/?gclid=CJSP6eHd1p0CFQ0aswodyGhCtA

http://www.mysavingsquest.com/

If you have any questions, please feel free to call or email me at my contact info below.

The end of Fed supported Mortgage Backed Security Purchase Program draws near.

The Fed does begin their two day Federal Open Market Committee meeting today, ending with the release of their formal Policy Statement and Interest Rate Decision at 2:15pm ET tomorrow. I feel that there will be no change in interest rates - the Federal Funds Rate currently stands at 0.25%. However, the Policy Statement from the Fed is extremely important as always…will they hint at any inflation concerns? Will they reiterate Bernanke's words from last week saying that the current recession is most likely over? Will they comment as to the future of their stimulus programs, such as their Mortgage Backed Security purchase plan? The wording they use is always carefully crafted as the market looks for clues - and while the Fed doesn't like to deliver surprises, the wording of this statement will be very interesting to hear.

The Fed must be very careful how it deals with the Mortgage Backed Security purchase program. Fed members know that they can't pull the rug out from under their purchases, which would cause home loan rates to rise quickly under the reduced demand for Bonds…but on the other hand, the program can't continue forever, and is currently set to expire near the end of this year. The Fed has purchased approximately $870B - or about 70% of the $1.25T committed to, and if they stay on course with their plan, home loan rates will indeed rise as the purchasing slows and stops. There truly is an opportunity at hand to purchase or refinance a home with historically low financing rates right now, and it won't last forever. In the future, many will look back and wish they had acted now.

Apply online, email or call 972.603.8209  for a free pre-approval today.

Patty Farmer

Sr. Mortgage Banker
Cell: 972.603.8209
pattyfarmer2003@yahoo.com

Envoy Mortgage

The mechanics of selling a house is on the road to change. Sellers are beginning to feel the change in buyers attitudes.

Buyers are now expecting to pay a little less for a home then they did about a year ago. Todays prospective buyer is spending a lot more time looking on the internet even before they contact a real estate agent to see what housing prices are like and what interest rates to buy those homes are doing.

Today, for a Seller to sell their home in a timely manner, the price must now be within the actual market prices or below. The days of putting your house on the market and have it sell almost immediately are gone. There is a lot more to it now.

The obstacle to overcome is how the home shows to prospective buyers. You need to remember that now there are more homes on the market, giving buyers a lot more choices. You, the seller, want your home to show at its best.

This leads us to the “Staging” of a home. Less is always better. If your home needs painting, paint it. If your carpets need to be cleaned, clean them. Set your dining room table with nice tablecloths and nice dinner ware. Take most everything on your kitchen counter tops off. If your living room or family room looks like there is too much furniture, make it disappear. Rent a storage space if necessary. Even closets and pantries need to be neat and tidy. Buyers tend to look everywhere. There are still many new homes being built, go and check them out. See how a professional stages a model home.

A First Impression is everything. Your agent will normally take photos of your home and the one that goes on the Multiple Listing Service, Realtor.com, etc., is the front of your house. Water the lawn, clean up by the front door, put potted plants if you can, and make sure when your agent takes pictures that no cars are in the way. This first photo will also have a bearing on what the agent thinks. Will that agent even tell a prospective buyer that your house is for sale?

Landscaping, I have seen some properties offered that because the seller has no landscaping in the back yard that the buyer will get an allowance at the close of escrow. If you can, and have the time, put down some fertilizer and grass seed and put in your own back yard. This can really make a difference. Always keep in the back of your mind, you’re the seller who wants their house sold. A Buyer has lots more choices today and would probably go on to the next house if they felt they had to put several thousand dollars into a back yard that they wouldn’t have to spend with another house.

First and foremost, buyers are just as conscious of money and how much they spend as you are on how much you can actually get for your house and move on to the next one.

I am a Mortgage Banker, and have been watching the real estate market and the interest rates change for the past several months. I work closely with several Realtors in the Dallas Metroplex and have many tools for both Buyers and Sellers available on my website. Please feel free to call or email me if you have any questions.

Patty Farmer
Envoy Mortgage
972.603.8209
pattyfarmer2003@yahoo.com 

It's no secret that many facets of lending and real estate have changed as a result of the credit crisis. In addition to tightened lending practices that resulted from rising mortgage delinquencies, Washington has been heavily involved in altering the way lenders do business today.

Two individual pieces of legislation impacting our business need to be taken into account when determining closing dates for purchase transactions.

Home Valuation Code of Conduct
The Home Valuation Code of Conduct (HVCC) went into effect May 1, 2009. Intended to shield appraisers from undue influence from loan officers and lenders, this legislation installed a "firewall" between those individuals directly involved in the origination of the loan from the selection of and contact with appraisers.

HVCC also requires that borrowers receive a copy of the appraisal a minimum of three days in advance of closing. Part of the kicker here is that "received" is considered, in effect, three business days after the appraisal has been mailed to the borrower.As HVCC requires a firewall between the originator and the appraiser, the time to receive an appraisal has increased, in some cases by as much as two weeks or more. While this may not always be the case, it is important to take into consideration when considering closing dates. Today, conservative closing dates are mandatory to properly manage expectations of all parties.

Housing and Economic Recovery Act
The Housing and Economic Recovery Act (HERA) amends and impacts several aspects of obtaining a mortgage, the disclosures required for borrowers, and the timing of their delivery. This impacts the minimum time required to close, and should any changes be made to a loan application that could impact the Annual Percentage Rate (APR), this could impact the closing date.

Other than paying for a credit report, lenders may not accept any additional fees from a borrower until four business days after disclosures have been provided to or mailed to a borrower. This has the potential to delay several aspects of the application process.

Finally, upon making application, a borrower is provided a Truth in Lending (TIL) statement, detailing the total expected costs that could be incurred over the life of the loan. Should anything change in the loan application that could change the APR by more than .125%, a new TIL must be reissued to the borrower a minimum of 3 business days before closing. Items impacting the APR could include a borrower accepting a higher interest rate than initially qualified by floating their rate at application, a change to the loan amount, a change in product, a change in closing date, and any changes to fees.

What Now?
While there is more we can discuss on the specifics of these legislative implications, I felt it important enough to let you know now that I would not recommend you write purchase contracts with short closing time frames.

I will be preparing additional information that can be provided to both  buyers and sellers to help explain the rationale behind not scheduling closing dates in advance of 30 days at a minimum and ideally not less than 45 days.

Thank you, if you have any questions, please pick up the phone and call me.

Patty Farmer

972.603.8209

Sr Mortgage Banker

Envoy Mortgage

Why the Government’s Growing Debt Load Could Impact YOUR Mortgage Payment

The increase with interest rates can be tied into a few critical factors, one of which is the government’s debt load. Many consumers assume that banks or lenders set their mortgage rates based on the prime rate, but interest rates work very similar to most commodities, and are influenced by a secondary exchange market. Interest rates have the potential to change multiple times during the course of one day. The rates that banks or lenders offer for a mortgage are correlated to the prices of mortgage backed securities or mortgage bonds. Mortgage bonds, are traded on a secondary marketplace and the coupon rate investors require is what directly raises or lowers the interest rate on a Mortgage Loan.

The most common bond that casual investors follow is the ten year Treasury bond. The yield on the ten year bond dropped to 2.3% in early March and rose to nearly 4% in early June. The rapid increase in Treasury yields was influenced by investors returning to the stock markets, sharp increase with oil prices and the concerns over the debt level and the Treasuries ability to continue to finance their debt load. As the yields on the bonds have moved higher, fixed mortgage rates climbed over one full percent. The good news is that long term mortgage rates remain at attractive levels (under six percent), but are likely to remain volatile as the economy works through its challenges.

Please feel free to call or email me with any questions you may have about Mortgage Rates and how that may impact YOUR Mortgage Payment.

Patty Farmer
Envoy Mortgage
Sr. Mortgage Banker
972.603.8209
Pattyfarmer2003@yahoo.com
www.PattyDoesLoansFast.com

Rates have been volatile, but get ready -- they may fall again

by Amy Hoak, a MarketWatch reporter based in Chicago.

After a recent spike seen in mortgage rates, some consumers are wondering whether they've missed their chance to refinance into an ultra-low rate.

Fear not: While the conforming 30-year fixed-rate mortgage hit a daily average of 5.81% last Thursday, it averaged 5.53% on Tuesday, said Keith Gumbinger, vice president of HSH Associates, a publisher of consumer loan information. And it's possible that rates could continue to fall.

"Predicting interest rates is like predicting who is going to win the World Series in January," said Guy Cecala, publisher of Inside Mortgage Finance. That said, he calls the recent spike "somewhat of an aberration," and expects rates will continue to drift down.

Why the recent run-up in rates? Over the past month or two, "the economic skies have brightened somewhat," Gumbinger said in an email, and the threat of "trillion-dollar budget deficits for the foreseeable future, the potential for significant inflation, and few clues as to how the government might extricate itself from intrusions into markets" created a landscape that was not appealing to investors.

But now, rates are retreating partly because inflation doesn't seem as immediate a threat as investors feared, Cecala said. In his opinion, nothing fundamentally has changed in the economy over recent weeks to warrant the rate rise, yet he expects volatility through the remainder of the year as investors debate the economy's health.

"Realistically, I think that the rates will drift under 5% again. It may take a month, may take two months," he said.

It's also important, however, to realize that extremely low rates likely won't be around forever, said Bob Walters, chief economist of Quicken Loans, in a statement.

"Luckily, we have seen rates drop some this week, which should help many consumers breathe a little easier," Walters said. "But the fact remains, the government's plan of purchasing mortgage-backed securities cannot go on indefinitely, and when it ends, we will most certainly see a spike in rates. The hope is that the Fed can keep rates low long enough to kick-start a housing recovery. Whether that will work remains to be seen."

"Volatility is the key word in the mortgage industry these days when it comes to rates," said Kyle Kerwin, senior vice president of mortgage lending for Signature Bank of Arkansas.

Here are five tips for those shopping for a mortgage today, particularly those who need to refinance an existing loan:

1. Get started on paperwork. Once you've found the mortgage professional you'd like to work with, get started on the necessary paperwork. Rates move regularly, and if paperwork has been started your file can be processed more quickly when rates hit a low. When you start the application process, your credit score will be pulled and you'll need to submit support documentation including W-2 forms and pay stubs. You might be asked for updated documents nearer to closing.

2. Make sure your credit is in good shape. Check credit reports and fix problems as soon as possible, said Mary Curran, president of Highland Financial Mortgage Corp. in Northbrook, Ill. Even seemingly small charges can haunt a borrower: A forgotten, unpaid parking ticket, for example, can noticeably affect a credit score, she said.

3. Decide at what rate it makes sense to pull the trigger. If you have a 6% rate now, rates would have to hit 5% or lower for it to make financial sense to refinance, Cecala said. Talk with your mortgage professional about what's best for your particular situation.

4. Stick to your guns. Once you determine the rate you'd need to get, it's probably wise to stick to that decision. Consumers sometimes gamble that rates will go lower, and the plan can backfire if rates reverse course, Kerwin said. A couple of weeks ago, rates were close to 4.5% in his market, "and people wanted to hold out for an extra eighth of a percent."

5. Remember, rates are still good. Yes, rates could fall and create another record low as a result of a swoon in the stock market, a collapse of a major bank or a deepening of a recession, Gumbinger said. But it isn't likely that many consumers would crave those economic shocks. "Why would anyone wish for those things again to simply get a rock-bottom, ultra low mortgage rate? If it means saving $250 per month on your mortgage but it costs you $50,000 in your 401(k), how could this be seen as any kind of benefit?" he said.

If you would like a FREE review of your Mortgage to see if a Refinance is the right option for you, or if you are interested in getting pre-approved to purchase a new or existing home please call me TODAY at 972.603.8209 or email me at pattyfarmer2003@yahoo.com