Karl's Mortgage and Related Info Site

Mortgage Rate Update

FHA Loans Facilitate Home Ownership

The Federal Housing Administration (FHA) program first began in 1934 in an effort to encourage home ownership despite the difficult economic times of the era. The program enables consumers who may not qualify for a standard loan to obtain the financing they need to purchase a home without income limitations.

FHA loans differ from typical loans in that they are insured by the Federal Housing Administration, which is a part of the Department of Housing and Urban Development (HUD). Because this insurance reduces the lender's risk on the loan, lenders have greater flexibility with regard to approving loans. For example, FHA loans are not credit-score driven, so a client may be able to obtain a loan despite having had credit problems or even a bankruptcy in the past.

FHA loans also provide added flexibility when it comes to closing costs and the down payment. Many of the closing costs can be incorporated into the loan, and a down payment of just 3.5% of the purchase price is required. The down payment may be obtained as a gift from a family member.  FHA loans are processed just like any other loan, and they provide a wonderful opportunity for consumers who are seeking to achieve home ownership!

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Thursday, 7th January, 2010:

*Rates are subject to change due to market fluctuations and borrower's eligibility.

Karl Peidl
Pleasant Valley Home Mortgage Corp.
305 Harper Drive, Suite 3
Moorestown, NJ 08057

856-252-1224

kpeidl@pvhmconline.com

www.karlpeidl.com

Mortgage Rate Update
High Credit Score = Low Mortgage Rate

Credit scoring was developed in the 1960s as a means to determine whether or not consumers were likely to repay their loans. The score ranges from 350 to 850 with a higher score being extremely favorable. Essentially, a high credit score translates into lower interest rates for the borrower.

There are five factors that comprise the credit score. Payment history accounts for 35% of the score; outstanding credit balances have a 30% impact; credit history makes up 15%, type of credit factors at 10%; and inquiries influence the score by 10%. This gives the lender a snapshot of an individual's sense of financial responsibility and ability to pay back loans.

There are many quick tricks to improve the credit score, and I can provide borrowers with more information on this subject. If necessary, I guide them to a reliable resource for credit remediation. If a borrower has to pay a higher interest rate to close a loan, the tarnished credit rating will begin to improve once mortgage payments are made on time and in full. If that is the case, my team and I will be on the watch to alert the borrower when an opportunity arises to refinance and get a lower interest rate.

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Thursday, 31st December, 2009:

*Rates are subject to change due to market fluctuations and borrower's eligibility.

Mortgage Rate Update
Know Your Credit Score

In the past, it wasn't out of the question to obtain a mortgage with a FICO score in the low 500 range. In fact, if you were willing to accept the payment, you could even do so with little money down.

Today, however, if you have a low FICO score, you may not be able to get a mortgage. In fact, depending on how much of a down payment you can afford and the mortgage program you are applying for, you may be looking at a minimum score of 680 to obtain a mortgage.

The point is, your credit score is more crucial than ever-not just for getting a low rate, but for qualifying for a mortgage at all.

So, before you sign a purchase contract or apply for financing, take the time to have your credit profile checked out. Often, there are steps you can take to help correct and improve your credit score. But doing so, requires the insight and advice of a professional who knows what to look for and what to do to achieve the desired results.

If you think your credit score and credit profile could use even a little improvement, contact me to discuss your situation. With a short conversation, we can discuss what your credit score looks like and what options you have.

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Thursday, 24th December, 2009:

*Rates are subject to change due to market fluctuations and borrower's eligibility.

Mortgage Rate Update

Homebuyer Opportunities Nearing End

For prospective homebuyers who are on the fence about making a home purchase, the next few months represent a countdown of sorts for two reasons.

First, huge tax incentives are about to expire. April 30, 2010 is the last day to enter into a home purchase contract and still potentially qualify for a federal income tax credit of up to $8,000 for first-time homebuyers and up to $6,500 for repeat homebuyers. The credit can be claimed only on contracts that close by June 30, 2010.

Secondly, another form of stimulus will soon disappear, as the Federal Reserve winds down a program that has been keeping home loan rates artificially low. The fact is that the lowest rates of 2009 were driven down to their attractive levels because of the Fed's Mortgage Backed Securities (MBS) purchase program. The Fed has already used over 80% of the allocated funds for MBS, meaning less than 20% remains to be used over four months.

As the Fed's program winds down and ends, we'll likely see two things happen. First, we will probably see higher levels of volatility-with rates sometimes shifting dramatically in the middle of the day. Second, since MBS will have less support from the Fed, rates are likely to rise over time.

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Thursday, 17th December, 2009:

*Rates are subject to change due to market fluctuations and borrower's eligibility.

Mortgage Rate Update

Financial Reasons to Buy

There are a number of personal and emotional reasons to buy a home. But there are also some strong financial reasons to make the investment. Here are just a few of those reasons:

Increase Net Worth: Few things have a greater impact on net worth than owning a home. In a comparison of renters versus homeowners, the Federal Reserve Board of Consumer Finance found that the average net worth of renters was just $4,000 compared to homeowners at $184,400.

A Big Tax Deduction: One of the largest tax deductions available is the amount of interest paid on a mortgage. In fact, a $150,000 home at a 5.50% interest rate can add up to approximately $8,000 in first year's interest. This amounts to a significant savings - effectively reducing the amount of a homeowner's monthly mortgage payment.

Long-Term Appreciation: Over the last few years, home prices have corrected and become more affordable. While that's good news for potential buyers, it has overshadowed the long-term appreciation of a home's value. The reality is, despite market ups and downs between 1950 and 2002, US home prices appreciated at an annual growth rate of 4.8%. Even if you calculate a modest appreciation of 3%, a home purchased today for $150,000 will grow in value to $364,000 over 30 years.

In addition, don't forget that the government is offering a tax credit of up to $8,000 for first-time buyers through June 30, 2010. The tax credit has also been expanded so that qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years can receive a tax credit of up to $6,500.

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Thursday, 10th December, 2009:

*Rates are subject to change due to market fluctuations and borrower's eligibility.

Mortgage Rate Update

Homebuyer Tax Credit Extended and Expanded

Great news for homebuyers! The Homebuyers Tax Credit has been extended into the first half of 2010...and it has been expanded to include benefits for current homeowners!

Who Qualifies? First-time homebuyers may be eligible for the tax credit worth 10% of the purchase price of the home, with a maximum available credit of $8,000.

In addition, the program now gives current homeowners an additional reason to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Eligible Incomes: Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more can receive a partial credit; however, single filers who earn $145,000 and above are ineligible.

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more can receive a partial credit; however, joint filers who earn $245,000 and above are ineligible.

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Thursday, 3rd December, 2009:

*Rates are subject to change due to market fluctuations and borrower's eligibility.

Upside Down?
You Can Refinance Up to 125% of Your Home's Value

Even if you owe up to 125% more on your mortgage than your home is worth, you may be able to refinance. For example, if your home is worth $200,000 but you owe more than that, qualifying homeowners can now refinance up to $250,000.

According to First American Core Logic, more than 15.2 million homes had negative equity in June 2009. This represents nearly 33% of all mortgaged properties across the country. Where in the past, being upside down on your loan would have precluded your ability to seek relief, you now may have an opportunity.

The Making Home Affordable program was initially structured to accommodate homeowners with a new loan to 105% of their home's value. However, that amount has been increased to 125%. There are requirements to qualify including whether your loan is currently owned by either Fannie Mae or Freddie Mac. You can find out if your loan is held by either agency by visiting http://makinghomeaffordable.gov/loan_lookup.html.

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Monday, 30th November, 2009:

*Rates are subject to change due to market fluctuations and borrower's eligibility.

What's In Your Wallet?

In recent years, there has been an explosion in the number of credit card issuers and - perhaps more confusingly - in the types of rewards being offered by those credit cards. So now, you not only need to consider the rate and terms of your credit card, but also what rewards or other benefits it offers. The following information can help you consider what types of rewards are out there and which is best for you.

Airline Miles: If you travel frequently, then maximizing your airline miles may be the very best reward. And if you primarily fly on a single carrier, you will do the best to take their affiliated credit card, as they typically offer 'bonus' opportunities to earn extra miles.

Cash Back: There are several items to consider when focusing in on cash back cards, most importantly being the fine print. For example, some cards have tiers - which means, you won't earn the most cash back until you reach a certain amount of spending for the year.

Store Cards: Cards issued by particular merchants can be some of the most valuable cards if you are a frequent shopper at that store.

Points Cards: Many rewards cards offer general purpose points that can be redeemed for a wide variety of items, including airline miles, cash back, gift cards from a variety of places, gifts to charity or simply merchandise. These cards can be very beneficial due to the flexibility that they offer.

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Thursday, 19th November, 2009:

*Rates are subject to change due to market fluctuations and borrower's eligibility.

Karl Peidl
Pleasant Valley Home Mortgage Corp.
305 Harper Drive, Suite 3
Moorestown, NJ 08057

856-252-1224

kpeidl@pvhmconline.com

www.karlpeidl.com

www.pleasantvalleyhomemortgage.com

Mortgage Rate Update

Don't Wait for a Tax Return - Get That Money Now for Holiday Shopping

This time of year, millions of Americans find themselves wondering how they're going to pay for everything on their holiday shopping lists. Wouldn't it be nice if you had your tax return money now so you can use it for holiday spending? In a way, you can.

The IRS allows you to increase the number of dependants on your W-4 withholding form, meaning that less will be withheld for taxes from each paycheck. In the past, if you claimed greater than nine dependants, an explanation and approval may have been required. But the IRS has lifted this restriction. This lets you have more money in each paycheck instead of "loaning" the money to the IRS and having to wait for a refund.

But don't go overboard. You should only lessen the periodic tax withholding to match the expected refund. This way you are taking your refund as you go; instead of letting the IRS hold on to it.

Before you make the changes, consider visiting the IRS Withholdings Calculator to see how a change will impact your paycheck. Just visit www.irs.gov and type "Withholding Calculator" into the search bar at the top.

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Thursday, 12th November, 2009:

*Rates are subject to change due to market fluctuations and borrower's eligibility.

Mortgage Rate Update

Rate Lock Duration

Lock durations can vary for mortgage financing, but most lenders lock in the interest rate for 60 days from the date the loan application is submitted. As long as the loan is closed within that lock-in period, the lender honors the agreed upon interest rate.

Some consumers are misled by advertising that quotes unrealistically low rates based on 15- or 30-day lock durations. This is called 'short-pricing.' The lender basically knows the borrower doesn't have time to meet their conditions and have all the necessary paperwork in order within that brief time period. As a result, the lender is not obligated to honor the low rate that was listed in their advertising.

For simple refinance transactions, a 45-day lock-in period is more realistic. For purchase transactions, which are typically much more complex, you're much safer going with a 60-day lock, even though the interest rate might be a little higher than the rate you see quoted on billboards and the Internet.

Borrowers should make sure they have a written rate lock agreement, and allow themselves a reasonable amount of time to close their loan. I prefer to lock in all my clients as soon as their application is filed, rather than gamble with predicting short-term interest rate movement. My team and I focus more on assisting clients with long-term goals and management of their mortgage debt to secure a strong financial future.

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Thursday, 29th October, 2009:

*Rates are subject to change due to market fluctuations and borrower's eligibility.

Karl Peidl
Lincoln Mortgage Company
251 Bellevue Avenue, Suite 102
Hammonton, NJ 08037

609-878-7013

kpeidl@linc-mort.com

www.karlpeidl.com