Mortgage industry changes:
Low rates and terms soon to be history.
You are going to be hearing a lot about restructuring the mortgage industry in the next months and years. But the bottom line for home buyers is buy now and get financing in place by as early as May. The great terms of recent years will soon be gone, and probably gone forever.
Experts say you will probably never again see down payments in the 5 percent range (even now becoming harder to find) or 30-year fixed rates under 5 percent.
The median down payment in nine major U.S. cities rose to 22 percent late last year. This was the highest requirement since 1997 on properties purchased through conventional mortgages, according to a Wall Street Journal report.
In many areas, however, a down payment of only 10 percent of the mortgage amount could be available for people with high credit scores.
The lowest down payments are still offered by the Federal Housing Administration, FHA. They will finance a home with a 3.5 percent down payment.
But a recent Obama Administration white paper on the mortgage industry hints that this very low down payment might change as the federal footprint in the mortgage market shrinks.
According to CNN Money, Congress will be considering raising FHA down payment requirements, approving higher insurance fees for FHA mortgages, and changing rules for 'qualified' mortgages. This could mean higher interest rates for consumers and higher down payments, perhaps up to 30 percent.
With its low down payment requirements, low interest rates, and lower credit score requirements, FHA now has a 30 percent market share in the mortgage arena but plans are to reduce its activity to just 10 percent.
Administration officials say the planned process could take some time, but it might include phasing out federal backing of Fannie Mae and Freddie Mac. Since the mortgage crisis began, the government has bailed out the federally backed entities to the tune of $150 billion.
How to qualify
If you are interested in buying a home with an FHA mortgage, it's important to determine whether you have a favorable mortgage expense to income ratio. Here's how to calculate whether you would qualify for the maximum ratio of 29 percent.
Say the total monthly payment on the home would be $750, including hazard insurance, mortgage insurance, homeowners dues, etc.
Then, say the borrower's gross monthly income, including spouse income if married, comes to $2,850.
In this case, it would produce an expense to income ratio of 26.32 percent or well below the 29 percent maximum.
ASK THE EXPERT!Are these low selling prices going to last forever?
We want a bigger house but hate to sell ours right now.
Reported in October, the sale prices for existing homes rose slightly from the previous year. That's not saying much, but economists at Moody's Analytics say the market has hit the low point in the cycle. The worst is over.
Don't cheer just yet. Other economists say the market has just begun "a long climb out of a deep hole."
Low home prices won't last forever, but it could be some years before you could get the price you would like for the home you are selling.
Right now, buying and selling are a trade off. That is, you sell for a lower price, but you also buy for a lower price. With the home you buy at this time, you'll get a lot more for your money than what that home would cost in years to come.
Under the present conditions, you and other prospective buyers would do well to ask yourself what the personal cost of not moving forward would be.
The home you would buy is the place you need today. It would have more rooms and be more efficient for everyday housekeeping and activities. The enjoyment and excitement factors involved in getting the new place could be significant.
One of the big questions involved in buying is whether you have enough equity in your present home so the mortgage can be paid off.
If that's not a problem for you, this is an excellent time to begin your search for the right home.
How long would it take to sell your present home? If it's in a neighborhood people like and it's in good condition, it might not take very long. Friends of mine were shocked when their home sold in two weeks.
It's true that if you wait several years before selling your place, you will probably get a few thousand dollars more for it. But why wait until your children are grown up or away at college before going into a home where each could have their own room, or a guest room for visiting grandparents or maybe a recreation room they would all enjoy?
10 ONLINE-SHOPPING TRAPS THAT CATCH EVEN SMART SHOPPERSShopping online can be a great way to avoid the crowds, compare prices with ease and find deals. But it can also put you at risk of becoming a victim of identity theft if you don't take the proper precautions. To keep your personal information safe, here are 10 things you should avoid doing while making purchases on the Web.
Blindly Clicking Into Unfamiliar Site
If you're looking for a particular item, go to a well-known price-comparison site, such as PriceGrabber.com or Dealio.com. Don't let a search engine pick a site for you because hackers seed search results with fraudulent sites, says Jon-Louis Heimerl, director of strategic security for security-services company Solutionary. Even if you're using a site that you think is legitimate, look for security labels, such as VeriSign and Cybertrust, and for https:// to appear in the URL on pages that prompt you to enter personal information.
Assuming You Have the Same Protections With Debit as Credit
If a hacker steals your debit-card information and raids your bank account, you must report any misuse within two days to get the same $50 limited liability as you would with a credit card. Miss that deadline but report your loss within 60 days and you could be liable for up to $500. After 60 days, your liability is unlimited. If you don't like using credit cards, consider using EBillme to make secure cash payments when shopping online.
Not Monitoring Your Accounts
If you do a lot of shopping online, review your credit-card statements regularly to make sure there aren't any unauthorized purchases. Heimerl recommends that you print out your receipts or put e-mail receipts into a separate folder so you can check your credit-card statements against your receipts. He uses one credit card for online purchases only and was able to catch an unauthorized purchase quickly when one of his other credit cards was used for an online purchase.
Shopping From a Public Wi-Fi Connection
Hackers can tap into Wi-Fi connections at hotspots, such as coffee shops, airports and hotels, to capture your personal information. That's why you should never shop online using a public Wi-Fi connection. Also, never use a public computer to shop or check accounts online.
Billing Directly to Your Smart Phone
Use a credit card instead of having purchases billed through your mobile carrier because the card provides more security. If someone gets your credit-card information and goes on a spending spree, your liability is capped at $50 (Visa and MasterCard assume all liability for unauthorized purchases). Also, if you have a dispute with a merchant, you may have an easier time working out a solution. You'll get the least protection if you use a prepaid retail gift card or have purchases billed to your phone because they are not required by law to offer consumer protection against fraud or billing disputes.
Wiring Money to Pay For an Item
If you purchase an item from an online auction site, such as eBay, and the seller asks you to wire your payment, don't do it. Heimerl says wiring money is inviting yourself to a fraud situation -- you have no way to get your money back if the item you purchase never arrives. Pay with a credit card so you can dispute the charges if you don't get what you paid for.
Falling For Too-Good-to-Be-True Deals
It's hard to pass up a deal, especially when money is tight and you really need to make a purchase (such as a car to replace your clunker that just died). But if a website or individual is offering a deal better than anyone else, won't accept credit cards and demands a direct transfer of funds, it's probably a scam. A common one: Someone claims he's selling a vehicle at a low price because he needs the money fast (he lost a job or is a soldier going overseas, for example).
Clicking a Link in an Unsolicited E-Mail
Don't ever click on a link in an unsolicited e-mail to go shopping, even if the e-mail looks as if it came from a legitimate retailer, Heimerl says. You're safer going directly to a retailer's site to see whether it's having a sale rather than clicking on a link that could take you to a fraudulent site.
Clicking URLs on Social-Networking Sites
Using Twitter can be a smart way to stay on top of deals, but you have to make sure the deals are legit. The URLs on Twitter (and sometimes Facebook) are often shortened, so you don't know whether you're going to land on a legitimate retailer's site by clicking the link. Heimerl says to use a deal notification you see on Twitter as a tip, then find sales on your own.
Assuming an Escrow Service Is Always Safe
If the seller is pushing you to use a particular escrow company to handle a transaction, be suspicious because it might be part of a scam. You can verify a company's legitimacy by checking with state regulators, or ask to use an escrow company of your choosing, such as Escrow.com.
CREDIT SCORE REPAIR Q. I want to buy a house but I hear I need to raise my credit score. Do I have to get a better paying job or what?
A. Many people don't know that your credit score has nothing to do with income. A person making minimum wage could have a credit score equal to another making $100,000 a year! The credit score tells lenders only one thing: How likely you are to pay back the loan. These days, a credit score of 720 to 750 is usually considered a good starting point for a home loan. However, FHA loans may be more lenient. So, assuming you are looking at homes you can afford, you don't need to raise your income. Instead, you need to establish a history of paying your bills.
Here is a One-Year plan for better credit:
1. Go to www.annualcreditreport.com and look over your free annual report from each of the three credit reporting agencies. Correct errors.
2. Pay your bills on time. You must never be late even once.
3. Work on getting your credit balances below 50 percent of your maximum credit limit. That raises your score. If you balances are below 30 percent, it raises your score again.
4. If you don't have a credit card, look into establishing a secured card. With a secured card, you send the card company a deposit and then they send you a credit card. You can only use the card for the amount on deposit. But when you get the card, you should use it. Buy something, and then make your payments perfectly.
5. Don't apply for a store account every time the clerk says you can save 10 percent. Each time you fill out an application, the company hits your credit report. Inquiries like these count against your credit. Don't make applications for credit unless you actually need it.
6. If you have unused credit accounts, don't close them if you are planning to apply for a mortgage. That can actually make your score drop.
7. During your credit improvement year, don't buy a car. Lenders don't want to see buyers committed to several large credit accounts. Never finance a car before you try to take a mortgage.
8. Plan to open three new credit accounts during your credit improvement year, even if they are secured accounts. Be sure to space your new accounts by three months. Use each account and pay each off COMPLETELY every month. This is the kind of credit management that improves your credit score AND teaches you how to manage credit.
Brain Teaser
"Each other" leaves this very open-ended; that depends on if A shakes with B or A shakes with B & C, OR if A shakes with all the other nine, etc. I would say the answer would have to be one of tw 10 or 100. If each person chooses only one to shake with, it would be ten. IF each person shakes with everyone there, all ten, it would be 100.
Since this question is pretty vague, Some people may come to the conclusion that the answer is Either 90 assuming everybody stayed to shake hands with each other meaning the first person shook hands with 9 people and the 2nd person did the same etc etc bringing it to the conclusion that you got 90 handshakes.
Another answer towards for people would be 45 being that the first person gave a hand shake to 9 people and then left and then the 2nd person gave a handshake to 8 people n then left etc and etc making it 9+8+7+6+5+4+3+2+1=45.
Another conclusion, is the simplest conclusion you can come up with; at the end of the banquet 10 people shake hands with each other so how many handshakes were passed on? 5 hand shakes were given cause that way 10 people did give a hand shakes and since it takes 2 to give out a handshake 5 hand shakes were given.
Since this question is pretty vague, Some people may come to the conclusion that the answer is Either 90 assuming everybody stayed to shake hands with each other meaning the first person shook hands with 9 people and the 2nd person did the same etc etc bringing it to the conclusion that you got 90 handshakes.
Another answer towards for people would be 45 being that the first person gave a hand shake to 9 people and then left and then the 2nd person gave a handshake to 8 people n then left etc and etc making it 9+8+7+6+5+4+3+2+1=45.
Another conclusion, is the simplest conclusion you can come up with; at the end of the banquet 10 people shake hands with each other so how many handshakes were passed on? 5 hand shakes were given cause that way 10 people did give a hand shakes and since it takes 2 to give out a handshake 5 hand shakes were given.
Fuel Saving Tips
1. A dirty air filter in your car can hike your fuel consumption by as much as 10%. Gas right now is around $2.70 a gallon, if the place across the street was $3.00 would you go there? If not,it's time to change your air filter.
2. Set your cruise control at 60 mph. Cruise control applies the throttle more smoothly, reducing fuel consumption. And each 5 miles per hour above 60 is like paying 6% more per gallon of gas.
3. Use the trunk. A loaded-down roof rack cuts fuel economy by as much as 5%. But clear the trunk after a trip and your backseat. Every 100 pounds you remove helps by 1 to 2 percent.
4. Check your tires. Tires can lose as much as 1 pound of pressure per month, increasing their rolling resistance and decreasing your mileage.
5. Don't ignore the 'check engine' light. Issues with your engine can create 10-20% worse gas mileage.
6. Add-fuel injection cleaners. If you are always buying the cheapest gas, you may be missing on a chemical called amines, which help clean your fuel injectors. Cleaning your fuel injectors could improve your mileage by up to 20%.
2. Set your cruise control at 60 mph. Cruise control applies the throttle more smoothly, reducing fuel consumption. And each 5 miles per hour above 60 is like paying 6% more per gallon of gas.
3. Use the trunk. A loaded-down roof rack cuts fuel economy by as much as 5%. But clear the trunk after a trip and your backseat. Every 100 pounds you remove helps by 1 to 2 percent.
4. Check your tires. Tires can lose as much as 1 pound of pressure per month, increasing their rolling resistance and decreasing your mileage.
5. Don't ignore the 'check engine' light. Issues with your engine can create 10-20% worse gas mileage.
6. Add-fuel injection cleaners. If you are always buying the cheapest gas, you may be missing on a chemical called amines, which help clean your fuel injectors. Cleaning your fuel injectors could improve your mileage by up to 20%.