Social Security Number Process Change

The Social Security Administration (SSA) is changing the way Social Security Numbers (SSNs) are issued. This change is referred to as "randomization." The SSA is developing this new method to help protect the integrity of the SSN. SSN Randomization will also extend the longevity of the nine-digit SSN nationwide.

The SSA began assigning the nine-digit SSN in 1936 for the purpose of tracking workers' earnings over the course of their lifetimes to pay benefits. Since its inception, the SSN has always been comprised of the three-digit area number, followed by the two-digit group number, and ending with the four-digit serial number. Since 1972, the SSA has issued Social Security cards centrally and the area number reflects the state, as determined by the ZIP code in the mailing address of the application.

There are approximately 420 million numbers available for assignment. However, the current SSN assignment process limits the number of SSNs that are available for issuance to individuals by each state. Changing the assignment methodology will extend the longevity of the nine digit SSN in all states. On July 3, 2007, the SSA published its intent to randomize the nine-digit SSN in the Federal Register Notice, Protecting the Integrity of Social Security Numbers [Docket No. SSA 2007-0046].

1. 
   SSN randomization will affect the SSN assignment process in the following ways:
   It will eliminate the geographical significance of the first three digits of the SSN, currently referred to as the area number, by no longer allocating the area numbers for assignment to individuals in specific states.


2. 
   It will eliminate the significance of the highest group number and, as a result, the High Group List will be frozen in time and can be used for validation of SSNs issued prior to the randomization implementation date.


3. 
   Previously unassigned area numbers will be introduced for assignment excluding area numbers 000, 666 and 900-999.

These changes to the SSN may require systems and/or business process updates to accommodate SSN randomization.If you have any questions regarding SSN randomization or its possible effects to you or your organization, please see the related Frequently Asked Questions or email your question(s) to ssn.randomization@ssa.gov

Rates are incredibly low today

It's a great time to lock in if you need financing!

15 year fixed 3.625% APR 3.675%

30 year fixed 4.25% APR 4.3%

Give me a call with any questions.

Taum
480-967-8286

Can You Get a Loan Now?

The credit crunch is history, the recession is officially over, and banks are sitting on something like $1.5 trillion in cash. So why is it still so hard for many people to get loans?

The Federal Reserve says most lenders have stopped raising their standards, but that's not the same as throwing wads of cash at people, economists note.
"If you're already extremely tight and you stop tightening, that's not easing," said Paul Kasriel, the chief economist for Northern Trust. Furthermore, he doesn't expect conditions to dramatically improve borrowers' prospects anytime soon. "There's no magic bullet that will change this," he says.
What's happening is continued fallout from the financial crisis and recession. Commercial real estate loans continue to go bad, and foreclosures in the residential market are far from over. As home values keep dropping, more people who could afford to pay their mortgages are choosing not to, allowing their homes to go into foreclosure. Currently, these strategic defaults are responsible for about one out of three foreclosures.
From a banker's perspective, these trends are reason enough to be cautious about lending right now.
"Some loans you thought were good on your books may not be good," Kasriel said. "If you use your capital today to make loans and you have more write-downs, you could find yourself undercapitalized."
Banks are required to keep some money in reserves against losses. Falling below these required levels could cause the banks to face regulatory scrutiny or even takeover. So lenders cling to tough standards, focusing most of their attention on low-risk lending to those with good to excellent credit scores.
Here's a look at three major areas of lending -- and how you can improve your chances in each if you need a loan.
Mortgages
A quick history lesson, for those of you who weren't paying attention: Until 2006, when home prices peaked, lenders competed fiercely for customers, and their lending standards were loosened considerably -- to the point where you could get a mortgage without proof of your income or assets. Even those with lousy credit scores could usually find someone to lend them money.
Those loose lending standards came back to bite lenders as first subprime mortgages and then mortgages in general started defaulting in huge numbers. Derivatives and other financial products created by Wall Street firms to amplify profit from these mortgages wound up multiplying the risk and nearly brought down the financial system.
Since the crisis, investors have balked at buying mortgages that don't come with government guarantees. Today, 90% of home loans have those guarantees. Fannie Mae and Freddie Mac, government-sponsored entities created to encourage mortgage lending, and the Federal Housing Administration buy loans from lenders and repackage them for sale to investors with guarantees to make them whole if borrowers default. Before the recession, about two-thirds of loans made had government guarantees attached.
The reduction in the market for mortgages made outside the government-backed system means fewer options for borrowers. The only good news, said Matt Hackett of direct lender Equity Now, is that Fannie, Freddie and the FHA are no longer constantly changing their lending standards, so borrowers are encountering fewer surprises and last-minute demands for documents than they might have a year ago.
"It's much easier to get a handle on it," Hackett said. "The guidelines don't change every week or every day."
Fannie and Freddie guidelines favor those with decent credit scores (FICOs of 680 and above), a 10% down payment and steady incomes documented by two years' worth of tax returns. Those with lower credit scores or smaller down payments often wind up directed to FHA loans, as the FHA handles nearly all lower-credit-score applications.
Advice for mortgage seekers now includes:
³Polish those credit scores. Pay down credit card debt, get collections cleared up by disputing them or paying them in return for removal and keep making payments on time to boost your scores. To see where you stand, buy your FICO scores from myFICO for $19.95 each. It's the only site that sells scores made from the same FICO formula most mortgage lenders use.
³Build up your down payment. It's possible to buy a home with as little as 3.5% down, but you'll be instantly "underwater" once you consider how much it costs to sell and move (usually 6% to 10% of a home's value). A bigger down payment can help keep you right-side up and win you a better interest rate. If you can save 20%, you can do without private mortgage insurance.
³Consider waiting. Home prices are still falling in many areas, and interest rates aren't expected to climb soon, so there may not be a huge penalty for waiting if you need time to boost your scores or your down payment, or both.
Car loans
Lacey Plache, the chief economist for Edmunds.com, sees "a definite easing" in auto lending standards over the past year, with more loans being made to people with less than perfect credit.
In the first three months of 2010, for example, 70% of car loans went to people with "superprime" credit -- FICO scores of 740 or above. During the same quarter this year, the percentage was down to 65.6%, Plache said, with lower credit ranges all seeing a slight increase.
That still means the majority of loans are going to the lowest-risk customers, a fact that helps explain why auto sales remain depressed. Other contributors include the fact that people are hanging on to their cars a year longer on average than before the recession, plus supply disruptions from the disasters in Japan.
If you're in the market for an auto loan:
³Understand your credit scores' impact. People with credit scores in the good-to-excellent range -- 720 to 850 on the FICO scale -- are landing interest rates averaging 4.37% on three-year auto loans. Those with scores in the 660 to 684 range pay more than 3 extra percentage points -- 7.74% -- for the same loan, according to myFICO, which uses Informa Research Services to poll auto lenders. That's a difference of more than $1,000 on a $20,000 loan. If your credit scores won't win you a great rate, consider delaying your auto purchase until you can boost your scores -- a strategy that also will give you time to save up a bigger down payment.
³Check with your credit union first. Before you walk onto a car lot, you should know how much car you can afford to buy and what rate you should be getting on a loan. Ignorance on either point can cost you dearly once you sit down to negotiate. A smart strategy, recommended by Edmunds.com, is to get approved for an auto loan from your local credit union (credit unions often offer their members better rates and terms than many banks). If the dealership can find you better financing, you can take it and cancel the credit union application. Otherwise, your funding is secure, and you don't risk getting a higher interest rate or worse terms than you deserve.
Credit cards
Credit card companies are brawling to attract the high-FICO-score crowd with 0% balance transfer offers and lavish new rewards programs. Less heralded is the return of some credit card issuers to the subprime market.
"Certain major card issuers have delved back into offering cards to those with fair credit, little credit history and bad credit," said Ben Woolsey, the director of marketing and consumer research for CreditCards.com.
Capital One and HSBC, big players in this market before the recession, have returned, with Capital One sending credit offers to those with recent bankruptcies and foreclosures. A number of smaller banks now offer credit cards to those with troubled or short credit histories.
The credit card reform law limited the fees issuers can charge for such cards, so many of these offers come with "shockingly high" interest rates. A First Premier Bank secured credit card with a $300 limit, for example, comes with a 49.9% interest rate if you carry a balance. An unsecured card with a $700 limit for those with fair credit has a 36% interest rate.
Woolsey credits a variety of factors for the credit card industry's new willingness to lend.
"A robust return to profitability, significant reduction in credit losses, lower unemployment, less uncertainty about the legislative climate and competitive pressures have all factored into the card industry ramping up its account acquisition activities," Woolsey said. "This has been more pronounced for the superprime and prime segments of the market, but for certain issuers with the right product set and risk tolerance, it has begun to include near prime and subprime markets as well."
Here's what you need to know if you're in the market for a credit card:
³The best offers are reserved for those with FICOs over 750. If you have excellent credit, you'll have plenty of offers to choose from. If you're still carrying a balance, you can use a low-rate balance transfer offer to pay off your debt. If you pay your balance in full, shop around to find the best card for your spending habits.
³Rebuild bad credit with a secured card. Those sky-high interest rates won't affect you if you don't carry a balance. Instead, charge 10% or less of the card's limit and pay it in full every month to slowly rebuild your scores. Make sure the card reports to all three credit bureaus.
By: Liz Weston, www.money.msn.com

No Seasoning on Cash Out Refi after Cash Purchase

Effective immediately on Fannie Mae loans:

Borrowers who purchased the subject property within the past six months are eligible for a cash-out refinance if all of the following requirements are met:

1. The new loan amount is not more than the actual documented amount of the borrower's initial investment in purchasing the property, plus the financing of closing costs, prepaid fees, and points (subject to the maximum LTV, CLTV, and HCLTV ratios for the transaction).


2. The purchase transaction was an arms-length transaction.


3. The purchase transaction is documented by the HUD-1, which confirms that no mortgage financing was used to obtain the subject property.


4. The source of funds for the purchase transaction can be documented (bank statements, personal loan documents, HELOC on another property). Any loans used as the source for the purchase transaction will be required to be repaid on the new HUD-1.


5. All other cash-out refinance eligibility requirements are met and cash-out pricing is applied.

Note: The preliminary title search must not reflect any existing liens on the subject property. If the source of funds to acquire the property was an unsecured loan or HELOC (secured by another property), the new HUD-1 must reflect that source being paid off with the proceeds of the new refinance transaction

7 Nasty Credit Myths that Won't Die

A decade has passed since the vault cracked open and we started learning how credit scores really work.

For years, the creators of the leading credit scoring formula, the FICO, didn't want consumers to know the scores existed, let alone what went into them. In early 2000, however, E-Loan started letting customers see their FICO scores. That free experiment was quickly shut down, but the secret was out.

Pressure from consumer advocates and lawmakers finally persuaded the FICO creators -- a company named Fair Isaac, now known as FICO -- to reveal later that year the 22 factors, grouped into five categories, that went into creating its scores.

We've been adding to our knowledge ever since. But 10 years later I'm still hearing many of the stupid myths about credit and credit scoring that prevailed 10 years ago, plus some that have sprung up since.

These myths aren't just annoying. Their prevalence is keeping people from understanding one of the most important numbers in their financial lives. Credit scores are used:

-By lenders, to determine whether you're approved for loans or credit cards, along with the interest rates and terms you get.
-By insurers, to set premiums.
-By cell phone companies, to see who qualifies for a contract and who doesn't.
-By utilities, to determine whether you need to leave a deposit and how much.
-By landlords, to decide who gets apartments and rental houses.
-Failing to understand credit scores and how they work, in other words, really can put a dent in your financial life.

Here are the seven most dangerous myths that need to be dispelled:

Myth No 1: "If you handle your finances responsibly, your credit scores will take care of themselves."
Fact: A credit score is not a financial-health score. It doesn't measure your income, assets or financial savvy. There are some behaviors that may be good for your wallet that aren't good for your scores.

Keep in mind that credit scoring formulas have one primary purpose: to help lenders gauge the likelihood you'll default -- based on how you handle credit. If you stop using credit or use it in a way the formulas don't like -- using only one card, shutting down a bunch of accounts or maxing out your cards, even if you then pay them off in full -- your scores could suffer.

Myth No. 2: "Checking your credit hurts your credit scores."
Fact: Checking your own credit reports and scores does not affect your scores. Period.
A credit check could hurt you if you asked a friend at a bank or car dealership to pull your credit reports. Such transactions probably would be coded as "hard" inquiries, or as applications for credit, which could ding your scores. But checking your own credit is otherwise a non-event.

This persistent myth is particularly destructive, because it discourages people from knowing what's going on with their credit reports and scores. Many reports contain serious errors that result in your being turned down for a loan or paying a much higher interest rate than you deserve. You need to visit AnnualCreditReport.com at least once a year to view your free credit reports from the three bureaus and dispute any serious errors. If you'll be in the market for a major loan, such as a mortgage or an auto loan, you'd be smart to buy your FICO scores from myFICO.com to see how lenders are likely to view your application and get tips from improving your numbers.

Myth No. 3: "Asking for lower limits will help your credit."
Fact: Having sizable credit limits is a good thing for your scores, as long as you don't use them to run up debt.

Lenders like to see a big gap between your available limits and the amount of credit you're actually using. A lower limit reduces that gap, which can be bad news for your credit scores. Of course, if you can't trust yourself not to use your available credit, the damage to your credit scores may be the least of your worries. Otherwise, though, you probably should leave your credit limits alone.

Myth No. 4: "You need to carry a credit card balance to have good scores."
Fact: You don't need to be in debt or pay a penny of interest to have good credit scores.
Your credit reports and scores don't "know" whether you're carrying a balance or paying it off in full every month. That's because the balance reported to the credit bureaus typically is the balance from your last statement, not what was left over after you got that statement and paid the bill. So you might as well pay in full and save yourself the interest.

This myth encourages people to carry unnecessary debt, putting them at the mercy of credit card issuers and eroding their financial security.

Myth No. 5: "You should never close an account if you can help it."
Fact: The prevailing myth used to be that closing accounts could help your scores, which, we've learned, isn't true. But the knowledge that shutting accounts can hurt your scores has caused some people to balk at closing credit accounts, even when they probably should.

If your issuer is charging you a fee you don't want to pay, for example, closing a card or two shouldn't be a crisis if you have good scores, other open accounts and no plans to apply for credit in the immediate future. If you do plan to apply for a mortgage, car loan or new credit card, though, you should hold off on closing any accounts until after you've been approved.

Myth No. 6: "How you handle credit indicates how trustworthy you are."
Fact: People get in financial trouble for all kinds of reasons, including simply getting sick (medical bills were a factor in nearly two-thirds of consumer bankruptcies in 2007, according to Harvard University researchers).

There's no evidence of a link between information on credit reports and the likelihood an employee will commit fraud, but employers persist in thinking there is. (By the way, employers typically use credit reports to evaluate applicants, not credit scores.)

Furthermore, there is evidence that employers are abusing their power to review credit reports. Some states have already banned or limited pre-employment credit checks, and a bill was introduced in 2009-2010 session of Congress to do the same, although the legislation didn't go anywhere.

Myth No. 7: "All credit scores are pretty much the same."
Fact: There are hundreds of different credit scoring formulas. Even the scoring formula used by most lenders, the FICO, comes in different iterations. One lender may use the most up-to-date formula while another might use an older version that gives a different result. There are FICOs tweaked to accommodate car lenders, credit card lenders and finance companies, in addition to the "classic" FICO used by most mortgage lenders.

Some purveyors of other scoring formulas point to these different versions to try to convince people that it doesn't matter which score you get, since there are so many variations. Indeed, if you're simply looking for a guidepost as you try to shore up your finances, any of them can give you an idea of your credit's relative strength.
But if there's real money at stake, you want to get a score that's at least in the same ballpark as the one your lender will be using, and that's typically a FICO. If you're buying a credit score that doesn't say it's a FICO, it's not a FICO -- and it could be dozens or even hundreds of points different from the one your lender sees.

Liz Weston, www.money.msn.com

Life After Bankruptcy

Life After Bankruptcy

Bankruptcy is an uncomfortable subject for a variety of reasons. The most obvious is the potential havoc it can wreak on your finances. Running a close second is the negative stigma which is often attached to the process. This negativity is important to mention because strong emotions can sometimes lead to unsound financial decisions with devastating results.

Bankruptcy becomes a viable option for someone who is “upside down” in terms of cash flow. In other words, when a person has more money going out each month than coming in, bankruptcy should be considered if no reversal of this negative cash flow is within sight. The longer someone waits to explore the various options available, the more serious his or her situation may become.

One of the worst things people can do in this situation is to borrow more money to try and pay off their debts. On paper, this is clearly an unwise financial decision. In the real world, however, it is very common for individuals to pursue this strategy in an attempt to buy time and hold off on filing for bankruptcy. On the surface, this is certainly a noble notion; however it can often compound the problem and serves only to delay the inevitable.

For many homeowners in the midst of this upside down cash flow, speaking to a qualified mortgage professional is a much better option. An experienced loan officer can objectively look at your finances and help you determine if restructuring your mortgage would not only help, but possibly even alleviate any need for bankruptcy.

If bankruptcy is the only option, seek out a reputable bankruptcy attorney and credit counselor. A qualified mortgage specialist can provide references for you as well, as he or she works with these professionals on a regular basis. Reliable references are essential in this case because experienced professionals greatly increase the odds of a successful bankruptcy experience. It’s that simple.

When filing for bankruptcy, be completely honest and accurate regarding every aspect of your financial situation. This includes any changes to your income which may occur throughout the process. Bankruptcy is a federal procedure, adjudicated by real judges, and scrutinized by representatives who coordinate with the Department of Justice, the FBI, and the IRS.

Here are some additional steps you can take to make the bankruptcy process as painless as possible:

Save all paperwork regarding your bankruptcy, and keep it organized. This will prove beneficial after your bankruptcy as you now have all of the pertinent information in one place. Also, be sure to write down your discharge date. It’s surprising how many people forget to do this.
Establish a household budget. This can be accomplished in many ways, but there are several inexpensive computer programs available which do an excellent job.
Throughout the bankruptcy, do your best to not only live below your means, but to save as much cash as possible. You never know what you may need it for once the process is completed.
Be prepared for a barrage of junk mail. There will be sharks on the loose who are hoping to capitalize on your need for credit.

Tips for Rebuilding Credit:

If you must buy a car, focus on transportation as opposed to style. Buy an inexpensive, used car, and try to get a loan for it. It’s a good idea to figure out what your budget allows in terms of a dollar amount first. This means obtaining financing prior to looking for a car.
Get a secured credit card. Secured credit cards allow for the cardholder to deposit a said amount of money into an account, thus establishing the spending limit of the card. Missed payments result in deductions from the account. Some of these cards will reward responsible borrowers by upping the limit without an additional deposit. Some will even convert the account into a traditional credit card. (Be wary of offers of “easy credit” or any card which asks you to call a 900 number. You will be charged for the call.)
Meet with a credit repair specialist. Not only can they help you clean up the damage to your credit report, they can advise you on specific ways to rebuild the credit you lost as well.
While it does take time, there is definitely life (and credit) after bankruptcy. Some mortgage lenders will even lend to you within a year or so after a bankruptcy. If you’re in serious financial trouble, the trick is to get the help and advice you need from professionals you trust.

Home Loan Rate Trends

What is the Velocity of Money and How Does it Impact Home Loan Rates?

If you’ve been watching the economic news, you’ve probably noticed that market experts and traders have been keeping a close eye on the Commerce Department’s Personal Spending and Personal Income reports. Obviously, those reports provide insight into the health of our economy, but did you know they also influence home loan rates? That’s right, personal spending can actually influence the interest rates that are available when you purchase or refinance a home.

Here's why. It has to do with something called the velocity of money. Even though the government keeps pumping money into the system, nothing happens until that money is spent or lent – and passes from one hand to another or one business to another. The speed at which this money passes between parties is called the velocity of money. With the job market still very sluggish, consumers aren't spending much money these days, and businesses are still reluctant to spend money to make investments in their business. With the present velocity at low levels, inflation remains subdued and that's good for home loan rates. That's because rates are tied to Mortgage Bonds and inflation is the archenemy of Bonds, so low inflation is good for Bonds and rates. However, once velocity increases, the excess money in the system will cause inflation – which is bad for rates, since even the slightest scent of inflation can cause home loan rates to worsen. While we certainly want to see better economic recovery news in the near future, we have to remember that there's an inverse relationship between good economic news and Bonds and home loan rates. Weak economic news normally causes money to flow out of Stocks and into Bonds, which helps Bonds and home loan rates improve. Strong economic news, on the other hand, normally has the opposite result.

Currently, home loan rates are at a historically low level, but that situation won’t last forever. That means now is an ideal time to purchase a home or refinance before the velocity of money – and rates – change. If you or anyone you know would like to learn more about the current economic situation and how to take advantage of historically low home loan rates, then please contact me.

FIVE MAJOR TAX DEDUCTIONS THREATENED

Five major tax deductions are up for discussion for elimination, starting with mortgage interest:
•Mortgage interest deduction
•Charitable contributions
•State and local taxes
•Employer-provided health insurance
•Tax-deductible retirement plans

See full story at: http://www.usatoday.com/money/perfi/taxes/2011-04-14-tax-breaks-under-fire.htm

Realtor Bonuses Offered with Program

HomePath financing incentives are now available which allow up to 3 1/2% seller contribution to buyer's closing costs. This incentive is good through 6/30/2011.

Realtor Bonuses are offered through this program also. Call Taum for details - 480-967-8286 and hear a little bit more from Taum by clicking here:

http://www.youtube.com/watch?v=faAv9B1KnWg

Mortgages Now More Expensive, Harder to Get, Take Longer....That's Government in Action Again...

Real Estate Industry News

Mortgage Proposals Could Cost Borrowers, Some Say

Mortgage loans could get more expensive, and harder to get, under proposals presented by the Obama administration to reform Fannie Mae and Freddie Mac, some consumer groups said recently.
The administration's proposals suggest varying levels of government support for mortgages. But only one of those proposals would maintain a strong role by the government for consumers in the mortgage market, according to the Consumer Federation of America, a nonprofit advocacy group.
Plans to rely heavily on banks and investors to provide mortgages, without much federal support, could lead to fewer long-term, fixed-rate mortgages, higher prices and less access to secondary markets for small banks and credit unions, the CFA and others said.
"The administration has laid out a series of options that could lead to the abandonment of a nearly 70-year commitment to affordable homeownership for working American families," said Barry Zigas, CFA's director of housing policy, in a news release.
Other administration proposals that might affect borrowers:
³Raising the minimum down payment for a Fannie- or Freddie-backed home loan to 10%
³Reducing the maximum mortgage amount that can be financed or insured by Fannie, Freddie or the Federal Housing Administration
³Increasing the fees charged by Fannie, Freddie and the FHA
It's important to note that the proposals are just a starting point for what is sure to be a lengthy discussion about the future of mortgage finance in America.
The Mortgage Bankers Association's chairman called the release of the administration's proposals "another important milestone on the road to stabilizing the mortgage market."
One of the concepts outlined by the administration resembles a previous MBA proposal, said Michael D. Berman, chairman of the MBA.
"Our proposal envisions an explicit, but limited, government guarantee of lower-risk mortgage-backed securities. The guarantee would be paid for by fees used to build a fund to protect taxpayers," Berman said in a news release. "This is the most prudent approach, one that places the primary risk on private investors and ensures sufficient liquidity during times of economic stress in order to provide affordable mortgage finance in all types of mortgage markets."
Reduced access to loans
For sure, if the government scales back Fannie and Freddie, and fees involved with government-backed mortgages rise, it will inevitably curtail the availability of affordable mortgage credit for some borrowers -- particularly people with marginal credit or little money to put down, said Greg McBride, senior financial analyst for Bankrate.com.
"The consequence of reining that in and expecting the private market to fill the void is that some consumers will find that credit isn't available -- and when it is, it will cost a good bit more," McBride said.
While broad changes to the government-sponsored entities could bring higher costs to consumers, mortgage costs have been going up already anyway, in the form of loan-level price adjustments from Fannie and Freddie and fee increases from the Federal Housing Administration, said Keith Gumbinger, vice president of HSH Associates, a publisher of mortgage and consumer loan information.
And with a private mortgage market nearly non-existent today, it's far from clear exactly how -- and when -- policies will change, he said.
"This is a pretty broad framework," Gumbinger said of the administration's proposals. But, finally, people in the industry have a framework on the table to argue about, he added.
"Hopefully, we can preserve mortgage markets that existing players can profit in, and move away from the excesses and polices that pushed us to where the market went as far as it could and fell over," Gumbinger said.
For its part, the National Community Reinvestment Coalition said the proposed policies could lock working-class families out of homeownership.
"There is universal agreement with the principle that people who cannot afford homeownership shouldn't be put in an unsustainable loan," John Taylor, president and chief executive of NCRC, said in a news release.
"However, the administration's proposal may be overly narrowing the window of opportunity for many blue collar and low- and moderate-income people from realizing their dream of homeownership."

By: Amy Hoak, www.marketwatch.com

FHA Announces Increase to Monthly Mortgage Insurance Premiums

How Will This Impact Buying a Home?

I just wanted to let you know about an important announcement from FHA that will have an impact buying a home. As of this coming April 18th, the monthly Mortgage Insurance Premiums will increase for FHA loans (.25%). The change raises the current premium from .9% to 1.15% on 30 year fixed loans.

This increase could have a large impact on borrowers and their ability to qualify for FHA financing (or may even take them out of their comfort level for monthly payment).

Example:
$150,000 loan amount
Current monthly MIP: $112.50
New monthly MIP: $143.75

While this change will help strengthen FHA, which is important since some estimates show that FHA loans represent nearly 50% of all loans being done today, it puts the burden of shoring up FHA back on the consumer.

Even though FHA has increased their rates, the FHA loan is still a good option for buyers with little to put down; however, conventional financing is becoming more attractive every day.

If you have any questions at all about what this might mean, call or email me anytime. I'm committed to doing whatever I can to help people buy a home.

Renters Have Much to Gain by Pursuing Home Ownership

Scottsdale, AZ – Buying a home vs. renting is a big decision that takes careful consideration, as most mortgage consultants will agree. But the rewards of home ownership are great. For many years, purchasing real estate has been considered an extremely profitable investment. It is an achievement that offers a sense of pride, financial stability and potential tax advantages.

Yes, there are certain responsibilities associated with owning a home. Landlords will often argue the benefits of renting, and for obvious reason. If you are renting, you’re helping them make their mortgage payment.

The numbers are staggering if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will increase 5% every year, then over the next five years you will pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won’t benefit when the property value goes up!

However, if you were to purchase your own home or condominium, you would be well on your way toward building equity within that same five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates drop, and this would cause your monthly mortgage commitment to go down.

In addition to building equity, there are tax advantages that come into play with home ownership. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.

To find the loan program that is right for you, your mortgage consultant will need to evaluate your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for financing. It is also important to let your mortgage consultant know what your future goals are, because this will help narrow down which loan option is the best fit for your long-term needs.

There are many different types of loan programs available, including “low” and “no” down payment mortgage programs. These types of programs require the borrower to provide less than 3 percent of the loan amount as down payment. FHA lenders rule that the mortgage payment, including principal, interest, taxes and insurance (PITI) should not exceed 31 percent of your gross income, and the PITI plus other long-term debt (car payments, etc.) should not exceed 43 percent of your gross income.

Housing is an expense that takes a big bite out of the monthly budget. If you are a renter and feel that “home” is more than just someplace to hang your hat, think about the advantages of purchasing real estate. It may be time to take the step into building your personal net worth as a home owner.


Taum Hemmingsen is the owner/banker of Marketline Mortgage, LLC. Taum hosts Home Buyer’s Seminars which are open to the public on the first Tuesday of each month from 6:30p – 7:30pm. Seating is limited. To reserve your seat at the next event, call 480-967-8286 to RSVP and obtain a free copy of Taum’s Home Buyer Handbook.

Life After Bankruptcy

Taum Hemmingsen, Owner/Banker
Marketline Mortgage, LLC

SCOTTSDALE, AZ – Bankruptcy is an uncomfortable subject for a variety of reasons. The most obvious is the potential havoc it can wreak on your finances. Running a close second is the negative stigma which is often attached to the process. This negativity is important to mention because strong emotions can sometimes lead to unsound financial decisions with devastating results.

Bankruptcy becomes a viable option for someone who is “upside down” in terms of cash flow. In other words, when a person has more money going out each month than coming in, bankruptcy should be considered if no reversal of this negative cash flow is within sight. The longer someone waits to explore the various options available, the more serious his or her situation may become.

One of the worst things people can do in this situation is to borrow more money to try and pay off their debts. On paper, this is clearly an unwise financial decision. In the real world, however, it is very common for individuals to pursue this strategy in an attempt to buy time and hold off on filing for bankruptcy. On the surface, this is certainly a noble notion; however it can often compound the problem and serves only to delay the inevitable.

For many homeowners in the midst of this upside down cash flow, speaking to a qualified mortgage professional is a much better option. An experienced loan officer can objectively look at your finances and help you determine if restructuring your mortgage would not only help, but possibly even alleviate any need for bankruptcy.

If bankruptcy is the only option, seek out a reputable bankruptcy attorney and credit counselor. A qualified mortgage specialist can provide references for you as well, as he or she works with these professionals on a regular basis. Reliable references are essential in this case because experienced professionals greatly increase the odds of a successful bankruptcy experience. It’s that simple.

When filing for bankruptcy, be completely honest and accurate regarding every aspect of your financial situation. This includes any changes to your income which may occur throughout the process. Bankruptcy is a federal procedure, adjudicated by real judges, and scrutinized by representatives who coordinate with the Department of Justice, the FBI, and the IRS.

Here are some additional steps you can take to make the bankruptcy process as painless as possible:

• Save all paperwork regarding your bankruptcy, and keep it organized. This will prove beneficial after your bankruptcy as you now have all of the pertinent information in one place. Also, be sure to write down your discharge date. It’s surprising how many people forget to do this.
• Establish a household budget. This can be accomplished in many ways, but there are several inexpensive computer programs available which do an excellent job.
• Throughout the bankruptcy, do your best to not only live below your means, but to save as much cash as possible. You never know what you may need it for once the process is completed.
• Be prepared for a barrage of junk mail. There will be sharks on the loose who are hoping to capitalize on your need for credit.

Tips for Rebuilding Credit:

• If you must buy a car, focus on transportation as opposed to style. Buy an inexpensive, used car, and try to get a loan for it. It’s a good idea to figure out what your budget allows in terms of a dollar amount first. This means obtaining financing prior to looking for a car.
• Get a secured credit card. Secured credit cards allow for the cardholder to deposit a said amount of money into an account, thus establishing the spending limit of the card. Missed payments result in deductions from the account. Some of these cards will reward responsible borrowers by upping the limit without an additional deposit. Some will even convert the account into a traditional credit card. (Be wary of offers of “easy credit” or any card which asks you to call a 900 number. You will be charged for the call.)
• Meet with a credit repair specialist. Not only can they help you clean up the damage to your credit report, they can advise you on specific ways to rebuild the credit you lost as well.

While it does take time, there is definitely life (and credit) after bankruptcy. Some mortgage lenders will even lend to you within a year or so after a bankruptcy. If you’re in serious financial trouble, the trick is to get the help and advice you need from professionals you trust.



Taum Hemmingsen is the Founder and owner/banker of Marketline Mortgage, LLC; Licensed Banker # 0911893. For a free copy of our Consumer Credit Scoring Booklet, contact Taum at 877-967-TAUM (8286).

Your Smartphone - Your Most Dangerous Possession?

Forget what's in your wallet -- beware your smartphone. It's becoming one of your most dangerous possessions.
If your phone was stolen a few years ago, the thief could make prank calls and read your text messages. Today, that person can destroy your social life -- you said what on Facebook?! -- and wreak havoc on your finances.
Now that smartphones double as wallets and bank accounts -- allowing users to manage their finances, transfer money, make payments, deposit checks and swipe their phones as credit cards -- they are very lucrative scores for thieves. And with 30% of phone subscribers owning iPhones, BlackBerrys and Droids, there are a lot of people at risk.
"It's crazy the amount of information on that phone -- it's like carrying a mini-computer around with you, except that more people know the settings on their computer than they do on their phones at this point," said Nikki Junker, social media coordinator and victim advisor at Identity Theft Resource Center. "People are incredibly at risk as technology improves."
And mobile banking use is expected to soar by nearly 55% next year, according to recent data compiled by TowerGroup, a research firm for the financial services industry.
They found that while 17.8 million consumers used mobile banking last year, 27.4 million are expected to use it this year, and 53.1 million consumers are forecast to adopt it by 2013.
"We're now past the early adopters and starting to hit the early maturity phase," said George Peabody, director of emerging technologies at Mercator Advisory Group. "So much of our screen time is shifting from PCs to smartphones, and the banks want to be there and know they have to be there."
Google to power your mobile wallet?
In addition, the volume of mobile payments -- buying boots via Zappos iPhone app, for example, or paying bills -- is expected to climb to $214 billion by 2015, up from $16 billion in 2010, according to Aite Group, another financial services research firm.
And pay-by-phone is only going to get easier as our devices come embedded with Near Field Communication (NFC) devices that allow you to pay for your morning latte by waving your phone at the cash register.
Companies like Blaze Mobile and Bling Nation already let you pay major retailers by swiping your smartphone thanks to a sticker adhered to the outside of your phone. Meanwhile, an app created by mFoundry brings up an image of your Starbuck prepaid card barcode and lets you scan it in lieu of a credit card.
"A lot of players are now pushing to drive the contactless technology," said Gwenn Bezard, research director at Aite Group specializing in banking and payments. "While you're not going to wake up tomorrow and everyone is going to be using mobile payments, it's going to grow over the next years -- and from a very low base."
Watch your phone! Security attacks on smartphones climbed to an all-time high in 2010, according to AdaptiveMobile, an international mobile security firm. Specifically, attacks on Google's Android smartphones quadrupled, and smartphones running Java-based applications jumped 45%.
"Bad guys are following where the people are going -- and people are going to smartphones," said Peabody. "As smartphone prices continue to decline and even more people get them, that's definitely the new place for bad guys to go."
While storing a password and keeping your phone locked is a good start, it's not going to protect you from professional fraudsters.
"Don't think that having an initial password set on your phone can stop people from getting in there," said Junker. "It's a very low level of protection -- you can even find 30-second videos on how to crack smartphone passwords on YouTube."
Web: More dangerous than ever
If you use mobile banking or make online payments frequently, you should invest in anti-virus protection and check with your bank about any security or identity theft protection features that you can enable.
Most smartphones also offer remote wipe-out services -- like MobileMe for the iPhone -- that automatically erase the information on your phone if you claim it as lost or stolen.
If you bank with your phone by accessing its website rather than opening an app, be extra careful when typing in the address. Some identity thefts create domains with the same address as major banks with two letters switched in hopes a consumer will accidentally land on the site and enter their username and password, said Junker.
And make sure you immediately log out of any bank apps or sites where your financial information is stored as soon as you're finished. While your identity is still at risk if your phone is stolen, this will buy you time to wipe out your information as soon as you realize it's gone.

Source: Blake Ellis www.money.cnn.com