Mortgages by Jeremiah Phillips

You’ve probably heard that the government is going to be sending rebate checks to most Americans in an effort to stimulate the economy. Here is a brief explanation of, among other items, who gets rebates, how they are calculated, how higher income can reduce or eliminate a rebate, and what, if anything extra, you’ll need to do to get one.

Who gets rebates?

Only individuals get rebates. Business entities don’t get them. Nor do estates and trusts. But there are other new tax breaks for businesses. Not all individuals, however, get rebates. You don’t get one if you are or can be claimed as someone else’s dependent. Also, nonresident aliens and illegal immigrants don’t get rebates.

Does that mean all other individuals get rebates?

No, to get a rebate, in general, from 2007, you must either (1) owe tax as computed in a special way or (2) have at least $3,000 of qualifying income—earned income generally, social security benefits, and veterans’ disability payments (including payments to survivors of disabled veterans).

How much do you get?

A single person with no qualifying children gets a maximum rebate of $600 or a minimum rebate of $300. A married couple filing jointly with no qualifying children gets a maximum rebate of $1,200 or a minimum rebate of $600. To get the maximum, your 2007 tax (figured in a special way) must be $600 or more for a single person and $1,200 or more for a married couple filing jointly. To get the minimum, you must have at least $3,000 of qualifying income (explained above) or owe tax (figured in a special way) of at least $1. Your rebate amount will fall in between the minimum and maximum if your tax is more than $300 but less than the maximum rebate for your filing status. In that case, your rebate will be equal to your tax. For example, you are single and your tax is $500. You will get a rebate of $500.

Increased amounts for those with one or more qualifying children?

Anyone who qualifies for a rebate in any amount gets an additional $300 for each qualifying child. To qualify, a child must be under the age of 17, live with you for more than half of the year, and be your son, daughter, stepson, stepdaughter, brother, sister, stepbrother, stepsister, or descendant of any such individual. In addition, the child must not have provided more than half of his or her own support. Thus, for example, a married couple filing jointly with two qualifying children could be eligible for a maximum rebate of $1,800.

How does higher income affect a potential rebate?

The amount of the rebate (both the basic and the child’s amount) is reduced by 5% of a taxpayer’s adjusted gross income (AGI) above $75,000 ($150,000 for joint returns). For example, a married couple filing jointly with no children has AGI of $160,000, and net tax liability of over $1,200. Their rebate is $700: [$1,200 basic rebate − $500 phase-out (i.e., 5% × ($160,000 − $150,000)].

What do I have to do to get the rebate check?

Nothing. The IRS will automatically figure your rebate based on your 2007 tax return that is due April 15, 2008. It will start sending rebate checks out in May for those who file before then.

FHA Mortgage Limits go through the roof!! If you have been waiting they are here!!!

Here are the New Jersey Limits as of today:

 

The one thing that sticks out to everyone is Falling Interest Rates… With all the termoil in the mortage industry rates are doing very well.  A lot of people are now qualifying for rates in the 5′s…  That includes some FHA canidates.

With the changes in the mortgage industry there are currently things that affect the rate you will receive that have not been around before.  Credit score hits are the #1 thing that are determining you to get the lowest rate, but not the only thing.  If your rate is over 6.5% or an adjustable now is the time to see what you qualify for to get that mortgage payment down to a rate and payment you will not have to touch for a very long time…

When people hear the Fed is dropping the prime rate people automatically assume the Fed is lowering rates on regular 30 year fixed mortgage rates.  Well in partial that may be true but the Prime Rate affects other types of loans such as a Home Equity Line of Credit that you may have on your home as a second mortgage that you can draw against.  

 30 year fixed rates are directly affected to the 10yr T-Bill.  That is your best barometer of whether or not rates that day are going to be getting better or worse.  This only really comes into play when you will be closing on a mortgage in the next 30 days.  That is the standard time a rate is locked for.  So if you are still looking for a home to purchase and do not have a closing date scheduled then that would not be the time to watch every click on the 10 year T-Bill changing.  

Happy Holidays!

It’s getting to be that time where everyone is starting to think about the Holidays… Before the holidays arrive it’s always a good idea to check your mortgage to make sure there won’t be any surprises in the new year.

In the year 2008 there will be over $1 trillion adjustable rates coming due in America.  And with the current raise in interest rates over the past few years we can assume they aren’t going to be going down.  Every month you get your mortgage statement and you send in the payment.

If everyone takes a minute to analyze this statement – look for the following (if it’s not on your statement then pull out your mortgage information from your closing)

• Adjustable Rate Mortgage
• Interest Only – If you haven’t paid your balance down at all since you’ve had your mortgage.
• Interest Rate over 6.5%

If you have any of these types of mortgages it is worth the 15 minute phone call for an evaluation to see if it makes sense to take advantage of the lower rates.  I can be reached toll free at 888-331-6300 Ext. 566 or on my 24 hour hotline 609-760-9234.  You can also fill in your information below to send me a question-

Qualifying for a mortgage: Debt to income

Today everyone is hearing the words DTI- Debt to Income.  What does this mean you ask?
This is a part of how the mortgage industry qualifies someone to see if they can afford the mortgage they are applying for.

How it works:
You divide your Monthly Gross Income (Gross Income is before taxes are taken out) by your new housing payment plus all installment/revolving and legal (child support/alimony) debts. You then take that result and multiple by 100 to get the DTI Ratio.

Example: If you make $60,000 a year that is $5000 a month.  If your new house payment is $1500 (this includes taxes, homeowners insurance and PMI if applicable) + $400 (car payments, credit card minimum payments) it would look like this:
$1900 / $5000 = .38 Multiple by 100 = 38%. (GOOD RATIO TO HAVE)

A good ratio to have to qualify for your standard mortgage with out any other factors being considered should be below 42%.  When you start going above that other factors could result in getting approved for the mortgage or not. 

The easiest way to see if you qualify is to give me a call at 888-331-6300 Ext. 566 and in about 10 minutes and going through your information I will be able to tell you what you qualify for to purchase or refinance a home.

How does one get out of a mortgage that is adjusting to a payment you can not afford?

The answer is FHASecure Iniaitive! 

This new plan to help nearly 250,000 people save their home from adjustable rate mortgages that reset too high.

Here are the highlights of the FHASecure Initiative:

1. The mortgage being refinanced must be a non-FHA ARM that has reset.   Your loan must have adjusted already to be eligible.

2. The mortgagor’s payment history on the non-FHA ARM must show that, prior to the reset of the mortgage, the mortgagor was current in making the monthly mortgage payments.  You can be late on your mortgage but you must prove that you were not late prior to the reset and that the reset is the only reason why you have lates now. 

3. If there is sufficient equity in the home, under additional eligibility instructions provided below, FHA will insure mortgages that include missed mortgage payments.  If you are on a plan with missed mortgage payments that need to be paid, they can be rolled into your new loan, so long as you have enough equity.

4. Under certain conditions explained below, FHA will insure first mortgages where (1) the existing note holder writes off the amount of indebtedness that cannot be refinanced into the FHA insured mortgage; or (2), the FHA-approved lender making the new mortgage or the existing note holder may take back a second lien that includes closing costs, arrearages or previous secondary financing.  

Let’s say you owe $300,000 on your home but its only worth $270,000 today.  You can get a new FHASecure loan for $261,900 and a new loan for $38,100 from your new lender or the current holder of your mortgage if they will go for it.   This new note terms and payments have to be factored into your qualifying ratios but if they are deferred for 36 months, they don’t have to be.    These combined loans can exceed 100% and can exceed the FHA loan limit in your area.

5. Lenders must determine, as part of the underwriting process, that the reset of the non-FHA ARM monthly payments caused the mortgagor’s inability to make the monthly payments and that the mortgagor has sufficient income and resources to make the monthly payments under the new FHA-insured refinancing mortgage.

The bottom line is this is not a free pass.  If you are late only because your ARM adjusted and you can prove it, this program is the best way to save your home and your credit.

However, this is a terrific new program and once again demonstrates why FHA has been with us for decades. 

Today a lot of people woke up to finding out that Greenpoint Mortgage along with others have gone out of business. 

In the past few weeks I have met with, had conference calls and read articles on all the changes and how it is going to affect YOU the end consumer in getting loans. 

Over the past 5 years the mortgage industry has been stretched out like a rubber band to the seams and having loan programs that would allow some pretty wild things to happen (I.E. Lower credit score’s, 100% Financing & Not verifying certain information such as income and even employment).  Well the changes we are enduring right now is the snap back from the rubber band and constricting to a point of not doing most of those loans we have been so accustom to doing with out batting an eye at. If you a consumer who fits into one of the above categories all I can say is let’s update those pre-approvals you have.  Don’t think that you just did it a week ago that everything is ok – right now the mortgage market is changing on a minute to minute basis.  

Have a great weekend!!!  I also want to roll out my HOT LINE # which is getting me where ever I am at please do not hesitate to call – 609-257-4456. 

 Jeremiah

I will be available at a NJ Open House hosted by Dan Bozza of RE/MAX Central this coming Sunday from 1pm til 3:30 pm. at 2 Crane Way in Toms River New Jersey. Stop by for your free Homebuyers Tool Kit!  I’ll be doing on the spot no obligation pre-approvals as well as answering any questions or concerns related to financing. See you there!

I got a call from a new client over the weekend and they had mentioned they don’t believe they can get 100% financing as a First Time Homebuyer.  First thing I said was where did you get that information – because it is a false statement.

As a First Time Homebuyer you qualify for some of the best programs at 100% that I’ve seen in a long time.  Perfect example a good friend of mine bought a house last month and I got him into without $1 dollar out of his pocket at closing.  Will that happen on every purchase no.  But with the seller concession and the 100% loan I gave him he got a great rate and still had the money he needed to buy new furniture. 

I have this loan as an 80/20 option as well to avoid mortgage insurance as well… Give me a call if you have any questions.  You don’t have to be a First Time Homebuyer to get this loan either.