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Archive for the ‘Mortgage Lending’ Category
Tuesday, March 16th, 2010
If you are like me, you probably put off filing your 2009 taxes. But with the deductions and credits that apply to buying a home and making energy efficient improvements, if you are a homeowner, you will want to get started now, rather than later, to make sure you receive all the tax breaks you have coming in 2010.
It’s important to note that a tax credit is generally more valuable than an equivalent tax deduction because a tax credit reduces the tax dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed. For instance, if you can itemize energy-related purchases on your tax form, it will reduce the amount of tax you owe.
Hopefully my top 10 tax deductions and credits will help.
1. Energy Credits: President Obama’s American Recovery and Reinvestment Act reinstated federal tax credits for homeowners who make certain energy-efficient improvements like new doors, new windows, furnaces, heat pumps, hot water heaters, air conditioners, and more. The credit is up to 30% of the cost of installing such energy savers, up to a maximum credit of $1,500.
A larger credit is available for more ambitious projects especially ones where you generate your own power. For more information on which products qualify for credits, visit here.
2. First-Time Home Buyer credit: A home bought in 2009 may qualify for either an $8,000 or $6,500 credit. To qualify for the $8,000 credit you must not have owned a home for three years prior to buying a new house. The credit is up to 10% of the purchase price or up to a maximum credit of $8,000. For purchases after Nov. 6, 2009, no credit is allowed for homes that cost more than $800,000.
To qualify for the $6,500 credit, you must have lived in the same primary residence for five consecutive years over an eight-year period leading up to the purchase of a new home. The credit is 10% of the purchase price, up to $6,500.
3. Home-office deduction: The costs related to operating your primary workplace from your home are tax deductible. These costs include depreciation, utilities, and insurance for the portion of the home used for meeting with customers or for the primary place of business.
4. Points: Points paid to obtain a mortgage for the home are generally fully deductible, but not if you paid them as part of refinancing: in that case, you must deduct the points over the life of the loan.
5. Moving Expenses: If you moved for a new job that is 50 miles or more away than your old job was from your old home, you can deduct the expenses related to the cost of moving your family and household goods.
6. Rehab Credit: If your home is a designated landmark, you can claim a 20% tax credit for the renovations made within a two year period.
7. Rental Income: If the home was rented for 14 or fewer days when there was a major event in taking place in your town, like the Olympics, the income, regardless of the amount collected, is tax free.
8. Mortgage Interest credit: If you received a mortgage credit certificate from a governmental agency, you can claim a tax credit of up to $2,000.
9. Real Estate Taxes: You can deduct state and local real estate taxes paid during the year on any number of homes.
10. Roth IRA Payouts: The rules allow IRA Roth contributions to be withdrawn at any time without penalty, so this is a great tool to help save for a first home if you are a would-be home buyer. You can withdraw all the money deposited each year tax- and penalty-free. And, if the account is five years or older, you can withdraw the earnings tax-, and penalty-free too if you use them to help buy a first home.
Please note, there are more credits and deductions than the ones listed. To make sure you have not overlooked anything, or for help answering specific questions or any concerns about filing your taxes, I highly recommend working with a Certified Public Accountant. The money invested on an accountant will pay you back, either in the form of money saved from taking the appropriate credit or deduction, or by avoiding a penalty for incorrectly filing your return.
Here’s hoping your tax season is less taxing.
Tags: American Recovery and Reinvestment Act, Energy Tax Credits, First-Time Home Buyers Credit, IRA, ShoreBank
Posted in Mortgage Lending | 1 Comment »
Tuesday, February 16th, 2010
Although landlords are ultimately responsible for a building’s energy efficiency, there are a number of steps which environmentally-friendly renters, some of whom pay their own utility bills, can take to reduce energy costs and consumption. So I am going to share with you some of the easy and convenient steps that we share with our ShoreBank customers and encourage building owners to pass along to their tenants.
*P.S. Many of the tips also apply to anyone owning or inhabiting a home, apartment, or condo.
1. Turn off unused lights and computers and replace incandescent light bulbs with compact fluorescent bulbs (CFLs).
2. Caulk and weather-strip windows and outside doors. For older windows, place a sheet of plastic over them and use two-way tape to affix it. The greatest source of heat loss in a home comes from the windows.
3. Remember to use the storm windows which help insulate the home and keep heat inside it.
4. Keep your drapes open in the winter to let sunlight naturally warm the room and home. And in the summer, keep them closed to prevent the place from getting too warm.
5. For each degree lower or higher you set the thermostat, you will save potentially two to 10 percent on heating or cooling costs. In the winter, keep the temperature set at 68 degrees during the day and 55 in the evening. Wearing a sweater or layered clothing will make the temperature more tolerable, especially on days when the bill arrives in the mail.
6. Clean the coils on the back of the refrigerators which contribute to about 15 percent of the total monthly electrical bill. This can help persuade your landlord to finally get around to replacing the old one with an ENERGY STAR model.
7. Get an electric blanket. Besides the joy and comfort that comes from getting into a bed at night with warm sheets, it is less expensive than heating your bedroom.
8. Move your furniture away from the exterior walls to create space between you and the cold walls. This will make space for the air to move around, making the air warmer.
9. Keep your radiator and heating vents clean from dust. Dust and dirt prevents heat from flowing into the rooms where you need it. It’s “no fun” to clean, but being cold and paying more for it can be even more painful.
10. Select ENERGY STAR appliances and products, and check efficiency ratings prior to purchasing.
Whether you own or rent, energy efficiency is everyone’s concern. Please share this information with friends, family and / or your landlord. It might even help some renters get a faster response to a lingering maintenance issue when the building owner understands how it will reduce their monthly costs while adding comfort and value to the property.
In fact many of the improvements are eligible for tax deductions and may help lower income taxes. With the April tax deadline fast approaching, I will explore the tax benefits of buying a home and incorporating energy saving improvements in your 2009 tax return in my next blog entry.
For additional energy saving information, visit the U.S. Department of Energy’s website.
Tags: community development, energy efficiency, environmental sustainability, green banking, green building, ShoreBank, triple bottom line
Posted in Mortgage Lending | No Comments »
Tuesday, December 15th, 2009
I can’t think of many better New Year’s resolutions than one promising to make 2010 the time for improving your home’s energy efficiency. While the cold weather has descended on most regions of the country, making sure your home is well insulated and reducing energy costs never goes out of season. To help save you 25 to 45% per month on your utility bills, while protecting the planet and making your home more comfortable, I have some inexpensive and easy tips for going about it.
Getting Started: An Energy Audit
Winter is the ideal time for a certified auditor to perform a Blower Door Test which will determine how airtight your home really is.
From our experience with the ShoreBank Home Energy Conservation Loan Program, I suggest contacting a professional to perform an in-home inspection for air leaks, checking insulation and the overall efficiency of your home’s mechanicals and appliances to help determine which improvements offer the best value and environmental impact.
Insulate Your Attic
Be certain the attic hatch is well insulated. Heat loss due to poor insulation forces the furnace to work overtime, costing you more to heat your home.
Furnace
Have the furnace serviced and change its filters on a monthly basis to ensure maximum efficiency. Clogged air filters can make the heating system work harder and is more costly.
Install a Programmable Thermostat
A programmable thermostat will enable you to lower the temperature when the home is empty or in the evening while you’re asleep. And it can be adjusted for comfort when you are at home.
Check Windows
Quality storm windows not only improve energy efficiency, but also are eligible for a $1,500 tax credit in 2009 and 2010 from the federal government, thanks to the America Recovery and Reinvestment Act signed into law by President Obama last February. Plus you can include the cost of installation for these products.
Older windows can be repaired and continue to be efficient by sealing gaps with caulk, applying new glazing compound, replacing broken panes and repairing loose parts and installing weather stripping.
Decorate
One of my personal favorites, using lined draperies, working shutters or insulated shades, helps cut heat loss.
More information about energy-efficient improvements and tax credits is also available from the Alliance to Save Energy at www.ase.org.
Close Fireplace Dampers
When not in use, an open damper allows nearly 10% of the heat in your home to escape, according to “Preservation” magazine.
Caulk Opening and Holes
For areas around mail chutes, outdoor faucets, cable television and utility entrances, use exterior-grade caulking on the outside of your home.
Ceiling Fans
Set your fans to the lowest speed so the direction of rotation and the blades push the warm air down from the ceiling.
Bathroom Fans
Ensure the fans have functioning dampers to keep the cold air from coming in.
Finally, let’s make it happen in 2010. Remember, one-third of all dangerous greenhouse gas emissions released into the environment emanate from our homes. The small investment we make in improving our home is not only a good return on investment but also helps to stimulate local economies and supports good paying jobs.
Happy Holidays!
Tags: energy efficiency, Energy Tax Credits, green building, ShoreBank, triple bottom line
Posted in Mortgage Lending | No Comments »
Tuesday, November 17th, 2009
As unemployment, the leading cause of foreclosure, continues to soar above 10%, ShoreBank’s work helping homeowners to refinance and modify their mortgages continues to intensify. In addition to implementing the ShoreBank Rescue Loan program, which is helping homeowners to refinance their original loans from other institutions, we are among the few banks aggressively working with our own borrowers in President Obama’s Home Affordability Modification Program (HAMP) to provide new affordable mortgages.
Pundits say: “The bigger the story, the smaller the focus;” so let’s focus on how one of our mortgage lenders is tackling the challenge of saving a home.
Jabari Watson, an experienced loan officer who joined ShoreBank nearly two years ago, never imagined his responsibilities would be turned upside down. Far from his previous ShoreBank role assisting first-time homebuyers and residents with new home purchases, today he has become a mortgage modifier extraordinaire. While the duties have changed dramatically, one constant has remained—the amount of satisfaction he derives from helping an individual or a family have a home.
Each morning, Jabari receives a handful of troubled loan applications from our Asset Protection Department. He then identifies the appropriate, available rescue program that will best help the borrower catch up on his or her mortgage payment and save the home from foreclosure. But time is not on his side. The process usually takes up to 30 days and often the homeowner does not have that kind of time to get the issue resolved.
Once he identifies the appropriate program, Jabari hits the ground running, verifying the program’s criteria for application. To qualify for the HAMP program the borrower must:
- Have originated his or her home loan before January 1, 2009
- Be living in the home as his or her primary residence
- Have an unpaid balance of not more than $729,750 (for a single-family home)
- Have an income (this can include federal assistance or a part-time job)
- Have a monthly mortgage payment that exceeds 31% of their monthly income
In addition, Jabari must obtain certain financial information from his borrowers, including a signed tax return transcript form, their most recent tax return on file, their two most recent pay stubs, and an “affidavit of financial hardship” that, with the exchange of voice and email messages, often takes an inordinate amount of time to collect.
“Despite sifting through the endless mountains of paperwork, my pressure is nothing compared to what our customers are going through,” said Jabari at a recent team meeting. “These people are staring at the possibility of losing their homes and having nowhere to go. Now that is real pressure, so I try and handle their situation with the utmost sensitivity which can be hard to do when I have to ‘beat the clock’ to get the application process in time to save the home.”
Despite this and other current challenges, ShoreBank loan officers like Jabari have successfully completed 53 modifications since the launch of the program with many more in the pipeline. While we look forward to the day in the (hopefully) very near future when we can get back to exclusively making loans for new home purchases, we are committed to helping our customers and our communities through the economic crisis and to helping as many people as we possibly can.
Tags: community development, HAMP, mortgage modification, Rescue Loan program, ShoreBank, triple bottom line
Posted in Mortgage Lending | 2 Comments »
Tuesday, October 20th, 2009
To help more hard working people buy their first home and speed up the end of the recession, the $8,000 tax credit for first-time home buyers, scheduled to expire December 1, 2009, ought to be extended into 2010.
Since its inception as a vital component of President Obama’s American Recovery and Reinvestment Act of 2009, the tax credit has assisted nearly 1.5 million Americans, providing $10 billion for the purchase of a new home. The first time home buyer is someone who has been without a principal residence for a three-year period. It is available for homes purchased on or after January 1, 2009 and before December 1, 2009, but does not have to be repaid. Vacation homes and rentals properties are ineligible.
Single tax-payers with incomes up to $75,000 and married couples with incomes up to $150,000 are eligible for the full tax credit. The credit reduces the new homeowner’s tax bill or increases their refund–dollar for dollar. Unlike most tax credits, the first-time home buyer credit is fully refundable. This difference means that the credit will be paid to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed. (For additional information about the home buyer tax credit, visit www.federalhousingtaxcredit.com.)
Helping homebuyers to realize homeownership and life in a strong, healthy community is not only ShoreBank’s mission, but also the dream of millions of Americans. Previously we could rely on consumer spending to lead us through the recession and onto the road of economic recovery, but not now. Those days, I am afraid, are gone. I believe an extension of the tax credit is necessary in order to help stabilize our communities by encouraging consumer spend on home purchases, generating the additional revenues local government agencies need and encouraging the home improvement projects which create the badly-needed new jobs. In fact, unemployment is the number one cause of housing foreclosures, so an extension of the tax credit is essential and best of all, it has proven it works.
The tax credit is in a great position to continue being successful. While some have blamed the mortgage meltdown due to the ease by which many buyers obtained unaffordable loans, most of the irresponsible lenders are no longer in business. And now there are fewer institutions serving the areas hardest hit by the recession, and yet there are plenty of hard working individuals and families out there who need quality loans, and who qualify for them too.
Some naysayers will point to the tax credit not coming cheaply to American taxpayers. It is estimated to be costing taxpayers about $1 billion a month, but much of the tax credit will inevitably pay for itself. So now is the time for our government to invest in our housing market, our communities, and our taxpayers. Besides its proven record for speeding up the economic recovery, it is also a “tried and tested” formula for creating new jobs that will prevent future foreclosures and help stabilize entire communities.
Tags: community development, green banking, home affordability and stability plan, home ownership, ShoreBank, triple bottom line
Posted in Mortgage Lending | No Comments »
Tuesday, September 15th, 2009
Despite current economic conditions, many home improvement projects are holding their own. And the best way to get exactly what you want in your home is to customize its features. But “custom” doesn’t mean it has to be an expensive endeavor. Instead it just might mean saving money while protecting the planet. Here are a few ideas:
Tax Credits.
By incorporating sustainable materials and energy saving products in your home improvement project, you can recoup even more of your project costs and generate a social return. Thanks to President Obama’s America Recovery and Reinvestment Act of 2009 (ARRA) that was signed into law last February, tax credits have been extended and expanded for energy-saving improvements that had expired two years ago. This will save you money at tax time!
Tax credits are available in 2009 and 2010 for 30% of the cost of energy-efficient doors and windows, insulation, air conditioners, furnaces, heat pumps, and boilers for your primary home, up to a lifetime cap of $1,500. Plus you can include the cost of installation for these products. Starting this year, solar water heaters, geothermal heat pumps, and wind energy systems are also eligible for a tax credit of up to 30% of the cost and are available until 2016. More information about energy-efficient improvements and tax credits is available from the Alliance to Save Energy at www.ase.org.
Lower Utility Bills.
By conserving energy you lower your monthly utility bills by 25% to 45%. By including double-paned windows and extra insulation in the attic you can keep cool or warm air from escaping so the HVAC system doesn’t have to work as hard to maintain the right temperature.
Healthier Environment.
And the less electricity and water you use, the less of an impact you make on the earth’s resources while also reducing the amount of greenhouse gas emissions being emitted into the environment. By some estimates, one-third of all hazardous gases are emitted by homes. To discover the more than 40 categories of Environmental Protection Agency (EPA)-approved, home-improvement products and materials like insulation, appliances, windows, siding, and more, visit www.energystar.gov.
Make it Happen.
From our experience with ShoreBank’s Home Energy Conservation Loan Program, I suggest contacting a certified home energy auditor to arrange an in-home inspection of air leaks, insulation, and overall efficiency of mechanicals and appliances to help you determine which improvements offer the best value and environmental impact.
For more information, please visit, www.sbk.com.
Tags: community development, energy conservation loans, energy efficiency, Energy Tax Credits, green banking, ShoreBank, triple bottom line
Posted in Mortgage Lending | 3 Comments »
Tuesday, August 18th, 2009
Despite current economic conditions, low interest rates, upbeat economic reports, and government incentives are making this one of the best housing markets in decades. Whether you’re a first-time homeowner looking to take advantage of the available $8,000 tax credit before it expires at the end of Nov. 2009, or looking to downsize or to upgrade, now is a terrific time to buy a home.
One lesson many people have learned all too well lately is the importance of knowing how to buy a home responsibly to ensure successful, sustainable home ownership. To help you buy a new home and make the best use of your money, I am sharing with you some home buying information and advice.
Begin by having a plan.
Don’t act immediately. Think about what you want – the type of home and the neighborhood – and what you can manage at this point in your life. How will a mortgage figure into your retirement plans or payment for the children’s education? Think about how your cash flow may change in the future. Talk to a mortgage lending specialist very early in the process who is familiar with the community and who can help assess your needs, calculate costs and determine what you can afford.
Then choose a manageable “standard vanilla,” fixed-rate loan and payment schedule that fits your goals. And perhaps, most importantly, ask a lot of questions and be sure you fully understand the terms of your loan.
Be conservative.
Equity is the difference between the appraised value of the home and the debt or current loan balance on the home. It is important to have realistic expectations of what the appraised dollar amount is when you are pricing your home for sale. You may qualify for a large loan and find you can’t easily handle the payments because the actual sale price of your home was much less than its appraised value. As I like to say, “Hope for the best, but don’t count on the best,” and borrow only what you need and can afford to repay.
Make a difference.
Maybe the house you have your eye has been vacant and needs some work—the paint is peeling, the floors and cabinets are dull or cracked, or the kitchen needs new appliances. Renovations on any scale are an opportunity to get exactly what you want and increase your home’s value, which in turn strengthens the neighborhood.
But be sure to look at more than just the “carpet and the fixtures” because there are other parts of the home whose repairs can be very expensive. It’s important to ask yourself: Can I afford repairs that may be needed in the first year—the next year? Therefore, I remind you, don’t be afraid to ask questions about the condition of the home while shopping for a home. To avoid “costly surprises,” here are some questions to ask:
- Does the home have insulation in the walls, crawl space and attic? Losing heat and letting in the cold is inefficient;
- How old is the roof? Asphalt and wood lasts about 20 years, and clay is the most expensive to replace and repair;
- Has the heating, cooling, and hot water equipment been updated? Usually the older it is, the less efficient it is; look for the ENERGY STAR label for efficiency;
- And what type of material was used for the exterior siding? Was it properly maintained? Can I afford to maintain it because each material, albeit, wood, vinyl and brick, require different maintenance needs, such as cleaning, painting or mortar re-pointing?
There are a wide-array of loans in the marketplace designed to help rehab and purchase a new home. Look for loans, like the ShoreBank Home Energy Conservation Loan, that offer a free energy audits.
The energy saving improvements can reduce your monthly utility bill by 25 to 45 percent while increasing the home’s appraised resale value, sometimes in the neighborhood of 15 percent. In addition, they reduce the amount of greenhouse gas emissions that harm the environment. In fact, our nation’s homes contribute one-third of all green house gas emissions, or roughly the same amount emitted by autos and commercial buildings.
My next blog will share with you some suggested low-cost, eco-friendly home improvements that will add value and comfort to any home. In the meantime, if you have any questions about responsibly buying a home and obtaining a quality, affordable mortgage, please send me an email.
Tags: community development, environmental sustainability, green banking, home affordability and stability plan, home ownership, ShoreBank, triple bottom line
Posted in Mortgage Lending | No Comments »
Tuesday, July 28th, 2009
ShoreBank is a community bank. Our roots are deep in our neighborhoods. Our tellers know customers by name; our mortgage team knows the address of the home an applicant seeks to buy. Our customer relationships are often long-term and personal because our customers’ successes in business or in life benefit the community and not just the bank’s bottom line.
That is why the current economic situation is so personal to our team. We see firsthand the consequences of this economic crisis: closed businesses, unemployment, increased foreclosures and the threat of more. Home loss is devastating to all involved. A home is not like a stock or a bond – it has a presence and it occupies a central place in the life of a community and a family.
We hear the stories behind what threatens home ownership personally from those who are threatened: two-income families lose both their jobs; a spouse or a child becomes sick and the medical bills become too great; an elderly customer’s surgery reduces the hours she can work on a 2nd job. We listen and then we work to ensure their mortgages are affordable in light of changes that have come from this difficult economic environment – to modify loans so that payments are sustainable for the long term. Those modifications are critical to the continued health of our communities so we do everything we can to keep our customers in their homes.
Programs exist that can help people make their payments. President Obama’s mortgage modification program does not cost the borrower anything and can re-set rates to as low as 2%. ShoreBank has been implementing this new policy. Without it, many more people would have lost their homes.
We were able to modify our elderly customer’s mortgage, and mortgages for customers of many ages. People who work in our lending department talk about customers crying when they get the good news, that the loan can be worked out, that they can stay in their home. But less often they talk about the personal impact it has on them. One of our loan processors quietly recalled working with a woman who was signing her loan modification, “Tears were rolling from her eyes. She was so grateful to ShoreBank. She just broke down. I had to get up from there because I didn’t want her to see me crying.” Personally helping customers is what is best for the community. It’s what ShoreBank is all about.
Tags: community development, green banking, home affordability and stability plan, mortgage modification, ShoreBank, triple bottom line
Posted in Mortgage Lending | 3 Comments »
Tuesday, June 16th, 2009
Increasing numbers of homeowners are having a difficult time maintaining a good payment history with their mortgage lenders due to rising unemployment and to sharp increases occurring in their monthly payments as a result of adjustable rate, interest-only, and “option ARM” mortgages. With nearly a quarter of the nation’s mortgages scheduled to reset in 2009, according to the Center for Responsible Lending, thousands of Chicago homeowners will be at risk of falling behind on their mortgages and perhaps even losing their homes due to job loss and high-cost mortgages.
Whether you are a homeowner with an adjustable rate mortgage or just know someone with one, the following is a list of action steps that can help you get control of your finances and save your home.
1. Create a budget. Identify and list expected income and expenses for the next several months to determine what costs can be reduced to set aside more money for making the house payment.
2. Contact your Servicer to inquire about a modification of your current loan, which can lower your payment and fix the rate of interest going forward.
3. Check your refinance options. If the original lender is not responsive, you may be eligible to qualify for a 15- or 30-year fixed-rate, Energy Conservation or Rescue Loan from ShoreBank. Successful ownership is still the best way to build equity. To learn more about your refinancing options or the Rescue Loan program, contact a ShoreBank mortgage lending specialist at (773) 420-HOME (4663). Consultations with a ShoreBank lender are free and there is no obligation.
4. Get help. Contact nonprofit organizations such as Neighborhood Housing Services in Chicago that has counselors available at no charge to help you to evaluate all your options. For assistance in Cleveland, Detroit, and other areas, contact The Housing and Urban Development Department at (800) 827-1000 to receive a referral to a financial counselor in your area.
And, do not forget, you can also provide help to those who are struggling to keep up with their mortgage. For example, a significant number of our refinance mortgage customers have told us that they discovered the Rescue Loan and Prevention Program because someone at work or a neighbor, usually someone without mortgage payment difficulties, encouraged them to seek help.
With the number of foreclosed, empty homes not just in our urban neighborhoods but in suburban ones too continuing to increase, it is vital that if we wish to get the struggling market back on its feet and stabilize our community, we need to do whatever we can to assist homeowners at risk.
Tags: community development, foreclosed home, green banking, mortgage payment assistance, refinacing, ShoreBank, triple bottom line
Posted in Mortgage Lending | 1 Comment »
Wednesday, May 20th, 2009
With interest rates on 15- and 30-year mortgages, either near or at historic low levels, now might be the ideal time to explore refinancing your home’s mortgage. However, regardless of the interest-rate, the current mortgage crisis has taught homeowners that understanding their home loan and the process of obtaining a mortgage is vital for ensuring sustainable homeownership.
However, refinancing comes at a cost. For instance, closing fees on a new mortgage can average 3% of the total loan or $3,000 on a $100,000 loan. Closing costs include title policy, appraisal fees, and reestablishment of escrow accounts. So before you refinance, I suggest looking at some characteristics of homeowners to help you determine whether getting a new loan makes good economic sense, or are you better off with your current loan.
I suggest refinancing if you align with the following characteristics:
• Your mortgage’s interest rate is significantly higher than the market’s interest rates.
• You are planning to continue living in your current home for at least several years which will help recoup closing costs over the life of the loan.
• You have an adjustable rate mortgage that is due to reset, reaching a rate significantly higher than the market-rate.
• You have an adjustable rate due to reset and would like to lock-in, a secure and competitive fixed-rate.
• You have a decent amount of equity in your home, about 20% or more. You may be able to refinance even if your home is now worth about the same as your loan value or even a little less; check www.makinghomeaffordable.gov for details refinancing loans that are 105% or less of their property values.
• You have money to use for closing costs. Typically you can obtain a more favorable rate if you have money available up-front as opposed to bundling it into the new mortgage.
On the other side of the coin, it may not pay to refinance if you fall into one or more of the following groups:
• You already have a pretty low interest, 5% or lower, and recovering closing costs is nearly impossible.
• You are planning on moving which makes recovering closing costs nearly impossible too.
• 
You have an adjustable rate mortgage at a pretty good rate and you are planning to move in the next year or two.
• The reassessment of you property is part of the refinancing process and it may force you to pay private mortgage insurance (PMI). You will be charged PMI* when your loan is more than 80% of the current value of the home (*Fannie Mae and Freddie Mac sold loans are eligible under the new Refi Plus program)
• Keep in mind that you are reducing the principal balance on your mortgage, from the very first mortgage payment. Therefore when it’s affordable, consider refinancing for a shorter term. This will prevent you from extending the term of the loan.
• You don’t have the money for closing cost and the interest rate you have to settle for is too high.
And finally, too many homeowners have been struggling to pay not only the mortgage but also other bills, due to a loss of income or perhaps an unexpected expense. As a result, their credit quality has taken a good hit since they obtained their mortgage.
However, for these homeowners who are saddled with a high interest rate, may still qualify for a loan modification or refinance at ShoreBank or other community banks who engage in character lending and rely on the borrower’s payment history, instead of the credit score, in qualifying for refinance loans. It’s worth the effort to obtain lower payments and build equity.
The Making Home Affordable modification program will provide payment relief and prevent foreclosures and is available through your current lender.
Tags: community development, green banking, home ownership, Making Home Affordable modification program, refinacing, ShoreBank, triple bottom line
Posted in Mortgage Lending | 2 Comments »
