homeowners

The “Kick ‘Em While They’re Down” Rule

May 8, 2007

In his weekly syndicated column, Kenneth Harney pulled back the curtain on a nasty piece of IRS tax code that can penalize homeowners with foreclosures and short sales. Because the IRS treats canceled debt as ordinary income, homeowners that “work something out” with their lender may inadvertently add tens of thousands of dollars to their annual […]

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Why “Prime Rate” Is A Name And Not A Number

May 2, 2007

Pop Quiz: Which interest rate is lower?  8.25% or Prime Rate? If you answered anything other than “they are the same”, then you can understand first-hand why banks refer to Prime Rate by name instead of by number. It’s a neat little piece of sales psychology that keeps people from recognizing their true cost of […]

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Would You Have Answered The Mortgage Type Quiz Correctly?

March 27, 2007

The pie chart at right comes from a Bankrate.com survey, sampling 1,000 adults about their current housing situation. The question asked: What type of mortgage do you currently have? While the 34% “Don’t Know” figure is troubling, even more frightening is the 6% “ARM” figure. The sample size was small, but far more than 6% […]

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The Fed Sets The Fed Funds Rate Sets Prime Rate

March 21, 2007

This afternoon, the Fed adjourns after a two-day meeting and it is widely expected that they will leave the Fed Funds Rate unchanged at 5.250%. So, what is the Fed Funds Rate and why does it matter to everyday people? The Fed Funds Rate matters to you and me because it is used to calculate […]

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Conforming ARMs Are Going Delinquent More Rapidly Than Sub-Prime ARMs

March 14, 2007

The Mortgage Bankers Association released a report yesterday detailing how mortgage-holding homeowners are meeting their obligations. The statistics were a major factor in the Wall Street sell-off yesterday as investors increasingly grow nervous that sub-prime mortgage defaults will spill over into other credit markets and take the economy with it. The report stated that fourth […]

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Sub-Prime Changes Freeze Out Homeowners

March 8, 2007

The snowballing in sub-prime lending is becoming an avalanche. Effective today, many lenders have discontinued 100% financing programs and other “piggyback” scenarios.  These types of loans represented the widest doors to homeownership for Americans in recent years. There are several reasons why a home loan applicant may be considered “sub-prime”, but the most common reason […]

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The Two Methods To Generate Home Equity Are Not Equal

February 6, 2007

Home equity is created in one of two ways (assuming increasing home value and a non-negatively amortizing first mortgage). In the first method of creating equity, the homeowner pays down the principal balance on the mortgage.  This increases the difference between what is owed on the home and what the home is worth. In the […]

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Mortgage Insurance Is Tax Deductible in 2007, But With A Catch

January 23, 2007

Adding complexity to the home financing process, The Tax Relief and Health Care Act of 2006 includes new tax code for homeowners.  The act grants itemized deductions for private mortgage insurance (PMI) and government mortgage insurance (MIP) expense premiums paid in 2007. For all loans originated in the 2007 calendar year, mortgage insurance is tax-deductible […]

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