What the rate cut means for home loans

This past Tuesday, the Federal Reserve cut interest rates by .75%! That's the biggest cut since 1984. This is great news if you have a credit cards, car loans, an adjustable rate mortgage, or a home equity line of credit. For long-term rates, however, this could mean the beginning of the end of the lowest rates since 2005. Let’s look at the impact of a few recent Fed Funds Rate cuts and the corresponding impact to home loan rates to see what this could mean for you:

January to June 2001: Federal Rate Cut 2.25% Home Loan Rate Rose 0.10%

October to December 2001: Federal Rate Cut 0.75% Home Loan Rate Rose 0.45%

May to August 2003: Federal Rate Cut 0.25% Home Loan Rate Rose 0.78%

If you are waiting for long-term mortgage rates to fall further from here, don’t count on it. Your best chance to lock in the lowest mortgage rates since 2005 is now. Getting your application in process will allow you to capture a rate near all time lows.

Source: Regina Elmers, Coldwell Banker Home Loans

Homebuilders get Coldwell Banker's sales assist

Despite the slowdown in new home sales, Coldwell Banker King Thompson's New Homes and Condo Division is growing rapidly. In addition to Portrait Homes where I have been working, Coldwell Banker also has partnerships with Village Communities, Dominion Homes, Maronda Homes, Heitmeyer Homes, and several other private developers. These partnerships allow agents to expand our business into the new homes segment of the market while helping the builders with their staffing and marketing issues. They know the importance of building relationships with Realtors who will bring their clients to these new home communities. Many of these builders see the value of Coldwell Banker's internet marketing and know that more and more buyers are looking for virtual tours rather than print ads.

http://columbus.bizjournals.com/columbus/stories/2007/12/24/story6.html?page=1

Tax time

Are you still trying to decide if you should rent or buy a home? Think about these tax benefits of being a home owner.

1. At purchase: In many cases the points and origination fees on your loan are tax deductible. Look at lines 801 and 802 on your settlement statement to see how much you paid.

2. Mortgage interest: You can deduct the interest paid on your mortgage and home equity loans. In the beginning of the loan, this is a large chunk of the monthly payment and you could be saving almost a third of the interest expense through deductions. Also, if you are paying private mortgage insurance and purchased or will purchase your home between January 1, 2007 and December 31, 2010, the private mortgage insurance is tax deductible too. Don't forget about your property taxes. You can get deductions for the property taxes in the year it is paid, not the year you put it in your escrow account.

3. At sale: If you owned and occupied your home as your principle residence for 2 of the last 5 years you can earn up to $500,000 on the sale for married couples or $250,000 for singles and pay no federal income tax at all. So that means you can buy a fixer-upper, work on it for nights and weekends for two years (while living in it) then sell it for a nice profit, tax free!

http://new.realtor.com/Basics/Buy/ClosePossess/TaxBenefits.asp?poe=realtor
http://www.bankrate.com/brm/itax/news/taxguide/sweet-home1.asp?caret=4b

Falling even more!

Shortly after posting my last blog, I received an e-mail from Wells Fargo advertising even lower rates! They are offering 30 year fixed FHA loans at 5.5% and 30 year fixed conventional loans at 5.625%. If you've been thinking about buying a home, now is the time!

Interest rates are falling!

Now is a great time to buy! There is still plenty of inventory out there and interest rates have fallen! Coldwell Banker Home Loans is now offering 30 year fixed FHA loans with no points at an interest rate of 5.92% and 30 year fixed conventional loans with no points at an interest rate of 5.72%!

3 Signs of Predatory Lending

Subprime lending was started to give credit to buyers who otherwise would not be able to qualify for a loan. Although this sounds good, predatory lenders often charge such high interest rates and fees that it is not in the best interest of these buyers. Here are three signs of a predatory lender:

1. Choose easy targets: Predatory lenders tend to go after elderly people, immigrants, minorities, and individuals with low credit scores because they believe that these groups may be less educated about lending practices.

2. Charge unnecessary fees: Add unnecessary fees or services, like overpriced insurance.

3. Give misleading or no information: The terms of the loan may seem too good to be true. They may offer very low prices in the beginning then change the terms at the last minute.

Always make sure that when you are looking for a loan compare several lenders and ask your real estate agent for advice before choosing a lender. Usually you will find that the legitimate lenders offer very similar terms and rates. If it seems too good to be true, it probably is!

http://www.realtor.org/rmomag.NSF/pages/Excerpt200801?OpenDocument