A and N Tips: Rock That Tax Return!

Smart Ways to Spend Your Tax Refund

Consider using your tax return to maximize your future financial situation

Refi to a Lower Rate

By refinancing to a fixed and/or lower interest rate, you can improve your mortgage savings and your financial situation for years to come.

Spruce Up Your Space

Is your kitchen or bathroom looking a little dingy? If so, consider a renovation. Home renovating and remodeling can drastically improve the value of your home.

Upgrade Your Home

Whether you are planning to grow your family, acquire the perfect vacation home or move to a smaller, more manageable property, your tax refund can play a large part in covering the closing costs and other fees associated with this new purchase.

Does a Property Need to have Appliances?

Credit: Michelle Meiklejohn

Habitable Condition:  Property must be in a condition that is immediately habitable and must contain:

• At least one fully functional bathroom (i.e., shower/tub, toilet, and hand sink).

• Other bathroom(s), if not functional, must be escrowed for repair.

• A fully functional kitchen with appropriate appliances (i.e., sink, cabinets, utilities to support a stove and refrigerator).

• Stove and refrigerator do not need to be present if they are not a built-in, as non-built in appliances are considered personal property. Comparables without appliances are not required.

• If stove and oven are built-in, they must be functional, or the space must be reconfigured to allow for appliance.

 

• Utilities (gas and/or electricity) and plumbing must be functional. If not available for testing, due to "winterization"

New Amendment: Illinois Landlord & Tenant Act

Effective January 1, 2012  For A and N Realtors, Investors, and Landlords: An amendment has recently passed to the Illinois Landlord and Tenant Act which creates a new Section 765 ILCS705/15 "Changing or rekeying of the dwelling unit lock." This New law requires most Cook County Landlords to change locks with every new tenant. If the landlord does not comply with this new rule, which will take effect January 1, 2012, then that landlord may be liable to the tenant for damages sustained because of stolen property by someone with the old tenants' key. MORE INFO HERE

I have been receiving a lot of questions about FHA Mortgage Insurance Premium, Here are Some Answers

FHA mortgage insurance is similar to the private mortgage insurance (PMI) required for conventional mortgages with down payments below 20%, but key differences exist:

Up-front Fees: 1% up-front fee due at closing.

Rate: For fixed rate loans, there is an annual premium of 1.1% to 1.15% of the loan amount per year, divided over 12 months. Variable term MIP rates are 0.25% to .50% per month for 15 year or shorter-term loans.

Removal: FHA MIP is mandatory for the first five years of loans with terms more than 15 years (even if your loan balance reaches 78% of the original home value or sales price. PMI premiums can often be removed if the loan balance is below 80% of current market value. Conventional loans automatically remove PMI when the loan balance falls below 78% of the loan amount.

Exceptions: If you have a loan term of 15 years or less and put down 10% or more of the sales price, the MIP will be cancelled after the loan balance falls to 78% (of the original sales price, or the original appraised value, whichever is less). 20% down on a 15-year loan cancels PMI altogether.
How the MIP Affects Your Loan Decision? Considering that PMI payments do not go towards the principle, or add to the value of the home, most borrowers would choose to avoid paying PMI altogether.

However, It's hard to avoid paying PMI without putting 20% down. IF you have good credit history, and the money to put 20% down, then a conventional mortgage is probably better for you as PMI would automatically be lifted. However, if the down payment is a family loan or a gift, you may not qualify for a conventional loan even with 20% down. In that case, an FHA loan with MIP may be your only option, if you cannot afford the higher payments of a conventional 15-year mortgage.

Call A and N Mortgage 773-305-5626 for any more questions!

A and N's Home Buyer Tips: Get the Best Refi Rates

• Improve Credit - If you're a homeowner with great credit and plenty of equity, odds are those lower rates are within your reach. But if your score is less than desirable, work at improving it by paying all of your bills on time, paying down your credit card debt, keeping your credit lines open and increasing your credit limits.        

• Loan-to-Value Factor - To calculate your loan-to-value ratio, divide the amount you want to borrow by the current value of your home. If your LTV ratio exceeds 80 percent, you may have trouble qualifying for a refi.

• Short Term = Savings - Paying your loan off in a shorter period of time is not only a surefire way to save money over the life of your loan, but it is also a way to obtain an attractive rate on your mortgage.

• Opt to Pay Points - Buy down your loan's interest by paying points. A point is equal to 1 percent of your loan amount. Those buyers who opt to pay more points when refinancing are often  able to acquire lower interest rates on their loan. This could mean significant savings over the life of the mortgage. 

Is Mortgage Fraud on the rise even with the new Fannie Mae requirements for QC?

While commercial loan origination and median home prices have been trending downwards, mortgage and property fraud rates have been steadily increasing, up 75% from pre-recession peaks. According to the CoreLogic Fraud Index, $12 billion worth of originated loans were found to be fraudulent in 2010, and while the total for this year is expected to be around $7.4 billion, the rate of mortgage fraud remains constant due to the currently contracting revenues of the mortgage business. 

In all, these fraudulent mortgages could carry a price tag of up to $375 million a year for lenders. However, also according to the CoreLogic Fraud Index, mortgage fraud has taken on a new identity, with the traditional identity and employment fraud rates falling a combined 56% from their 2010 levels. 

Current market conditions- distressed and depreciating properties, as well as overwhelmed loan servicers scrambling to mitigate growing losses following the mortgage bubble’s collapse in late 2008- have proven to be strong catalysts for the growth of property, occupancy, and debt fraud in a time when US regulators are watching the mortgage business more closely than ever. 

Further examination of CoreLogic’s data have also show higher fraud rates in the Midwest and Northeast, with Chicago receiving the top national ranking where the risk of mortgage fraud is over 30% of the national average. Furthermore, Suspicious Activity Reports filed by large lenders was 70,472 in 2010, up from 67,507 in 2009. However, it is important to note that while SAR reports are increasing, this increase may show a growing trend of due diligence and stricter compliance with mortgage laws following the housing bubble’s collapse in late 2008.

Stats cited from http://mortgagedaily.com