HR3915

From Mortgage News Daily:

Earlier this week, the House Financial Services Committee passed HR3915 out of committee to the full House of Representatives with a favorable vote of 45 to 19.

The vote, which came early Tuesday evening will need approval of the full House and then would need to be passed by the Senate and signed by the president before becoming law.

HR3915, which is strongly opposed by some segments of the lending community, sets minimum standards for loans including a reasonable assumption that the borrower will be able to repay the loan. It also mandates a mechanism for licensing mortgage brokers who are not appropriately regulated by the states or by agencies such as the Comptroller of the Currency. The bill also proposes liabilities for those who securitize potentially risky loans.

While the bill seeks to correct some of the longstanding practices that its sponsors feel have contributed to the current subprime situation, there is nothing in HR 3915 to address either fiscally or legislatively the current fallout from those practices.

The bill, if it does pass both houses of Congress, will undoubtedly see many changes before it is sent to the president for his signature.


Source: http://www.mortgagenewsdaily.com/1172007_HR3915.asp

Contest Winner

Kimberly Ouellette of Milford, NH has been named the
winner of Compass Mortgage, Inc.’s “Win a FREE Mortgage Payment” Sweepstakes. We received hundreds of entries from area homeowners and prospective buyers, all of whom were eager to win up to $2,000 toward their monthly mortgage payment or closing costs on a new property.

The ‘Win a FREE Mortgage Payment’ Sweepstakes serves as a thank you to our loyal customers who have allowed us to serve them for many years. It’s also a great way to introduce other New Hampshire homeowners and first-time home
buyers to our products and services.

You could be out next winner! Sign up today at www.CharleyFarleyHomeLoans.com.

Win a FREE Mortgage Payment

I'm pleased to announce our next "Win a FREE Mortgage Payment" sweepstakes. The winner will have one free monthly mortgage payment (up to $2,000 value).
For details, visit www.charleyfarleyhomeloans.com.

Stay tuned for the winner of the sweepstakes ending today.

Sub-Prime Borrower? Have Some Plastic....

Yesterday's Boston Globe featured an article revealing that credit card companies have begun targeting subprime mortgage holders with new credit card offers! The "rationale" is that if homeowners can't refinance to get quick cash, then they'll use their credit cards instead.

As counter-intuitive as it sounds, credit card companies are quite fond of subprime mortgage holders who can't meet their monthly obligations, says the Globe. (This is because they're likely to make only the minimum payments on their bills, allowing the credit issuers to (hopefully)collect big interest fees.)

Read more here.

Landscaping: What to Look For

Buying a house? MSN shares some tips on what to look for when evaluating the landscaping:

• Plant health. Even if you're not a professional gardener, there are some tell-tale signs that a plant is sick. Wilting plants -- or brown and crispy leaves -- are warning signs. So are mushrooms and fungus at the bottom of a tree, as well as evidence of insect problems.
  
  
• Placement of tree limbs. Look to see if any limbs are touching a roof or could interfere with a power line -- both possible areas of concern. But be especially aware of a tree limb hanging over the chimney. Not only could animals climb down into the chimney, but a branch could block the draft and create higher carbon monoxide levels in the home.
  
  
• Problems underground. It's tougher to look for evidence of heavy root growth than it is to take a survey of the limbs above. But sometimes, roots will make their presence known by lifting or cracking a sidewalk or driveway, creating a trip hazard. Also, a depression in the yard could indicate a leaking sewer line caused by root interference.
  
  
• The lay of the land. Drive around the block and look at the ground on which the home is situated. Is it at the bottom of a hillside, at the top of one, or on flat land? It's important that rain isn't able to follow a downward slope toward the foundation (a condition that could lead to flooding).
  
  
• Foliage proximity. Watch out for foliage that is close to the house's exterior, because it can provide shelter for insects and rodents and gives them an excellent vantage point from which to enter the house. Also, if shrubs are too close to the building and the wind causes them to rub up against the house, the siding could wear out.
  
  
• Deck construction. Although a deck isn't a living part of the landscape, it's still an important one to inspect. The building of a deck is a common do-it-yourself project, and sometimes mistakes can be found in the final product. Make sure that the deck is fastened to the house correctly and is supported properly. It should have places for people to grab onto,and balusters should be close enough that a 4-inch ball couldn't fit through them (ensuring that a child's head couldn't get stuck).
  

Can You Get a Rebate on Your Next Home Purchase?

This past Sunday's Boston Globe included an article on how online agents are using rebates compete against traditional commission-based real estate brokers.

Savings to the consumer can be substantial, but there are tradeoffs. What's more, some states bar the practice of rebates, says the Globe, on the grounds they could be misused as kickbacks.

As you might expect, establishment brokers question whether a rebate really is in a customer's best interest. For instance, an agent may not be able to negotiate a lower commission or may reduce the level of service they provide because they owe the rebate company 35% of their commission. Then there are those who feel that the whole practice of hawking rebates is "undignified".

Online agents, on the other hand, counter that customers can have it both ways -- good purchase prices and money back in the form of a rebate.

Don't expect this debate to be resolved any time soon....

Sellers: Create a Child-Friendly Home

Quicken Loans shares these suggestions for making your home more attractive to buyers with small children:

• Cabinet locks. Install in areas where potentially dangerous items are stored (such as under the kitchen sink cabinet).



• Appliance locking straps. These easy-to-install items prevent kids from opening ovens, dishwashers and toilets.



• Fireplace gate. Fire = hot = ouch! Need we say more?



• Smoke detectors. Install one near every bedroom and in common areas throughout the house. (Consider adding a carbon monoxide detector, as well.)



• Electrical outlet covers. This inexpensive and easy fix can help potential buyers visualize their child playing or living in your home.



• Curtain/blinds cord cleats. Eliminate a potential choking hazard by installing next to windows and using them to wrap the cords.

10 Tips For Selling Your Home More Quickly

1. Get a local broker.

2. Read the sale agreement and make sure you understand what's in it.

3. Know the marketplace. Recorded sale prices frequently don't tell the whole story. Area real estate professionals know the innards of recent transactions and are in a good position to provide negotiating advice.

4. Know your terms. Rather than a given price, it's best to think of a home as a package of price and terms. For instance, in a slow market it may be better to pay a "seller contribution" to help buyers off-set closing costs than to lower the sale price.

5. Reduce deposit requirements.

6. Throw in additional items, such as washer/dryer, etc.

7. Update MLS photos to match the current season.

8. Review the marketing plan. Is it being followed? Does it need to change?

9. Visit open houses for other properties. What are other sellers offering?

10. Don't sweat the small stuff, if a buyer is interested. It costs a lot more to locate another buyer.

Source: Realty Times

Making the Most of Your Rewards Points

SmartMoney shares strategies for racking up (and spending) credit card points:

Pay off your balance. The more you spend on interest, the less your points or miles -- and eventual rewards -- are worth.

Be loyal. The more credit cards you're using, the fewer points you'll accumulate on each. (The exceptions: Citibank and American Express, which combine points from several credit cards into one account.)

Avoid annual fees. In rare cases, credit cards that carry an annual fee can boost the value of your rewards. But for most consumers, it's just an added cost that eats away at their value.

Save up. Resist the urge to spend your points as soon as you rack them up. Issuers tier their programs -- the more points you have, the sweeter the reward.

Seek out point promotions. If you're earning just one point or mile per $1 spent, you're really missing out. Look to your credit card statement and your issuer's Web site for bonus-points offers.

Mortgage Troubles Even for "Good" Risks

From the New York Times: Countrywide Financial said Monday that more borrowers with good credit were falling behind on their loans and that the housing market might not begin recovering until 2009 because of a decline in house prices that goes beyond anything experienced in decades.

__________________________________________________________

Having trouble making your adjustable-rate loan payments? You may be able to refinance to a fixed-rate loan at more favorable terms than you're paying right now. Contact Charley Farley at Compass Mortgage at (603) 472-2272 for details.

Your First Down Payment

USA Today reports on the unusual measures to which some home buyers are resorting, in order to purchase their first home.

Cautions the article:

The tighter mortgage market is not only shutting out borrowers with weak, or subprime, credit ratings. It's also putting pressure on first-time borrowers, who sometimes share financial characteristics with subprime borrowers: meager savings, a new job and a brief credit history (which, in effect, is equal to a poor credit history). They also may have relatively large debts, such as a car loan or student loans, which can reduce the amount that a mortgage lender will give them.

Unlike the people featured in the article, you don't have to go to work in Baghdad, cash out your 401K, or move back in with your parents to get the money to purchase a property. Compass Mortgage offers a number of no-money-down programs. Call us today at (603) 472-2272 or visit www.CharleyFarleyHomeLoans.com.

Source: USA Today

Declutter your life

The curiously-named productivity blog "Dumb Little Man" claims:

Devote a little of your time to tossing clutter from your life, and keeping things relatively clutter-free, and you'll be rewarded with much more pleasing living spaces, with a less stressful life, and with better organization and productivity.

Read more here.

Home Buying Incentives

Below are six common incentives that home sellers are using to attract buyers, according to MarketWatch:

1. Reducing the price

2. Paying points

3. Down-payment assistance

4. Help with closing costs

5. Adding a home warranty

6. Small, personalized incentives

Top Places to Live: Almost #1!

Hanover, NH was ranked second in Money Magazine's annual ranking of top areas to live.

According to the magazine:

The world-class teaching hospital Dartmouth-Hitchcock Medical Center (just a stone's throw away in Lebanon), a smattering of environmental engineering and mid-size technology firms and, of course, Dartmouth itself all attract the cosmopolitan crowd. Add a downtown dotted with locally owned shops and restaurants and a fully stocked grocery cooperative, throw in a myriad of year-round activities sponsored by the college or the town, and it's easy to see why people love it here.

Time to Move Up?

Move-up buyers are finding that the real estate market is very advantageous these days. (This is because smaller, existing homes are holding their resale value, while newer, larger homes are being heavily discounted.)

Get pre-qualified for your next home at www.charleyfarleyhomeloans.com

Identity Protection and Your Computer

For many people, a computer is not only a productivity tool, but also a point of vulnerability. Here's how to stay safe:

• Install anti-virus, anti-spyware and firewall protection, and keep them up to date.
  
  
• Don't open e-mails from strangers. (Malware can be hidden in embedded attachments and graphics files.)
  
  
• Don't open attachments unless you know who sent them and what they contain.
  
  
• Configure Windows so that the file extensions of known file types are not hidden. ***Never open executable attachments.***
  
  
• Don't click on pop-ups. Also, configure Windows (or your Web browser) to block them.
  
  
• Don't provide your credit card number online unless you are making a purchase from a Web site you trust.
  
  
• Keep an eye on the URL on the top of your browser every time you enter a new page. (Reputable sites will always direct you to a secure page with an URL starting with "https://" whenever you actually make purchases or are asked to provide confidential information.)
  
  
• Use strong passwords: at least six characters, including at least one symbol and number, and no reference to your name or other personal information. Use a different password for every site that requires one, and change passwords regularly.
  
  
• Never send a user name, password, or other confidential information via e-mail.
  
  
• Consider turning off your computer when you're not using it (or at least putting it in standby mode).
  
  
• Don't keep passwords, tax returns, and other financial information on your hard drive.
  

Source: MSN

Protecting Yourself from Identity Fraud, Part I

Protecting your identity is key to building and maintaining good credit.

MSN offers these tips on how to do just that:

• Keep your confidential information private. Your bank or credit card company won't call or e-mail to ask for your account information. They already have it.



• Keep an inventory of everything in your wallet and your PDA, including account numbers. Don't keep your Social Security card in your wallet.



• Stop getting banking and credit card information in the mail.



• Monitor your bank and credit card transactions for unauthorized use. Crooks with your account numbers usually start small to see if you'll notice.



• If you conduct business online, use your own computer. A public computer is less secure, as is wireless Internet.



• Look for suspicious devices and don't let anyone stand nearby when you use an ATM. Take your card and receipt with you. Keep your PIN in your head, not your wallet.



• Don't store credit card numbers and other financial information on your cell phone.

Next time, we'll look at more ways on protecting your computer from vulnerability...

2007 Housing Forecast: Harvard's Take

The Harvard Joint Center for Housing Studies recently released its annual State of the Nation's Housing report for 2007. Although it states that the longer-term outlook for housing is (more) upbeat, it adds that the length and depth of the current correction will depend on:

• employment growth
  
• interest rates
  
• credit availability, and
  
• the speed with which builders pare down excess supply.
  

The report also predicts that home prices will soften further as they follow the downturn in home sales and starts. This means that homes will stay on the market for longer periods, and that motivated sellers, builders, and investors will reduce prices.
One bright note, says the Harvard analysts: no matter how long it takes, the market will eventually recover.

Source: Mortgage News Daily

Timing: The Key to Finding Your Dream NH Home

Home buyers have many concerns and hesitations when deciding to purchase a property. (Not surprising when you consider that a home purchase is, for many people, the largest single investment they'll ever make.)

Among the apprehensions are:

• Have I looked long enough to understand the local market and the range of housing options available?
  
• Could there be another, even better listing on the market, perhaps at a better price?
  
• Will an upcoming listing be more appealing?
  
• Should I wait and see what else might come along, or should I go for it?
  

The Internet is a great tool to quickly get you up to speed about the local market. Also, ask your agent to provide you with a list of similar listings that sold within the last six months or one year. (This will help you determine how often listings like the one you're considering become available and whether you should move forward quickly with an offer.)

Be sure to get pre-approved, so you know exactly how much house you can afford.

Don't pass up a good listing because you don't think you know enough to make an informed decision. Do your homework and be ready to act when you see your dream home.

Source: Inman News

When's the Right Time to Buy?

According to Money Magazine, it's when the market is starting to improve.

Signs to look for, says the magazine, are:

• declining inventory (preferably under 6.5 months of inventory on hand)
  
• houses selling faster
  
• Realtors opinions of local market conditions growing more favorable, and
  
• signs that sellers are less desperate (fewer incentives, homes selling closer to asking price, etc.)
  

But regardless of the economy, says Realty Times, the best time to buy is when you are ready:

• You've found the home you really want
  
• It's affordable
  
• You can get a reasonable home loan
  
• The home will serve you and your family for years to come.
  
• You're not looking for perfection. (No home is perfect.)
  
• You've given up trying to "beat" the market.
  
• You're comfortable with your compromises (location, size, price, features, or condition)
  
• You're confident that the home you selected is desirable enough that you will be able to sell it in any market.
  

500 Top Foreclosure Zip Codes

Where have the most foreclosures been filed? Find out at CNN

How many NH ZIP codes are on the CNN list? None.

Are We There Yet?

Late last year, some economists were saying the real estate market would start bouncing back by the middle of 2007. That hasn't happened yet. Why?
According to the Wall St. Journal, contributing causes include:

• inventories of unsold houses that have continued to grow (in part because of buidler speculation), and
  
• a surge in mortgage defaults, which has made lenders much more reluctant to grant credit to people with spotty payment histories
  

So when will this worse-than-expected slump end? It's hard to predict, but many feel that the bottom is near.

Wall St. Journal: Housing Downfall to Continue

The Wall St. Journal's "Economists See Housing Slump Enduring Longer" reports that "economists are giving up on the idea that the U.S. housing slump will be quick and relatively painless."

It continues: "Instead, more are concluding, the downturn that began nearly two years ago will last at least through the end of 2007, remaining a major drag on the U.S. economy. The culprits: a glut of homes for sale and growing caution among lenders who now regret being so free with their mortgages during the boom."

The entire article is available online, but can be read in its entirety only by WSJ subscribers.

Tips for Selling a"Fixer-Upper"

• Don't let a prospective buyer look at your home until it has been prepared for sale. Buyers remember what they see, not what you tell them the house will look like when you're done with the prep work. You could lose a good prospect by showing your home before it is ready.
  
  
  

• Take advantage of the fact that the property you're selling is a fixer-upper. In other words, market it as a fixer. A certain segment of the market is looking for fixer properties that can be improved to increase value. In fact, these buyers sometimes overpay for the perceived potential.
  
  
  

• Don't lose sight of the fact that you're marketing to a limited pool of buyers. Most buyers won't even look at a fixer-upper because they don't have the time, expertise, or resources to turn a property around.
  
  
  

• List it at an enticing price. The list price should reflect concessions made for work that needs to be done.
  
  
  

• Have pre-sale inspections done and make the reports available to buyers to review before they make offers. This will help to minimize the chance of a deal falling apart when the buyer finds out the extent of the necessary work.
  
  

Source: Inman News

If You Get a Prescreened Offer....

Your mortgage originator does not authorize the sale of your personal information by the consumer credit reporting companies (Equifax, Experian, Innovis, and TransUnion)and cannot stop it. But here's what you, the consumer, can do:

• Opt-out of pre-screened offers of credit and insurance by visiting www.optoutprescreen.com or by calling 1-888-5-OPT-OUT



• Exercise caution when you are presented with prescreened offers over the telephone. Find out with whom you are speaking and how the company got your information. Ask for any offers to be sent to you in writing.



• Remember that the mortgage process is complex: take the time to compare products and ask questions.



• Avoid being rushed or presured into a decision.



• Get a second opinion.



• Don't sign any blank forms.

Source: National Association of Mortgage Bankers

Avoiding Mortgage Triggers, Part 2

Applied for a mortgage with a particular loan originator, only to receive phone calls and mail from companies you don't receognize? Here's what to look out for:

• "Bait and Switch": this scheme is run by companies who get business by luring consumers in with low rates... and then switching the loan product


• Solicitations that ***appear*** to be from your curent mortgage company... but aren't. Always confirm who you are speaking with. If in doubt, hang up and call back at your mortgage company's main number.
  
• Requests for PIN numbers, passwords, mother's maiden name, or your social security number.
  

If you believe that you have been the target of any abuse of the system, please report the incident to the Federal Trade Commission at 1-877-FTC-HELP.

Source: National Association of Mortgage Brokers

Avoiding Mortgage Triggers, Part 1

Last February, I discussed mortgage triggers, which are generated when a mortgage lender pulls a borrower's credit history from a credit agency's database.
(See earlier entries here and here)

In the next several listings, I'll discuss how you can stop this practice and facilitate a smooth closing.

First, let's take a look at what happens when a mortgage originator pulls your credit report from consumer credit bureaus (such as Transunion, Equifax, Innovis, and Experian) to obtain your credit score and process your loan application:

• The credit bureaus may place your personal information on a prescreened list (also called a "trigger" list)
  
• Within hours, the credit bureaus may sell the list to hundreds (or thousands) of companies. Your mortgage originator does not authorize this sale of your personal information... and we cannot prevent or stop it.
  
• Shortly afterwards, you may begin to receive phone solicitations for other mortgage products from numbers and companies you don't recognize.
  
• Within days, you may also begin to receive mail solicitations for mortgage products from other companies.
  

Visit again tomorrow to learn what to look out for. Later, I'll tell you what you can do to protect yourself and your identity.

Source: National Association of Mortgage Brokers

Investors Opt Out of Real Estate

USA Today reports that a soft market is making some real estate investors switch back to stocks.

While real estate can be lucrative, says the publication, "it often comes with headaches and hidden costs. Those may have been tolerable when home prices were soaring, but now that prices have stabilized or even started to drop, the annoyances are deal killers."

The paper adds that "some investors want to get out, but fear they're so far in the hole already that they don't want to take the loss."

Read more here.

So does that mean that investing in real estate is a bad idea for everyone right now? Not at all. Some feel that property prices are bottoming out and that it's a buyer's market. But as with nearly all investments, there are no guarantees.

Real estate investors who are looking for a "quick flip" should assess their risk tolerance and ability to ride through rough patchs. But for those who have the resources (and intestinal fortitude) to invest in additional properties and hold them for a while, there are bargains to be found.

Landscape Projects For Home Sellers

Landscaping is a home improvement that appreciates over time.
Deciding which projects to tackle depends, in part, on how long you think you'll be around to enjoy the results.

If you're selling in a year or less, you may want to:

• Edge the beds. Cutting fresh edges where grass meets mulch makes the lawn look well kept. Also, if your foundation plants are overgrown, widening the beds will make the shrubs seem smaller.
  
  
• Nourish the grass. For truly lush turf, ideally you should start regular fertilizer treatments a year before listing the house. But you can green up the lawn with just a single application.
  
  
• Scatter color throughout. Blanket your yard with petunias, impatiens and other small annuals that will flower throughout the current growing season. Also invest a few hundred dollars in some larger perennials and in shrubs that stand at least four feet high.
  

Source: Money Magazine

Contingent-Sale Offers

You're trying to sell your home and a potential buyer has made a contingent-sale offer. Should you consider it?

Contingent-sale offers make many sellers nervous-- and for good reason. A contingent-sale offer typically withdrawing your property from the market for a transaction that may never close. If the buyer's house doesn't sell, the deal is off and you'll need to find another buyer. And you have little way of knowing how salable the buyer's existing property may be.

If you're presented with a contingent-sale offer for the purchase of your home, you do have options. Consider asking that the buyer include a release clause which allows you to continue to offer your home for sale. If you receive an acceptable offer from another qualified buyer, the contingent-sale buyer must:

• remove the contingency within a specified timeframe and
  
• provide evidence that he can close even if his existing property isn't sold
  

If the contingent-sale buyer is unable or unwilling to do so, you are free to sell your home to the other buyer.

Source: Inman News

Getting What You Deserve

CNN's "Wow, I could've had a prime mortgage" looks at why many borrowers who qualified for prime-rate loans wound up with subprimes instead.

The news source reveals that a regional director of one company reviewed several hundred [subprime] loans recently for its wholesale division and found that ***all of them***, with one exception, qualified for a prime-rate loan.

What's one way to make sure you're getting the best possible program for which you qualify? Know your credit score. (Prime loans are usually granted to borrowers with credit scores of 650 or higher.) And since other factors also influence which package you're ultimately offered, talk with your mortgage professional and don't be afraid to get a second opinion.

Pet Owner? Selling Your House?

Pets can actually make your home harder to sell. Experts often suggest that you put your pets in a kennel while showing your home.But that's not always practical or affordable. So what else can you do? Quicken Loans has several useful tips:

Vacuum every day, even twice a day. Pay careful attention to the corners and edges of carpeting, where pet hair can accumulate.

Avoid Pet Smells Use cleaning products with a lemon scent and wipe all surfaces before a showing. If the smell of your pets is extremely strong, try bleach. (While bleach is not a favored smell, most experts agree the smell of bleach is better than the smell of someone else's pets.)

Make Sure They're Not Home During Showings Having your pets at the house is the last choice and no tonly for cleanliness reasons. The last thing you need is a lawsuit when someone claims your dog bit them or a family member.Arrange for friends or family to take your pets for a few hours. If you simply can't arrange to get your dogs out of the house, set up a temporary pen in your backyard.

Market Your Home to Other Pet Lovers Instead of trying to hide all evidence of pets, promote the fact that your home is "pet-friendly."

Source: Quicken Loans

5 Key Questions to Ask a Home Seller

Inman News shares five key questions home sellers -- and their real estate agents -- hope buyers don't ask:

1.) WHY ARE YOU SELLING THIS LOVELY HOME?

When you know why the seller is selling, you can

• tailor a purchase offer that will meet the seller's needs, and
  
• determine if the seller is highly motivated to sell
  

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2.) HOW MUCH DID THE SELLER PAY FOR THIS HOME?

The answer to this question shows how much cash the seller absolutely must receive -- and how much room there is to negotiate.

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3.) WHAT DEFECTS DOES THE HOME HAVE, AND HAVE THERE BEEN ANY RECENT PROFESSIONAL HOME INSPECTIONS?

Smart listing agents obtain the seller's written disclosures at the time of listing and have it easily available to prospective buyers. Also, home sellers often have customary professional inspections completed before the home is put on the market.

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4.) WHAT PROBLEMS HAVE YOU HAD WITH THIS HOME?

In most states, court decisions and statutes do not require home sellers to reveal past problems that have been corrected. But it is still important for buyers to know if those past problems might again become future problems.

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5.) WHAT IS THE QUALITY OF THE PUBLIC SCHOOLS?
Even if you don't have small children, this is an important question to ask. Top quality schools contribute to home values and future market value appreciation. Families prefer to buy in communities with superb public schools and are willing to pay extra for the privilege.

Automated Valuation Models

Generally, an appraisal is an independent estimate of a property's value that is provided by a licensed appraiser. With residential real estate, these valuations are often made on the basis of the value of recent comparable properties, as well as a physical examination of the home itself. As impartial third-parties with a strong knowledge of local pricing, appraisers provide a valuable service for buyers looking at properties they emotionally value.

Automated valuation models (AVMs) serve a basic and fundamental purpose to buyers and sellers, but are not a replacement for the services of a licensed appraiser. (In fact, companies offering AVM services have been subject to legal action for calling their products "appraisals".) An AVM is a computerized estimate of what a specific property is worth, based on database information and analysis of a variety of factors (including property attributes, location, recent sales, tax assessments, and other criteria). It is best-suited for situations when a reasonably accurate estimate of a property's value, rather than a full appraisal, is needed.

Critics of automated valuation models state that anything short of an on-site, exterior and interior professional appraisal is likely to overstate the true worth of the property if it's located in a slowly-appreciating market. They also point out that AVM estimates are often based upon very faulty data that will most likely not include "fresh sales" in your area.

Relying solely on AVMs to give you a value prior to selling your home is also risky. This is because automated valuation models base their value estimates without anyone evaluating the condition of your home or the condition of the comparable sales that were used to estimate your home's value. Your Realtor(R) can provide you with a list of comparable properties in your specific area and physically assess the interior and exterior of your home to give you suggestions on an appropriate asking price.

When you purchase a home, your mortgage lender will likely require a full appraisal by a state-licensed appraiser. (This is to ensure that the loan amount is consistent with the true value of your home, and that you are not overpaying for the property.) We can recommend qualified, experienced appraisers who are familiar with the New Hampshire market: For details, call (603) 472-2272.

Tax Tips for First-Time Homebuyers

Itemizing works for many -- but not all -- homeowners. Choose the deduction method that gives you the larger deduction amount: sometimes, it's the standard deduction. Also, the time of year when you actually closed on your house could make a big difference in your deduction method choice.

Make the most of mortgage interest. If you itemize, be sure to write off all the interest you paid on your mortgage (even from private loans,such as seller financing).

Hang onto your HUD-1. Don't rely solely on Form1098 information. Initial adjustments of interest for the first month following a sale should be figured in; that information can be found on the HUD-1 closing document.

Points pay off. You can deduct points for the tax year in which you purchase the home. They're fully deductible... as long as they are reasonable and consistent in the area where you bought your home. And if it's a primary residence, you can choose to amortize or deduct the points all at once.

Check your property tax bill. Depending on when you bought your house and your jurisdiction's tax year, you may be able to claim a deduction.

Home-Equity loan or line of credit? As long as the loan (of up to $100,000) is secured by your residence, its interest is deductible.

Self-employed and working out of your house? Don't forget about any home office deductions to which you may be entitled.

Did you make improvements to your home to alleviate a medical condition? Be sure to itemize these, too.

Source: Bankrate.com

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The NH First-Time Homebuyers Club makes the home purchase an easier one. Better yet, it's absolutely free! Learn more at www.NHFirstTimeHomebuyer.com.

3 Rules for Successful Real Estate Investing

• Do your homework. Know the market and its risks.
  
• Prepare for the worst. It will happen.
  
• Think location, location, location.
  

Source: MSN.com

How Your Credit Score is Calculated

35% -- of your score depends on your payment history
30% -- of your score is based on how much you owe
15% -- of your score depends on the average age of your accounts
10% -- of your score depends on new credit
10% -- of your score is based on your experience with revolving credit, such as credit cards

Source: Kiplinger's Personal Finance Magazine

Questions to Ask When Interviewing a Listing Agent

Agent Experience

• How long have you been selling real estate?
  
• How many homes did you sell last year (as a seller's agent)?
  
• Of the homes you sold last year (again, as a seller’s agent), what was the average number of days between the original listing and an accepted offer?
  
• What is the average ratio between the listing price and the selling price?
  
• What is your experience with my particular neighborhood?
  

Marketing Plan

• How do you propose to market my house? (open houses, previews for agents, yard signs, MLS listings, etc.)
  
• At open houses: will ***you*** be there to interact with potential buyers, or will you just send an assistant?
  
• What sort of advertising will you do?
  
• What sort of Web marketing can I expect? (photos, virtual tours, links to other Web sites, etc.)
  
• Do you take professional-grade photographs (or work with actual professional photographers)?
  
• How often do you expect to communicate with me regarding inquiries and other buyer interest?
  

Personal Info

• Do you consider yourself readily accessible? (evenings, weekends, by cell phone or beeper)
  
• Do you expect to be out of the office while my home is listed? (vacation, etc.) If so, who will be handling the listing in your absence?
  
• Can you provide (at least) three references?
  

Money Matters

• What do you think my home is worth, and how do you determine your valuations?
  
• What is your fee structure? Commission, flat-fee, a la carte? Do you recommend one or another?
  
• What do the fees include and, perhaps more important, what don’t they include (e.g., document preparation, etc.)?
  
• “That’s a hunk of change” (or something to that effect). Why do you believe you’re worth it?
  

Source: zillow.com

Ways Your House Can Make You Money

Here are some tax strategies for home owners:

• The "2 in 5" rule: if you've lived in your home for two out of the previous five years, you get a tax break when you sell it
  
• Rent out part of your home: for "rental property" income now and tax benefits when you sell the property
  
• Create a home office: this is handy if you've got a high income that is preventing you from taking the full mortgage interest deduction
  
• Move out early -- and still save: if you have to sell your home under certain unforeseen circumstances
  

To learn more, click here.

Pre-Qualification vs. Pre-Approval

Pre-Qualification:
-- doesn't require a credit check
-- carries no weight with buyers or lenders
-- based on buyer's word on his/her income and assets
-- gives you a fair idea of the price range of home you should be looking at

Pre-Approval:
-- is the next step after prequal
-- requires getting your credit checked.
-- involves us confirming and verifying information that is relevant to your obtaining the best possible loan program
-- allows you to choose which program best suits your needs

Once you're pre-approved, we help you strategize on how to structure your offer, with respect to seller-paid closing costs. You'll also receive a written pre-approval letter to attach to your offer.

Decoding Real Estate Jargon

Here's what some popular descriptors may really mean:

State-of-the-art: Meet the Jetsons
Spacious: Airplane hangar
Charming: Small
Gourmet: Viking range
Cute or cozy: Small
View: Of what?
Fantastic: According to whom?
Well-maintained: Old, but not a disaster
Wonderful: Not much to talk about
Great neighborhood: What's wrong with the house?
Renovated: Red flag: botched job?
Remodeled: When? How long ago?
Fixer-upper: A shack
Handyman's dream: A wreck
Needs TLC: Somebody screwed up a remodel
Romantic: Old
Tear-down: Just what it says: tear it down
No price: Overpriced
Great starter home: Tiny
As-is: Smells like a tear-down

Source: zillow.com

Information Overload?

Are buyers are being provided with too much information when hunting for a mortgage? Does disclosure of complex transactions, such as yield spread premium (YSP), confuse homebuyers and lead to poor financial judgment? These are the issues being looked at by the Federal Trade Commission (FTC). A report that is scheduled to be released soon already has the National Association of Mortgage Brokers (NAMB) considering changes in mortgage disclosure forms.
Stay tuned...

Source: Realty Times

Normal Wear and Tear

To get a full refund on your apartment's security deposit when you move out, you must return a rental in its previous state, minus "normal wear and tear."

"Normal wear and tear" usually includes:

• Some matting of the carpet
  
• A few nail holes on the walls
  
• Fading or yellowing of the paint
  

Some things that clearly don't fall under normal wear and tear include:

• Stains and burns on the carpet
  
• Broken windows
  
• Broken or missing blinds
  
• Gouges in the doors and walls
  
• Flea infestations caused by your pet
  
• Pet scratches on the molding and on or around doors
  

Source: MSN

Common Borrower Mistakes

Here's a list of common mistakes made during the new loan process, according to Yahoo Finance:

Believing you're qualified for the loan, when you aren't.

Not considering the taxes or insurance.

Taking an ARM simply because the lender recommended it.

Misunderstanding private mortgage insurance (PMI).

Not considering the loan term.

Not picking a less expensive house.

Source: Yahoo Finance

Above the (State) Law?

Last month, the United States Supreme Court ruled that national banks’ mortgage-lending subsidiaries do not have to obey state banking regulations, according to the New York Times. And because the federal government has not established a broad set of regulations against predatory lending, says the newspaper, borrowers face new issues.

For consumers, the decision raises a new question: How do you tell if a lender is regulated by state lending laws? The short answer is: Check with your state’s banking regulator. (You can access the New Hampshire Banking department's Web site at www.nh.gov/banking)

Source: New York Times

Dumb Renovation Trends

CNNMoney lists 5 Dumbest Renovation Trends.

Affluent Urban Markets Evading Subprime Slump

Subprime borrowers are rare in affluent markets because affordable homes are in short supply, says a recent Reuters article.

While home prices are falling in several sectors, properties in many desirable neighborhoods are still selling at astronomical levels, because housing stock is small while demand from affluent buyers is persistently high.

Even so, the article states that now, people are "buying for the long run."

Source: Reuters

About Where We Live

Home choices include:

• a free-standing house
  
• a house sharing common walls with its neighbors (such as a townhouse or "row house")
  
• and a courtyard house (often found in Spain and Asia)
  

Currently, says author Witold Rybczynski, about 90% percent of single-family houses in the United States are detached. He points out their advantages, including:

• light and air from all sides
  
• greater acoustic and visual privacy
  
• less danger of fire from neighboring buildings
  
• being able to pass from the front yard to the backyard without going through the interior
  

Rybczynski points out that "houses are not only investments, they are homes, and hence sources of personal pleasure and pride" and states that the decision to buy a house is emotional as well as financial.

He adds that people become richer, they spend more money on their homes. By 1970, four out of five new houses were either ranchers or splits. Today, in contrast, than one-third of new houses exceed 2,400 square feet.

Is Relief in Sight?

Three-fourths of the $600 billion of subprime mortgages in 2006 were sold by lenders and repackaged into bonds, says USA Today.

Federal Deposit Insurance Corp. (FDIC) Chair Sheila Bair is, to use her own words, "hold[ing] the [loan] servicers' and investors' feet to the fire," since it should have been clear that the loans were high-risk. The FDIC, Federal Reserve and other regulators asked lenders to work with homeowners, promising they will not face regulatory penalties for reasonable workouts. It urged them to work with consumer groups and to help borrowers avoid predatory restructuring scams.

But to do this requires working through complex tax and accounting rules that limit what servicers can do. For example, some bonds have a 5% cap on loan restructuring or are crafted in a way that some investors win and others lose if loans are changed.

Fannie Mae said yesterday that it will help borrowers refinance out of adjustable-rate mortgage (ARM) products or other loans. Consumers could move into loans that meet Fannie's standards without first having to clear unpaid bills on credit reports. Also, the maximum loan term could be stretched to 40 years from 30. (The firm estimates that as many as 1.5 million borrowers could be eligible for its loan options.)

Source: USA Today

Why Do We Live in Houses?

Because it's what people want, says author Witold Rybczynski. (i.e., it's a "cultural thing".)

Rybczynski traces back to the medieval town dwelling, "which combined living space and workplace, and was occupied by a mixture of extended families, servants, and employees."

This started to change in 17th-century Europe, he says, when people "began to live and work in separate places; children grew up with their parents (rather than being apprenticed to strangers, as before); and the home, securely under the control of what we would now call the "housewife," was restricted to the immediate family."

17th-century Dutch cities and towns were composed almost entirely of houses built in rows, side by side. The tradition of "row houses" then spread to England and Wales, and other countries, including the United States.

Today, 75% of Americans live in houses. But what kind of home do they prefer according to Rybczynski? Tomorrow, we'll look at the choices....

Source: Slate

Is Now the Time?

If home values are falling, can this really be a great time to buy or sell? After all, The New York Times recently concluded that "people who chose renting over buying in the last two years made the right move. What's more, tightening mortgage requirements are making it tougher for borrowers to get the financing they want, so there's a smaller pool of buyers to buy sellers' homes.

In an article published today, Realty Times stated that not everyone should own real estate... if they did, reasoned the publication, then who would rent investment properties?

People who shouldn't buy, it adds, include:

• individuals who will be short-term residents in a given community
  
• those with small, declining, or uncertain incomes and
  
• individuals who live in areas where both jobs and people are leaving
  

The article also quotes the NAR (National Association of Realtors), who offers good reasons why someone should buy or sell:

• interest rates are near historic lows
  
• overall, prices are stabilizing (with some communities even seeing price increases)
  
• there's a positive economic outlook, and
  
• during the past decade, real estate has been a great investment
  

Boston Housing Activist to Aid Subprime Borrowers

The Boston Globe reports that an organization run by Boston housing activist " will provide $1 billion in mortgage refinancing to homeowners nationwide who are struggling with high-cost subprime loans".

Bruce Marks, says the newspaper, "is a colorful figure who successfully used guerrilla tactics in the 1990s to pressure major US banks to fund mortgages for low- and middle-income workers".

Through Marks' organization, borrowers can replace their high-interest subprime loans with traditional 30-year fixed-rate mortgages at below-market levels. The new loans will be made available regardless of whether borrowers are in foreclosure.

As a condition of receiving a loan from his organization, borrowers are required to participate in housing activism in their communities. This will enable Marks to "lead mass protests of borrowers with high-cost mortgages at company headquarters and the homes of their executives."

Source: The Boston Globe

Did Craigslist break FHA laws?

In a typical month, Craigslist (www.craigslist.com) allows its users to freely post more than 10 million free ads on its Web sites, which are localized by city.

Recently, a group of Chicago lawyers sued Craigslist Inc., says Inman.com, alleging violations of the federal Fair Housing Act (FHA). They claimed that Craigslist publishes housing notices that blatently "indicate preference, limitation or discrimination on the prohibited basis of race, color, national origin, sex, religion or familial status."

Craigslist argued that it wasn't liable, because of the immunity afforded to Web site operators by the federal Communications Decency Act (CDA) for third-party content.

The judge ruled in Craigslist's favor, affirming that the service isn't liable for the content provided/posted by its users.

The article did not state whether the lawyers were going to sue the individual posters of the discriminatory ads.

Source: Inman News, via Yahoo

Realty Times: The Market Doesn't Matter

Insightful article (URL below) includes these key take-away points:

-- The market hasn't changed; it has moved on. And it certainly hasn't returned to normal and never will. There isn't any such thing as a normal real estate market because each market is new and different and unique to now, and driven by not one event but several, some of which never repeat themselves.

-- Today, there is a loan for anyone who is responsible with money and has a decent job.

-- For some real estate practitioners, 2007 will go down as their best year ever. That will be entirely determined by what they do, not what the so-called market does.

Source: Realty Times (via Yahoo)

Who's to Blame?

Today, CNN Money takes a look at who is -- and isn't -- responsible for the subprime lending situation.

Their candidates and assessment:

1) Mortgage Brokers: Did brokers steer borrowers to loans they couldn't afford?
No, says the National Association of Mortgage Brokers, who puts the blame instead on lending companies. "It's the lender's money," said an organization representative. "They're reviewing the loans. They put loan programs out there and it's the mortgage broker's job to sell the programs."

2) Appraisers: Did inflated appraisals put home buyers in jeopardy?
Appraisers don't bear the primary responsibility for all the bad loans, says CNN Money. But more accurate appraisals could have lessened the severity of the problem, it added.

3) Regulators: Did Government agencies drop the ball?
Although regulators could probably have acted sooner to stem the worst abuses, the majority of the loans being done by companies like New Century and Countrywide were not under the control of bank regulators.

4) Lenders: Did they relax underwriting standards too much?
Lenders made far too many loans to borrowers they knew -- or should have known -- would not be able to pay them back.

5) Wall Street: Did investors purchase loans that were too risky?
Although it's not a primary cause of the subprime crisis, it certainly enabled it.

6) Real estate agents: Did agents encourage consumers to buy far more house than they could afford through the use of exotic mortgage products?
Perhaps on occasion. But ultimately, borrowers have to take on responsibility for staying on budget.

NH FTHB Web Site Launches

I'm pleased to announce the launch of the NH First-Time Homebuyers Club ® Web site at www.NHFirstTimeHomebuyer.com.

Getting the Best Loan When Credit is Tight

CNN Money says that now --more than ever -- it pays to be a prime borrower.

While changes in the subprime market can be alarming, says the media source. However, not everyone is at risk: in fact, prime borrowers can still get competitive terms.

CNN outlines some basic steps you may want to take in order be considered a prime borrower in today's lending environment. They include:

• Pay down your debt balances
  
• Pay your bills on time
  
• Resist new credit
  
• Fix errors in your credit report
  

Investing in Foreclosures

The growing number of homeowners who are falling behind on their mortgage payments could provide opportunities for real estate investors, says Pat Mertz Esswein of Kiplinger's Personal Finance.

Most of the problems, says the publication, are among homeowners with "subprime" mortgages, whose interest rates are spiking as low introductory rates expire. Some 700,000 of these loans are projected to go into foreclosure between now and the end of next year.

We agree that investing in a foreclosure is not an easy, quick, inexpensive, or surefire route to wealth. The typical deal comes with more problems than the average "do-it-yourselfer" can handle. Even so, it can be a rewarding experience if you're willing to do your homework.

The slower the local real estate market, the greater the chance that you'll find a bargain. This is because sellers and lien holders are forced to offer bigger discounts to lure a smaller pool of buyers.

Experts recommend that you try to buy homes for

• 20% to 30% less than their market value if you plan to "flip" the properties
  
• 10% to 20% less than their market value if you plan to rent them out with the option to buy, and
  
• 5% to 10% less than their market value if you intend to rent them out indefinitely.
  

Sweepstakes Winner Announced

Elaine Moreau of Hudson, NH is the winner of our first “Win a FREE Mortgage Payment” Sweepstakes.

Read the press release here

What Kind of Mortgage Do You Have?

A new BankRate poll found 34% of homeowners do not know what type of mortgage they own.

Other items of note:

• 28% of survey respondents worry (either "regularly" or "sometimes") about how they will afford their payments next year.
  
• 34% of respondents with ARMs do not know what they will do when their loan readjusts.
  

If you have an adjsutable rate mortgage, now may be the time to lock into a mortgage with a fixed rate. Call Compass Mortgage at (603)472-2272 or visit www.CharleyFarleyHomeLoans.com


Source: BankRate

So You Want to be a Landlord...

Owning rental property can be a nightmare -- or a good way to steadily build wealth.

The difference between a profitable investment and a disaster, experienced landlords say, is often the amount of work an investor is willing to put in. Not everyone is cut out to screen tenants, track down overdue rents and field middle-of-the-night repair calls.

Read the entire story (from MSN) here: articles.moneycentral.msn.com/Investing/RealEstate/DoYouHaveWhatItTakesToBeALandlord.aspx.

My House is Worth.......

"My House is Worth What?", a new series that began airing on HGTV in August 2006, is coming to Manchester, NH in May. Show producers are looking for area homeowners who would like to be considered for the show.

Each episode of the show tells homeowners across the country:

• what their current home is worth,
  
• where they should renovate if they are planning to
  
• or just how much equity is available to fulfill a life long dream (child’s college, wedding, trip around the world, etc.)
  

For more information on the show, visit www.pietown.tv/shows/myHouseIsWorthWhat.html

For an application form, visit www.pietown.tv/shows/myHouseclientreqs_H.html

How Terrorists Affect Your Mortgage Application Process

Here's how current laws that were developed to stop/detour/minimize terrorist activities affect you when you apply for a mortgage:

The Patriot Act is a U.S. Federal law that was designed to assist in the prevention of money laundering by terrorists. (Money laundering occurs "when criminals attempt to characterize the proceeds from illegal activities as funds derived from a legitimate enterprise."*) Terrorist financing is only one aspect of money laundering. But the events of September 11 has made our government aware of how crucial it is to block terrorist access to the U.S. financial system.

According to the U.S. Treasury, identifying and curtailing terrorist financing isn't easy. This is because transactions may originate from legitimate sources and involve relatively small amounts of money. So efforts to contain terrorist-related money laundering must be both broad and comprehensive.

The Patriot Act covers a wide range of activities, from simply opening up a checking account to taking out a home loan. All lenders -- including Compass Mortgage -- must comply with this law. (And as mortgage brokers, we must also meet the "due diligence" practices of the many companies whose programs we offer.) But what does this mean to you when you apply for a new mortgage or attempt refinance an existing one?

The Patriot Act requires us to verify your identity when you ask us to help you obtain a loan. When you apply, we'll ask you for your name, address, date of birth, and other information that allows us to identify you. We'll also ask to see your driver's license/passport/military ID (or other form of government-issued photo ID).

After you provide us with the information we need, your name is then checked to determine whether it appears on any government-provided lists of known (or suspected) terrorists/terrorist organizations. Your current home address and place of employment are also verified; the source of funds used for the transaction are also considered.

Additionally, we're required to keep an eye out for borrowers who
-- provide insufficient or suspicious information
-- have funds inconsistent with their income
-- have suspicious movements of funds from one bank into another

The overwhelming majority of most lenders' customers and transactions are not considered "high-risk", so is the Patriot Act and similar legislation really necessary? Some people believe that the personal information they are now required to provide when conducting financial transactions represents an invasion of privacy. Regardless of whether this is true, the fact remains that the Patriot Act is a law that all lenders -- including Compass Mortgage -- are required to follow. Also, most borrowers recognize that the satisfaction of home ownership far outweighs the inconvenience of having to provide additional proof of identity.

*Source: Findlaw.com

Mortgage Programs and Homeselling

For buyers, ramifications of the current mortgage industry gyrations are pretty apparent. Because lenders are tightening requirements for obtaining credit, it may be harder for many people to obtain a favorable mortgage program. (And even if you do qualify for one, you may have to put more money down.)

But what does this mean to you if you're trying to sell your home?

Fewer qualified borrowers could mean a smaller pool of available buyers for your house -- no matter what your asking price. In the recent past, homes of all sizes and value have been financed through "no money down" and "no income verification" loans, from entry-level homes through multi-million dollar properties. Although "low doc/no doc" programs are unlikely to vanish entirely, there will fewer programs and fewer loans offered in these categories.

Fewer buyers is not the only problem for homesellers. The buyers who are in the market may have less money to spend than previously. (Again, because of stricter lending requirements means, potential homebuyers may qualify for a lower amount of financing than they may have six months or a year ago.)

So fewer buyers with less money means that homeowners may have to lower their asking and selling prices. If you're a buyer with impeccable credit, this can be a great opportunity to get more house for your money. If you're the seller... well, not so good.

So should you sell now, before requirements constrict further? Or should you try and wait it out until the industry normalizes (in late 2007 or early 2008)? Because each situtation is unique, we advise that you consult with your Realtor.

Limited Housing Options for Those With Bad Credit

A Reuters article claims that, due to the subprime mortgage situation, lower-cost housing (such as mobile home parks and apartment rentals) may be the only housing options left to those closed out of homeownership.

However, it warns that former homeowners with ruined credit from mortgage defaults --or those who have substandard credit -- might still find it difficult to find housing. Becaus eof their bad credit, they won't easily qualify for a personal loan with which to buy a mobile home. What's more, many available apartments are in high-quality buildings that have tough credit standards for tenants.

Soure: www.reuters.com/article/ousiv/idUSN1930366120070320

Greenspan on Subprime Risk, Housing Prices

Last week, Former Federal Reserve Chairman Alan Greenspan there was a risk that rising defaults in subprime mortgage markets could spill over into other economic sectors.

Greenspan said the ongoing housing downturn appeared to stem more from:

• the recent stagnation in housing prices after years of appreciation
  

than from

• a decline in mortgage quality
  

but said he was not downplaying problems in so-called subprime loans.

If home prices keep falling, he warned, there could be more of an impact on the broader economy's momentum. Consumer spending fuels two-thirds of national economic activity.

Source: CNN Money

Tax Myths about Homeownership

1. My mortgage interest will reduce my tax bill.

2. All costs related to my home are deductible.

3. I must use money from my home sale to buy another residence.

4. Putting my child on my home's title is a smart tax move.

5. If I take a capital loss when I sell my home, I can write it off.

Read the entire story and learn more at realestate.msn.com/Buying/Article_bankrate.aspx?cp-documentid=687267>1=9226

How are Home Prices Being Affected?

House prices could fall 10% in 2007 if a credit crunch taking shape in the mortgage market gathers momentum, said a Merrill Lynch researcher this week.

The company stated that the biggest concern is that tighter lending standards in the mortgage market -- even if it is confined to lower-quality (read "sub-prime") borrowers -- will constrain overall housing demand and hamper recovery in the housing market.

Source: Reuters

Why Use a Local Mortgage Lender?

Local firms such as Compass Mortgage have the knowledge, expertise, and contacts to handle your financing as efficiently as possible. Your bank or credit union may not offer a full range of loan programs for your unique needs; they are often limited to offering their own programs (when you might need a more flexible solution). They also may not be as familiar with local real estate and/or insurance requirements or property values. What's more, they may send out an appraiser who doesn't know the local market. Just as you work with a local Realtor who specializes in a particular geographic regions, so should you work with a local mortgage professional.

On Subprime Lending

Subprime lending has been in the spotlight recently, due to a number or articles on predatory practices and failing institutions.

The term "subprime lending" describes a specific lending market sector that makes loans to customers who may otherwise have difficulties obtaining financing.

Typically, subprime customers do not qualify for prime market rates because they have blemished (or limited) credit. Consequently, they are charged a higher interest rate and higher fees by lending institutions to compensate for the increased risk of default or foreclosure.

Subprime lenders are usually stand-alone companies and are not affiliated with prime lenders (who take little risk with their funds). There are a number of lenders in the subprime mortgage market who "play by the rules" and serve communities that may have been underserved by other lenders in the past. However, other lenders engage in abusive practices such as

• Equity stripping, which occurs when a loan is made based on the equity in a property rather than on a borrower's ability to repay the loan.
  
  
• Packing, which is the practice of adding credit insurance or other "extras" to increase the lender's profit on a loan.
  
  
• Flipping, which happens when a lender induces a borrower to repeatedly refinance a loan, often within a short time frame, charging high points and fees each time.
  

So how can this be a problem for existing homeowners who have already obtained financing from a reputable source? Tightening guidelines on subprime lending are affecting all aspects of the mortgage industry. This makes it more challenging for homeowners to convert from an adjustable rate loan to a fixed-rate one, or to pull equity from their properties. Some borrowers are locking in rates, only to find out that their loan program doesn't exist a few weeks later.

Here's how one visitor to Mortgage News Daily sized up the situation:

"I can't refinance. There's no equity in my property. The loan I need can't be offered. I can't sell without bringing money to the closing. I don't want foreclosure. How do I make it through this cycle?"

---

The bottom line: Obtaining a new or refinanced mortgage can be a life-changing financial decision. Subprime finance companies offer customers with low FICO scores a chance to re-establish their credit and eventually qualify for loan programs with more favorable rates and terms.

Whether you're looking to buy or refinance, be sure obtain multiple offers and consider getting a second opinion. Have a back-up plan in case your financing is delayed or denied, and don't wait until the last minute to apply.

Four Tips for Refinancing

Bankrate.com offers these four tips to ease the refinancing process:

• Know why you want to refinance
  
• Provide paperwork promptly;
  
• Lock long
  
• Keep in touch (but not too much)
  

Read the entire article here: www.bankrate.com/ust/news/mortgages/20030605a1.asp

Why Balance Transfers Harm Your Credit Score

Taking advantage of a balance-transfer offer to reduce your debt can affect your credit scores in a number of ways:

• Simply opening a new credit card to take advantage of the offer can lower your scores by about 5 points.





• Transferring your balance to a card with a lower limit can also hurt your scores, as can consolidating debt. The FICO formula typically would rather see $1,000 balances on five cards than a $5,000 balance on one card.





• You can compound the damage by closing the old credit card, since shutting down the account trims the amount of available credit that's used in the credit-scoring formula.
  

Source: MSN Money

Credit Facts: Checking Your Own Credit

True or false: requesting your own credit report lowers your credit score.

False. Many people get this one wrong. There is a difference between checking your own credit and having a creditor check your credit. When you check your own report, it does not harm your credit score.

Making sure your credit report is accurate -- along with paying your bills on time and keeping credit card balances below 35% of their limits --will help you maintain a healthy credit profile.

How Competitive is Your Local Market?

Whether you're buying or selling, it's good to find out how "hot" your local area is. Here's some advice from Yahoo Real Estate and Inman News on how to do just that:

Talk with local real estate agents. Find out how many listings are on the market in your area. How does this compare with the inventory level of last month, six months ago, and a year ago? How long is it typically taking listings to sell? Is the time lengthening or shortening? Are homes in your area selling with multiple offers? (If so, this usually indicates that there are more buyers than sellers in the market.) In such a market, listings can sell quicker. If prices have been slipping, an inventory shortfall can cause the market to firm up and prices to stabilize.

Subscribe to a local newspaper. How fat is the real estate ad section? Are the same home-sale ads running week after week? Or, are listings selling quickly? Are price reductions common or rare?

A little research can make you a better-informed real estate buyer/seller.

Fallout From Tighter Guidelines

In the wake of news that a dozen or so subprime lenders have recently closed their doors or been purchased, and that a dozen more are in trouble, USA Today took a lot at what's happening in the mortgage industry


They found that, to stem their losses, lenders nationwide are notifying mortgage brokers to cut back on some subprime ARM loan programs. Many of them are:

• Reducing loans for 100% of the purchase price.

  
  
  

• Reducing the number of "piggyback" loans, whereby a lender makes one loan for 80% of the purchase price and a second loan for the remaining 20% of the price at a higher interest rate.

  
  
  

• Raising the required credit score.

  
  
  

• Requiring more documentation of a borrower's income and scrutinizing the appraisal and comparable-home sales data.
  

So how will this affect your ability to get a new loan, or refinance your existing one? It really shouldn't as long as you were't a marginal candidate to being with. At this point, most of the pain is being felt by lenders who made riskier loans... and hasn't spread to the broader financial markets.

But what if your ARM is climbing to an interest rate you're not comfortable with? Call us today at (603) 472-2272 and learn how we might help....

5 Ways to Lower Your Credit Score

Here's 5 easy ways to wreck your credit score (they're more common than you'd think):

• Late payments
  
• High card balances
  
• Closing credit cards
  
• Too many in-store cards
  
• Fines that add up
  

Interested in learning more? Then read this CNN Money article: money.cnn.com/2006/07/10/pf/credit_killers/index.htm

What $1500 buys

The winner of our "Win a FREE Mortgage Payment Sweepstakes" will win a free mortgage payment, valued at up to $1500. Here's just a few ideas for what you could buy with that money:

• One 40" LCD HDTV
  
• 652 gallons of gas (at $2.30/gallon)
  
• down payment on a new car
  
• annual surcharge for adding your new teenage driver to your auto insurance
  
• Take 75 of your closest friends to the movies (including popcorn, drinks and candy for all!)
  
• 15-20 dinners for two (including drinks, dessert, and gratuities)
  
• Pay your electric bill for up to a year (or more)
  
• Pay your cell phone bill for up to two years (or more)
  
• a start-of-the-art laptop computer
  
• a three-night vacation for two to London
  

Enter our Mortgage Payment Sweepstakes on or before March 15 at www.charleyfarleyhomeloans.com

Why Lenders Don't Want Your House

Most lenders will do almost anything to avoid foreclosure, says MSNBC, if you talk to the right people as soon as you can. This article explains why and what you can do to save your home.

Even better, says the publication, you can get to the right people, you have a lot more options for saving your house than you did a decade ago.

To learn more about the lending process, click here

Opt-Out of Receiving Unwanted Mortgage Offers

So you've applied for a mortgage with us and, within hours, you're getting flooded with offers for other lenders.This happened because when we check your credit to provide you a rate quote, one (or more) of the national credit bureaus takes our inquiry and sells it to other lenders.

This selling of "hot prospects" is a very lucrative side business for the bureaus -- who staunchly defend their right to sell applicants' personal financial information. (After all, they're the ones who provided us -- for a fee -- with your credit score, credit card balances, and other financial information, to begin with.)

The National Association of Mortgage Brokers disagrees. It argues that when credit bureaus sell overnight trigger lists to third-party lead generators, they fail to comply with a key provision of the Fair Credit Reporting Act.

When we check your credit, we are unable to tell the credit bureaus (Experian, TransUnion, and Equifax) not to sell our inquiry to other lenders. However, you can opt out of uninvited mortgage offers by visiting http://www.optoutprescreen.com or by calling (toll-free) 888-567-8688.

Opting-out via the optoutprescreen.com web site will prevent you from receiving "firm offers" for credit and/or insurance for five years. To permanently opt-out, you will need to complete and submit the Permanent Opt-Out Election form available through the web site

The Washington Post has published an excellent article on this topic, which you can read here.

Mortgage Triggers, Part 2

Here's why some mortgage companies purchase "trigger leads" for marketing opportunities:

• Trigger leads can be up to 50-80% cheaper than many types of internet mortgage leads.

  
  
  

• The information contained in trigger leads is highly accurate, because it comes form credit agency data.

  
  
  

• Potential borrowers are often open to second opinions and quotes. (Here at Compass smortgage, we offer a "Get a Second Opinion on Your Mortgage" program, although we do not purchase trigger leads at this time.)
  

And here's how mortgage companies use trigger leads to keep tabs on their existing borrowers:

• Track changes in the credit profile of current customers (delinquent debts, taking on too much additional debt).

  
  

• Early notification that a borrower may be selling or refinancing existing property.

  
  

• Advance notice that an exisitng borrower may be purchasing a new primary residence, or a second home, vacation home, or investment property.
  

Selling credit "triggers" is a highly profitable sideline for the big three credit agencies. But it's not a new one: triggers have been available to lenders for years. However, Web-based technology is morphing them into a totally new type of product.

MSN: The Myth of Perfect Credit

The highest-possible FICO score is 850, says MSN Money and Bankrate.com, but even people with the best credit don't usually exceed 825. Those last 25 points wouldn't save you money on a loan anyway, says the online resource.

Read the entire story here: http://articles.moneycentral.msn.com/Banking/YourCreditRating/PerfectCreditYouDontNeedIt.aspx

Mortgage Triggers, Part 1

When a potential borrower applies for a home loan or to refinance, a mortgage company puts in a "hard" inquiry to one or more of the credit agencies: Equifax, TransUnion, and Experian. Information contained in a borrower's credit report (years of credit history, late payments) is required to establish his/her creditworthiness. A favorable credit history can result in better interest rates and terms on a mortgage loan.

When the borrower's credit history is pulled from a credit agency's database, it creates a "trigger" within the reporting system. This trigger essentially alerts the credit agency to send information about the inquiry to credit data buyers. These companies then aggregate this data and sell it to their clients (often other mortgage companies.)

This is why you may receive calls and letters from other mortgage companies when you apply for a home loan or refinance. We don't sell your data -- we want your business and the last thing we'd ever do is sell your information to a competitor.

Tomorrow, we'll discuss why "trigger leads" are valuable to mortgage companies. And next week, find out whether you can "opt out" of the trigger system.

Help Your Realtor Sell Your Home, Part 2

Here are some more tips for creating a buyer-friendly home:

Staging
It’s all the rage these days - and for good reason. Staging doesn’t have to cost a lot of money, and the rewards of doing it can be huge. When you sell your house "as is" - or don’t stage - it can actually cost you money. Staging a home, on the other hand, can result in your home’s selling for a higher amount than it would otherwise.

TIP: Linger in the doorway of every room and imagine how your house will look to a buyer. Does your current arrangement of furniture and belongings show off your home’s strengths and meet the standards of a "buyer-friendly house"? 

For additional ideas on staging your home, download our exclusive "Selling Your Home" 8-page  brochure at www.CharleyFarleyHomeLoans.com/brochures/sell_realtor.pdf

Get a second opinion
Ask a friend or neighbor - one who is not afraid to be blunt - to walk through your house as a prospective buyer would. Get his/her opinion on how well it “shows”. Consider making any additional changes, depending upon your budget and schedule.

The Bottom Line
Your Realtor will help you sell your home by marketing it, bringing in potential buyers, helping you evaluate offers, and guiding you through the entire closing process.

Your job is to make your home look as attractive and inviting as possible, to improve your chances of getting the price and terms you want when you sell it.

Win a FREE Mortgage Payment

Visit the Compass Mortgage web site at www.charleyfarleyhomeloans.com on or before March 15 and sign up for our "Win a FREE Mortgage Payment Sweepstakes." (Links on the green navigation bar and in the red block on the top right of the site.)

Good luck!

The Home of 2015

What will the home of the future look like? The National Association of Home Builders (NAHB) took a took an educated guess at its recently-concluded annual convention.

Changes will come much faster over the next decade than they have in the past, due to the pace of technoloical advances. Overall, homes will be "greener" than today and there will be increasing emphasis on access for persons of limited physical ability (a trend that has already started as the baby-boomer generation greys).

The average square footage is likely to be in the same 2,400 sf. range that is found in today's new homes. The family room will replace the living room (which will either vanish or become a library, "retreat," or parlor). Ceilings throughout the first floor will be 9-feet high, with the second floor being 8-9 feet. More homebuyers will opt for three-car garages and for larger doors that admit SUVs.(So much for green!)

Source: MortgageNewsDaily.com

Help Your Realtor Sell Your Home, Part 1

Potential buyers are committing to a significant amount of debt when they decide to buy your property. Your job is to help them view it as their dream home. here are some proven tips and techniques...

First impressions count!
“Curb appeal” increases what someone may be willing to pay for your home. Potential buyers not only want to be impressed with your home, they want everyone else to be, as well. Make sure that your lawn, yard, garden beds, and driveway are well-kept and tidy, because appearances matter.

Cleaning
This is the most cost-efficient ways to spruce up your home. Make sure you scrub your home from floor to ceiling. Wash your windows, vacuum your carpets and drapes, and dust thoroughly. Remove dust, grime and fingerprints from all surfaces. Cleaning your light fixtures: can make a huge difference in the lighting in your rooms. Also, make sure your house smells good and is free of odors.

Tomorrow, I'll discuss additional tips to help your Realtor sell your home.

Refinancing ARMs Harder These Days, says WSJ

With rates on many homeowners' adjustable-rate mortgages rising, says the Wall Street Journal Online, some borrowers who would like to refinance into a new loan are finding they can't.

In some cases, that is because their loan carries a prepayment penalty, which would force them to come up with thousands of dollars if they refinance in the first few years.

Other borrowers, says the publication, are getting caught short by a changing housing market -- one in which home prices have flattened and lenders are beginning to tighten their standards after a long period of making mortgages easier and easier to get.

The challenges are greatest for homeowners whose credit has declined since they took out their last loan and for those who have little if any equity.

To read the entire article on Yahoo Finance, click here.

8 Big Mortgage Mistakes

MSN Money has a list of 8 of the most common (and costly) mortgage mistakes. They are:

• Not fixing your credit
  
  
• Not looking for first-time home buyers' programs
  
  
• Not getting pre-approved for a loan
  
  
• Borrowing too much money
  
  
• Not shopping around for rates and terms
  
  
• Paying junk fees
  
  
• Not planning for closing costs
  
  
• Not having enough cash on hand after closing
  

To read the entire article, click here.

More from Freddie Mac

During Q4 2006, 84% of new mortgages that were the result of refinancing were "cash out" loans. This resulted in $70.7 billion in equity pulled out of American homes in a three-month period.

Refinancing itself accounted for 46% of all mortgage loans during the fourth quarter.

A Freddie Mac spokesperson speculated that

"many families found it cost effective to cash-out equity through a new first mortgage, even though it raised their [interest] rate. With the prime rate at 8.25%, a home equity loan or line of credit based on that rate may not make sense if the financing need is large (like a major home improvement or college tuition payments) and will be paid back over several years."

Source: Mortgagenewsdaily.com

So How's the Real Estate Market Doing?

Freddie Mac issued its "February Economic Outlook" on February 8.

In addition to its usual economic forecasts, the report spotlighted defining moments of the 2006 market. Those that should interest residential homebuyers and sellers include:

• US Census Bureau inventories of new homes have begun to decline: down to a 5.9-month supply at year's end (compared to 7.2 months in July). However, keep in mind that these figures on new home sales are recorded at the point that sale contracts are signed. If a contract is cancelled, it is neither reflected in revised figures nor do these units return to inventory. (Cancellations were running as high as 30% last fall.)

  
  
  

• Excess inventories may continue to weigh on home prices over the long term and sellers are only reluctantly lowering prices as they slowly recognize the new reality of a buyers market.

  
  
  

• Single family starts in December 2006 were off 30% from their peak, but sales of new and existing homes were down 18% and 14% respectively. The decrease in new homes on the market may eventually -- maybe over as much as a year -- ease the inventory glut.
  
  

* Source: Mortgagenewsdaily.com

Hot Words to Sell Your Home

MSN reports on a Canadian study which has found that the right phrasing in real estate listings can speed a sale (and even boost the final price).

One tip: If you must sell, don't put "must sell" in your ad.

To read the entire article, visit http://realestate.msn.com/selling/Article2.aspx?cp-documentid=2856666

Key Factor That Boosts Home Values

An interesting study has just been concluded by the National Association of Home Builders that identifies how various features in a home impact the property's value. The association's Housing Economics Department created a house price estimator, based on data from the American Housing Survey, a nationally representative survey of about 60,000 housing units conducted by the U.S. Census Bureau in odd-numbered years.

Waterfront locations have the most significant positive effect on home values, the study determined. This applies to homes in every census region and in every type of setting. For example, being on the waterfront raises the value of a standard home in a Midwestern suburb by an average of 43 percent, and in a non-metro areas in the South by 44 percent. In the central city of a large California metro area, being on or near water raises the value of a home by 41 percent.

The characteristic with the largest negative effect on home values is the presence of abandoned buildings within one-half block or about 300 feet of the home. Bothersome trash, industrial buildings, inadequate shopping and bad roads also have a significant negative effects on the price of a home. For more information about the house price estimator, check out the model online at: www.nahb.org/estimator/.

(Source: www.jimwoodard.net)

Are Open Houses Good or Bad?

Mortgage News Daily looks at the pros and cons and concludes that the jury is still out:

For the seller: Many buyers rely on the Internet and open houses in their home search. Many "free-lance buyers" (those who don't use Realtors) are newer Americans who don't quite understand (and are thus afraid of) the process or younger/tech-savvy individuals who really want to do it themselves. If you don't host an open house, these buyers may never see your property.

For real estate professionals: Sunday is prime-time for selling real estate and listing agents prefer to spend that time working with their own buyers. Even so, open houses can be an excellent way for Realtors to connect with potential new customers.

50-year mortgages?

Yes, you read that right. Bankrate.com discusses the loan program and whether it's a viable alternative to interest-only loans.

The bottom line? Although it's tempting to have lower month payments, you won't be building equity. (In fact, depending on fluctuations in the real estate market over the next ***half-century***, you could end up owing more than the house is worth.)

Compass Mortgage offers a number of 15-year and 30-year mortgage loan programs that allow you to buy a house you can afford while also building equity. For details, contact us today at (603)472-2272 or visit www.CharleyFarleyHomeLoans.com

Improve Your Score by Managing Your Credit

Manage your credit for the LONG RUN. In the long run, your scores will be determined by time and good financial behavior which should include the following:

• Pay your bills on time. Late payments and collections can have a serious impact on your credit score.
  
  
• Reduce your credit balance. If you are “maxed” out on your credit cards, your score will be low. Try to keep your credit card balances below 50% of the available limit. EXAMPLE: It’s better to have two credit cards with $10,000 limits where you owe $5000 on each than to have one credit card with a $10,000 limit that is maxed out.
  
  
• Do not apply for credit frequently. A lot of inquiries will give the appearance you may be taking on more debt than you can afford. Each inquiry can cause up to a 5 point drop in your credit score. The actual amount of damage depends on the number of inquiries, time period and other factors in your credit file.)
  
  
• Don’t close any old accounts. Your credit score is largely determined by the length of your credit history. Closing older accounts can make your credit history look younger than it actually is, which can hurt your score.
  
  
• Avoid over-consolidating. If you consolidate your credit card balances onto one low rate card and the balance on that card goes over 50% of the high credit limit, your credit score will go down.
  
  

Building a good credit history over time - by paying bills promptly, establishing a variety of accounts, and keeping balances below 40% of your credit limits - is the best strategy for having and maintaining excellent credit.

Reverse Mortgages and Baby Boomers

CNN reports that baby boomers are creating unprecedented demand for reverse mortgages.

Renowned as being spenders rather than savers, says the news provider, boomers are proving to be only too happy to borrow against all or some of their home to finance their retirement lifestyle.

Reverse mortgages allow boomers to borrow against the equity in their homes, providing additional funds to support themselves in retirement. Debt and interest builds up over time and may be repaid by the beneficiaries of the estate when they sell the home.

Research group Datamonitors says most people take a lump sum of between $40,000 and $50,000 and splurge on a new car or holiday. Others elect to take a few hundred dollars extra each week to support a more comfortable lifestyle.

Home Equity Advantages, Part 2

Cash-out programs allow borrowers to receive up to 80% of the loan-to-value ration for their home. In other words, the lender would pay off the borrower’s existing loan and provide cash up to 80% of the home’s value. (For example, a homeowner who refinances a home valued at $300,000 -- and whose balance on his existing loan is $200,000 -- would be eligible for up to $40,000 cash.) Homeowners can then use that money to help pay for a college education, investments, or purchase a vacation home. All related closing costs, financing costs and prepaid items can be rolled into the new loan amount, further maximizing your borrower's cash flow potential.

If the interest rate offered for your refinanced mortgage is significantly higher than your current rate, cash-out refinancing may not be a sensible choice. In this case, a home equity loan or line of credit (HELOC) might be a better idea. While cash-out refinancing is a replacement of your first mortgage; HELOCs are separate loans on top of your existing first mortgage.

The opportunity to use the equity you have built up in your home is one of the benefits of homeownership. When you need cash for a home improvement project, to pay off high-interest consumer loans, or to finance higher education, you need not look any further than your own front doorstep.

To learn more about home equity loans on your New Hampshire property, call Compass Mortgage at (603)472-2272 or visit www.CharleyFarleyHomeLoans.com.

Home Equity Advantages, Part 1

Home equity is the most significant source of wealth for many homeowners. Find out how to make your home equity go to work for you.

Once you purchase a home and begin making payments, you immediately begin building equity. Of the 69% of U.S. households who own their own homes, 24.7% have accumulated 100% equity.*

Your home is the most valuable asset you may ever own. Usually, it is an untapped resource that can be used to your benefit. Non-traditional refinancing products allow homeowners to lower their monthly mortgage payment and borrow money to strengthen their financial position.

Cash-out (or "equity release") refinancing allows homeowners to refinance their existing mortgage and receive a portion of their equity back, to use for such things as remodeling, consolidating higher-interest debts (such as credit cards or loans), or investing money in places that may offer a higher return.

Tomorrow, I'll tell you more about these types of programs.

*Source: 2005 Census Bureau and HUD figures.