(302) 703-0727

(302) 703-0727

Doug MacGray’s Weekly Financial Update – Week of March 10, 2008

John Thomas March 10, 2008
STRUGGLING ECONOMY: Clearly, we are in a poor situation. Almost all data that came out last week was negative, and the markets responded in kind. The job numbers were negative.  Construction spending fell by -1.7%, mostly due to a drop in residential construction. Consumer credit grew by $6.9 billion. Factory orders dropped -2.5% in January.   JOB LOSSES IN PERSPECTIVE: Last month there was a net loss of 63,000 jobs. In the recession of 1980, in April payrolls declined by 145,000, 2.3 times what was lost in February 2008. Of course, since the total number of employees in April 1980 was a little under 91 million versus today’s almost 138 million, this 145,000 loss represented even a far greater percentage decline. Maybe more important, since February 2008 was the second month of job losses, a potentially better reference point would be the 431,000 jobs lost in May 1980, the second month of that year’s recession.   DECREASING EQUITY: In the fourth quarter of 2007, homeowners’ equity fell to its lowest level in more than 60 years. The national average for owners’ equity as a percentage of household value dropped to 47.9%. In 1945, the percentage was 84%.  (Federal Reserve’s Flow of Funds report for the fourth quarter of 2007: www.federalreserve.gov/releases/z1/).   A COLLEGE SAVINGS ACCOUNT….FOR YOURSELF:  Almost everyone knows that a Section 529 College Savings Account is a good place to put money because you enjoy tax-free growth if you ultimately use the money for qualified education expenses. Occasionally, I have worked with young couples who have started putting money into a plan, naming themselves as the beneficiary, temporarily, until they started having children. However, I believe that the use of these accounts should and will be used much more extensively by baby boomers for themselves.

More and more people are proactively planning what they will be doing in retirement, and for many, it is to move on to some different type of career. I had a very high executive client at a Fortune 500 company who retired and went to law school. But consider some of the following possibilities:

  • A semester at sea studying marine biology
  • A year-long French lit course in Paris
  • A fall session exploring art in Guadalajara
  • A summer of music appreciation in Vienna
  • An ecological field trip to Costa Rica  

(See http://www.petersons.com/Â for more possibilities.)

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New Delaware FHA Loan Limits for 2008

John Thomas March 7, 2008

HUD announced on Thursday 3/6/2008 that it had completed the revised loan limits for FHA loans.  The new amounts for 2008 are broken down by county. New Castle County will have a new maximum FHA loan amount of $420,000. The old limit was $292,685. Kent County will have a new FHA loan limit of $417,000 and the old limit in Kent was $266,000.

Sussex County will also have a new limit of $417,000.  This is BIG!!! People who have credit challenges can qualify for an FHA loan as long as they can meet the income guidelines.  This limit is only temporary and expires at the end of 2008, so HURRY if you are in this new range.

Please call me to discuss an FHA loan at 302-368-7132 Ext.12 ask for John Thomas and I can answer all your questions about the new loan limits and what it takes to see if you qualify for an FHA loan.

If you would like to apply for a Mortgage Loan, you can APPLY ONLINE HERE, you can call John Thomas at 302-703-0727.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713

Doug MacGray’s Weekly Financial Update – Week of March 3, 2008

John Thomas March 5, 2008

As we head into the third month of the year and what seems like the third year of this year’s presidential election, I hope you are well and that you are weathering the choppy economic environment as well as all of life’s other challenges.

LAST WEEK’S MARKETS:

The markets advanced for the first four days of the week, but gave it all back on Friday. The Dow [-0.93%; -7.53%], the S & P 500 [-1.66%; -9.38%], and the NASDAQ Composite [-1.38%; -14.36%] all declined for the week.  Many investors getting out of stocks moved to the quality of U. S. Treasury securities, driving their prices up and yields down. T-bills dropped well below two percent, meaning lower returns ahead for money-market funds and other short-term investments. If the Fed lowers rates again in March, rates on T-bills, CDs, and money-market funds could slip to near one percent.  Once again investors will have to move further out on the yield curve or take on greater risk, to maintain higher levels of income and return. The average taxable money market fund in the USA was yielding +3.05% last week, down from +4.75% just a year earlier (source: iMoneyNet). Keep Reading...

Court Decision Upholds Down Payment Assitance Programs for FHA Loans!

John Thomas March 4, 2008

I am pleased to announce that Nehemiah was victorious in its litigation against HUD!

Judge Lawrence K. Karlton of the United States District Court for the Eastern District of California upheld Nehemiah’s motion for summary judgment. The Court Clerk’s Office is directed to enter judgment and close the case.

To be clear, the U.S. Department of Housing and Urban Development’s (HUD) rule to ban private downpayment assistance as proposed in the “Standards for Mortgagor’s Investment in Mortgaged Property regulation published October 1, 2007, is permanently set aside.

I am thrilled with the Court’s decision to support low-to-moderate income families across the country by ruling against HUD’s attempt to ban private downpayment assistance. This is a major and conclusive judgment, leaving no uncertainty that downpayment assistance is a lifeline to the families that Nehemiah serves. It is heartening to see that the Court’s arguments echo our sentiments and concerns. This decision preserves access and supports the use of sensible and reasonable approaches to homeownership for millions of working-class families. It is a privilege to continue providing a helping hand to America’s underserved families by building both safer communities and financial strength through homeownership.

Since May 2007, Nehemiah has led the fight against this controversial rule. Since it was announced, there has been confusion throughout the industry regarding the potential impact of this rule. As the DPA industry leader, Nehemiah took seriously their responsibility to provide us with timely, accurate and responsible information about the events and activities surrounding this issue on their website.

The Down Payment Assistance Program allows for a grant from a non-profit company that can contribute the 3% required interest that the buyer must have in the transaction according to FHA guidelines. This grant can be a gift from the seller to the Down Payment Assitance Program who then gifts it to the buyer. This allows a person to essential borrower 100% financing through an FHA Loan and to have the seller also pay up to 6% of the closing costs.

If you are interested in this program please give me a call and we can discuss the details. 302-368-7132 Ext. 12.  Or fill out the contact information on this webpage and I will contact you.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713

Update on FHA Loan Limit Increase from NAMB

John Thomas February 26, 2008

During a recent teleconference with the U.S. Department of Housing and Urban
Development (HUD), NAMB learned that HUD plans to publish the new FHA loan
limits in a Mortgagee Letter to be issued during the first week of March.

HUD will publish separate lists for the FHA program and the GSEs.

Additionally, HUD will be recalculating the median home prices which are used to
calculate the loan limits.  The new loan limits will be based on 125% of the median
home price in counties across the country and will be capped at $729,750.

The floor for FHA loans will be raised from $201,060 to $271,050, and originators
can begin processing applications now for any loan that was assigned an FHA
case number after February 13th (the date the bill was enacted). 

These changes are a result of the Economic Stimulus Package signed by Pres Bush
on February 13th, and will expire after one year.

However, HUD officials participating on the teleconference indicated that more comprehensive FHA reform should be moving through Congress in the coming weeks.

If you would like to apply for a Mortgage Loan, you can APPLY ONLINE HERE, you can call John Thomas at 302-703-0727.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713

Doug MacGray’s Weekly Financial Update – Week of February 25, 2008

John Thomas February 25, 2008

FORECLOSURES OVERHYPED?: 
The foreclosure figures used by much of the media come from RealtyTrac, a source that counts each filing in the foreclosure process. One house has to go through several steps in the process (each with its own “filing”), so counting each one as a separate foreclosure, as many in the media do, is inaccurate.

HOME VALUES DECREASING?:
In a one year period, home prices have decreased by about 4.5 percent.  However, since January 2000, the national average home price has risen by 80.45 percent, according to the S&P/Case-Shiller index of home prices.  Declines from record highs should be put in perspective. However, according to Moody’s Economy.com, nearly 8.8 million homeowners, or 10.3% of the total, have mortgages that are higher than the value of their houses.

A SLUMP IN HOUSING ACTIVITY:
Housing starts were up overall in January of 2008, but all of the gains were in the multi-unit construction area. Single-family home construction actually dropped 5.2%. Even worse, building permits fell 3.0%, the lowest level since 1991, which doesn’t look good for the future of the housing sector.

LEAVING YOUR ESTATE TO YOUR CHILDREN “IN EQUAL SHARES”:
Four out of five people split what they have equally among their children, according to an article in this month’s Money Magazine. When I was drafting estate planning documents, I found the percentage even higher, but I always asked questions to make sure it was right for them. Here are some circumstances which could dictate that “equal shares” may not be right:

  • One of your children has an addiction, such as gambling, alcohol, drugs
  • One of your children got a full scholarship to college for whatever reason (grades, athletics, etc) but you paid for all four years of your other children’s tuition.
  • One of your children takes you into their home in your old age, while your other children live far away.
  • One of your children provides significant monetary assistance to you in your old age, while your other children are unable or unwilling to do so.
  • One of your children is smart, ambitious, and/or independent and sets out on their own at age 18, while another languishes at home living off of you well into their 20s (or even later).

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    First Time Home Buyer Seminar – March 22nd at 10:00 AM

    John Thomas February 22, 2008 Tags: ,

    There will be a Free First Time Home Buyer Seminar on Saturday, March 22, 2008, at 10:00 AM. The seminar will last about 2 hours and each participant will be able to receive a free copy of their tri-merge credit report. The seminar will cover all of the basics of buying a new home in Delaware. The seminar will cover Delaware FHA loans, Delaware VA loans, My Community loans, and First Time Home Buyer Loan Programs. Each participant will receive a Free Audio CD on Credit Scoring, Credit Scoring Handbook, Homebuying Handbook, and an opportunity to meet with a mortgage planner to be pre-approved to buy a home at the seminar. You will also learn the importance of credit in buying a home and learn valuable tips on how to improve your credit score. Learn what programs are available to help with down payment and closing costs. To register for the seminar, please call 302-703-0727  and ask for John Thomas.

    If you would like to apply for a Mortgage Loan, you can APPLY ONLINE HERE, you can call John Thomas at 302-703-0727.

    John R. Thomas – NMLS 38783

    Certified Mortgage Planner – Primary Residential Mortgage, Inc.

    302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

    248 E Chestnut Hill Rd, Newark, DE 19713

    No PMI Loans in Delaware?

    John Thomas February 12, 2008 Tags: ,

    No PMI Loans in Delaware?

    Can you get a loan with no Private Mortgage Insurance (PMI)?  This depends on the type of mortgage loan you are applying for financing such as FHA Loan, VA Loan, USDA Loan, Conventional loan, or a Non-QM loan.  You can get a loan with no monthly mortgage insurance if that is what you are looking to obtain.  In order to understand what you are options are, we need to start by explaining PMI.  If you have questions or want to get started on a mortgage pre-approval, call us at 302-703-0727 or GET STARTED ONLINE

    What is PMI (Private Mortgage Insurance)?

    PMI is foreclosure insurance for the Lender and only benefits the Lender.  In the event you default on your loan, the insurance company will pay the Lender.  PMI is usually required on loans with less than a 20% down payment.  When you borrower more than 80% of the purchase price you are a much higher risk to the lender because there isn’t enough equity for the lender to foreclose and recover all of their money and fees.  Because of this, the lender requires the borrower to pay for an insurance policy for the lender to protect the lender in case the borrower defaults on the loan.  PMI became tax deductible in 2007.

    How Much Does PMI Cost?

    Typically PMI ranges from 0.23% to 1.75% of the loan amount and is usually paid monthly along with other items such as your property taxes and homeowners insurance.  The PMI can be much higher if you have bad credit and/or you receive a level adjustment from desktop underwriting.  This can make your PMI be as high as 1.46% of the loan amount.  The cost of the PMI is determined by the type of loan (adjustable vs. fixed), the term of the loan (30 year vs. 15 year), the amount of down payment (0%, 3%, 5%, 10% or 15%), your credit score, and the type of DU approval you get.  The more down payment you have the lower the monthly PMI.

    How can I avoid PMI

    There is really no such thing as a NO PMI LOAN for conventional loans with Loan-to-Values more than 80%.  What lenders do when they advertise this gives you what is called Lender Paid Mortgage Insurance (LPMI).  This is accomplished by giving you a higher interest rate, so in essence, you are still paying it by paying more interest per month than a loan with PMI.  Sometimes this can raise your rate as much as 1%.

    There are really only two ways to avoid PMI altogether on conventional loans.  One is to make a down payment of at least 20%.  If you do not have 20% to put down, you may be able to utilize a piggyback loan which is called a second mortgage.  This can be an 80/20 which would be for a 100% financing, an 80/15 for 95% financing, an 80/10 for 90%.

    Please don’t be taken by unscrupulous salespeople who try to say because of your credit score you don’t have to pay mortgage insurance.  You pay for it one way or another.  If it is a conventional loan, you pay either PMI or have a higher rate with LPMI.  FHA loans all require MI (mortgage insurance) regardless of the LTV.  So even if you are under 80% with FHA, you must have mortgage insurance.  VA or Veterans Loan is the only one of two loans that don’t have monthly mortgage insurance without raising your rate.  VA loans charge you a one time upfront mortgage insurance that you can roll into the loan but don’t require a monthly mortgage insurance premium.  The other loan that is 100% financing without PMI is a USDA Rural Housing Loan.

    If you have questions or would like to speak with us about planning a mortgage please feel free to call us at 302-703-0727 or APPLY ONLINE

    John R. Thomas – NMLS 38783

    Certified Mortgage Planner – Primary Residential Mortgage, Inc.

    302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

    248 E Chestnut Hill Rd, Newark, DE 19713