How Donald Trump’s Presidency Will Affect Interest Rates

Throughout his campaign and following his win in the November election, President-elect Donald Trump has had a massive impact on our nation and around the world. Once he is sworn is as Commander-in-chief, President-elect Trump will continue to influence many aspects of everyday life, including buying and selling real estate. As we look ahead to what the next four years of a Trump presidency holds, our nation is pondering what to expect from his administration.

A few weeks after the November election, the Los Angeles Times reported that, “Long-term U.S. mortgage rates continued to surge this week in the aftermath of the election of Donald Trump as president.” Rates increased by approximately .25% after the election.

Put in proper perspective, it’s important to understand that the Fed has kept rates artificially low for many years in an effort to keep our fragile economy from imploding. As we finally move forward into a more healthy economy it’s only fair to expect these controls to give way to a normal market and a more sound fiscal policy. (You can’t kick the can down the road forever!) Even though mortgage rates have increased, they are still very close to historical lows and they are not expected to increase much more in the near future.

Admittedly, the prospect of higher interest rates isn’t what one wants to hear if they are considering buying a new home. Higher interest rates have a negative impact on the amount a home a person can qualify for but at the same time, an increase in interest rates could potentially drive down the overall price of homes. Higher interest rates can make refinancing less feasible for homeowners who are looking to refinance their homes because the savings won’t be as great and as home values decline, so does their equity.

The silver lining is that the prospects of a Trump presidency is having a significant >positive effect on our economy. More jobs and higher paying jobs that are expected from a Trump presidency will almost certainly bode well for would-be homebuyers and home sellers.

Positive and Negative Outlooks are Both Impacting Interest Rates

In anticipation of Trump’s ascension to the most powerful job in the world, investors have been putting as much capital as possible into the US stock market in hopes that Trump’s presidency will yield the economic boom that analysts are predicting. In order to put their put their funds into stocks, a lot of investors have withdrawn money from the US bond market.

As the strength of Treasury bonds decreases, the interest rates that accompany mortgages rise in comparison. As the stock market rises, the mortgage bond market dips which causes mortgage rates to rise. This is normal. There have always been and will always be ups and downs in both markets.

Either way, the result is the same. Whether investors are excited or downtrodden about a Trump victory, it’s a given that the housing market – as well as other segments of our economy – will feel some repercussions while we adjust to the policies of the new Administration.

What Does This Mean For You?

The ability for an average person to buy a home is slightly more difficult than it was a few months ago. However, a new home is not out of reach for most prospective home buyers. It might take a little more time and patience but in most cases your efforts will be rewarded. Home buyers might need to expand the scope of their search parameters. Keep in mind that your first home is not likely to be your forever home. It may not be exactly where you want it to be and it may not the home of your dreams – it’s a stepping stone.

The key is to get into the home as soon as you can. Chances are that you’ll be able to earn some equity and sell for a profit in a few years. The money you earn from appreciation on your first home is what you will use to buy your second home and you will get closer to meeting your ultimate housing goals then.

In today’s environment, it’s more important than ever to work with a knowledgeable, dedicated loan officer to help you navigate through the home buying process. If you live anywhere in Texas, Dorothy Erminger is a great resource for potential homebuyers. Dorothy will guide you through the loan process and you can rest assured that your home buying experience will be straightforward, pleasant and easy-to-follow.

Dorothy and her colleagues work tirelessly to ensure their clients lock down the best loan program for their unique needs at very competitive interest rates while minimizing unnecessary costs. She is known by her clients as well as industry professionals as a stickler for detail – which translates to smooth closings – on time, every time! Owning a home is part of the American Dream, and it’s Dorothy’s goal to help you turn your dream into a reality.

Credit Inquiries and Credit Score

Accounts: All 4 Types of Inquiries

Inquiry—is the common term that is used to describe someone who is checking into and/or viewing your credit. Basically they’re inquiring about someone’s track record and payment history to creditors.
Many experts in the industry rate the inquiries down to a two part description. The two part description is usually labeled “hard pull” or “soft pull” inquiries. Most people who refer to these two terms lack the over all understanding that there are actually 4 types of inquiries. The four different types of inquiries are used for different purposes and can either affect your score or not affect your score.

The four different types of credit inquiries are labeled as: account review inquiries, promotional inquiries, standard inquiries, and self pull inquiries. It’s easier to just use the first part of the term rather than having to verbally state all the words attached to inquiry with every description.

An “Account review inquiry” is when a potential creditor requests from the bureaus, permission, to review your account for only negative information within a certain time frame. This potential creditor does not receive good information about your credit and does not receive your credit scores (only information on recent delinquencies). An example would be if your ALLSTATE INSURANCE desires to request an account review on your negative payment history over the last 12 months. This information could be very valuable in determining your financial strength, financial reliability and responsibility, and in determining if there may be a common sense reason that you are now a higher insurance risk and are more prone to be in an accident and cost ALLSTATE INSURANCE more money.

This type of inquiry would be labeled a “soft pull”, because it is not factored into the credit risk scoring formula to remove points off your credit score. One of the major flaws with the account review inquiry is that it does not take into detail or exception if an individual has earned a lot more money, opened a lot of new accounts, mistaken or misapplied payments or, had lates that another creditor should’ve paid off to another creditor in the transfer and pay off of prior loans. This unfortunate example could lead to increased insurance rates to a prospering and responsible individual which is completely unfair.

“Promotional inquiries” are requested with the sole purpose of just receiving a credit score only. A promotional inquiry will not include information on recent lates, collections, public records, information on types of accounts, and who your creditors may be. Once again the only information that is provided to your requested potential creditor is simply a credit score. Promotional inquiries are usually distributed for the sole purpose of deciphering statistically who would be the best candidates to send credit promotions. The most common type of credit promotion is mailing offers with applications for credit cards. The credit card companies save time and money by narrowing their targeted audience to people who they feel would qualify for their credit offer. This saves them time, money, and makes the credit card companies way more money. Promotional Inquiries do not hurt your credit score and just like Account Review Inquiries, they are not even seen by your future potential creditors when they view your credit history.

“Standard Inquiries” are requested by your creditors when you are applying for a loan, money, line of credit, or extension of credit. You may be shopping for a car, boat, applying for a mortgage, applying to rent an apartment, leasing a tractor or construction equipment, buying/leasing furniture, or
computer equipment etc. These loans are very important to you because you want the best deal
knowing you can save thousands of dollars on interest by purchasing from a lender that gives you the best interest rate. The problem is the more you shop around the more potential risk you have of continually lowering your credit score. The scoring model has attempted to make changes so they don’t continually brutalize the savvy and thrifty shopper that is trying to get the best deal.

Copyright © 2016 Credit CRB, All rights reserved.

This is not a commitment to lend or extend credit. Restrictions may apply. Information and/or data is subject to change without notice. All loans are subject to credit approval.

Home Buyer Education Certificate May Help You Qualify for a Loan Program that Offers Lower Rates, Lower Mortgage Insurance

If you are a first time homebuyer and are looking for a homebuyer education course to help you achieve your homeownership goals and possibly help you qualify for a special first time homebuyer program that offers a lower interest rate and/or lower mortgage insurance rate- try this free, interactive course at http://www.freddiemac.com/creditsmart/tutorial.html

For more information about qualification, please call Todd Kurio, Residential Mortgage Loan Originator, at 512 459 2405. NMLS #214411/216616, todd.kurio@capstarlending.com. Capstar Lending, Equal Housing Lender.

This is not a commitment to lend or extend credit. Restrictions may apply. Information and/or data is subject to change without notice. All loans are subject to credit approval.

Tips For Protesting Property Taxes

It is that time of year again and I’ve been fielding questions about property taxes. There has definitely been an increase in values in Texas cities, but that doesn’t mean the value the county appraisal district has for your home is correct. Below is the information I posted last year, which outlines the steps to protest the value. The most important thing to take is data and documentation. Good luck, Adam

Are you one of everybody in Travis County who received a notice this week that your home’s appraised value is higher than last year? I usually protest appraised value on at least one of my properties every year, and I’m generally successful. The steps included in how to protest property taxes are:

    1. As quickly as you can, send in the form on the back of the notice to protest the property taxes. There is a deadline, you don’t want to miss your opportunity. If you request a protest, you don’t have to follow through with it if for some reason you change your mind.
    2. If you purchased your home in 2014 and it appraised higher than the price you paid, make a note of this. With a copy of the settlement statement, they’ll usually simply lower it to the price you paid. You are not obligated to provide them with any information, so if the appraised value is lower than the sales price it is a good time to stay quiet.
    3. When sending in the protest form, make sure to request the data the county appraisal district used to assess your home. They are required to provide it if you ask for it.
    4. After a long time, the county will reply with a notice of a date for an informal protest and a formal protest. They will also include a packet with their details about your home as well as a spreadsheet of the comparison homes they used to arrive at their data.
    5. Make sure the data they have for your home is accurate. I’ve had properties where the square footage in the county records was larger than the actual square footage. Simply showing the square footage calculations from the appraisal lowered the appraised value not only for that year, but going forward. Other inaccuracies might include the condition of the property or structures that are no longer there. This also can go the other way, which you may not want to bring the assessor’s attention with a protest.
    6. Make sure the properties they are using for comparison are actually similar to your property. The comps should be of the same type and within the same neighborhood. I’ve had single family houses incorrectly compared to commercial property, much larger properties, duplexes and properties in other non-comparable neighborhoods.
    7. Find properties that are more comparable and support a lower value. The best data is closed MLS listings from your immediate neighborhood. Most real estate agents are more than happy to help with locating these. Of course, these listings must support a lower value. It is very possible that the values in your neighborhood have gone up and the tax assessor is correct.
    8. Make notes of all items with your property that may negatively affect your home’s value compared to any higher valued properties, especially items that won’t show up on their spreadsheet. For example, do the comparable properties have similar-sized lots but your lot has a portion that is not buildable due to a flood plain, terrain or irregular shape? Is your lot on a busy road, adjacent to commercial buildings? Does it lack the view that other nearby properties might have? Have the comparable properties been updated and remodeled or expanded while your house has not?
    9. By state law, the value the appraisal district is considering is as of January 1 of this year, so what is important is the condition of the property at that time. Comparable properties from the previous year can be used.
    10. Attend the informal hearing with data, and reschedule it if the time they assigned you doesn’t work. This hearing is a meeting with a county appraiser in his or her cubicle. Usually there will be an unhappy property owner with no data ranting at the appraiser in the adjacent cubicle. That approach will not be successful, and the appraiser will be happy to have someone in front of them not doing that. Show the appraiser everything to support your claims. He or she will want copies of anything that they use to update your file. Photographs are helpful, as are documentation of closed sales and maps. I have found the county appraisers very reasonable when they have data to review. However, they will never take your word for it that you think your house isn’t worth that much and they should just lower that value right now.
    11. If you are not successful and still feel you have a good case and good data, you can move on to the formal protest. This is a hearing with a county appraiser on one side and you on the other. Three paid, citizen appointees listen to documentation from both sides and vote on an outcome. I’ve had three formal hearings. Two were successful, with the appointees asking relevant questions of both sides and considering the documentation. The third was unsuccessful and featured one of the appointees who couldn’t do simple math and one who fell asleep during the hearing.
      It doesn’t cost anything other than time to protest, and a successful protest may lower your taxes this year and in future years if there is incorrect information in the county records. If you do not want to spend the time to protest, there are services that will protest your taxes and their fee is a portion of the savings.

My opinion is generally that you know your neighborhood and property better than anyone else, and generally you will make your own best advocate. Good luck, Adam Stephens NMLS 216606

OWELTY LIEN: A Great Way to Refinance and Split up Equity in a Divorce

No one wants to get a divorce. However, if it is inevitable, there are ways for partners to make a clean break and get their fair share of the property in question by getting an Owelty lien.

Since Texas is a community property state, if you are married, and you own a primary residence with a homestead exemption, both spouses have equal rights to the equity in their home.
If Your Name is On the Mortgage, You Are Still Responsible For Payments After A Divorce. Most spouses think the divorce decree releases them from obligation to the lender. That is not the case. Even if the decree awards the property and the debt to one spouse, if the other spouse is on the mortgage, they are still responsible for the debt. Any late payments or other derogatory reporting will be reflected on both spouse’s credit report and would negatively affect each spouse’s credit score.

An Equitable Work Around

An Owelty Lien is a way to give each spouse what is owed to them as detailed in the divorce decree without having to sell the house. You don’t have to have the required 20% equity which would be required on a Texas Cash Out Refinance.

For more information on Owelty Liens, please call Todd Kurio, Residential Mortgage Loan Originator. 512 459 2405, NMLS #214411/216616, todd.kurio@capstarlending.com. Capstar Lending, Equal Housing Lender.

Capstar Lending Announces NEW Mortgage Assistance Program!

Capstar Lending is pleased to offer the Travis County HFC Hill Country Home Down Payment Mortgage Assistance Program. This program is for properties located anywhere in Travis County including anywhere within the City of Austin. This is a grant for up to 5% of the loan amount. This assistance can be used for down payment, closing costs and prepaids.

This program is for new or existing homes, 1-4 units detached or attached, condos or townhomes that meet the lender’s requirements. Borrowers must occupy the home as their primary residence.

There is no first time homebuyer requirement for this program and there are no purchase price limits. The loan amount maximum is set by the type of loan program you are applying for. For example, the FHA loan limit for a single family home in Travis County is $305,900.

The maximum income limit for this program is $105,560. This is based on the qualifying income used on the loan application. There is no recapture tax on this program.

Borrowers must have a minimum, middle credit score of 640.

For more information or to apply,please call Todd Kurio, Residential Mortgage Loan Originator. 512 459 2405, NMLS #214411/216616, todd.kurio@capstarlending.com. Capstar Lending, Equal Housing Lender.

This is not a commitment to lend or extend credit. Restrictions may apply. Information and/or data is subject to change without notice. All loans are subject to credit approval.

IRA Withdrawal for Home Purchase

IRA’s consist of two types- Traditional and Roth. Funds contributed to traditional IRAs are “before-tax” contributions because they are made and, thus, lower taxable income and tax liability.
However, when traditional IRA funds are withdrawn (and not rolled over to another pension- type account), the funds are fully taxable regardless of the age or other circumstances of the taxpayer.

If the IRA is Roth, IRA withdrawal for home purchase of up to $10,000 for a “first home” are completely free of tax and penalty (as long as the funds have been in the IRA for five years or more).

The 1997 Taxpayer Relief Act changed some IRA rules to allow certain types of IRA withdrawals early, without penalty, in some circumstances.

The rules for taking a distribution from a Roth IRA to finance a first time home purchase are slightly different than those for a traditional IRA.  The law defines a ‘first time home buyer” as someone who has not owned for 2 years. So the law helps even newer home buyers.

If you are a first time homebuyer and you meet the Roth IRA rules as a qualified distribution (after the account has been open for 5 yrs)you can withdraw $10,000 or less to purchase a home (if the funds are used directly toward the home acquisition-which includes down payment, closing costs, etc).

If the withdrawal counts as a qualified distribution you will avoid paying income taxes and early withdrawal fees. If you are married, and you and your spouse are first time homebuyers, you can each pull from retirement accounts, giving you $20,000 to use for a home purchase.

If you have not set money aside for your home purchase or don’t have a Roth IRA to tap- then you might want to consider other down payment options.  Capstar Lending offers Mortgage Assistance Programs and other grant programs that will provide the funds for your down payment and closing costs.

Please consult your financial/tax advisor for more detailed information.

This is not a commitment to lend or extend credit.  Restrictions may apply.  Information and/or data is subject to change without notice.  All loans are subject to credit approval.

Please call Todd Kurio, Residential Mortgage Loan Originator for more details. 512 459 2405, NMLS #214411/216616, todd.kurio@capstarlending.com.   Capstar Lending, Equal Housing Lender.

 

Low Mortgage Rates on VA Loans in Texas!

Want to learn more about historically low mortgage rates for Texas Veterans in Austin, Texas and other cities across Texas?

The Texas Veteran’s Land Board (VLB) hosts free “come and go” fairs across Texas to let veterans know about the resources and programs that are available to them for the VA loans in Texas program.  VLB staff and other representatives from the U.S. Department of Veterans Affairs and the Texas Veterans Commission will be on hand to provide information on home loans in Texas and other information about disability and pension claims, land and home improvement loans, state veterans homes and cemeteries. For more information about these VLB events, please go to: www.glo.texas.gov/vlb/veterans-benefits-fairs/

These events are located in Austin, Amarillo, Waco, Corpus Christi, Tomball, Dallas, Big Spring, Fort Worth, San Antonio. For more information on Home Loans for Texas Veterans, Please call Todd Kurio at 512-459-2405 –Residential Mortgage Loan Originator, Capstar Lending, NMLS #216616/#214411, e: todd.kurio@capstarlending.com.

What Are Jumbo Loans and What Will They Cost Me?

A jumbo loan (otherwise known as non-conforming) is a loan where the loan amount exceeds the Fannie Mae or Freddie Mac limit.

In Texas, the conforming loan limit is $417,000. In higher cost areas like California, the conforming loan limit is as high as $729,750. Jumbo loan rates in Texas are now lower than the loan rates for conforming loan amounts($417,000).

In the past, jumbo rates were about .50% higher than a conforming loan amount. In my 22 years as a mortgage loan originator, I have never seen the jumbo rates the same or lower than conforming loans. The main reason jumbo rates are so low is because lenders that buy and service these loans want to attract wealthy clients and cross sell them other financial products (like brokerage services) where they can collect ongoing fees.

Given the strict underwriting requirements with all mortgages, especially jumbo loans- borrowers are having to open up their entire financial position in order to qualify and lenders can see what other opportunities there are for opening a brokerage account, life insurance, etc. Also, since the borrowers are taking out a low fixed rate loan, the borrowers are likely to keep their mortgage and won’t be refinancing anytime soon. The affluent client will stay as a bank’s customer for a long time.

Jumbo loans have also become cheaper on a relative basis to conforming loans in part from additional government regulation. The Federal Housing Finance Agency(FHFA), which regulates Fannie and Freddie, has forced lenders to keep additional reserves for potential mortgage defaults on conforming loans. They have increased reserves by charging guarantee fees (GFees) to lenders which increase rates on conforming loans. Since Fannie and Freddie don’t participate in the jumbo loan market, those guarantee fees don’t apply on jumbo loans and therefore are not passed on to borrowers who borrow more than $417,000.

In Austin, Texas, you can still obtain financing with as little as $32,450 down up to a sales price of $649,000. These loans also don’t require private mortgage insurance. You can obtain financing with a minimum down payment of $90,700 on a sales price of $907,000 without mortgage insurance.

We can help you with a purchase or refinance of a jumbo loan in a timely and professional manner. Please call Todd Kurio, Residential Mortgage Loan Originator, at 512 459 2405 or email at todd.kurio@capstarlending.com. Capstar Lending, NMLS #216616

The Two Types Of Private Mortgage Insurance (PMI)

When looking into financing, most borrowers want to avoid paying private mortgage insurance.  Private Mortgage Insurance(PMI) is generally required on conventional loans when the loan amount is greater than 80% loan to value (meaning you have less than 20% equity in the house). The two types of mortgage insurance are Borrower Paid (BPMI) and Lender Paid (LPMI).  Lets take a look at each.

Borrower Paid or BPMI

The lender charges a yearly premium paid out in your monthly payments.  The average BPMI is .21 and 1.15%, depending on how much you put down and what your credit score is.  BPMI can be cancelled by law.  Once the balance reaches 78%, the lender is required to cancel BPMI.  There are other options to cancel the the PMI at 80% loan to value.

Lender Paid or LPMI

Includes the cost of the insurance in the form of a higher rate. In exchange for covering the PMI, the lender charges you a slightly higher rate for the life of loan. It normally results in a lower monthly mortgage payment than BPMI. This type of mortgage insurance can’t be cancelled.   The LPMI is usually an attractive option if you are likely to move or refinance within 7-10 years. LPMI may have tax benefits compared to borrower paid monthly which is no longer tax deductible(for tax advice, please consult a tax professional). Borrowers can generally purchase 5% more house with LPMI than with BPMI for the same monthly payment.

Keep in mind, these types of insurance should not be confused with insurance that pays off your mortgage upon death, or homeowners insurance, which protects you from losses due to such events as wind, fire, damage,etc.  This type of mortgage insurance only protects the lender in case of default (non payment of the loan).  Even though the borrower/buyer pays for this type of mortgage insurance- it does not protect the borrower- it protects the lender.

However,there are ways to avoid the monthly mortgage insurance cost. In addition to doing a “piggyback” loan where you get a first and second loan to avoid the mortgage insurance, you can also avoid monthly mortgage insurance costs by obtaining Lender Paid Mortgage Insurance, one of the two types of mortgage insurance we discussed above.

For more information on ways to avoid mortgage insurance and lower your monthly mortgage payment- please contact Todd Kurio, Residential Mortgage Loan Originator, todd.kurio@capstarlending.com, 512 459 2405 NMLS#216616