Posts

Interest Expense Always Exceeds Tax Savings; Nobody “Needs” Write-off

There is no doubt that renters experience a tremendous tax benefit or subsidy when they buy a house. This is b/c they can deduct all of the interest and property taxes they pay from their income before calculating their tax liability. But, we often have borrowers who are confused about the nature of tax deductions, […]Read More

IRS Only Allows Deductions For Those Who Actually Pay

We often have borrowers who are just co-signing or going on title, but they have no intention of making payments. These same borrowers also often want to “take the tax deduction for interest and property taxes.” The IRS, however, usually does not allow borrowers to take the deduction for interest and property taxes unless the […]Read More

Accrued Interest on Mortgages – Arrears, Skipping Payments

Interest on mortgages always accrues in arrears. This means your December 1st mortgage payment covers interest that accrued in November. In contrast, a December 1st car payment will cover interest that will accrue in December. For a purchase, borrowers pay interest through the end of the month, and then skip a payment. Hence, if a […]Read More

Accrued Interest and Mortgage Payment Myths

We had a seller recently who insisted on closing by month-end b/c he could “not afford another payment” on his mortgage. B/c we inherited the deal from another lender 7 days before month-end, we were not able to comply with the seller’s request. The seller was utterly confused, however. Interest was accruing against his mortgage […]Read More

PMI (Mortgage Insurance) Is Back for The Better!

Mortgage Insurance is back. MGIC, our favorite provider of mortgage insurance, recently lowered all of their rates, and they increased their Maximum LTVs. This is extremely good news, as PMI is a welcome alternative to FHA. The reasons are two-fold: (1) PMI has NO UP FRONT Mortgage Insurance (while FHA currently requires 2.25% of loan […]Read More

FHA Mortgage Ins. for 5 Years; Up Front MI Goes Up To 2.25%

Remember that FHA Monthly Mortgage Insurance must remain in place for at least 5 years (even if the LTV is 50%), but borrowers can eliminate MI after 5 years IF they can prove they have 22% Equity (their LTV is 78% or lower). Remember too that FHA’s “Up-Front-Mortgage-Insurance” jumps up to 2.25% (of the loan […]Read More

Rates Off a Bit; FLIP Rules Explained Again

We are still getting FLIP questions. We have both FHA and Conventional lenders that allow for FLIP Transactions. A FLIP is a property getting re-sold by a party (other than a bank) that took possession in the last 90 days. Our FHA FLIP lenders typically request two appraisals to ensure the value is there and […]Read More

Rates Will Shoot Up No Matter What the Fed Does

Our continued reminder to our clients is that rates will increase, and increase sharply, no matter what the Fed does. The Fed does NOT have 100% control over market interest rates. The Fed’s limited tools are not enough to control the interest rates in the way many think they can. What will spike rates: (1) […]Read More

Why Buy Now?

We have a first time buyer who has been making offers continually for over 18 months. His problem is not a lack of inventory; his problem, we think, is that he is too obsessed with getting a “good deal” and he underbids time and time time again. We tell him to bid more aggressively and […]Read More

Debt Ratios To 60% OK; New Regulations Not a Concern

We had two purchases come to us in the last week that were denied at other lenders because of High Debt ratios. Remember that different lenders have different debt ratio ceilings, and relying on a single lender is risky. Most of our lenders cap ratios (per Fannie Mae guides) at 45%, but Met Life goes […]Read More

Options With Less Than 20% Down; No More 2nds; MI Is Best if Borrower Is Very Strong

If a buyer has less than 20% of the Purchase Price for a Down Payment, there are far fewer options than there were two years ago. Concurrently funded 2nd mortgages and/or equity lines no longer exist. The only options now are Mortgage Insurance or FHA Financing. For well qualified borrowers, Mortgage Insurance is still the […]Read More

Investors Can Own Ten Properties with Mortgages; CAL STRS Loans

With respect to gold prices, even though near-record gold prices in excess of $1,000 per ounce make people nervous, keep in mind that gold prices would have to exceed $2,300 in “inflation- adjusted” dollars to equal the highs we hit in the early 1980s. So, don’t panic until you see gold prices above $2,000 per […]Read More

Google Enters the Mortgage Arena – Industry Too Complex Now

The New York Times announced that Google will soon enter the mortgage arena by offering rate quotes. Lending Tree, a company that also offers on-line quotes, is upset about this because Google will be using the same supposedly exclusive technology that Lending Tree uses. Here at JVM we could not be more bemused by all […]Read More

Two Schools of Thought – Inflation School Winning; Other Lender Had Purchase Since February!

Right now there is a “tug of war” between two schools of thought. On the one hand, the economy remains weak, and the government is buying huge portions of mortgage backed securities in an effort to keep rates low. The economy remains weak enough that there is no threat of inflation. Mr. Bernanke, our Fed […]Read More

Huge Rate Variance Among Lenders

The market appears to believe a recovery is in the works, so money continues to leave Bonds (and mortgage backed securities) for the Stock Market, which has improved almost 34% since March lows. Because higher rates will put a damper on the expected recovery, many analysts expect one or more dips in rates before the […]Read More

Traders Focus on Excess Debt; Financing Ten Investment Properties; Inventory Absorbed

Rates edged up as the market appears to be concerned again about the record levels of debt that will be coming to market this year. Traders are uncertain that the market can absorb all the debt. Housing inventory in California is now at only 6.5 months’ supply, down from 15.3 months a year ago. This […]Read More