If you’re underwater with your mortgage, don’t feel alone — and don’t feel like you have no options. With the Home Affordable Refinance Program (HARP) loan, you may be able to refinance no matter how upside-down your mortgage is.

According to researchers at CoreLogic, a leading analytics firm, 11.1 million or 22.8 percent of all residential properties in the United States were worth less than the amount their homeowners owed on the mortgages used to purchase them. It’s hard not to feel stressed out in that situation. Fortunately, you have a life preserver.

The HARP loan is a federal program specifically designed to reach out and give a helping hand to responsible homeowners that have suffered a reversal of fortune thanks to collapse of the real estate bubble. The federal government originally rolled out the HARP program in 2009 to help homeowners who were underwater or near underwater. However, the program was recently broadened to reach even more borrowers who need a helping hand. Originally, HARP applied to 895,000 underwater borrowers; and now HARP II is expected to help up to double that amount. According to HUD, about 400,000 homeowners have taken advantage of the program since it launched in April 2012.

And that’s terrific news, because it means that not only do the homeowners who are in truly dire straits have access to help, but the underwater homeowners who are continuing to make payments and need some financial breathing room can get some relief by refinancing. The new HARP II loans mean that those homeowners can have extra money going back to their bottom line each month, while continuing to pay off their loans in a reasonable timeframe. And that’s a good thing for Fannie Mae and Freddie Mac, because that equates to more financially stable and dependable borrowers.

The new program offers a number of advantages over the original HARP loans. First off, there is no loan-to-value or combined loan-to-value restriction on fixed-rate loans with terms of 30 years and under. In other words, HARP II can help millions of homeowners no matter how upside-down they are on their mortgages. Previously, there was cap that restricted borrowers who owed more than 125 percent of their home’s current worth from accessing the program.

In addition, an appraisal may be waived if a value for the home can be automatically generated, and the borrower only needs to have a 620 FICO score.

There are three main components to qualifying for a HARP II refinance loan. The first requirement is that your loan must be owned by either Fannie Mae or Freddie Mac. If you’re not sure, I can easily look up your loan for you and determine if you qualify. You can also visit www.fanniemae.com/loanlookup or www.freddiemac.com/mymortgage and fill out the quick, online forms, which will tell you if either government-sponsored enterprise owns your loan. Second, your loan must have been sold to Fannie or Freddie before June 1, 2009. Third, a HARP II refinance must benefit you in least one of four ways:

• It must reduce your loan’s monthly principal and interest payment.
• It must reduce the loan’s interest rate.
• It must reduce the loan’s amortization term.
• It must transition your mortgage to a more stable type of loan. For example, it must move you from an interest-only loan to a fully amortizing loan; it must move you from an adjustable-rate mortgage to a fixed-rate loan; or it must transition you from a longer 30-year term to a 15-year loan.

If you have a Fannie Mae- or Freddie Mac-owned loan that is underwater, or close to it, and you are looking to come up for air, please contact me using the information printed on this message. I would be happy to meet with you to review your current loan status and discuss how the HARP II program can help you breathe easy and gain the financial confidence and stability you deserve.

Freddie Mac and Fannie Mae have adopted changes to the Home Affordable Refinance Program (HARP) and you may be eligible to take advantage of these changes. If your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP. You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking the following websites: www.freddiemac.com/mymortgage or http://www.fanniemae.com/loanlookup.

Whether you are considering a first home, a larger home for a growing family, moving into your dream home or perhaps buying a second home or rental property, two key economic factors, mortgage rates and home prices, have lined up in your favor. Let’s take a look at how they are working together to give you extremely potent buying power and why you should take action now before these favorable conditions change.

Irresistible Interest Rates
When you read in the newspapers that rates are at historic lows, this is not an exaggeration. Interest rates on home loans truly are at the lowest they have been in decades. The reason for this is that due to the recent “Great Recession,” the Fed has had to lower the federal funds rate to between 0 percent and 0.25 percent. The federal funds rate is the interest rate at which savings banks, commercial banks, savings and loan associations and credit unions trade balances with each other.

The federal funds rate impacts all other rates, including mortgage loans, so, at times of slow or no economic growth, the Federal Reserve will lower the federal funds rate in hopes of making credit cheaper to all people and in turn boosting the economy. This is why home mortgage rates have remained so low. The moment the economy starts to truly grow, the Federal Reserve will start to increase the federal funds rate, and home financing loan rates will follow suit.

Right now, mortgage rates are incredibly attractive after a downward slide over the course of 2011 that ended with 30-year fixed-rate mortgages in the 3.9 percent interest rate range. So far, in 2012, rates have topped the 4 percent mark, according to surveys from the Mortgage Bankers Association, but these are still historic lows.

Will rates stay like that? Well, factors such as increases in retails sales and improvements in unemployment are pointing to a recovery. After a spike to 10 percent in October 2009, unemployment rates have been on a solid downward trend since September 2011, and have been hovering at 8.3 percent.

Certainly, qualifying for loans is harder these days. More rigorous documentation is required, and down payment requirements and other lending terms aren’t as loose as they were during the 2005-2006 real estate boom, but if you are in solid financial shape, you needn’t worry. I’d be happy to sit down with you and look at what loans make the most sense for your financial position, and to work out different scenarios using today’s low rates, as well as rates after possible increases in the near future.

Home Prices
In terms of home prices, now has never been a better time to buy. After spending months at stratospheric highs during the real estate boom, homes that had doubled in price by 2006 are still below their pre-bubble values.

If anything, home prices are still in retreat. Using data from the National Association of REALTORS®, the median cost of existing single-family homes ended 2011 nearly at the same price it began the year, $158,000. And that price tag is down from 2010 and 2009.

That said, inventory might be starting to slip, which could see prices go higher. In recent months, housing inventory has been hovering around a six-month supply (at current sales rates), with roughly 2.4 million homes for sale. That might look like a lot, but it is nearly 20 percent below what it was a year ago.

Using simple supply-and-demand, it’s not hard to see that with declining inventory, today’s low prices could go up in the not-too-distant future. This is just as true for today’s rock-bottom interest rates, so it’s not hard to see why savvy homebuyers are responding to the bargains. All-cash purchases of existing homes are accounting for roughly 30 percent of transactions, and investors are accounting for more than 20 percent of purchases. The investors know a good deal when they see one, and today’s lending and real estate environment represents an amazing bargain indeed.

Make Your Move
The numbers don’t lie. You will most likely never see a better buying opportunity than now. If you are considering a purchase of a larger home to accommodate a growing family, the dream home you’ve always wanted, an investment property or any other home purchase, take the time to review to the numbers. Mortgage rates and home prices have created a spectacular buyer’s market.

But remember, it won’t stay this way forever. An improving economy could foster higher rates, and declining inventory could see prices go up. If you are on the fence about a real estate decision, don’t be. Now is the time to make your move. Please contact me using the information provided on this newsletter and I’d be happy to help you develop a strategy to take advantage of this historic opportunity.

Your home is one of your most important investments and financial assets, but do you know its value? If you hesitate to answer, don’t worry, you’re not alone. Even if you’re not trying to sell right now, there are other reasons that you may want to know your home’s market value. And knowing this number can help you move quickly when it’s time to make a decision about any of the following actions.

Selling your home.
There might come a time when you need to sell your home. You might get offered an out-of-state job opportunity, determine it makes financial sense to downsize, or need to look for a larger home if your family is expanding. If you are ready to buy another home, your current home’s value can narrow down your options for your new purchase, and I can show you the financing options that will be available to you. Knowing your home’s market worth would certainly help you make an informed decision, and put you in a position to more quickly respond.

Refinancing your home.
There are a number of reasons to refinance. For instance, you might be able to finally tap into current low rates, or you might desire better terms. You can find out if you will qualify for a traditional refinancing program or if you may be eligible for the HARP II refinance program, which allows homeowners who owe more than their home is worth to restructure their loans into more stable products with a lower rate. Until you know your home’s value, you won’t know how advantageous or disadvantageous a refinance would be from a financial perspective. I’d be happy to assist you in exploring whether refinancing makes financial sense for your unique situation.

Making home improvements.
While you might have mulled over how home improvements, such as a bathroom makeover, new countertops, or perhaps an addition, could improve your enjoyment of your home and mused at what additional value they might bring, you really don’t know until you’re aware of your home’s value. Check what other homes in your areas have sold for, and pay particularly close attention to any sold properties that had upgrades similar to or the same as yours in relation to those that don’t. Once you get an idea of what your home might sell for, you can see if the upgrades you are considering are worth the expense, or if you might want to go with a more cost-effective option.

Reassessing your taxes.
Your county assessor’s office reviews property values on a periodic basis, and makes adjustments based on a property’s market value. In a down market this can mean much lower property taxes. Being aware of your home’s value can put you in a position to anticipate changes and do some tax and financial planning accordingly. That said, many assessor offices only shift their regular assessments by a maximum amount or percentage of the previous year’s value. However, many states offer an appeal mechanism that can help you push for a lower reassessment to ensure an even more advantageous (and fair) property tax break. But the key is to know your home’s actual value and be able to document it.*

So, how do you determine your home’s value? Your first instinct might be to go to a popular website or download an app for online services that provide estimated real estate values. While these services might offer some instant gratification, they might not take in all the factors and trends that will give you the most accurate estimate of your home’s worth.

Especially if you are considering a move, the best option is to go to a real estate agent that has expertise in your marketplace. An experience professional who is familiar with the properties in your area and has been involved in numerous local transactions will have not only the tools and information but also the context and expertise to get a more accurate read on your home’s true market value. An experienced agent can bring insight into your local market and help you see opportunities that you may not have considered before. This also gives you the opportunity to find a trusted agent that you can work with when it’s time to buy or sell.

I work with a number of experienced real estate partners who can meet with you to help determine your home’s actual market value and help you prepare for any of the situations listed above. If you’d like to learn more or get in touch with those experts, please contact me using the information on this email. I’d love to help!

Everything changes with time, and your home financing shouldn’t be any different. The home loan you selected when you bought your house 10, five or even one year ago may not fit your financial situation anymore.

As we all know, your financial situation and the real estate market can change. Because our lives and the economy are not static, it’s important to reassess your home financing periodically to see if it is still the right plan for you and to see if there are ways for you to reduce your monthly payments, pay off your loan sooner or change to a loan type that works better for your current financial needs.

For many people refinancing is a great idea — even if you only bought your home in the past couple of years. Additionally, new programs have opened up the refinancing option to homeowners who may be underwater on their loans, allowing them to reap the benefits of a revised home financing program.

There are many different reasons why a homeowner may choose to refinance.

• Take advantage of historically low interest rates.
  Interest rates haven’t been this low in 50 years. If you can get in now before they begin to climb, you can keep your monthly payments low and could even hold down the overall cost of your loan over the long haul.
• Ditch your adjustable-rate mortgage.
  It could be your current loan is an ARM that will soon adjust upwards. Or, you might prefer the peace of mind offered by a fixed-rate mortgage.
• You have a Fannie- or Freddie-owned loan.
  Even if you’re underwater on your home, you may qualify for a refinance under the HARP II program. With no LTV requirements, homes worth less than their mortgages can still get a refinance so the owners can take advantage of today’s market and reduce their monthly payments.*
• Get some cash.
  You could have credit card debt or another large expense that you wish to pay off. If this is the case, you might want to refinance and “cash out” a certain amount to cover this expense. In fact, cashing out a certain amount at a mortgage’s much lower rate to pay off a debt — say, a credit card — at a much higher rate often makes solid financial sense.
• Change to terms that better suit your current financial situation.
  For instance, your current loan might be a 30-year, but you now find yourself in a financial position that lets you pay it off in 15 years. Opting for the shorter term loan will help you pay off your debt sooner and save significant money over the term of the loan. Likewise, you might find yourself in a position where your income has decreased and you wish to extend the term of the loan.
• See whether you can remove your private mortgage insurance.
  PMI is required of borrowers who put down less than 20 percent on their home, and can cost anywhere from .25 percent to .75 percent of the loan value. In general, if you have a 22 percent equity position in your home, you will likely be able to remove your PMI, but be sure to check your state regulations as they vary widely. Look at comparable houses for sale in your neighborhood to help you gauge whether your equity has risen.
• Roll a second mortgage into one loan.
  Again, this could mean significant savings for you over the long haul.

If you see yourself in any of these situations, you should give me a call so we can see if a refinance would benefit you.

Key Considerations
Whatever your reasons for wanting to refinance, there are a number of factors you’ll want to consider.

• Make sure that your current loan does not have a pre-payment penalty for refinancing. Such a penalty says that you cannot pay off your loan too early. If you have one in place, you’ll want to make sure you are outside that penalty phase (these typically last between one and five years).
• Look at whether or not the costs of a refinance are recouped by your lower rate. All loans have closing costs associated with them, and you want to make sure that whatever savings your new loan delivers will also be worth the closing costs.
• Ensure the savings over the long term make sense. Compare the overall cost of the new loan to the cost of the old loan. Take the remaining months of your existing loan and multiply them by your principal and interest payments and compare that product to the same calculation for the new loan. Is it lower? Is it higher? How large is the difference? Obviously the goal is to save money, but if a cash-out is involved, you’ll need to account for that.
• Factor in the tax deductions of the new loan in comparison to the old. Are they larger or smaller? By how much? The write-off for mortgage insurance means a lot to most households, so you want to make sure that the money you save on your mortgage won’t be undermined by a less advantageous tax position.**

When considering a refinance there is a lot of information to take into account, which is why it makes sense to sit down with a home financing expert to ensure you’re making the smartest financial decision you can.

Every month, you receive a mortgage statement that reminds you to make your regular payment against your loan, but did you realize that it can serve as a strategic financial tool?

It’s true. Whether you receive your statement via regular postal mail, or get your statement online, there are various pieces of information on it that can serve as useful intelligence for better managing your home financing, and help you make well-informed decisions about your loan.

Let’s take a look at four important pieces of information found on your statement each month:

1. Taxes.
As tax season approaches, you’ll want to review your property tax write-offs, but also use your statement to check that you aren’t paying too much. Many people have their property taxes paid via an escrow account attached to their home loan. The yearly property tax is put aside in the account and paid out per your local county assessor’s tax collection.

If you pay your property taxes through such an escrow, the year’s property tax total will be divided by 12 and bundled into your monthly mortgage payment. If your local real estate market has shifted, the figure being set aside for your property tax escrow could have shifted, as well. If the property tax fees on your payment stay the same while your home’s value changes, it might be time to have your home’s value reassessed.*

That said, there can be limitations placed on how much the assessors can adjust the value of your property each month, so make sure you familiarize yourself with your local regulations.

2. Amortization.
When you make a payment against your home loan each month, you pay the same amount, but what that money goes toward changes over time. In your loan you have the principal amount, which is the amount you borrowed to finance the purchase of your home, and you have interest, which is the fee you are paying for borrowing that money.

When you first begin paying your loan, your payment goes predominately toward interest, but over time your monthly payment shifts increasingly toward principal. This process is amortization, and your statement shows how your loan is amortizing each month.

If you want to try to pay down your loan more quickly in order to gain additional equity in your loan, you can pay a little extra each month, or make an additional payment each year. Make sure to note on your payments that you wish these extra payments to be applied toward principal, and watch your progress on your statement.

3. Homeowner’s insurance.
Like your property taxes, many homeowners pay their homeowner’s insurance in monthly installments that are bundled into their loan payment. If you do this, make sure to monitor your loan statement to see if this amount increases or decreases, which would obviously reflect changes in your insurance rates.

Also, taking a moment to examine the amount you are paying provides you with an opportunity to mull over whether or not you need to alter your policy in any way.

4. Private mortgage insurance.
Borrowers are generally required to pay for private mortgage insurance (PMI) if their down payment is less than 20 percent of the sales price of their home. This means that the loan-to-value (LTV) ratio is more than 80 percent. Essentially, PMI is designed to protect the lender in cases where the borrower defaults on the loan.

In most cases when your current loan’s LTV falls to 78 percent or below, you no longer need to pay for PMI. So, if you pay PMI, watching the principal on your loan each month can help you keep track of when you may be able to cancel your PMI, which can save you a fair amount of money (which you could consider putting toward the principal, in fact).

Remember, your mortgage statement is more than just a reminder to make your payment — it’s a useful tool. If you’d like to learn more about how to strategically leverage the information on your loan statement, or if you have any other home financing questions, please contact me using the information on this email.

For many Americans, our homes represent our single largest financial investment and asset, let alone the place where we eat, sleep, live our lives and raise our families. Given all the life changes that we can experience in 12 months, it’s worth taking a moment to review what has happened in our lives — and in the real estate market — and ensure our homes still have the right financing behind them. There is no better time to do this than at the start of every new year.

It’s a smart financial move to take a look at your mortgage each year to determine if it is still the right fit and meeting your current needs. Reviewing your loan with a licensed mortgage professional is critical so you can fully understand your options. I’d be happy to spend some time with you and review your current mortgage and your long- and short-term financial goals. Together we can determine if it’s time for a change. Below are some of the points we will address and events that may have changed in your life during the last twelve months.

Low mortgage rates. We keep hearing that mortgage rates are lower than they have been in decades. Perhaps you were not in a position to take advantage of today’s rates because of a previously low credit rating or annual income. If circumstances have changed and you are now in a place where you can leverage current bargain rates, it may be time to reevaluate your current mortgage and make a change.

Life changes. A new baby, an unexpected medical expense, saving for college tuition, decreased or increased income or having to buy a new vehicle and take on a monthly car payment are all big events that can change your budget in ways that impact your mortgage. Some of these events you can plan for now, so that you are prepared for your budget to change significantly. To address other unexpected expenses that may have occurred in the last year, you may want to look into a cash-out refinance to meet additional financial burdens head-on. We can discuss your options to decide what works best for you and your changing needs.

More favorable loan options. You might want to consider different loan terms, get a completely different type of mortgage or remove a second mortgage. Or, you might be in an adjustable-rate mortgage that will soon adjust upwards, so you might seek a fixed rate.

Eliminating mortgage insurance. Perhaps your current loan includes private mortgage insurance, which is required when you make a down payment of less than 20 percent, and can cost from .25 to .75 percent of the home’s value. In general, if you financed your home at least two years ago and now have 20 percent equity in your home, you can request your lender remove the PMI. You may also consider a refinance for a different type of mortgage.

As you can see, when conducting your mortgage review we’ll need to look at many variables. In addition, you’ll need to keep some other factors in mind:

Closing costs. If you wish to refinance to get a lower rate, you want to see how long it will take you to recoup your closing costs. You’ll need to consider how long you plan to stay in the home along with other factors to make sure a refinance is a fiscally sound move.

Tax deductions. Another key consideration is the possible gain or loss of tax deductions, depending on the type of mortgage you pursue.* We sometimes don’t realize how much of a tax break we’ve been getting from our mortgage interest!

No matter how you slice it, engaging in an annual mortgage review is a big job, and you’ll need some expert advice to ensure your mortgage is still the right one for you — or to select new financing that brings you greater benefits. In the same way you would consult with a doctor to come up with a healthy fitness plan for the coming year, I would love to sit down with you and review all the options and variables in play. Reach out to me via the contact information on this email to schedule your mortgage checkup today!

*W.J. Bradley is not a credit counseling or financial advisement firm and this information is for educational purposes only and is not to be taken as guidelines or guarantees to improve your credit or financial situation or eligibility to secure a home loan.

Most people use credit to make a purchase at some point in their lives, whether it’s a big-ticket item like a home or car or smaller purchases made on a bank or store credit card. These lines of credit are extended to individuals based on a number of factors that, when combined, determine your credit score. Understanding that credit score can have a tremendous impact on your financial health, and frequently on other aspects of your life as well.

A credit score is a numerical value calculated by a third party that describes how likely someone is to repay a loan. Credit scorers look at a variety of factors including past financial and borrowing history to determine the score. Lenders then use this score to decide how safe it is to lend that person the money they need.

How those scores are calculated depends on the rating system. Most people are familiar with the FICO score. FICO is named for the Fair Isaac Corporation, which was founded by an engineer named Bill Fair and mathematician Earl Isaac, who developed their credit scoring system in the 1950s. It has since gone on to be the gold standard of credit scores — and that should come as little surprise given that Fair and Isaac were true visionaries for their time (Isaac even experimented with artificial intelligence as early as the 1950s).

FICO scores range between 300 and 850 points, with the higher scores telling lenders that a borrower is a low risk, and lower scores denoting a higher credit risk. If your FICO ranks too low, you’ll have a tough time finding a loan, and if it’s high enough, lenders might offer you competitive terms to secure your business. To provide some perspective, the median FICO score for U.S. borrowers in 2010 was 723.

The FICO credit scoring model is used by the three biggest U.S. credit repositories, Equifax, Experian and TransUnion. For mortgage lending purposes, if three scores are present, the middle score is used. If two scores are present, the lowest score is used.

The factors that go into your FICO score are:

Whether you plan to be in your new home for a short or long period of time, you’ll always want to be mindful about how much your improvements will cost and what type of value they will add to your home.

Your payment history on loans and other credit, as well as bankruptcies, delinquencies and past due payments. Late payments, especially multiple late payments, can seriously hamper your credit. Payment history constitutes approximately 35 percent of your FICO.

The number of accounts you owe on and how much. Also, how close you are to your loan limits is important. The amounts you owe impact roughly 30 percent of your FICO.

How long your various credit accounts have been open and how long since each has seen activity. The longer you have had credit, the more it helps your rating, especially if you use that credit, so don’t close out old accounts. Fifteen percent of your FICO is influenced by the age of accounts.

Recently opened new accounts. Applying for lots of different credit at the same time will hurt your rating. That said, applying for various loans of the same type in a concentrated period of time, such as a car loan, will not impact your FICO as it denotes that you are shopping for a good loan. Newly opened accounts affect 10 percent of your FICO score.

Types of credit used. FICO scores also rate your ability to manage a mix of different types of credit, such as a mortgage, student loans, car loans, credit cards and other types of credit. This impacts about 10 percent of your FICO.

Remember, your score matters. Make sure to review your FICO early in the process of securing a home loan. Ensure that none of the three credit agencies’ reports contain any errors, and appeal to have them removed if so.

Would you like to learn more about FICO scores and how they relate to loan eligibility? I’d love to help. Please contact me via the information on this message and I’d be happy to sit down and meet with you.

*W.J. Bradley is not a credit counseling or financial advisement firm and this information is for educational purposes only and is not to be taken as guidelines or guarantees to improve your credit or financial situation or eligibility to secure a home loan.

You’ve found a great home, but it’s a bit rough around the edges and you’re on a limited budget. That leads to a number of questions: How much will the necessary upgrades and repairs cost? How much value will they add to the home? How are you going to pay for all this?

Whether you are upgrading to a larger home in a neighborhood you’ve always loved, downsizing to a smaller home now that the kids are out of the house or even moving to a new state, don’t let a house that you love get away just because it needs some repairs or updates — you do have options!

203(k) Loans
A 203(k) loan lets a qualified borrower not only finance the purchase price of the home, but also include the price of the necessary repairs to the home.

Many types of properties qualify for 203(k) loans. Approved improvements include painting, room additions, decks, bathroom and kitchen remodels, finished attics and basements, structural changes and repairs, environmental rehab such as removing lead paint or making energy efficiency upgrades, roofing, flooring or accessibility upgrades for disabled residents.

It’s important to note that there are two different types of 203(k) loans available and you’ll need to determine, along with your lending professional, which type of loan is right for your particular situation. I’d be happy to spend some time with you to review and determine what might best meet your needs. Here’s a quick overview of the available 203(k) options:

• A “streamlined” 203(k) loan is intended for a home that requires only non-structural repairs like cosmetic upgrades (painting, new carpet and appliances, new roof). In addition to the price of the home, you can borrow up to $35,000 to cover improvements.
  
• A “regular” 203(k) loan is for properties that require structural repair, such as room additions, or major landscape work or site improvement. You can borrow the purchase price of the home, plus the price of the improvements, up to 110 percent of the home’s expected value after the improvements.

Once you’ve understood your loan options you’ll also want to examine the specific types of upgrades or repairs you’d like to make to your new home.

Eligible Upgrades and Repairs that Make Sense
Whether you plan to be in your new home for a short or long period of time, you’ll always want to be mindful about how much your improvements will cost and what type of value they will add to your home.

A good place to review this data is in Remodeling magazine’s annual “Cost vs. Value” report. The report is considered a sort of gold standard for the return on investment for various home improvements. This can also serve as an excellent guide towards helping you understand the costs of certain types of upgrades and repairs. The data is available for free on the magazine’s site (www.remodeling.hw.net/2010/costvsvalue/national.aspx), and can be broken down by region and even city. It even provides drill-down information on various improvements, including pictures.

Here’s a look at some of the top remodeling projects you may want to consider that are eligible under 203(k) loans.

• Minor kitchen remodel. If your new home doesn’t have your dream kitchen, this may be a smart choice for an upgrade. While kitchen upgrade costs can be high, Remodeling magazine estimates replacing the cabinet door fronts; adding new hardware; getting a new range; swapping out the counters; laying new flooring; installing a new sink; and painting a dated, 200-square-foot kitchen can bring a 72.8 percent return on investment.
  
• Attic bedroom. Does your new home lack that extra bedroom you desire? You may want to consider converting your attic space into an extra bed and bath. This will not only provide you with more living space but converting an attic to a 15×15 bedroom with a 5×7 bathroom will bring on average a 72.2 percent return on your investment, according to Remodeling magazine.
  
• Basement remodel. Finishing a 20×30 basement area into a bonus room with a bathroom and a wet bar can provide you with a great deal more space in your new home and can also add a good deal of value to it.

Another key trend to keep in mind, presented in Remodeling’s latest national data, is that upgrades on the outside of the home offer some of the best value of all home repairs and upgrades. These include:

• Steel entry-door replacements. Swapping out a drafty wood door and jambs for a 20-gauge steel door is the No. 1 replacement in the country.
  
• Replacing the garage door. This improvement takes the No. 2 spot.
  
• Wooden or composite deck additions. In addition to adding ambience to your home, decks can also add to the value of it. For instance, Remodeling magazine data shows that adding a wooden deck with an anchored, 16×20 deck using pressure-treated wood with railings and stairs delivers a 72.8 percent return on your investment.

There are a wide variety of upgrades and repairs permitted under the 203(k) loan programs, so be sure to examine all of your options and determine what makes the most sense for your new home.

Getting Started
Once you’ve determined the upgrades and repairs you’d like to pursue, be sure you speak with an experienced 203(k) lender that is well-versed in the details of permitted improvements under the program. It is also important to note that FHA rehab loans may take longer to close with a lender that doesn’t have experience with them, because there is more paperwork. Working with a lending professional that is experienced with 203(k) loans will help you avoid those delays.

Please contact me using the information on this newsletter, and I’d be happy to review how you can use the right funding to put some shine on that diamond in the rough!

Given current economic pressures, many people are trying to erase debt from their financial picture and focus on saving and safer investments. Americans are paying down their credit cards and cautiously borrowing money. Not surprisingly, paying down the home mortgage has become an attractive option for people in a financial position to do so.

However, paying off your mortgage isn’t necessarily something you always want to do. It turns out there are various considerations you should weigh to decide whether paying off your mortgage is the right move. Let’s take a look at some of the factors that could influence your decision:

Do you have other debt?

If you are still paying off a car or carrying credit card debt, then paying off your mortgage shouldn’t necessarily be your first concern. It all comes down to interest rates. Chances are your mortgage carries the lowest interest rate you have. Why prioritize paying off a loan at a much lower interest rate when you should be prioritizing paying off more expensive loans, such as credit cards?

Peace of mind.

For many, paying off the mortgage brings a psychological benefit. It’s true for many people that they are not happy when they owe money; it represents an insecure state of personal finances for them. That’s completely understandable, but curbing an emotional response to consider how you can best make your money work for you is probably the best way to go. For some, that could indeed be to pay off the mortgage. For others, it might make more sense to stick to the original term of the loan. The best rational outcome should ultimately prove the most psychologically satisfying.

Taxes.

If you pay off your loan early, you will lose the ability to write off the mortgage interest you have paid during the tax year. That can amount to a considerable deduction. However, don’t be oversold on this issue. If you don’t itemize your deductions, or are confident that you won’t be itemizing by the time you pay off your loan early, then this might not apply.*

Make sure to do the math.

As mentioned, your money should be working for you, so you need to take a moment and determine the most beneficial way to use your capital. Paying down your mortgage is one way, but can you get that money to perform better for you through investing? Whichever is the higher rate will be the strategy you want to pursue. Then again, you also need to factor in the taxes that will come into play if your investments pay off. How will capital gains taxes fit into the equation?

Remember that your home is an investment.

The equity you place in your home will most likely pay you back quite well. While the real estate market has dips, it has been on an upward trend in the broader sense. Moreover, if you pay off your home, you’ve now eliminated a major expense from your retirement budget, which means you’ll need less money to retire. That said, you are sacrificing diversification and the ability to rapidly respond to new opportunities.

Inflation can work for you, believe it or not.

Working on the assumption that there will be inflation in the coming years, what you pay now as a mortgage payment will be relatively less in 10, 20 or 30 years. So if you pay off early, you lose the opportunity to have inflation actually work to your benefit for a change.

Putting yourself in a less secure situation with a lender.

It sounds counter-intuitive, but paying off a mortgage can actually hamper your flexibility to make your money work for you, because your money has gone to your lender, as opposed to an investment where it can work for you and from which you can draw income. In today’s employment landscape, that’s an important consideration.

As you can see, deciding whether or not to pay off your loan early is not a cut-and-dried decision by any stretch. It requires a long, careful look at the numbers and potential life scenarios to determine the smart play. For some it will be to pay off the loan early, and for others paying the loan off in its original term is the way to go.

If you’re considering paying off your loan early, I’d love to review all the considerations with you so that you can make the right decision for you. Simply contact me using the information on this message, and I’ll be happy to help you carefully consider the pros and cons.

* WJB is not a tax advisory firm. The information contained in this article is for informational purposes only and may not reflect current tax year rules and regulations. Consult your tax advisor or the IRS for current tax year rules, restrictions and regulations.

If you are thinking of entering the real estate market, whether as a newcomer or after having taken a break, it’s important to understand some of the new developments that have occurred since the recent market upheaval and how you can use those changes to your advantage to make good choices and solid investments that are right for you and your financial goals.

Whether you’re looking to buy an investment property, second home or even a primary residence there are some new property options that are well worth exploring. Three types of properties that have become very prevalent in today’s real estate market are short sales, foreclosures and REOs. If you’ve never had to deal with buying such a property, your initial reaction might be that the sale will be complicated or protracted, but that’s not necessarily the case.

The common thread for all these types of properties is that the lender has some level of involvement in the sale of the property, rather than just an individual owner. Because so many homeowners owe more than their home is worth or have been unable to keep up with their mortgage payments, it’s not surprising that more of these properties are being listed.

Let’s take a closer look at short sales, foreclosures and REOs to clear up any misconceptions and to demonstrate that these are every bit as solid an opportunity as any other home sale:

Short sales.
In a short sale, a homeowner who has experienced some kind of financial hardship and cannot afford to pay the mortgage and the lender that sold them the mortgage enter into an agreement in which the home will be sold for less than the balance of the loan. This represents a good opportunity for the buyer, because the home will be more competitively priced.

Now, you might have heard that short sales are time-consuming and can end in frustration. That’s no longer the case in most instances, thanks to rules that went into effect under the Department of Treasury’s Home Affordable Foreclosure Alternatives Program (HAFA), which have streamlined the process.

In a short sale, you should work with an agent that has some expertise in short sales (the National Association of REALTORS® offers a special certification, in fact). You make your offer directly with the seller’s agent, who coordinates with the seller’s lender. Not long ago a short sale could drag on for months, leaving the buyer and seller in limbo while the lender took its time making decisions; new laws have significantly cut down on the wait time and many short sales are accomplished within a much shorter time frame now.

Foreclosures.
Foreclosure is a little more tricky. A home goes into foreclosure when the current owner defaults on his or her mortgage. The home can then go into a foreclosure auction, where it is possible to bid on the home. There is a minimum bid the lender is asking for. Winners must pay the full amount of the winning bid at auction. For a typical homebuyer, this is usually not a realistic scenario.

Any unsold auction property reverts back to the lender and becomes an REO, or real-estate owned property, and the lender must find another way to sell it.

REOs.
When a home is put up for sale in a foreclosure auction but is not sold, it becomes an REO. The lender repossesses it, owns it and needs to sell it. Often, REOs represent a good opportunity for prospective buyers, because lenders aren’t in the business of owning homes, so they are motivated to sell.

That said, remember that the lender is still in the game to get the most money it can for the property, and many lending institutions operate departments that oversee their REO properties and take offers on them. Typically, both the lender and the buyer are represented by real estate agents.

REOs are usually somewhat maintained, but can be rough around the edges and need some sizable repairs. This can have a bearing on price. While you will be able to conduct an inspection of the home as you would in any real estate transaction, REOs are often sold “as is,” so if the inspection uncovers costly necessary repairs, the terms of your offer might change.

Perhaps the most important thing to keep in mind when it comes to short sales, foreclosures and REOs is that while they represent excellent home-buying opportunities, they are not fire sales. The sellers, whether the owner or the lender, want to get the most money possible for the property, so it is important to manage your expectations about what constitutes a good bargain.

As you can see, there’s nothing mysterious or hard to understand about these different types of properties in today’s real estate market. I’d love to answer any questions you might have about how these types of properties, and discuss how they can provide solid opportunities for anyone in the market.

Contact me using the information accompanying this newsletter to learn more.

Real estate news dominated last week’s economic headlines with the sales of existing homes for March, including single-family, townhomes, condominiums and co-ops, reaching a rate of 5.1 million units, according to the latest findings from the National Association of REALTORS®.

March’s performance was 3.7 percent higher than an upwardly revised 4.92 million units for February, but still 6.3 percent below March 2010′s 5.44 million pace, NAR reported.

“Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path,” said NAR chief economist Lawrence Yun, who said he expects the improving sales pattern to continue. “With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain.”

Where new housing is concerned, permits for new housing units issued in March were at an annual rate of 594,000, marking an 11.2 percent increase over February’s revised rate of 534,000, according to the latest figures released by the Census Bureau last week.

While March’s permits showed a monthly upward trend, it was still 13.3 percent below the March 2010 estimate of 685,000. Permits for single-family homes in March were at a rate of 405,000, which was 5.7 percent above February’s revised figure of 383,000.

Construction starts on private housing starts in March were at an annual rate of 549,000, which was 7.2 percent above February’s revised estimate of 512,000, but 13.4 percent below March 2010′s rate of 634,000. Starts on single-family homes for March were at a rate of 422,000, which was 7.7 percent above February’s revised figure of 392,000.

Initial jobless claims for the week ending April 16, dipped to 403,000, a decrease of 13,000 from the previous week’s revised figure of 416,000, according to the Employment and Training Administration. The four-week moving average was 399,000, an increase of 2,250 from the previous week’s revised average of 396,750.

The advance number for unemployed workers that were insured during the week ending April 9 was 3,695,000, a decrease of 7,000 from the preceding week’s revised level of 3,702,000.

New homes sales data for March from the Census Bureau leads this week’s financial headlines on Monday, followed by Consumer Confidence figures for February from the Conference Board on Tuesday.

Wednesday will see durable goods orders for March from the Census Bureau, followed by advance figures for Q1′s gross domestic product from the Bureau of Economic Analysis on Thursday. Also on Thursday, the Employment and Training Administration will release initial jobless claims data for last week.

The week’s financial news wraps up Friday with personal income and spending data for March from the Bureau of Economic Analysis, and April’s consumer confidence index from the University of Michigan.

Last week saw a busy calendar of economic updates, starting off with somewhat encouraging foreign trade news. February’s total exports of $165.1 billion and imports of $210.9 billion resulted in a goods and services deficit of $45.8 billion, down from $47 billion in January, the Census Bureau reported Tuesday. February exports were $2.4 billion less than January’s exports of $167.5 billion, and February imports were $3.6 billion less than January imports of $214.5 billion.

In related news, U.S. import prices rose 2.7 percent in March and export prices advanced 1.5 percent for the month, the Bureau of Labor Statistics reported last Wednesday. These gains both followed 1.4 percent increases for both categories in February. Prices for overall exports rose 9.5 percent for the year ended in March, the largest 12-month advance since July 2008.

Higher prices for both agricultural and nonagricultural exports contributed to both the monthly and 12-month increases in overall export prices, while higher fuel prices and nonfuel prices drove the import price increase.

At home, advance estimates from the Census Bureau for March’s U.S. retail and food services sales were $389.3 billion, an increase of 0.4 percent over February, and 7.1 percent above March 2010. Total sales for January through March 2011 were up 8.1 percent from the same period a year ago. The January to February 2011 percent change was revised from +1.0 percent to +1.1 percent.

Three key retail sales segments for March were retail trade sales, which were up 0.3 percent from February 2011, and 7.3 percent above last year; gasoline stations sales, which were up 16.7 percent from March 2010; and nonstore retailers sales, which were up 12.4 percent from last year.

March’s Producer Price Index for finished goods slightly tapered back its growth in March with a 0.7 percent gain, which followed a 1.6 percent increase in February and a 0.8 percent gain in January, according to the Bureau of Labor Statistics.

March’s PPI gains could mostly be chalked up to increased energy prices, with nearly 90 percent of the increase in the finished goods index attributed to a 2.6 percent rise in prices for finished energy goods, the Bureau reported.

In related news, February’s combined value of distributive trade sales and manufacturers shipments was estimated at $1.17 trillion, up 0.2 percent from January 2011 and up 10.9 percent from February 2010, according to the Census Bureau.

Manufacturers’ and trade inventories were at an end-of-month level of $1.45 trillion, up 0.5 percent from January 2011 and up 9.1 percent from February 2010. This put the total business inventories/sales ratio based on seasonally adjusted data at the end of February at 1.24, slightly down from February 2010′s ratio of 1.26, the Bureau reported.

Initial jobless benefit claims for the week ending April 9 totaled 412,000, an increase of 27,000 from the previous week’s revised figure of 385,000, the Employment and Training Administration reported Thursday. The four-week moving average was 395,750, an increase of 5,500 from the previous week’s revised average of 390,250.

Encouragingly, the advance number for insured unemployed workers during the week ending April 2 was 3,680,000, a decrease of 58,000 from the preceding week’s revised level of 3,738,000. The four-week moving average was 3,728,750, a decrease of 20,750 from the preceding week’s revised average of 3,749,500.

This week’s financial news begins Tuesday with the Census Bureau’s data for March housing construction starts and permits. In related news, on Wednesday the National Association of REALTORS® will release March’s existing home sales stats.

Thursday wraps up the week’s economic news with initial jobless claims for this week, which will be released by the Employment and Training Administration, and the Conference Board will release its leading economic indicators data for March.

Consumer credit saw its largest increase in more than two years during October, according to the Federal Reserve’s latest report released last week. October’s consumer credit increased at an annual rate of 1.75 percent for the month, marking the second straight monthly increase.

Non-revolving credit, such as home and student loans, increased at an annual rate of 6.75 percent to $1.59 trillion, while revolving credit, such as credit cards, decreased at an annual rate of 8.5 percent, dropping to $800 billion. This was the 26th straight monthly drop for credit cards.

The largest segment of the non-revolving debt’s growth was student loans, which may suggest that Americans are seeking degrees that could improve their job-hunting prospects.

Read More >

Labor productivity for the third quarter jumped by a 2.3 percent annual rate over the last period, nearly keeping pace with analyst predictions of a 2.4 percent gain.

Productivity is measured as output compared to hours worked, and according to last week’s report from the Bureau of Labor Statistics, non-farm labor output increased 3.7 percent and hours worked increased 1.4 percent in the third quarter. Non-farm business productivity increased 2.5 percent from the third quarter of 2009 to the third quarter of 2010, as output increased 4.3 percent and hours worked rose 1.7 percent.

These gains are moderate, which could point to a future uptick in hiring as businesses realize they have hit a productivity ceiling, even though the unemployment rate inched up to 9.8 percent for November, according to the Bureau of Labor Statistics report from last week. The Department of Labor reported last week that for the week ending November 27, the advance figure for seasonally adjusted initial claims was 436,000, an increase of 26,000 from the previous week’s revised figure of 410,000.

Read More >

Your mortgage is one of the cornerstones of your financial foundation, so it’s important that you take some time each year to ensure your fiscal “house” is in order. Each year’s financial planning should include an annual review of your home financing to make sure that your loan is in line with your short- and long-term financial goals, as well as with what’s happening in the marketplace.

Some people call it a mortgage checkup, some people call it a mortgage review, but whatever you call it, ensure that you take some time each year to take a look at your home loan. This is especially true right now. Given the current financing market, now is the perfect time to review your mortgage. Rates are low and you could benefit from a decreased monthly payment as a result.

A mortgage review is especially important if you’ve run into some life changes that could impact how your mortgage fits into your personal finances, such as:

Read More >

Closing on time, with little or no red tape, saves you money, time and worry.

That’s why W.J. Bradley has put together a team of the best processors, underwriters, closers and funders in the business. They’re fast, they’re accurate, and their goal is to make sure you get your loan when you need it. In fact, we have some of the fastest turn times in the mortgage lending industry, measuring the time in hours, not days.

Our entire team is charged with the task of ensuring you have the best customer experience every step of the way. Our Operations team is just as committed to providing you with excellent service as I am! Together, they do the work so you don’t have to worry.

WJB also employs state-of-the-art technology to ensure speed and accuracy when processing your loan. We will keep you apprised of the progress of your application throughout the process and we’re here to answer any questions you have, at any time.

If you’re ready to discuss refinancing a current loan or purchasing a new home, call W.J. Bradley today. We’re building a secure future: yours.

Better-than-expected retail sales data led the week’s financial headlines, with advance estimates for October’s retail and food services sales hitting $373.1 billion, a respectable 1.2 percent jump from September and a 7.3 percent increase over October 2009.

On their own, retail trade sales were up 1.3 percent (±0.5%) from September 2010, and 7.7 percent above last year; auto and other motor vehicle dealers sales were up 14.7 percent from October 2009; and nonstore retailer sales were up 13.5 percent from last year.

In related news, October’s Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent, the Bureau of Labor Statistics reported last week. While this was slightly below the 0.3 gain experts were hoping for, last month’s gain perpetuated a healthy trend.

The Bureau noted in its report for October that, as has often been the case in recent months, an increase in the energy index was the major factor in the overall CPI increase. The gasoline index rose for the fourth month in a row and accounted for almost 90 percent of the “all items” increase, and the household energy index rose as well.

Read More >

W.J. Bradley is a privately held independent mortgage lending firm, founded in 2003. We are committed to helping consumers obtain real estate financing targeted to their personal financial needs and goals.

We’re here to help you every step of the way with options and servicing that will get you into your new home quickly.

Meeting Your Needs

At WJB, we believe your home is just a part of your overall financial portfolio. Finding the right home financing means taking into account how your loan fits in with your short- and long-term financial goals. We take the time to discuss your goals with you, and to make sure you understand every step of the process so you can make the decision that is best for your unique situation.

Going High-Tech

Our cutting-edge technology ensures you get the best range of options for your financing, quickly and with no red tape. We can also keep you informed on the progress of your loan, every step of the way. Our in-house processing moves your loan through approvals, processing and underwriting so that your closing is on time and stress free. We’re proud to say we have some of the fastest turn times in the business.

Whether you are looking to finance a new home or refinance your current mortgage, we can help you obtain the best home financing to meet your needs.

Contact me today to see how W.J. Bradley can help you find the home financing to fit your needs.

At W.J. Bradley, we’re experienced at navigating the requirements for government backed Federal Housing Administration (FHA) loans and in helping you decide whether this is the right kind of loan for you.

These loans can help first-time and low-income borrowers get into the home of their dreams or to refinance a current home loan to lower monthly payments.

FHA loans are forgiving of past credit issues and may have lowered FICO score requirements. They also have a low down payment requirement, so you need less cash on hand to purchase your new home. This means more borrowers can qualify for an FHA home mortgage and become homeowners.

You can also refinance an existing loan with an FHA loan, which may lower your monthly payments and let you keep more cash in your pocket.

As an experienced loan officer who is familiar with the FHA program and its requirements, I am qualified to explain this home loan product to you and help you determine if this is the right financing for your unique financial situation.

Call me today to learn more about qualifying for an FHA loan!

During the Great Depression, the federal government sought to create a stable platform for economic growth, and that platform was homeownership. Through bolstering the rate of homeownership, the feds felt citizens would be in a better position to give back to the economy.

With that in mind, in 1934, the Federal Housing Authority (FHA) was established. The FHA was not created to actually lend money; rather, it was created to insure the loans made by approved lenders, such as W.J. Bradley, and to protect the lenders against defaults on the loans.

If a borrower obtains an FHA loan and then defaults on it, the lender is compensated by FHA, and thus the lender will not lose as much money and is therefore more willing to lend according to FHA guidelines.

Inviting Terms

Fast forward to today, and the FHA loan program remains an extremely attractive option for homebuyers seeking financing. Originally considered a program mainly for first-time buyers, FHA loans are now one of the most popular types of loans for all types of borrowers due to a variety of attractive features:

Read More >