Treasury Invites Taxpayers to Get Refunds by Debit Card

The U.S. Treasury wants to quit writing paper checks. At the same time, it wants to give taxpayers more choices.

Its latest effort consists of a pilot program to deliver tax refunds through prepaid debit cards. About 600,000 taxpayers earning $35,000 a year or less have received letters inviting them to activate a debit card that can receive direct deposits.

An estimated nine million households, about one in every 12, don’t have bank accounts. By activating the debit card for a tax refund, they wouldn’t have to pay a check-cashing fee, and the government would save the cost of producing a check.

Each tax refund check costs the government about $1, including the cost of processing roughly 600,000 claims each year for missing checks. Payments by direct deposit cost the government about 10 cents.
The pilot program will provide consumers with a debit card that can be used, not just for receiving refunds, but also for shopping with many features of a checking account.

Deputy Secretary of the Treasury Neal Wolin, quoted by Bankrate.com, says the debit card “can be used for everyday financial transactions, such as receiving wages by direct deposit, withdrawing cash, making purchases, paying bills and building savings safely, giving users more control over their financial futures.”

Half of the 600,000 offers from the Treasury test program will carry a monthly fee of $4.50. The rest will be free. The different approaches will allow Treasury to determine which is more likely to lead consumers to sign up for the card.

FHA Loans Could Undergo Changes

With its extremely low down payment, the Federal Housing Agency (FHA) loan is the primary method for financing for homebuyers across the country. According to a recent Wall Street Journal article, the FHA loan will be undergoing some changes that could have a major effect on affordability.

“About 56% of mortgages for a home purchase were FHA-insured in 2009, up from 6% in 2007,” reported the WSJ. According to the Mortgage Bankers Association, up to 80% of those who received an FHA loan were first-time homebuyers.

Currently these loans can be for up to $729,750 in high-cost markets, but the Obama administration is recommending that these high limits expire in October. $625,500 would be the new high limit.

More changes to the FHA program are seen on the horizon. “On April 18, the annual mortgage-insurance premium on new FHA loans is set to rise by a quarter of a percentage point on 30- and 15-year mortgages,” states the article. In addition, some predict that the standard 3.5% down payment could soon rise to 5%.

What do you think about these expected changes to the program and the impact it might have on the market?

5 Rules for Mortgage Insurance Tax Deductions

President Obama has signed a bill that has extended the tax deduction of mortgage insurance through 2011.  Here are the rules to remember in regards to this tax deduction:

1. Your purchase or refinance loan must close before Dec 31st, 2011.
2. Household income must be $100,000 or less to get the full write off of the insurance premium.
3. The amount of the write off is reduced by 10% for every $1000 over $100k,  with it phasing out at $109,000.  This means if you make over $109k as a household you can not write off mortgage insurance.
4. It applies to your primary home and one other residence that the tax payer uses.
5. All forms of mortgage insurance qualify for this.  So if you have a FHA or conventional loan, they qualify. 

If you have paid upfront mortgage insurance with a VA, FHA or USDA loan you can also use this as a tax deduction.  The amount is just divided over a 7 year period.

The above is not intended as tax advice. Seek out a tax professional for advice about mortgage insurance deductions.

Avoiding Foreclosure

When the stress of a possible foreclosure rises, it is important to remember that there are many resources out there to help avoid it. The programs and agencies below all specialize in helping people avoid foreclosure on their homes:

U.S. Department of Housing and Urban Development (HUD)
800-569-4287
http://www.hud.gov/local/ca/homeownership/foreclosure.cfm

HUD Avoidance Counseling
http://www.hud.gov/offices/hsg/sfh/hcc/fc/

Making Home Affordable Program
888-995-HOPE
http://www.makinghomeaffordable.org/

Housing California
916-447-0503
http://www.housingca.org/nr/resource/foreclosure_resources/

State of California – Consumer Home Mortgage Information
http://yourhome.ca.gov/

Fannie Mae Resource Center
800-732-6643
http://www.fanniemae.com/homeowners/index.html

Project Sentinel – Redwood City counseling agency
(HUD Approved Agency)
888.331.3332
http://www.housing.org/

Neighborhood Counseling Services – Silicon Valley
(HUD Approved Agency)
408-279-2600
http://www.nhssv.org/foreclosure-counseling.htm

Neighbor Works America
202-220-2300
http://www.nw.org/network/foreclosure/default.asp

National Foreclosure Mitigation Counseling
202-220-6314
nfmc@nw.org

The important thing to remember is that foreclosure isn’t always inevitable, and there are many programs and agencies ready to help. Share these resources if someone you know is going through a possible foreclosure on their home.

Tips for Buying a Home

There are many pitfalls you can avoid when you are in the market to buy a new home. Here are just a few tips and strategies to help you prepare for success:

Know your credit score.
You may be able to get a better mortgage rate and more favorable loan terms by restructuring some of your balances on credit cards, car loans, etc. Mortgage professionals help you correct errors on your credit report and determine which balances to restructure or pay off in order to improve your credit score.

Know how much you can spend and determine how much you can afford before you start shopping for a home. Mortgage professionals can help you:

• Finance your home based on your monthly payment comfort level
• Determine how much cash to use as your down payment and where to get these funds
• Understand your before and after-tax monthly payments
• Restructure some other debt you may have to free up more monthly cash flow that enables you to improve your home buying budget

Don’t get caught in the “pre-approval” / “pre-qualification” trap.
It is always better to get a full approval / loan commitment from a mortgage professional before you even start looking for a home. Many mortgage brokers and lenders will give you a “pre-approval” or “pre-qualification”, but these are often meaningless. What you really need is a bona fide commitment from a mortgage lender that you are in fact approved for financing. Many real estate transactions have been ruined because buyers, sellers and Realtors have counted on “pre-approval” letters that proved meaningless. Mortgage California can help you with this!

Determine whether to rent or buy a home based on timeframe, budget and local market conditions.
Mortgage professionals help you run the numbers to determine if it is better for you to rent or buy a home based on your individual circumstances.

Develop a financial strategy for your closing costs, home improvements and furniture expenses.
A home purchase is a significant financial commitment. Mortgage professionals help you understand the costs involved in home ownership and help you develop a financial strategy for dealing with these costs ahead of time.

Evaluate the mortgage products that will work best in your situation.
Remember, it is far better to find a mortgage professional who can help you implement the best strategy with competitive interest rates than for you to shop for the lowest rate with the wrong strategy.

7 Things You Should NOT Do When Applying for a Home Loan

This is a list of things to steer clear of when you are seeking to obtain financing for a home. If you do any of these things, please contact your loan officer immediately.
Even if you have been pre-qualified, we can help you re-qualify.

1. Don’t buy or lease an auto!
Lenders look carefully at your debt-to-income ratio. A large payment such as a car lease or purchase can greatly impact those ratios and prevent you from qualifying for a home loan.

2. Don’t move assets from one bank account to another!
These transfers show up as new deposits and complicate the application process, as you must then disclose and document the source of funds for each new account. The lender can verify each account as it currently exists. You can consolidate your accounts later if you need to.

3. Don’t change jobs!
A new job may involve a probation period, which must be satisfied before income from the new job can be considered for qualifying purposes.

4. Don’t buy new furniture or major appliances for your “new home”!
If the new purchases increase the amount of debt you are responsible for on a monthly basis, there is the possibility this may disqualify you from getting the loan, or cut down on the available funds you need to meet the closing costs.

5. Don’t quit your job!
The lenders will verify all borrowers' employment at the day of closing.  No job, no loan!

6. Don’t attempt to consolidate bills before speaking with your lender!
The loan officer can advise you if this needs to be done.

7. Don’t pack or ship information needed for the loan application!
Important paperwork such as W-2 forms, divorce decrees, and tax returns should not be sent with your household goods as it contains your personal information and could jeopardize your identity. If it gets lost or stolen, duplicate copies take weeks to obtain, and could stall the closing date on your transaction.

PHH Mortgage Ranked a Top Originator--MY COMPANY!!!!

PHH Mortgage, which Mortgage California is a part of, was listed as the 7th highest ranking mortgage finance bank originator in the third quarter last year nationwide, with a $46.57 billion dollar year-to-date value.
This ranking is adjusted for pending mergers and corporate events. Check out the list of top originators below:

First-Time Buyers Fading

According to a recent report in the Wall Street Journal, the domination of cash-buyers and investors has been steadily increasing since July.

Capital Markets reported that “cash buyers and investors together have driven 70% of the increase in existing home sales seen since last July, while first-time buyers have been responsible for just 6%.”
This means that home prices are lower, and are expected to continue decreasing as demand for home weakens.

Locally, Santa Clara and San Mateo home sales are also dominated by cash-buyers and investors. As more homes are pushed to sale via foreclosures, demand will lower along with housing prices.

Speed-Cleaning Your Kitchen

There are many shortcuts and extra efficient methods of keeping your kitchen spotless without spending too much time cleaning every day. This Real Simple magazine article recommends setting up three kitchen to-do lists: daily, weekly, and seasonally.

Daily chores include wiping down the sink, stovetop, counters, and sweep or vacuum the floor. They tally this up as taking 3 minutes and 30 seconds total.

Weekly, Real Simple recommends wiping down backsplashes, appliances, cabinets, garbage can, switchplates and phones. Also, one should mop weekly (about four minutes, the most time consuming of these quick tasks), and wash the dish rack. The weekly tasks add up to about 20 minutes.
Seasonal tasks include deep cleaning and scrubbing of the refrigerator, sink, and other appliances four times per year.

While cleaning isn’t everyone’s idea of fun, using these quick guidelines will decrease your cleaning time to minutes a day – the time it takes to brew your coffee.For motivation, Marla Cilley, author of Sink Reflections, recommended in the article to clean your sink first.

“A sparkling sink becomes your kitchen’s benchmark for hygiene and tidiness, inspiring you to load the dishwasher immediately and keep counters, refrigerator doors, and the stove top spick-and-span, too.”