Wake me up, when September Ends / Harvest Time!

Good morning all! Well what a year it has been so far, we’re excited to see what Fall will bring! And we had a good August; a great way to finish the summer months.

An interesting tidbit about September: according to history, the Anglo-Saxons called it Gerst monath, (meaning Barley month,) because it was this time that they harvested barley to be made into their favorite drink: barley brew. It was also called Harvest month. Well although we here at Prominent Escrow don’t brew beer, (at least I don’t think thats a service we offer,) I’m sure that after a long day in the real estate industry, there are those of us who enjoy a cold one!

So here we go: Start harvesting your farms, go help home-owners begin to take advantage of the tax relief provided only until the end of 2012, because remember, without that relief, homeowners who back out of their mortgages with a short sale or foreclosure have to pay taxes on the amount that is forgiven. Although inventory is low, strive to help find your buyers quality properties, that they can get into and take advantage of low FHA interest rates. For our lending clients and partners, rates will begin to increase, help get applicants locked in now while they are still under 4 percent.

So as we look forward to September’s happenings, we would like to thank you all for your support, wish you a great Autumn, and also wish you a successful harvest month!

Lance Indes of Prominent Escrow Services

Posted in Uncategorized

Refinancing mortgage for shorter term can bring huge savings

Original Post Date: August 26, 2012

By: Lew Sichelman

Most people refinance to save money. That usually means jumping to a lower rate. But you also can save big bucks by trimming the term of your loan, possibly at the very same low rate.

Most lenders today offer the same 30-year rate on mortgages with terms of 20 to 29 years, said Karen Mayfield of Bank of the West. And most offer the same 15-year rate on loans with durations of eight to 15 years.

You may not save any money immediately, at least not in terms of your monthly payment. But you could save a bundle in interest over the shorter life of your new mortgage. Plus, you’ll build a nest egg that much faster.

The potential drawback to shorter-term mortgages is that your tax deduction for mortgage interest won’t be as large. But that’s a questionable disadvantage.

For one thing, interest is cash out of your pocket. Why spend the money if you don’t need to?

For another, mortgage interest is not a dollar-for-dollar write-off. Rather, the deduction is based on your income-tax bracket. So if you are in the 15% bracket, you’ll get back only 15 cents for every dollar in mortgage interest you spend.

Then there’s the question of whether mortgage interest will remain deductible. Granted, it’s a long shot right now that Congress would eliminate the benefit. But make no mistake, the once-sacrosanct write-off will be on the table if and when lawmakers ever reform the nation’s tax code.

So, with the deduction argument out of the way, let’s look at some possibilities using, for simplicity’s sake, a loan amount of $300,000.

Say you have a 4-year-old, 30-year mortgage at 6.5%, with a monthly payment to principal and interest of $1,896. If you refinance at 4% into a new 30-year mortgage of $288,000 (your present balance of $285,179, plus $2,821 in closing costs wrapped into the loan amount), your payment will drop to $1,375, a significant monthly savings of $521.

But you’d be starting all over again. As a result, on top of the $76,196 in interest you’ve already spent on the original mortgage, you’d be paying an additional $206,984 in interest over the term of the new loan.

Sure, most people don’t keep the same house, let alone the same mortgage, for 30 years. Indeed, the average life of a home loan is about seven years. But if you do, if this is your final castle, you will be paying for it for 34 years, not 30.

Now, suppose that instead of opting for a lower payment, you decide to shoot for the same monthly payment but reduce the term of the loan. A new $288,000 mortgage at 4% over 20 years will run $1,745 a month.

That cuts your monthly outlay by about $150 and saves a whale of a lot of interest — $130,854 for the 20-year loan at 4% versus $206,984 for the 30-year loan at 4% and $382,633 for your original loan.

Better yet, you are not starting over.

Shortening the length of your mortgage isn’t for everyone. But if you are comfortable making roughly the same payment as you are now, it is worth considering. “Do the math,” Mayfield advises.

Posted in Uncategorized

U.S. home sales rose 2.3% in July


Original Post Date: August 22, 2012

Americans bought more homes in July than in June, the latest evidence that the housing market is slowly recovering.

Sales of previously occupied homes rose to a seasonally adjusted annual rate of 4.47 million in July, a 2.3 percent increase from the previous month’s rate, the National Association of Realtors said Wednesday.

The industry’s recovery has grown more consistent, though it remains slow and uneven. July sales were below the 4.6 million annual pace reached in April and May. And the annual sales pace is below the roughly 5.5 million that economists consider healthy.

The number of first-time homebuyers, critical to a housing rebound, rose to 34 percent of sales, up slightly from June. In a healthy market, first-time buyers make up about 40 percent of sales. Purchases are being restrained by low levels of homes available for sale and by tight credit standards.

Other recent reports have contributed to the picture of a healing industry. Home prices are rising nationwide. And builders are growing increasingly confident because they’re seeing more traffic from potential buyers. An index of builder confidence rose to its highest level in five years in August.

Builders responded by applying for the largest number of building permits in nearly four years last month. They broke ground on slightly fewer new homes in July than in June. But that was after the number of housing starts had reached a 3 1/2 -year high in June.

In July, the number of unsold homes ticked up to 2.4 million. It would take about 6.4 months to exhaust that supply at the current sales pace. That’s just above the six months’ inventory that typically exists in a healthy economy.

Even with near-record-low mortgage rates, many would-be buyers are having difficulty qualifying for loans or can’t afford the larger down payments being required by banks.

Hiring picked up a bit in July, which could support more home sales in the coming months. Job growth helps consumers feel more secure about their finances and typically encourages more of them to buy a house.

Employers added 163,000 jobs last month, the most since February. Job gains had averaged only 73,000 in the April-June quarters, raising fears that the economy was faltering and might even slip into recession.

Posted in Uncategorized

Behind the Numbers: Builders’ Better State

By Sarah Portlock and Alan Zibel

It may be hard to believe, but the nation’s home builders have had four straight upbeat months.
Home builders’ confidence rose two points in August, marking yet another sign of the housing market’s stabilization — one of the positive developments in the economy in recent months. The National Association of Home Builders said Wednesday its housing market index rose two points to 37 this month, the highest level since February 2007.

But the index is still below historical levels. A reading above 50 in the NAHB index would mean that more builders view conditions as good rather than poor. The gauge hasn’t been in positive territory since April 2006. At the height of the building bubble, readings were in the high 60s and low 70s.

All three components of the index rose in August. Builders’ expectations for traffic from potential buyers and current sales conditions both rose by three points, and expectations for sales over the next six months rose one point.

The housing market was one of the weakest parts of the economy in recent years during the historic bust. It has now turned positive amid a tenuous economic recovery.

Spending on home construction, home improvements and other parts of real-estate transactions have added to economic growth for five straight quarters, accounting for 0.22 percentage point of the 1.5% growth rate in the first quarter.
Here’s what industry analysts think:

Joshua Shapiro, economist, MFR: “These recent results would seem…to point to sharp gains in single-family housing starts, something that so far has not occurred. The next few months will be critical in determining to what degree home builders follow their more optimistic talk with action. While some continued improvement in starts is possible, we continue to believe that the massive supply overhang of existing homes will present brutal competition to the new-home market for the foreseeable future, and therefore it is unlikely that single-family housing starts will make sharp gains from current rates anytime soon.”

Stephen East, builder analyst, ISI Homebuilding Research: “We view this morning’s release as a positive, particularly so given that this is a survey of primarily smaller builders, which have lagged the larger builders…Historically, these increases have been short lived and we expect that reaction again as investors await the important housing starts data released tomorrow morning.”

Posted in Uncategorized