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Insurance Word Find Contest-2 Tickets To VA State Fair

September 18th, 2011 1:29 AM

Find the 22 INSURANCE words in this puzzle. Circle all 22 words, then read the "hidden message" which is located outside the circled Insurance words. The 1st person to Email me the 22 Insurance words & the "hidden message" to: billye@atkinsandassociates.net wins 2 tickets to the Virginia State Fair!

Posted by Billye Atkins on September 18th, 2011 1:29 AMPost a Comment (0)

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Rates On Mortgages Hit A Record LOW...

September 1st, 2011 9:48 AM

The rate on the most common type of mortgage set a record low this week, as investors were hit with more bad economic news. The super-low rates may become the new norm, mortgage analysts say.

The 30-year fixed-rate mortgage fell 4 basis points this week, to 4.41 percent.

The 15-year fixed-rate mortgage rose 5 basis points, to 3.63 percent. The benchmark 5/1 adjustable-rate mortgage fell 3 basis points, to 3.12 percent.

This is the lowest rate on the 30-year fixed since September 1985. The previous record was 4.42 percent. Rates reached that level on Oct. 20, 2010, and Nov. 3, 2010.

The 5/1 ARM rate hit a record low this week. The adjustable rate hit a previous record last week when it reached 3.15 percent.

Many mortgage experts expected rates to rise this week. Since rates tumbled in recent weeks...normally, after sudden, sharp drops, mortgage rates are followed by a rebound.

However, there is still a tremendous amount of volatility, driven by fear … driven by the unknown in Europe and the unknown as to whether we are going to into another recession.

Plenty of bad news to keep rates low

A series of economic indicators still points to a weak economy, and that is fueling investors' fear that the United States could go into recession again. That fear may help keep rates low until the end of the year.

This isn't anything like 2008 or 2009 because banks are better capitalized now, but we still have a lot of problems. Housing is still weak. Foreclosures were a little better but (mortgage) delinquencies are on the rise. Until unemployment improves, rates are likely to remain low.

One good economic sign wasn't enough

Investors were offered a glimpse of hope Wednesday when the Commerce Department released a report on durable goods orders. The report showed orders for long-lasting goods such as cars and refrigerators rose by 4 percent, after falling 1.9 percent in June. That's the biggest increase since March and a better result than economists had expected.

After the report was released, the stock market, which bled for days, improved slightly, a sign that investors seemed to be regaining confidence in riskier investments. When investors choose the stock market over Treasury bonds and demand for Treasuries decreased, bond yields increased. Mortgage rates often follow bond yields' direction.

But despite the short-lived optimism among investors, the report had no impact on rates.

New-home sales declined to the lowest level in five months, according to figures released this week by the Commerce Department. Purchases fell 0.7 percent to an annualized pace of 298,000 after a rate of 300,000 in June.

The percentage of U.S. home loans past due increased in the second quarter, according to a Mortgage Bankers Association survey released this week. The jump was mostly attributed to an increase in the number of loans overdue by 30 days, which likely resulted from homeowners losing their jobs or staying unemployed for long periods, analysts say.

Buyers on the sidelines

Uncertainty, volatile markets and bad economic news have helped keep rates low, but it also has contributed to keeping nervous homebuyers on the sidelines.

The volume of mortgage applications from home purchasers fell last week to a 15-year low, according to the MBA. The number of refinance applications also slowed as it decreased 1.7 percent compared to last week. Two weeks ago, refinances had surged more than 20 percent.

Lock now

Some mortgage analysts say they don't expect a spike in mortgage rates anytime soon, however, all it takes is "one major headline," for rates to shift direction.

My advice to you is to always do your research in regards the property you're looking to invest in. It's crucial to not only pay close attention to the market changes, but also specifically on the territory you're looking to invest.

Where rates are headed next week will depend much on what Federal Reserve Chairman Ben Bernanke says (or doesn't say) Friday when he makes a speech in Jackson Hole, Wyo.

Many investors will keep their eyes on Bernanke on Friday. However, no major announcements are expected during the speech and little impact is expected on mortgage rates.

That said, don't take a chance...

Don't try to "time the market". Rates are great and the sooner people refinance or purchase...the sooner they save.

The ever-changing real estate market is definitely bringing lots of opportunities to the "Homebuyer" - like you.

Take advantage of the current low-rates and begin a more active role in the pursuing your dream of becoming a homeowner or lowering the amount of your existing mortgage payment!

Call: Atkins & Associates Professional Services for quotes & pre-qualifications. "We're HERE To HELP & We CARE". (540) 286-2323

www.atkinsandassociates.net

Posted by Billye Atkins on September 1st, 2011 9:48 AMPost a Comment (0)

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Veterans Affairs Mortgage Program Avoids The Pitfalls Of Other Lenders...

August 20th, 2011 10:46 AM

Imagine a mortgage program that seems to defy many of the lessons of the housing bust:

• 91 percent of its borrowers make zero down payments.

• Loan amounts go well into the jumbo range — to $1 million and sometimes above, even with little or nothing down.

• Credit standards are flexible and generous. Underwriting rules encourage loan officers to look for ways to approve applications rather than to reject them.

• Mortgage originations are up — almost triple what they were just three years ago — and are on track this year to exceed 2010’s volume. The rest of the loan industry, by contrast, is down by anywhere from 25 percent to 30 percent.

You might assume that any home loan program with come-ons like these must be swimming in bad mortgages, loaded down with serious delinquencies and foreclosures. Yet this one, which gets relatively little attention in the media, has better mortgage performance than FHA and is comparable with some “prime” loan operations that have far more stringent credit rules.

Can you name this financing phenom? It’s the Department of Veterans Affairs’ home loan guaranty program. At a time when federal regulators are considering imposing a 20 percent minimum down payment requirement for most conventional mortgages, the VA program, which is restricted to veterans, offers important insights on how to get families into homes with little cash upfront, and to keep them out of foreclosure, even in tough economic times.

What’s in the special recipe at the VA? Tops on the list: a combination of loan features that are by far the most attractive available in the current market. While the FHA program also allows minimal down payments — 3.5 percent — the VA goes to zero even if you need a jumbo-sized loan.

Unlike low-down-payment loans you can get from Fannie Mae and Freddie Mac and FHA, there are no monthly mortgage insurance premiums. VA loans do have an upfront “funding fee” that varies according to the down payment and other criteria. Currently this fee ranges from 2.15 percent for zero-down borrowers to 1.25 percent for applicants putting down 10 percent. Most applicants opt to roll the fee into the loan amount and finance it over time.

The VA imposes no credit score minimums. Its average FICO score is 708, compared with the 750 to 770 scores typical for Fannie Mae- and Freddie Mac-backed conventional mortgages at the best interest rates. It does, however, require underwriters to look closely at credit bureau reports and documented income to ensure that borrowers have the ability to repay their loans.

The agency is exceptionally flexible on seller contributions to help buyers pay closing costs, escrows and loan origination charges -- more lenient, in fact, than any other national program. That, in turn, can significantly lower the net cash outlays needed from borrowers at closing.

The VA also stretches debt-ratio norms when needed to help creditworthy, income-strapped borrowers get into a home. Though the official “back end” ratio of total household monthly debt to household income is 41 percent, lenders say VA will let them push this higher, even to 55 percent, on a case-by-case basis.

With all these accommodations to borrowers, how is it that VA’s 90-day delinquency rate in the latest study by the Mortgage Bankers Association is 2.2 percent while FHA’s is 4.8 percent? Or its total seriously delinquent plus in-foreclosure rate for borrowers is 4.5 percent, against FHA’s 8.04 percent and the conventional prime market (Fannie and Freddie) at 4.3 percent?

Michael Fratantoni, the mortgage bankers association’s vice president for research, says that the VA’s record “is remarkably good, given that they’re allowing first-time buyers to get in with no down payments,” which is traditionally linked to high defaults and foreclosures.

Michael Frueh, the VA program’s acting director, says the key to the agency’s quiet success is its almost paternalistic emphasis on servicing its 1.5 million borrowers — moving early and quickly to intervene at the slightest hint of payment problems.

“At the end of the day, we are veterans’ advocates,” he said in an interview. “We exist solely to help them,” not only to afford to finance their homes but to remain in them. In the past three years, the VA has instituted industry-leading techniques such as requiring lenders to establish “single point of contact” servicing systems, where customers deal with one person about their mortgage issues, rather than anonymous multitudes.

Could this mindset — intensive “advocacy” servicing as a borrower benefit built into the loan itself — be duplicated in other segments of the mortgage market?

Maybe the real question is: Why not?

TWP/krh

Atkins & Associates places VA Home Loans~ For More Information Contact: Billye Atkins at: 540-286-2323~ "We're HERE To HELP & We CARE!"

Posted by Billye Atkins on August 20th, 2011 10:46 AMPost a Comment (0)

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A Simple Bailout Plan for Housing and the U.S. Economy

August 2nd, 2011 5:13 PM

A Simple Bailout Plan for Housing and the U.S. Economy~

Now that the topic of the budget and the debt limit has somewhat subsided , we are forgetting that the single clear and present danger for the US economy is the state of housing. As the economy is slowing again, it threatens to trigger more foreclosures. In turn, this would further damage banks' balance sheets and prevent already gun-shy banks from finally loosening credit. If banks decided to hoard even more reserves, it would have disastrous consequences for economic growth and job creation. Yet, this is nothing new: it has been the situation for two years and nothing was done then and since. Worse, it would be surprising if anything intelligent gets done now. Both parties have lost even the slightest perspective on the reasons that brought us here. What would make you think that once August 2nd passes, they will work together to resolve the situation? Some economists, such as Martin, had identified the problem in the fall of 2008. His article, "How to Save an ‘Underwater’ Mortgage", published in the Wall Street Journal in August 2009 was his third attempt to influence policy makers in giving a break to home owners; his first attempt had been made in September 2008 when it was still early in the game. Feldstein also went on Charlie Rose in early 2009 to plead his case with Nobel laureate Joseph Stiglitz who lent him support for the proposal. But to no avail. In spite of the influence of the former head of the Council of Economic Advisers from 1982 to 1984 under President Reagan and former president of the National Bureau of Economic Research, Washington was not listening.

To be fair, the Administrations - both Bush's and Obama's have come up with some loan modification programs to deal with the issue. However, they were so poorly designed and lacked so much in scope that they failed to gain any momentum. To the surprise of many, the Obama administration continued to pamper bankers and concentrate their efforts on saving the banking sector rather than home owners; blind to the fact that the collapse of housing sector is at the origin of the problems that banks had and still have today. Why is the idea of savings households as a way of getting banks out of trouble such a bad proposition? Is it because Washington is too influenced by the ideas of Wall Street?

Yet, read the several articles in which Feldstein outlines his bailout plan and will quickly come to the conclusion that in spite of his bang-on diagnostic of the situation and his good intentions, his proposal suffered from some important drawbacks that limit its application: It would have required changing the law, it reduced monthly mortgage payments very little, it affected only the worst-case borrowers, it would have taken a while to implement and it would have required that banks take some write offs (which, of course, they were very reluctant to do at the time). Finally, it also hinged on the assumption that the parties to any modification could agree on the value of the homes being targeted by the plan; probably the biggest problem when values were falling fast in the Fall of 2008 and the Spring of 2009.

I am proposing below a bailout plan for both housing and banks that dodges all of these limitations. Let me know what you think.

"In the Spring of 2009, US Treasury Secretary Geithner unveiled his plan to save the economy and the banking system. However, the plan still fails to fully acknowledge the negative dynamics of the still deteriorating housing market on the success of his proposal. Admittedly, the government also took steps to encourage lenders to modify loans for people in foreclosure or at risk of foreclosure. However, difficulties in determining who qualifies, and for which amount, will likely severely limit the scope of that proposal. Moreover, the government also proposed that private investors buy toxic assets from banks using government subsidies. However, finding common ground to establish a price for the assets has proven difficult. Equity issues have also been raised by many who fear that the scheme will enrich hedge funds and private equity managers.

"Here is an alternative: Make an attractive offer to all homeowners but tweak the incentives so as to attract only those needing help. Specifically, offer to all existing homeowners (of owner-occupied homes), mortgage relief up to 33% of the value of their mortgage in exchange for the same percentage of equity in their home. As a virtue of being offered to everyone, all individual decisions to accept or refuse the government's offer would provide much needed information about the quality of individual loans. This information would represent the Holly Grail for the financial sector as it would allow banks and investors to finally put a fair value on mortgage pools.

"The opportunity for each individual homeowners to "sell" a portion of their home to the government (in a debt-equity swap fashion) also offers the following: truly significant mortgage payment reductions for borrowers, some breathing room to support consumption and a huge quality improvement in banks' balance sheets. If designed as a simple mortgage pre-payment program, such a plan could be implemented by motivated banking loan officers within six months.

"Consider a homeowner who bought a house in 2006 for $250,000 with a $240,000 mortgage ($10,000 down payment). This homeowner may now be contemplating foreclosure as the value of his home is likely closer to $200,000 today and/or his monthly mortgage payments too high. Under the proposed plan, the homeowner could choose to accept mortgage relief for $60,000 (25% of the original $240,000 mortgage) in exchange for a 25% equity stake in his home. By selling the property for $300,000 in 7 years (assuming a reasonable 6% annual nominal appreciation), the homeowner's share of the house would then be $225,000; $35,000 above the $180,000 modified mortgage. Not bad for a $10,000 initial investment, largely under water today! The government would get back $75,000; enough to recoup its capital and protect against inflation.

"A simple example would also convince the reader that the offer would be rejected by homeowners with enough home equity. This means that each individual decision to reject the government’s offer would also send a strong signal to the market as to who would repay their mortgages in full without government help.

"In the previous example, if the house were to be sold early for $220,000, the outstanding bank mortgage ($180,000) would be repaid first to the bank and the balance of the proceeds from the sale ($40,000+) would go directly to the restructuring government entity. The balance of government equity ($20,000-) would then be converted into a fully recourse loan yielding 3%. The conversion of the equity into a full recourse loan would provide a disincentive for the owner to sell his/her house early or to enter foreclosure. This would help stabilize the housing market by keeping more homes off the market until prices have appreciated enough. Moreover, the full recourse conversion would also deter borrowers with no prospect of ever repaying their loans from entering the swap agreement; providing much needed information about which loans which should be definitely written off. Moreover, the relief effort would focus on making sure that only troubled, but salvageable, borrowers are turned into viable homeowners.

"Assuming an average mortgage relief of $60,000 for the 12 million homeowners with little or marginally negative equity today, the total cost of the plan would be $720 billion. However, as we saw, most of this money could be recovered, once the homes are sold. Moreover, if banks were forced to first write down each mortgage by 5% before being entitled to the debt-equity swap money, the initial funding for the scheme and the ultimate cost to taxpayers could be substantially reduced.

"Allocating the bail-out money directly to American homeowners would be a politically superior strategy than buying up banks or let hedge funds and private equity investors buy the toxic waste; not least because it would allow many families to stay in their home. Banks, on the other hand, would be much closer to assessing their loan portfolios at values that might actually reflect their true worth under more favourable market conditions. This prospect alone would promote the strong support of banks which in turn would speed up implementation and thus could help avert bank nationalization.

"By taking an equity position in homes, the government insures a certain fairness as it extracts something (i.e. equity) from over-leveraged homeowners, without passing moral judgment, rather than trying to determine administratively who should get it. Finally, as the leverage is transferred from over-leveraged owners to the government most able to support it, the risk to the economy is also considerably reduced."

Isn't this simple enough?

Let us know what you think about this idea. Comment here on our blog post or visit us on Facebook (https://www.facebook.com/home.php#!/pages/Atkins-Associates/107614635937211) & comment there.

Contributed By: LV/MNT

Posted by Billye Atkins on August 2nd, 2011 5:13 PMPost a Comment (0)

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How Debt Default Will Impact Mortgages...

July 26th, 2011 10:55 AM

A Debt Default Will Be a Disaster

“How would a debt default by the Federal Government impact the home mortgage market?”

We can only guess about the extent of the impact, but it would range somewhere between ugly and catastrophic. Ugly might be a doubling of interest rates and a drop of 50% in loan volume. Catastrophic would mean an almost complete shut-down.

About 95 of every 100 home loans being written today are placed into mortgage-backed securities that are sold in the market with guarantees by Fannie Mae, Freddie Mac or Ginnie Mae. These are Federal Government guarantees, the value of which would drop like a rock with a default.

At best, the securities market would immediately demand a sizeable rate premium on new guaranteed mortgage-backed securities to compensate for the added risk. This would immediately translate into sharply higher interest rates charged to new borrowers.

At worst, the markets for these securities would stop functioning altogether as investors retreated to the sidelines to await further information on which Government obligations would be honored and which would not. That could be a long wait, since the systems the Government uses to make payments have no provisions for allocating funds when there isn’t enough money to pay all claims, and there are no contingency plans for this contingency.

“If a default had the horrendous consequences you describe, and these induce Congress and the Administration to agree finally on an increase in the debt ceiling, how long would it take financial markets to return to normal?”

Markets would never return to a state where US Government obligations are viewed as riskless. We will pay for this loss of grace forever.

Investors in fixed-income securities are worse-case oriented, and make a major distinction between the impossible and the unlikely. The current rates that the Treasury must pay investors are based on the assumption that default is impossible. Once a default occurs, it will NEVER again be viewed as impossible. The additional cost of carrying debt on which default is possible will be paid forever.

“How much extra would it cost?”

That is not knowable in advance, but I’ll hazard a guess. My guess is that the cost of carrying the Federal debt will increase by about 3 percentage points where it would more or less match the return on investment grade corporate bonds. On a debt of $14 trillion, an increase of 3% in carrying cost would add about $420 billion to our annual deficit.

An optimistic estimate would be that the cost would rise by only .25%, which would increase the annual deficit by “only” $35 billion.

“Do you really think there will be a default?”

Given the current political impasse, I think the probability is frighteningly high. Many important events, especially in the political world, are the result of inadvertence. Nobody planned them, often nobody wants them, but events set in motion years earlier acquire a momentum of their own and nobody has the motivation and/or power to stop it. Since nobody wants it, everybody expects someone else to swing the axe.

In that connection, the threat posed to mortgage lenders, Realtors and home builders by a debt default is enormous, but where are their spokespersons? When a bill is introduced to, e.g., eliminate tax deductibility of mortgage interest, the trade groups are all over the Congress and Administration to beat it. But on an issue that threatens their very existence, they are nowhere to be seen. Their assumption seems to be that at the 11^th hour the politicians will prefer doing the right thing to laying the blame for disaster on their adversaries. In the current political climate, that is a terribly risky assumption.

MNT/TMP

Posted by Billye Atkins on July 26th, 2011 10:55 AMPost a Comment (0)

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All Natural Supplements For Heart Health

July 23rd, 2011 11:43 AM

Facts About Supplements for Heart Health

Many people take vitamins and supplements to boost their heart health. Which supplements work best? How much should you take? Here are tips to help you shop wisely.

Supplements for Heart Health

Supplements like omega-3 fatty acids (fish oil) and plant sterols may help lower cholesterol and improve blood flow to the heart.

Coenzyme Q10

Coenzyme Q10 acts like an antioxidant, which helps protect cells from damage. Some studies show that CoQ10 supplements may lower blood pressure slightly and may help heart failure.

Fiber (Psyllium)

Fiber lowers cholesterol, as well as the overall risk of heart disease, according to many studies. Soluble fiber binds with cholesterol in the intestines and prevents it from being absorbed by the body.

Flaxseed Oil

Flaxseed and flaxseed oil may lower cholesterol levels. It’s not yet clear whether it also lowers your overall risk of heart disease.

Folic Acid

Folic acid , a B vitamin, lowers levels of the amino acid homocysteine, which has been linked to heart disease. But studies have not proven that folic acid reduces the rate of heart attacks and stroke.

Magnesium

Magnesium helps keep blood pressure normal and the heart rhythm steady.

Omega-3 Fatty Acids

Omega-3 fatty acids from fish oil can lower blood pressure and triglycerides, according to research. Omega-3s may also reduce your overall risk of death from heart disease.

Red Yeast Rice

Red yeast rice may lower total cholesterol and “bad” LDL cholesterol, according to several studies. One ingredient in red yeast rice – monacolin K – is identical as the active ingredient in a cholesterol drug.

Posted by Billye Atkins on July 23rd, 2011 11:43 AMPost a Comment (0)

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Have You Considered A Health Savings Account?...

April 27th, 2011 2:13 AM

Have You Considered An HSA?

If you have a high-deductible health plan (at least $1,100 for individuals; $2,200 for families), you may be eligible to fund a health savings account (HSA), which you can use to pay for medical expenses. In general, contributions are 100% TAX DEDUCTIBLE, interest or other earnings on the assets are TAX FREE, and your money grows TAX DEFERRED. Money saved can be used for qualified medical expenses (see IRS Publication 502) TAX FREE for life. HSA funds can also be used to pay COBRA or other medical insurance premiums during periods of unemployment or temporary layoff.
Any funds you don't use will grow tax-free and can be rolled over from year to year. By the time you turn 65, any money you did not use, you can withdraw in the same style as an IRA (with no penalty), so if you are fortunate health wise, it's almost like a retirement account that you can use for today's medical expenses.

Posted by Billye Atkins on April 27th, 2011 2:13 AMPost a Comment (0)

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Life Insurance Needs~

March 31st, 2011 4:42 PM

http://www.youtube.com/watch?v=3PkPGH8uiT4

Check out the above video.

We are only a "call or click" away!

www.atkinsandassociates.net

540-286-2323

Posted by Billye Atkins on March 31st, 2011 4:42 PMPost a Comment (0)

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Smiles With A Heart~A Day Of Local FREE Dental Services:

March 11th, 2011 11:28 AM

Below you will find information regarding a day of FREE dental care sponsored by our local Smile Center on April 8th to assist underpriviledged patients from the community. Please share this information with anyone who may benefit!

On April 8, 2011, Fredericksburg Smile Center will be holding their Sixth Annual SMILES WITH A HEART benefit at 2330 Plank Road – Gateway Village- in Fredericksburg, Virginia. On this special day we will be providing free dental care for underprivileged patients in our community. We encourage clinics, community support groups, church leaders, and others that know the needs of members of our disadvantaged community to notify those people who need our help.

Most of the procedures will be cleanings, restorations and extractions, with one procedure permitted per patient. Patients will be seen on a first come first served basis. No appointments will be given. Please be advised that people line up very early, wait times can be significant and not everyone who comes will be able to be seen.

Local dentists and staff will be volunteering their time and efforts to make this great cause a success. We will start at 7:00 am, break for lunch and call it a day by 5:00 pm.

Posted by Billye Atkins on March 11th, 2011 11:28 AMPost a Comment (0)

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"Get Up & Do Something" Day~

February 28th, 2011 9:01 AM

Friday, March 4th is "Get Up and Do Something" day.

Let me challenge you to consider starting to save for a down payment on that dream home!

Saving for a down payment on a home can be one of the most challenging tasks a family faces in the quest for home ownership. Creating a down payment savings plan and sticking to it will help potential buyers reach their goal of home ownership faster.

Down payment requirements for 2011 are back to the same requirements from before the most recent mortgage and housing meltdown. For 2011, the basic down payment requirements are as follows:

Standard Fannie Mae / Freddie Mac Conforming for mortgages up to $417,000 loan amount: 5%
High-Balance Fannie Mae or Freddie Mac up to maximum limits in each region: 10%
FHA loan with credit score of 620 or higher: 3.5%
FHA loan with credit score between 550 and 619: 10%
Veterans Administration (VA) loans: 0% (yes - 100% financing)
USDA Rural Development loan (if your area qualifies - see below): 0% (yes - 100% financing)
Jumbo mortgage purchase loans for amounts above high-balance limits: 20% - 40%

All of the rules for down payments changed in 2008 back to the standard down payment programs of the past. If your home is located in a USDA lending area, then you could participate in the USDA zero down payment mortgage program. Veterans can also still purchase homes with zero down payment as well under the VA mortgage program. Otherwise, you will need a minimum 3% to 3.5% down payment to participate in FHA, Fannie Mae or Freddie Mac programs.

The purchase of a home usually entails saving for three up-front costs. The down payment is the largest part and is a percentage of the total purchase price of the house. As the economy improves and home prices stabilize, more people will be able to purchase a home and reap the substantial tax benefit o home-ownership. Today, first time home buyers can still purchase a home with no down payment only with the VA or USDA programs. However, putting even a small down payment down of 3% or more can help you get a much better interest rate.

In addition to a down payment, funds are needed to cover closing costs. Closing costs include all fees required to execute the sales transaction, such as attorney fees, title insurance, appraisals, points and tax escrows. While these charges vary considerably, most home buyers will need at least a few thousand dollars for closing costs (also tax-deductible).

Finally, home buyers need to show that after paying the down payment and closing costs they will still have some reserve funds to protect against short-term cash flow problems. Ideally, a home buyer will have at least three months' worth of housing payments available after closing. These funds do not need to be paid out; they simply remain in the home buyer's savings. Many programs today do not require any reserves at all.

As an example of total cash that used to be required, a home buyer purchasing a $200,000 home with a $1,750 monthly housing payment would need to have approximately $20,000 available. This includes $10,000 for a five percent down payment, approximately $5,000 for closing costs and about $5,000 in payment reserves. After closing, the home buyer would have $5,000 left over.

Today, borrowers can purchase a home with either no down payment through USDA or VA or with a 3% to 3.5% down payment and in many cases have the seller or lender finance closing costs. With little or no down payment or closing costs needed at closing, borrowers only need to show that they have reserves. Even though a borrower might not need reserves for a loan program, it is a good idea to actually have money set aside in case of emergency.

Based on the requirements outlined above, you should develop a savings plan that will help you achieve your goal of home ownership in the near future. Since the down payment required depends on the purchase price, you should meet with one of Atkins & Associates mortgage lending professionals to determine how large a mortgage can be obtained. The maximum loan amount will determine the approximate price range in which you should be looking. For example, a home buyer whose income will support a mortgage of $190,000 can look for homes with a price of about $200,000 and plan to save a down payment of at least $6,000.

Before starting a savings plan, a future home buyer needs to determine his or her current financial position. This includes reviewing all assets and liabilities, developing a budget and planning how much to save each month. When analyzing total current assets, a consumer should not overlook any source of funds. In addition to all checking and savings accounts, many people have CDs, stocks, mutual funds and savings bonds. Retirement funds such as a 401k or an IRA can be counted toward the payment reserve requirement. Some 401k plans even allow employees to borrow against the plan. Proceeds from borrowing against one's own retirement funds can be used toward a down payment.

By subtracting all current financial assets from the amount of funds needed to purchase a home, one can determine how much needs to be saved. A cash flow budget should then be prepared to determine how much can realistically be saved monthly. Some sacrifices of non-essential items may need to be delayed temporarily in order to meet each monthly goal! No matter how a home buyer accumulates funds to purchase a home, careful planning will always smooth the road to home ownership.

As savings increase and the opportunity to purchase a home draws nearer, home buyers need to make sure that all funds saved are fully verifiable. Mortgage lenders have tightened verification procedures for down payments to insure that all of the funds a borrower claims exist and were not borrowed. The number one source of mortgage fraud in the 1980's was consumer misstatements about their financial assets.

Many "would-be" home buyers look into renting a home with an "option to purchase" (which Atkin & Associates can assist you with) as a method of saving a down payment. In these transactions, the seller/landlord will credit a portion of the monthly rent toward the purchase price. Only the portion of a rental payment that exceeds the amount of the "set-rent", can be applied to the down payment. This can be a terrific way for renters to be able to save for a purchase that few people end up thinking about. As a result, this type of transaction can often get you into a home quicker, without the need to relocate to a different home...saving the time and inconvenience of a move.

Of course, the easiest way to save is to receive a gift from a relative. More than half of all first time home buyers receive gift funds from relatives in order to help with their down payments. While Fannie Mae and Freddie Mac mortgage loans require that a borrower putting less than 20% down must have at least 5% of their down payment be from their own funds, FHA allows the entire down payment to be gift funds. No matter how you accumulate the funds to purchase a home, careful planning (which Atkins & Associates can assist yu with), will always smooth the road to home ownership.

For assistance with qualifying for your home purchase within the United States, please contact Atkins & Associates at: (540) 286-2323 or visit us at: www.atkinsandassociates.net or email us at: billye@atkinsandassociates.net

We are here to HELP & We CARE!

Posted by Billye Atkins on February 28th, 2011 9:01 AMPost a Comment (0)

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