Two Truths, One Lie – Finance Style

Have you ever played the icebreaker game, “Two Truths, One Lie?” 

As far as icebreakers go, this is a good one and eye opening! In fact, there is a current game show with the premise.

This is how it works:

Everyone goes around the room and says three statements. Two are true, and one is false. Today, let’s play with a couple of different hot topics in finance and see if you can spot the lie.

 

Mortgages

  1. If you have no FICO score, you can still get a mortgage
  2. Private Mortgage Insurance (PMI) does not protect me (the buyer)
  3. As a rule of thumb, you should be 80 or older in order to get a reverse mortgage

Credit Cards

  1. Buying with credit makes us feel the same as buying with cash
  2. Credit cards were invented in 1950
  3. Credit cards are considered unsecured debt

Estate Planning

  1. Over 50% of Americans have no estate plan, no will and no medical directives
  2. Dying without a will is known as “an intestinal death”
  3. Not everyone needs to hide their money from the “death tax”

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Mortgages

  1. If you have no FICO score, you can still get a mortgage
    True; it is a lot easier with a credit history, but manual underwriting is an option
  2. Private Mortgage Insurance (PMI) does not protect me (the buyer)
    True, PMI protects the lender from you (the buyer) not ponying up
  3. As a rule of thumb, you should be 80 or older in order to get a reverse mortgage
    False, it’s age 62…still old, though.

Credit Cards

  1. Buying with credit makes us feel the same as buying with cash
    False; with credit cards, we focus on benefits and cash makes us focus on cost
  2. Credit cards were invented in 1950
    True; the first credit card (as it is known today) was created in 1950 with the Diner Club card
  3. Credit cards are considered unsecured debt
    True; unsecured debt means that they can’t come get your stuff (unlike a mortgage or car loan, which are secured)

Estate Planning

  1. Over 50% of Americans have no estate plan, no will and no medical directives
    True; what is your estate plan?
  2. Dying without a will is known as “an intestinal death”
    False; an estate would be “intestate” and has nothing to do with death-by-Taco-Bell
  3. Not everyone needs to hide their money from the “death tax”
    True; only estates worth more than $5.25M (for 2013) need to be thinking about estate taxes

Want to learn more fun finance facts? Go to DanHinzCoaching.com, and follow me on Twitter and Facebook.

As a financial coach, I am focused on increasing the financial literacy of Bay County and Florida. If you, or someone you know, would like to get out of debt, avoid bankruptcy, or become more responsible with money, contact me for more information on personal coaching, classes, and seminars.

Government Shut Down and Tax Deadline

While the Government Shut Down has closed IRS help centers, and the online and phone help lines, your tax forms are still due by October 15 for those who have filed an extension.

According to irs.gov no refunds will be issued during the lapse in operations and everyone should try to file electronically if possible.  However, if you do owe this year – payments are being accepted.

And that taxpayers…….. is your tip for today from Abby our mascot here at Adams Business Solutions!  Have a tax or bookkeeping question?  Send it to us at lauree@adamsbusinesssolutions.com  you may see it answered here!

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Buying a Home? Why the FHA Loan is No Longer the Low Down Payment Loan of Choice

This the second article in a series discussing the ins and outs of the best mortgage loan products available for home buyers.  Last week, the USDA Rural Housing Loan was featured.

The FHA loan was once a very popular and useful loan for helping first time home buyers achieve their dreams of home ownership.  “Was” is the key word though because this loan is no longer the loan of choice for most home buyers.

First let me explain why the FHA loan has become the dinosaur of mortgage loans, and then I will explain what is the new best loan with a low down payment that can be obtained anywhere, regardless of whether it is in the City limits or not (see last week’s article about USDA loans).

Due to substantial losses taken during the economic recession and housing crisis, the FHA (Federal Housing Administration) had to increase its revenues to keep operating and attempt to avoid  a taxpayer bailout.  FHA makes its money by insuring loans which in turn allows mortgage lenders to grant loans over 80% loan to value.  In short, the FHA (backed by the U.S. Government) stands behind the loan, allowing lenders to loan home buyers up to 96.5% of the cost of the house.  Without this guaranty, lenders will not loan more than 80% of the cost of a home, eliminating many potential home owners from being able to buy.  After all, how many buyers have an extra $40,000 to put down on that $200,000 house?

For its most popular loan, the 3.50% down 30 year fixed rate mortgage,  FHA now charges 1.75% up-front Mortgage Insurance (MI) and an additional 1.35% annual MI based on the outstanding loan balance.  This annual MI expense used to drop off after the loan reached around 78% loan to value and home owners could request its removal after only 5 years.

However now, FHA borrowers must pay this MI for the full 30 years of their loans even when the loan to value is less than 50%, even when it is less than 10%.  On a $200,000 house the cost of the up-front MI would be $3,377.50 and the beginning monthly MI cost is $215.46 or $2,585 in just the first year.

The FHA loan was designed with a noble cause in mind: to make home ownership more affordable.  Yet now when compared side by side against the USDA Rural Housing Loan and the Conventional Loan with 3% Down, FHA is the most expensive loan option available.

There are a few scenarios where it does make sense to get an FHA loan:

  • If the buyer has had a bankruptcy and/or foreclosure within the past 7 years. Conventional financing requires a 7 year period to have passed, but FHA’s waiting period is only 3 years.  I recently closed a loan where FHA granted an exception and allowed the loan to be made less than 3 years from the foreclosure date (but greater than two years) due to extenuating circumstances.
  •  Manufactured Home Loans. The only mortgage loan product I have available for a manufactured home is an FHA Loan Product.  This is a lower cost loan than other financing for manufactured homes through finance companies.
  •  Refinancing? FHA offers some higher cash out refinance options than conventional loans and also FHA has a Streamline refinance where the home owner can get the benefit of a lower rate without having to have an appraisal completed on the house. This is very useful for those who home value is under water.

If you cannot qualify for a USDA Rural Housing loan due to income or property location eligibility reasons and want a low down payment loan, the Conventional Loan with 3% down is a better and lower cost option than the FHA loan.  I’ll feature this product in my next post.

You are welcome to email specific questions to me at mtarleton@englending.com, call me at 850-866-2963, and also visit my website at www.bankofengland.us.

Mike Tarleton
Sr. Mortgage Loan Officer
Bank of England
850-866-2963 (Cell)
706-888-0980 (Cell / Text)

NMLS: 264821
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30A Sales Activity

What’s Going On in the 30A Real Estate Market?

Are statistics exciting or what? To some, me included, it is like watching grass grow, unless it happens to be about a subject dear to my heart or perhaps my wallet.

Recently there has been a lot of buzz in the area about how the market is going up and the doom and gloom is over. With that in mind I decided it was time to just take a look at the facts and see where things stand.

The area that I am concentrating on is the roughly 18 miles of the Hwy. 30A corridor. I am comparing the first 2 quarters of 2012 to the same period in 2011 (January 1 to June 30th). These numbers were generated from the Emerald Coast Association of Realtors and do not include properties that were handled outside of that format.

These are simply the facts and I will let you draw your own conclusions, but I do have a couple of observations.

It is apparent that sales activity is up as far as single family homes and residential land is concerned. Prices are also up in those 2 categories with 5.6% in price per square foot for homes and 10% for residential land. Time will tell if these increases are sustainable. Condominiums are a different matter, while sales have gone down the prices have gone up 7.3%. It’s possible sales have been affected by the financial market. Condominium mortgages continue to be problematic.

Well, the grass has grown a little since you’ve been contemplating this information. I hope you find it useful and welcome any suggestions you may have for additional research on this topic that affects all of our wallets.

*Statistics were compiled by Hugh Smith using data provided by the Emerald Coast Association of Realtors.

Beachy Beach Real Estate  850-233-4351

Guide to Local Gas Prices

As a community, we may not always agree on the same things.

However, there’s some thing in town that equally hit us all.  For example, Traffic, Real Estate, Tourism, even that smell the Paper Mill gives off.

Gas Prices-  another solid example of something we all deal with.

Granted, our daily drive is easier then commuters in other cities (ahem, Atlanta. Where a milk run to the local store can run you about 45 minutes, one way)

Yet, most of us still end up spending quite a bit of time behind the wheel and if you work in town but live on the beach, forget about it.  All that back and forth driving can really add up at the pump.

Digital Guide Below

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A Special Thanks to our Sponsors

Focused on Panama City Beach, PCBDaily has a broad scope of coverage including the current real estate market, the tourism industry, special events and festivals, construction updates on new projects, photographs of the area, videos of the area and much, much more.

Advertising with us works.

If you’re interested in joining us as an Advertiser, Sponsor or Adoption (it’s national Adopt-A-Blog week, you didn’t know?) you can find more information here.

To our current Sponsors, Advertisers and Affiliates, we wanted to offer our thanks in a special shout-out section, for working with us and keeping PCBDaily able to continue bringing you news, interests and social media updates from Panama City Beach.

Check after the break for a list of our sponsors.

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BP Pays Panama City Beach $1.2 Million

After months of waiting to hear news of the pending claim filed over losses in tax revenue during the Deepwater Horizon Oil Spill, BP offered a claim settlement to Panama City Beach City Council Members, with a respectable $1.2 million payout.

The question to ask now is how the City is planning on utilizing the money. At the moment, mention has been made that the current goal is to put the money towards completing projects the City didn’t have funds for previously.

Continue reading “BP Pays Panama City Beach $1.2 Million”