Refinance Website

I came across a new website that I thought was worth sharing with the world. It's a website that is all about refinancing mortgage debt. It is called RefinanceMortgageDebt.com. Check it out! You can a learn a lot about refinancing and all of the mortgage programs that are available for your unique situation.

Will the ARM make a comeback?

An ARM ,or adjustable rate mortgage, is a mortgage product with an interest rate that is tied to a certain economic index and that is fixed for a certain period of time (e.g. 1,3,5,7, or 10 years). After the fixed period the interest rate will periodically adjust as the economic index changes. In the mortgage industry, "ARM" has almost become a swear word. We can thank the media for this. So many bad things have been associated with an ARM... foreclosures, pre-payment penalties, rising payments, option-ARMS, negative amoritization, etc. The stigma has gotten so bad that I'm afraid that if I mention an ARM to a client that they are going to sprint out the door and never look back. Yet, with some trepidation, I have to say that there are some circumstances in which an ARM makes sense (gasp!). Check it out...Today a 30 year fixed rate is around 4.875%, but a 7 year ARM is at 4% and a 5 year ARM is at 3.875%! For a first time homebuyer that is certain that they will move after 5 years, why wouldn't they consider saving almost a full point of interest over that time. On a 100,000 loan, it's a savings of almost $5,000. Of course nobody can know for certain how long they will stay in a home but for many people I believe it is worth taking that risk. It's also important to know that it's not certain their interest rate will adjust higher after the fixed term. In today's market, many adjustable rate mortages are adjusting lower because the rates of the economic indexes are so low. I think it's time the ARM makes a comeback. I hope I don't go out of business for saying that.

1,599 grants remaining

Besides the $8,000 dollar tax credit for first time homebuyers, there is now a $6,000 grant for anyone that purchases a new-construction home. The guidelines are pretty much the same as the federal tax credit except the home must be new construction and the buyer does not have to be a first time homebuyer. There is some excellent information about it on the utah housing website.

Obama's Tax Credit

A lot of people have asked me about the new first time homebuyer tax credit and how it compares to the old $7,500 tax credit/loan. The two biggest differences that I can see is 1. It is for $8,000 and 2. It is not a loan but a legitimate tax credit that you don't have to pay back!! Sounds pretty sweet to me. One way to think about it is if you buy a home for $100,000, the real price is $92,000. Frankly I wish I were a first time homebuyer so I could take advantage of this incredible opportunity. For more information, I found this article on yahoo.com... First Time Homebuyer Tax Credit