Top 10 FHA Loan Advantages

Fannie Mae and Freddie Mac underwritten conventional, FHA and CA loans account for the vast majority of mortgages chose by buyers to finance their home purchase. While buyers have the choice on which product to use, there are some considerable advantages to FHA.

1. More tolerant for credit challenges than conventional loans.
2. Lower down payments than conventional loans.
3. Broader qualifying ratios - total house payment with mip can be up to 31% of borrower's monthly gross income and total house payment with all recurring debt can be up to 43%.
4. Seller can contribute up to 6% of purchase price - this money must be specified in the contract and can be used to pay all or part of the buyer's closing costs, pre-paid items and/or buy-down of the interest rate.
5. Self-employed may qualify with adequate documentation - two year's tax returns and a current profit and loss statement would be required in addition to the normal qualifying and underwriting requirements.
6. Mortgage insurance premium can be released in five years when the balance is 78% of original sales price.
7. Liberal use of gift monies - borrowers can receive a cash gift to assist in purchase from family members, buyer's employer, close friend, labor union or charity. (A gift letter would be required specifying that the gift does not have to be repaid.)
8. Special 203(K) program for buying a home that needs capital improvements - requires a firm contractor's bid attached to the contract specifying the work to be done. The home is appraised subject to the work being done. if approved, the home can close, the money for the improvements escrowed and paid when completed.
9. Loans are assumable at the existing interest rate - assumptions require buyer qualification but are actually easier than qualifying for a new mortgage. Closing costs are lower on assumptions than originating a new mortgage.
10. If the rate on the assumable mortgage is lower than current rates for new mortgages, it could add value to the property.

Renters Insurance

Here's something you might consider interesting: the five major things that renters insurance will cover, in order of what our insurance agents consider to be most important.

1 - $20,000 for your personal property, such as furniture, clothes, appliances, electronics, etc.  You can save $20 a year by accepting 'actual cash' value in the even of a claim, but if you can even name one thing that you'd want the original cost of reimbursed, then we suggest you pay the extra $20 a year for replacement cost.

2 - Paid hotel and food expenses up to 12 months in case a covered peril (i.e. lightning, fire, windstorm, weight of ice or snow, theft, etc.) forces you out of your living space.  This is great for families, as you would be able to maintain privacy, etc.

3 - Liability coverage, in case someone trips on your sidewalk or doormat and sues you for not keeping it orderly, or you hit someone with your tee shot on the golf course, or accidentally turn off the heat in the winter and cause the pipes to burst and flood the house. (This happened to some of our renters last winter!)

4 - Medical payments to help waive a health insurance deductible in case no negligence can be determined (thus liability coverage couldn't be exercised).

5 - $1,000 identity theft coverage (easily upgraded to $10,000 for an additional $0.58/month).

One More Chance?

Fixed rate mortgages are at their lowest level for 2011 as reported in the current Freddie Mac weekly Primary Mortgage Market survey. Many qualified buyers missed the opportunity last fall in October and November to refinance at record low rates. This may give homeowners one more chance to refinance and save money on their payments.

An important thing to keep in mind is that points paid in connection for refinancing a home are generally not considered prepaid interest and must be spread over the life of the mortgage. Some advisors suggest that you have the lender quote a "par value" loan to eliminate the points, which will lower refinancing costs even though the mortgage rate will be slightly higher.

(Additional income tax information is available in IRS Publication 936.)

Why it's Great to be Here in Iowa

As one of mid-Iowa's oldest real estate and property management companies, we love to see Iowa getting the attention it deserves.  In recent years more and more people have started realizing why buying and selling property in central Iowa is such a great choice.

• CNN Money (2010) ranked Ames as the 9th best place to live in the nation.  

• US Money listed Ames on their 'best places to retire' list.  

• In addition, Ames has been listed among some of 'the best emerging metro areas' and high on the list of 'the best green cities' in America, ranking #12 and #39, respectively.

• Iowa even has one of the lowest unemployment rates in the nation! (6th lowest)

• The graph on the left shows average house listing price vs. per capita income for each of the fifty states.  Iowa is the red dot along the bottom.  In this case, being at the bottom is where you want to be!  Iowa's position means that we have the best value for those looking to buy a home, because our per capita income is right in the middle of the nation, but our home prices tend to be lower (2nd lowest in the nation).  If you're looking to buy or sell a home in Iowa, this means the odds and the money are both stacked in your favor!

All this and more contribute to why Iowa is the place to be.  Whether you're buying or selling a home, Triplett makes it easy to join in the fun and experience why everyone agrees central Iowa is great!

Homeowners and Renters Policies

There are 16 things covered under a standard homeowners or renters insurance policy.  Take a close look - some of these might surprise you:

1) Fire or lightning
         2) Windstorm or hail (including tornado)
                  3) Explosion
                           4) Riot or civil commotion
                                    5) Aircraft
                                             6) Vehicles
                                                    7) Smoke
                                                         8) Vandalism or malicious mischief
9) Theft

10) Falling objects
11) Weight of ice, snow or sleet
12) Accidental discharge or overflow of water or steam (excluding sewer and failure of sump pump)
13) Sudden and accidental tearing apart, cracking, burning or bulging
14) Freezing
15) Sudden and accidental damage from artificially generated electrical current
16) Volcanic eruption|

Come on in to triplett and chat with one of our knowledgable insurance agents. they can help you decide what kind of policy is best to insure your life!  Who knows?  You might even learn a thing or two along the way...

Cash Now - Mortgage Later?

You might think that a person who pays cash doesn't have many concerns or at least not the same ones as most people. Roughly 9% of people paid cash for their home last year with a considerably higher percentage paying cash this year.

The first question that comes to mind when we hear someone say they want to pay cash for a home is "Do you think that you might put a loan on the home in the future?"  Paying cash may affect your ability to deduct the interest on a mortgage placed on the home at a later date.

Currently, a homeowner may deduct the interest on up to $1 million of acquisition debt.  Paying cash for a home establishes acquisition debt at $0.  At that point, the only deductible interest would be home equity debt which is limited to $100,000 over acquisition debt.  You can get more information about this from IRS Publication 936.
 

On the surface, paying cash certainly seems simple but it may have consequences later.  At Triplett, we can point out the areas when advice from a tax professional is in order.