Who is left to refinance?


Plenty of folks, per the number crunchers at CoreLogic. Putting aside the question of, "What will a world of 3.5% 30-yr borrowers look like in five years?" there are still oodles of homeowners with rates in the 5% and 6% range who could benefit. "Roughly 69% of American homeowners with mortgages at the end of the second quarter had rates of 5% or higher and about 33% of them had rates above 6%, according to detailed mortgage data provided to The Times by Santa Ana research firm CoreLogic."

-Terry O'Donnell

I know there are many people who have tried but various problems keep them from refinancing.  If I haven't talked to you about it shoot me an email or call at (615) 777-4663 and we can discuss it. 

9 Popular Tax Breaks You Can No Longer Count on in 2012

From what I understand the tax deductibility of Mortgage insurance expired Jan 1-2012. So you can probably write it off on the return you are about to file, but not the next one.



I believe the same thing is happening with our sales tax deduction. Tennessee, being one of the few states without an income tax had been allowed to write of the sales tax in lieu of state income tax. But that write off is also going away. Write your congress people.  And take a look at this article....


9 Popular Tax Breaks You Can No Longer Count on in 2012



Lawmakers may have extended the payroll tax holiday for two months, but they let a number of tax breaks that might be dear to you expire.

By David Muhlbaum, Kiplinger.com

You'll face a higher tax bill next spring if Congress doesn't act to revive a series of tax breaks that expired Dec. 31, 2011. Among the breaks that Congress didn't extend in all the sturm-und-drang over the payroll tax holiday are:


Alternative minimum tax patch...The AMT is a parallel tax system created more than 40 years ago to prevent excessive use of tax breaks by the very wealthy, ensuring they pay at least some tax. Taxpayers whose income exceeds the AMT exemption - in 2011, $48,450 for individuals and $74,450 for married couples filing jointly - must calculate both regular tax and AMT liability and pay the larger of the two amounts. But exemption levels have, at least tentatively, dropped to $33,750 for individuals and $45,000 for married couples filing jointly in 2012, which will expose 31 million taxpayers to the higher AMT this year, according to Tax Policy Center estimates.


Higher mass transportation benefit...This one's of particular interest to straphangers, van-riders and other users of public transit. A 2009 federal stimulus provision raised the maximum an employee could receive for transit, tax-free, from $120 to $230. That matched the tax-free limit for parking. With the expiration of this break, the maximum for 2012 dropped to $125. Employees who've asked to have an amount higher than that withheld from their paycheck to cover their total commuting costs will see their net pay come down, as the difference is now taxed.


Deduction for direct IRA payouts to charity...Retirees who are 70½ or older could direct up to $100,000 of their IRA distributions directly to charity and exclude the donated amounts from taxable income. Not anymore in 2012, unless Congress reinstates this deduction.


Write-offs for state sales taxes...This particularly significant expired break allowed you to deduct either state income tax or state sales tax from your federal taxable income.


Teacher's supplies deduction...Teachers, even if they didn't itemize, were able to take an additional deduction of up to $250 for classroom supplies they paid for out of their own pockets.


Tuition and fees deduction...Taxpayers (up to certain income limits) who can't claim the more advantageous American Opportunity or Lifetime Learning credits can still reduce taxable income by up to $4,000 for tuition and other qualifying educational expenses -- if, of course, Congress reinstates this break.


Mortgage insurance premium deduction...Homeowners who don't exceed certain income limits had been able to deduct premiums they pay on mortgage insurance policies issued after 2006 on their primary residence.


Personal tax credits applied against the alternative minimum tax...Credits such as the tuition and dependent-care credits were allowed to offset your AMT liability.


Research and Development credit...Like the AMT patch and direct IRA payouts, this credit, which allowed high-tech companies and others to subsidize research in areas that might go unexplored, has broad support. But it still falls to Congress to reauthorize it periodically.


We think Congress will manage to revive these breaks -- eventually -- with the exception of the transit subsidy, whose chances are no better than 50-50 . But you may spend much, if not all, of 2012 in a state of uncertainty. The political atmosphere in Washington is so toxic that it is doubtful the parties will reach agreement before the end of 2012, when Congress will have to take up the question of extending the Bush tax cuts.


If lawmakers wait too long, in 2013, we may have a repeat of the 2006 and 2010 filing seasons, when many taxpayers had to wait for the IRS to reprogram its computers before they could file their tax returns. In both cases, the start of the filing season was delayed for many until early to mid February.


Reprinted with permission. All Contents ©2012 The Kiplinger Washington Editors. http://www.kiplinger.com/ .

Mortgage Market Guide

You can reach me at 615-777-4663 (HOME) or email me at George.Margrave@migonline.com

The Truth About Closing Credit Cards

If you have read anything about how to get and keep a high credit score, you have probably seen this advice: never close your credit cards. This advice is true and good. Sort of.


The 2 parts of valid reasoning behind the idea of not closing any credit cards are:

1. Closing a credit card will decrease your debt utilization ratio. A whopping 30% of your credit score is calculated from your Amounts Owed. Your debt utilization ratio (your total revolving debt divided by your total credit limit) needs to be as low as possible in order to reap the maximum credit score. Closing a credit card takes away some of your total credit limit, which can raise this ratio, and lower your credit score.

2. Closing a credit card will impact your length of credit history. It's a fact that the credit scoring model looks at how long a person has had credit established; the longer, the better. Closing a credit card you have had for many years may cause your length of credit history to decrease, which can result in a lower score.

So, there are valid reasons to not close your credit cards.


ADVICE: Never close a card that has a balance, your only credit card, or your oldest credit card!


But what if you have a ton of cards, are aiming to streamline your finances, and want to close some of them? Which ones can you close that will have minimal impact to your credit score?


If you have made the decision to close some of your credit cards, choose these (in this order):


Your newest card. The last credit card opened needs to be the first one to go. This card is not helping you very much with your length of credit history, so closing it should not have much impact on your credit score.

Your card with a zero balance. If you never use a particular piece of plastic, it is probably not figured into your credit score (credit lines must be used at least every 6 months in order to be factored into your credit score). Closing a card you never, ever use should have no impact on your credit score.

Your card with the worst terms. Big annual fees, high interest rates, and no perks give you no incentive to keep a card active.

You card with the lowest limit. A low limit credit card is probably having little effect on your debt utilization ratio. Closing low limit plastic can help limit your number of cards without great danger of credit score damage.

Closing credit cards doesn’t have to kill your credit score, just make sure you are choosing wisely.

Other points to remember are:

Always look at your debt utilization ratio before closing a credit card. If your ratio is going to be over 30%, don’t do it.

Always keep at least one credit card open and active, and pay the bill on time. This will give you points for managing credit wisely.

Always keep your oldest credit card open and active.

Take these tips to heart to ensure that whittling down your lines of credit has minimal impact on your credit score.

~~Susan McCullah is the Product Development Director for Data Facts, a 22 year old Memphis-based company that provides mortgage product and banking solutions to lenders nationwide

If you would like to speak with me about this or need any help, would like a copy of your credit report, please give me a call at 615-777-4663 or email me at george.margrave@migonline.com

Happy Thanksgiving!

Cash On Hand?

Today's topic is cash and miscellaneous deposits to your bank account. When processing a loan, it is an issue.


And you say how can that be a problem? When an underwriter looks at a bank statement and sees deposits that are not payroll they have to find out where it came from. They worry that it is unreported income which is a problem on loans with income limits such as THDA, or they worry that there is an unreported obligation, so you can save yourself a lot of aggravation if you have cash and can't document it by not putting it in your account. If you are going to need it to make your down payment, we need to address it. Call me for insight.

Should you have any questions or need help with any of this, please feel free to contact me at my office at 615-777-4663, my cell phone at 615-481-5626 or via email at George.margrave@migonline.com .

Lowest Rates Ever! (No really)

If you have been keeping up you know we have the lowest rates since I can remember (I think they are the lowest since the records were kept.) You have been hearing radio ads about this for the last two or three years, but now it is really true. How can it benefit someone who wants to refinance?


If you have an FHA loan at about 5.75% or higher, it would probably benefit you to lower your rate on another 30 year loan in the 3’s or low 4’s. For a little more we can pay your closing cost. If you can go to 15 year, it will probably still increase your payment but can make a huge difference in your future equity position. The kicker with FHA is the MIP payments eat up some of your interest savings. If you don’t have equity, we can do a streamline loan with no appraisal, but you have to pay the closing cost out of pocket, or we as lender might be able to pay it for you. Call me for details.

If you have a conventional loan, we are most likely going to have to have an appraisal. There will have to be enough equity to finance closing cost or you could pay them or once again we as lender may be able to do it. Once again call or email your questions. Just click on reply.

The bigger the loan the more savings you get. Also once again don’t forget the 10 or 15 year loans if you can handle the bigger payment.

I can be reached at 615-777-4663 or via email at George.Margrave@migonline.com .

The Local Real Estate Market

The media focuses on the national picture. But let’s stop and consider the local picture. The median price (not the average) for existing single family homes has dropped from $196,600 in 2008 to $173,100 in 2010. At the same time the interest rate has dropped from 6.15% to the present low 4's.

If we look at appreciation in Tennessee we see that the 5 year rate is positive at 2.79% and the ten year rate a great 28.06%. So from where I sit it is an unbelievably great time to buy a home in Tennessee. If you already own one, maybe it is time to sell it and move up. Or if not that, maybe to refinance and get a 15 year rate in the low 3's. No you didn’t hear wrong. Give me a call at 777-HOME (4663) or email me at George.Margrave@migonline.com .

Own, Rent, or Borrow?

The housing market still faces many challenges. High unemployment, foreclosures and other distress sales are keeping negative pressure on prices. This of course is good news if you are looking to buy as low rates and lower prices have brought affordability to record levels.

How Affordable? - Since 1963, it has cost an average of approximately 43% of "per capita" or individual income to finance the cost of a median priced home (20% down payment and prevailing 30 year fixed rate mortgage). Right now, it's only about half of that cost at approximately 22%.



Are you holding off on a purchase for fear that prices might fall further? - Chances are that some sellers might be thinking the same thing. If you're smart about it, you can use that as an advantage to strike the best possible deal on a home today for once a seller believes that prices have bottomed or are going back up, your advantage will be gone.



Don't confuse Price with Payments - Gambling on the expectation of a lower price tomorrow at the risk of higher rates can cost much more in the long run than locking in a sure thing today. Ex. $200,000 30 Yr. fixed loan @ 4.625% = $1028/mo. today vs. $180,000 @ 6.5% = $1137 per month later. In other words, paying less can still cost you more.



Own, Rent, or Borrow - One way or another, a home is something we all need every day. The numbers here tell the story and it's no secret that values have fallen, yet over time, that's not the case. As you can see by the chart, values over the last 10 years in most states show very healthy appreciation. And over the long haul (map), all states have positive appreciation.



We don't get a history lesson in the news because the news is about the moment and the more dramatic the better. That's what sells advertising and that's how they get paid. For the rest of us, taking a rational, longer term view of things makes more sense. This is particularly true when it comes to a home, for this is something we are likely to own for many years rather than just moments.



If you would like to discuss your options or just want to find out more, you can reach me
at 615-777-4663 or via email at george.margrave@migonline.com.