Mortgage Reform Needed

With more and more foreclosures dotting the landscape, people are asking why. For many the answer is bad mortgages.

Money Talks editor Stacy Johnson takes a look in this video. (Runs 1:32)…

If you have any comments about this video, we'd love to hear from you. Use the comment link below and tell us what you think.

Housing and Economic Recovery Act of 2008

We've been discussing all of these bills and plans for weeks and weeks, and now it's official… President Bush has signed the Housing and Economic Recovery Act of 2008 into law. With about 700 pages in this bill, it covers a lot of ground, and most of the new laws go into effect October 1st.

Some of the main points that anyone buying a home or interested in a mortgage will want to know, include:

• New Loan Limits for FHA - After December 31, 2008, FHA loan limits will be 115% of the median home sales price. In no case will the limit be less than $271,050 or greater than $625,500. Until December 31, many counties enjoy loan limits as high as $729,750 or 125% of the median home price.
• FHA Down Payment Assistance eliminated – Home buyers have only until October 1, 2008 to qualify and receive down payment assistance with FHA loans.
• FHA cash-out refinancing remains at 95% - No change here.
• FHA refinancing will only allow up to 96.5% for rate and term mortgage refinances - Currently it’s at 97%. What this means is you'll only be able to qualify for a loan amount up to 96.5% of your homes appraised value. So if your home is appraised at $100,000, you'll qualify for a $96,500 mortgage.
• FHA minimum down payments will now be 3.5% - Again, home buyers have until October 1 to take advantage of the current 3% minimum down payment. To illustrate this, a person wanting to buy a $200,000 home will now have to come up with an additional $1,000 for the down payment. Add to this the fact that down payment assistance is being eliminated and the urgency to act now on FHA loans can’t be overstated.
• Tax Breaks for First Time Homebuyers – Perhaps the most positive aspect of the Housing and Economic Recovery Act of 2008. There will be a tax credit of $7,500 (or up to 10% of the sales price, whichever is less) for first-time home buyers (or people who have not owned a home for three years). This credit phases out as annual income levels top $75k for an individual or $150k for a joint return. Key things: Must be a primary residence, the tax credit is PAID BACK in $500 increments over a 15 year period as part of your taxes (not cash payments) and is retroactive for homes sold between April 9, 2008 and July 1, 2009.
• Conventional loan limits (through Fannie Mae and Freddie Mac) will be calculated by county – The conventional loan limit is the most you can borrow before your mortgage is considered a “jumbo” loan and therefore subject to higher interest rates. The new loan limit will be 115% of the median sales price. In no case will the limit be less than $417,000 or greater than $625,500.
• Reverse Mortgages – Loan limits will by synched up with the Fannie Mae and Freddie Mac limit of $417,000.

If you have specific questions about this new Housing and Economic Recovery Act of 2008, post your question using the comment link below and we'll try to get the answer for you. Remember, your email address will never be published at this site to protect your privacy.

Homeowners Insurance: Tips for Reducing Your Premium

With prices for just about everything fluctuating (mostly in the upward direction) lately, people everywhere are looking to save money where ever they can. A good place to start is with your homeowner's insurance policy.

In spite of our economy, home values have increased over the past 5-15 years. Many people have failed to determine if their current insurance coverage would be adequate to replace their homes. Your policy should allow you to completely rebuild your home should a disaster occur. If not, get your policy updated to match your current property values.

To save money on your homeowner's insurance policy, follow these tips:

• Determine the limits you want on your homeowners insurance, what value you need to insure, get multiple quotes.
• Consider purchasing your homeowner, auto and umbrella insurance with the same company so a multi-coverage discount will apply.
• Having smoke, burglar alarms and a sprinkler system could mean bigger discounts.
• Get a quote for insurance that would pay to replace your belongings, rather than pay you based on their depreciated value.
• Ask your agent what documentation you need to substantiate a claim, in case of theft or fire. Make sure you videotape all of you personal properties including what is in the drawers and cabinets and send the tape to someone you trust for safekeeping.
• Make sure you carry enough liability coverage to protect you against a lawsuit if someone gets slips, trips or gets hurt on your property.

If you haven't reviewed your homeowner's insurance policy lately, now might be a wise time to do that, especially to make sure you are adequately covered in case of an unexpected disaster, like fire, tornado's, hurricanes, earthquakes, etc.

How to Find a Financial Advisor

Do you know the difference between a CPA and a CFU? How about a CFP and a CFA? If you're going to get financial advice, these are letters you might want to know.

In this short video, Money Editor Stacy Johnson gives us a few tips on how to find the best financial advisor. (Video runs 1:39)

Gas Prices: Is the Worst Behind Us?

U.S. retail gasoline prices have fallen more than 10 cents per gallon in a week and could fall another 25 cents by the end of summer. Could this be a sign that the worst is over for U.S. motorists this vacation season?

The decline tracks a record pullback in the price of crude that has come amid mounting evidence high energy costs and an economic slowdown are shrinking American demand for fuel.

Despite the recent declines at the pump, gasoline prices remain more than $1 higher than last year at this time.

What do you think? Is the worst behind us at the pump, or is this just a temporary lull? Use the comment link below and tell us what you think.