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One of my clients thought that their 45 minute move across townships would be easy. It was for her 15 year old son, who connected with new friends on Facebook even before they moved. But her 8 year old daughter did not have the same experience. You’d have thought they moved to a different country, they way her daughter reacted.

Moving is considered to be in the top five most stressful events in a person’s life and even more so for kids. Here are some tips to help ease the transition;

Involve your children in as much of the planning as possible. Help them find local web sites so they can learn about the schools, sports teams and other activities in the new community. You want to increase their familiarity and build excitement for the area.

Communicate. Take time to speak with them about the move and in particular, about their fears or concerns.

When possible, allow the kids to pick their own bedrooms. This makes it fun and exciting. Let them decorate as well, no matter how different their choices are from yours.

Keep a few special possessions out of the boxes. Familiar items, such as a blanket or stuffed animal, bring comfort to skittish kids.

Encourage them to make new friends. Introduce them to children in the neighborhood. Invite one of their classmates over for a play date early on. Or throw a kiddie housewarming party!

Seek help from professionals. A knowledgeable real estate agent can help you learn the area, give you leads on local children’s activities and make the whole move go more smoothly.

Fannie Mae raised the bar for mortgage applicants this past weekend.  Getting approved for a home loan just got harder, as if loan liquidity weren’t already the biggest problem facing home buyers.

In its official announcement, Fannie Mae says the updates minimize long-term lending risks.  If that’s the case, this won’t be the last guideline change Fannie Mae makes — especially with loans defaulting at an above-normal clip.

The immediate changes are major. The first pertains to credit scores.

Effective December 13, 2009, the bulk of Fannie Mae’s loans require a 620 credit score minimum.  There are very few exceptions. As a result, buyers with damaged credit may need to make repairs to their credit to qualify.

A second relates to loans with private mortgage insurance.

Homeowners whose loan-to-value exceeds 80 percent now have a choice:

1. Pay higher mortgage insurance premiums month-after-month
2. Pay a one-time fee paid at closing to compensate for higher risk

Both options result in higher consumer loan costs. This change probably has less impact since rates are so low, the monthly increase will probably be bearable for buyers, though it does result in less “bang for the buck” in the new loan – since the total payment is the target for most buyers, the increase in the amount of PMI means a decrease in the portion of the  payment needed to handle the actual loan.

A third change concerns maximum debt-to-income ratio. Fannie Mae will no longer approve loans with debt ratios exceeding 45 percent except with very strong assets and very high credit scores.

In no case whatsoever may debt-to-income exceed 50 percent.

There are other changes, too, including the elimination of seldom-used mortgage products and additional risk-based fees for “expanded level” mortgage approvals.  These updates affect just a small part of the population.

The National Association of REALTORS took a lot of heat from people who thought their ad campaign “There’s Never Been a Better Time to Buy a Home” was too optimistic. However, the ad campaign may have been nothing but the truth. Home prices are rebounding, mortgage rates are low, and — for 5 more months at least — there’s a federal tax credit for qualified buyers.  You don’t have to buy a home now, but with mortgage guidelines sure to tighten in 2010, now may be a better time than later.

The best “deal” won’t matter if you can’t get qualified on your mortgage.

Image via Wikipedia

The Federal Open Market Committee voted to leave the Fed Funds Rate within its target range of 0.000-0.250 percent.

In its press release, the FOMC noted that the U.S. economy “has continued to pick up”, that the jobs markets is getting better, and that housing market has shown “some signs of improvement” lately.

It’s the fourth straight statement in which the Fed speaks optimistically about the U.S. economy — a signal that the worst of the recession is likely behind us. Which doesn’t mean that things are better, just that they are getting better.

Just as there was speculation about the end of the last “boom” before the impact of that end was felt, there is always a lot of conversation about recovery before its impact is completely felt. People who are struggling now may be feeling some relief, but they may continue to struggle for a while longer – though they can do so feeling that things are getting better, and should continue to do so.

The economy isn’t without threats, however, and the Fed identified several, including:

1. Tight credit conditions for consumers
2. Businesses are reluctant to hire new workers
3. Lower overall housing wealth

The impact of each is obvious. Without more liquid credit, larger purchases like homes, cars, and business equipment may be stalled (or at least slowed) even though the demand or need for those purchases is growing. Until more people are employed, many families will be more conservative in their spending, delaying some of the benefits of the recovery. And finally, with less equity in their homes, people have a harder time releasing that equity for education, purchases, or opening new businesses. At least in our market area, since our price adjustments have been very moderate in comparison to the national averages, people have not lost as much housing wealth as in other parts of the country.

The message’s overall tone remained positive, however and inflation appears to be held in check.

Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent “for an extended period” and to honor its $1.25 trillion commitment to the mortgage bond market.  That plan — due to expire at the end of March 2010 —  should be noted by today’s homebuyers. Fed insiders estimate that the program suppressed rates by 1 percent through 2009.

Mortgage market reaction to the Fed press release is negative.  Mortgage rates aincreased after the annoucnement.

The FOMC’s next scheduled meeting is January 26-27, 2010.

Except for the first three years of my life and the time I spent in college, my life has been in Philly and I don’t understand anyone that doesn’t appreciate this city.

Although my residence is in a suburb of Philly, Elkins Park, I spend a lot of time in the city and enjoying all that it has to offer. I can spout off lots of wonderful things to do right now, like seeing the Gorky exhibit at the Philadelphia Museum of Art. Or seeing the production of Little Shop of Horrors a the Prince Music Theatre.

But if you are a chocolate lover, than Philly has the most unbelievable place to go. Max Brenner’s at 1500 Walnut Street is absolutely the best chocolate experience I have ever had. They serve breakfast, lunch and dinner, but what I experienced was their dessert. They have a separate dessert menu with what seemed like endless pages of selections of every type of dessert. And just about every dessert had chocolate. There were seven of us reading the menu and every few seconds someone was saying “OMG”. We would thing we would find the right one to order and then you would turn the page and start all over again.

Each one of us ordered something different and they were all wonderful. Banana Split Waffles, Melting Marshmellow Crepes, The Golden Heart, Warm Chocolate Soup, Truffle made of 70% Cocoa and two different ice cream sandwiches, but these were not your ordinary ice cream sandwiches. My only suggestion to our server was that they should have a sample platter. But then my sister-in-law reminded me that I created my own by tasting a little of each person’s dessert.

The atmosphere is hip and loud but fun, full of wood and chocolate smells and great service. And when you are finished eating, stop in the chocolate shop for great food and gifts. But go after you eat when you are full so that you don’t buy everything in site.

I love Philly and look forward to sharing some more of the highlights this great city has to offer. Enjoy your chocolate and let me know what you think.

APR is an acronym for Annual Percentage Rate.  It’s a government-mandated calculation meant to simplify the comparison of mortgage options.

A loan’s APR can always be found in the top-left corner of the Federal Truth-In-Lending Disclosure.

Because APR is expressed as a percentage, many people confuse it for the loan’s interest rate.  It’s not.  APR represents the total cost of borrowing over the life of a loan.  “Interest rate” is the basis for monthly mortgage repayments.

The main advantage of APR is that it allows an “apples-to-apples” comparison between loan products. 

As an example, a 5.000 percent mortgage with origination points and fees will almost certainly have a higher APR than a 5.500 percent mortgage with zero fees.  In this sense, APR can help a borrower determine which loan is least costly long-term. In other words, the APR is an artificial index that can be compared to determine which loans have higher or lower APRs, thus indicating the higher or lower cost to the consumer.

However, APR is not without its shortcomings.

First, different banks includes different fees into their APR calculations.  By definition, this spoils APR as a choose-between-lenders, apples-to-apples comparison method, though the total cost to the consumer is still accurately determined.

More importantly, when calculating APR, “life of the loan” is assumed to be full-term.  When a 30-year mortgage pays off in 7 years or fewer — as most of them do — APR comparisons are rendered less accurate. It is possible that a loan with a lower APR might be more expensive if the loan is not carried to the full term and would have had a higher APR if the shorter term had been used in the original calculations.

In other words, APR is just one metric to compare mortgages — it’s not the only metric.  The best way to compare your mortgage options is to review all the loan terms together and determine which is most suitable.

For today’s home buyers and homeowners that can manage the higher monthly payments, 15-year fixed rate mortgage rates look attractive as compared to comparable 30-year products.

The 15-year/30-year interest rate spread is near its 5-year high. As a result, the savings afforded by the 15 year mortgage is at its 5 year high also.

Despite lower rates, however, homeowners opting for a 15-year fixed mortgage should be prepared for its higher monthly payments. This is because the principal balance of a 15-year fixed is repaid in half the years as with a standard, 30-year amortizing product.

As compared to 30-year terms, 15-year products repay 3 times as much principal each month. It is this difference which makes the payment so much larger.

Versus a 30-year, 15-year fixed mortgages have a few downsides worth noting. The first is that, because 15-year mortgages are heavy on principal and light on interest, homeowners who itemize tax returns may have to claim a smaller mortgage interest tax deduction at tax time. Balanced against that of course, is the benefit of making much larger principal payments and retiring your debt earlier.

Another negative is that the sheer size of the payment. If you run into fiscal trouble down the road, the only way to reduce the monthly obligation is to refinance into a 30-year product and that costs money to do.

In other words, be sure you can manage the payments over the long-term before you opt for a 15-year term. If you can manage it, though, the rewards are tangible.

At today’s rates, a 15-year fixed and 30-year fixed costs $230 extra per $100,000 borrowed.

Thanksgiving is Thursday. If you’re cooking for group (or a crowd) and you haven’t yet put your menu in order, click on through Bon Appetit’s Thanksgiving Menu Planner.

Answer 3 basic questions and Bon Appetit serves up a list of dishes and their respective recipes.

1. For how many people are you cooking?


2. How much time do you have to cook?


3. What’s your style?

It’s not too late to host a delicious Thanksgiving dinner. Bon Appetit can get you moving in the right direction.

Or if you’re a luck guy like I am, maybe someone else will be cooking and all you’ll need to do is show up, be charming, and eat! What ever you’re doing though – be thankful for what you have – its probably much more than some others have.

Image via Wikipedia

It seems clear if you have never owned a house that you are eligible for the $8,000 first time home buyer tax credit. But many consumers have different situations and have been asking me questions about the tax credit and if their situation  would allow them to be eligible.

The new tax credit is not the same as the one just past, and the differences make it really attractive (in my opinion) to a whole new group of people. Here is some information that might help clarify who is eligible and how it can be used.

• If someone that is a first time home buyer purchases a house with someone that is not a first time home buyer, and then later that year they are married, is the first time home buyer still eligible for the tax credit?
  • The first time home buyer is able to take the entire tax credit as the eligibility for the credit is determined by the date of purchase.

• A first time home buyer has a co signer on the mortgage that is not a first time home buyer. Are they still eligible for the tax credit?
  • They absolutely are. The co signer cannot claim any portion of the tax credit, but the first time home buyer can claim the entire credit

• Someone owns an investment property but it is not their primary residence. They now purchase a property for their primary residence. Are they eligible for the tax credit?
  • Yes, as long as the person has not owned and used a home as their primary residence, they are eligible for the tax credit.

• If a husband and wife wanted to sell their primary residence which was owned by the wife alone and purchase another house, would the husband be eligible for the tax credit?
  • Unfortunately the answer to this one is no. The tax code requires that the tax payer and the tax payer’s spouse cannot have owned a home in the past three years.

The answers to these questions and many others can be found at the IRS web site. There are many good reasons to buy a house now. Interest rates are low, inventory is still large and tax credits have been extended for first time home buyers and expanded to people that are selling and buying at the same time. But remember, you still need to afford the mortgage payments and upkeep of the house. So although it’s one of the best times in my history of a Realtor to be a buyer, it is not the right time for everyone.

One last item, if you read my blog last week about Congress passing the tax bill, I promised to let you know who the 12 Representatives were that voted against it. If any of them are your Representatives, give them a call and tell them what you think of their vote! So because I always keep my prmises, the nays were Brown, Burgess, Flake, Franks, Garrett, Linder, McClintock, Paul, Price, Radanovich, Scalise and Shadegg!

Image by reeltor99 via Flickr

As Congress discusses a 6 month Extension of the First Time Home buyer Tax Credit with an additional credit for repeat home buyers, the results of the initial credit seem to be obvious when we look at the Pending Sales Market statistics from September for Philadelphia and surrounding counties.

With such substantial increases in the pending sales for all five counties, its obvious that our housing market has recovered substantially. Though its tough to know exactly how much the tax credit influenced this, logic tells us that it has had a substantial impact. When we add to this the decrease in inventory, we see what would be defined as a recovering real estate market.

So what does this mean for the next 6 months?

• With a tax credit extension, motivation for first time home buyers will continue
• A tax credit for repeat buyers will increase motivation for a new group of buyers
• Shrinking inventory generally means competition between buyers for more desirable homes and possible upward pressure on prices.
• Though the tax credits are significant, the 6 month window is still a limited window off opportunity.
• The limited opportunity provides substantial additional motivation for buying even at a time of the year which is traditionally slower because of the retail market.

So though there is still uncertainty about the unemployment numbers, and we have not seen a great resurgence in consumer confidence yet, it does seem that in the house buying arena, there are substantial reasons for potential home buyers to get off the fence and take action now to benefit from the combination of affordable prices, low mortgage rates, and tax benefits that may not be extended again in the more active spring market.