Selling Your Home
Get Pequalified for the upcoming purchase and make sure rates and programs are in your favor with Mortgage Applications Online!
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Okay, you’ve decided to sell your home. You have an agent and you’re anxious to get the ball rolling. Now is the time to take an active part in ensuring your success.
There are a few things you should do to ensure you get top dollar for your property.
A Good First Impression Can Sell Your Home
First impressions last the longest and are the most important in selling your home. As a seller, you will want to make your home as attractive as possible to potential buyers. The time, effort and limited financial investment involved can give you the competitive edge needed to sell your home when you want - at the price you want.
The exterior of your home is the first thing a prospective buyer will see. A little time and effort can make a big difference in the impression your home creates. This can pay big dividends when the sale is made.
Use This Checklist to Make Sure Your Home’s Exterior Looks it’s Best
Lawn is cut and neatly trimmed around the sidewalks and driveway
Flower garden is weeded
Shrubs are trimmed
Dead trees and branches are eliminated
All debris is disposed of
Toys and lawn equipment are neatly stored
Fences and gates are repaired and repainted, if necessary
The roof, gutters and downspout are in good repair
Driveways and sidewalks are washed down and checked for cracking and crumbling
Cracked windows and torn screens are replaced. Screens, windows and windowsills are washed. Doorknobs are polished.
Doorbell and front lights are in good working order
You may wish to consider painting the house before you show it. A new paint job, well done, will normally enhance the sale value a good deal more than the cost of the paint.
If your home’s exterior looks clean, orderly and in good repair, that’s the impression your house will first convey.
A Spotless Interior will Reinforce Your Home’s Good First Impression
Interior dirt and clutter can obscure your home’s good points, so start with a full house cleaning, top to bottom. Store unused and unnecessary items in closets or storage areas. You may wish to consider holding a garage sale.
Eliminate clutter and your home will look more spacious. This is a key selling point.
Next, take a tour of your house, observing it like a potential buyer.
Walls are clean and free of smudges, fingerprints and dents.
Woodwork and wallpaper are inspected for problem areas; wallpaper is clean and woodwork is waxed.
Badly worn furniture is temporarily stored in family’s or neighbor’s attic or basement.
Curtains and drapes are freshly laundered or cleaned.
Rugs and carpets are shampooed. Floors are waxed.
Loose doorknobs, sticking doors, windows and warped drawers are repaired.
Leaky faucets are fixed. Water discoloration is sink is eliminated.
Loose stair banisters are tightened and steps are free of objects.
Light fixtures are in good working order. Discolored or cracked switchplates are replaced.
Closets, shelves and drawers are organized to display spaciousness.
Clothing is hung neatly and shoes and other objects are neatly arranged.
Bathrooms are sparkling clean. Tub and shower caulking is repaired.
Bedrooms are neat. Bedspreads and curtain are attractive.
The kitchen is clean and tidy, including cupboards, stove and oven.
The basement, attic and garage are clean and well organized.
Mirrors, picture frames and glass covering pictures are clean and free of dust.
Mirrors are strategically placed to create an impression of added space in problem areas.
Lampshades are in good condition.
Electrical connections are plugged in.
Consider painting the walls and replacing the carpeting if cleaning doesn’t do the trick. Nothing says "new house" like new carpet and fresh paint.
It is also important to keep lighting in mind when showing your home. Good lighting will make your home seem more cheery and spacious.
Over Improving Doesn’t Pay
Don’t plan major improvements on your home. Most homebuyers will want to make their own major changes. Frequently, sellers will make improvements that buyers aren’t interest in. Then the investment is for nothing.
You will be better served selling them the potential at a price they can afford.
Last Minute Details that will Maximize Your Home’s Selling Potential
Make sure the television and radio are turned off, or low enough to allow the agent and buyer(s) to talk, free of disturbances.
Children and pets should be sent outdoors or to a friend or relative. This will eliminate confusion and keep the prospect’s attention focused positively on your home.
Perhaps most importantly, make sure bad odors are eliminated from your home. Bad odors are a virtual guarantee that your home won’t sell. Spray some air freshener before the buyer arrives, especially if you have pets or the house has been closed up for some time.
Ensure that the house has adequate lighting. During the daytime open the drapes. At night make sure plenty of lights are on, including the porch light.
Store wood next to the fireplace. In winter, make sure a fire is lit.
Make sure the kitchen sink is empty and dishes are clean and put away. Magazines and children’s toys should be in order. Plants should be watered and look healthy and vibrant. You may wish to arrange fresh flowers tastefully around the house.
While your house is being shown, it is a good idea to be off the property. Ask your agent if they want you there. Nine times out of ten, they will want to negotiate with potential buyers without your presence.
Your real estate representative has the experience and training necessary to bring negotiations to a successful conclusion. If you’ve followed the advice written above, you have already done your part in preparing your home.
Saturday, December 11, 2004
Friday, November 19, 2004
TAX alert affecting 1031 Exchange
TAX ALERT:
Recent tax bill signed by President affects
Section 1031 exchanges and Section 121 exemptions.
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On October 22nd, 2004, President Bush signed into law House Resolution (HR) 4520. Although the Bill was designed primarily as a corporate and foreign tax credit for companies doing business overseas, it included a provision that will affect certain real estate investors.
Section 121 of the Internal Revenue Code allows single taxpayers who sell a home they have owned and occupied for two of the past five years to exempt $250,000 of capital gain. For taxpayers who are married and file jointly, they may exempt $500,000 of gain.
Section 1031 allows certain investors of real estate to defer capital gains taxes by exchanging into like kind real estate.
Recently, astute investors have been combining the benefits of Section 121 and 1031 by exchanging appreciated property into a residence that is rented for a period of time and later converted into a principal residence. After two years of living in the appreciated property, the taxpayer sells the property and receives the beneficial exemption of Section 121 rather than the deferral of Section 1031.
HR 4520 amends Section 121 to require a 5 year hold period before Section 121 can be used to exempt tax from the sale of a property that was originally acquired as replacement property as part of a 1031 Exchange. In other words, properties acquired via 1031 Exchange are exempt from Section 121 treatment for 5 years after acquisition.
HR 4520 takes effect immediately for any property sold on or after October 22nd, 2004.
Example:
In July 2001, Mr. Jones, a single man, exchanged a highly appreciated apartment complex in Texas for a condo in Hawaii. Mr. Jones rented the Hawaii condo for one year and then in 2002 moved into the property, using it as his principal residence. Now that two years have passed since moving into the condo, Mr. Jones would like to sell the condo and use Section 121 to exempt his capital gain up to $250,000. Closing is set for early November, 2004. Due to the new tax law, Mr. Jones will be unable to use the Section 121 exemption until July 2006, five years after acquiring the property as part of an exchange.
For more information on Section 1031 and 121, please contact your tax advisor.
Thank you,
North American Exchange Company
THE LEADER in Qualified Intermediaries
Online mortgage Application
Recent tax bill signed by President affects
Section 1031 exchanges and Section 121 exemptions.
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On October 22nd, 2004, President Bush signed into law House Resolution (HR) 4520. Although the Bill was designed primarily as a corporate and foreign tax credit for companies doing business overseas, it included a provision that will affect certain real estate investors.
Section 121 of the Internal Revenue Code allows single taxpayers who sell a home they have owned and occupied for two of the past five years to exempt $250,000 of capital gain. For taxpayers who are married and file jointly, they may exempt $500,000 of gain.
Section 1031 allows certain investors of real estate to defer capital gains taxes by exchanging into like kind real estate.
Recently, astute investors have been combining the benefits of Section 121 and 1031 by exchanging appreciated property into a residence that is rented for a period of time and later converted into a principal residence. After two years of living in the appreciated property, the taxpayer sells the property and receives the beneficial exemption of Section 121 rather than the deferral of Section 1031.
HR 4520 amends Section 121 to require a 5 year hold period before Section 121 can be used to exempt tax from the sale of a property that was originally acquired as replacement property as part of a 1031 Exchange. In other words, properties acquired via 1031 Exchange are exempt from Section 121 treatment for 5 years after acquisition.
HR 4520 takes effect immediately for any property sold on or after October 22nd, 2004.
Example:
In July 2001, Mr. Jones, a single man, exchanged a highly appreciated apartment complex in Texas for a condo in Hawaii. Mr. Jones rented the Hawaii condo for one year and then in 2002 moved into the property, using it as his principal residence. Now that two years have passed since moving into the condo, Mr. Jones would like to sell the condo and use Section 121 to exempt his capital gain up to $250,000. Closing is set for early November, 2004. Due to the new tax law, Mr. Jones will be unable to use the Section 121 exemption until July 2006, five years after acquiring the property as part of an exchange.
For more information on Section 1031 and 121, please contact your tax advisor.
Thank you,
North American Exchange Company
THE LEADER in Qualified Intermediaries
Online mortgage Application
Sunday, November 07, 2004
Sterling Home Mortgage - Online Mortgage Application! Mortgage Broker for Home Loans
Sterling Home Mortgage
We offer simple online mortgage applications with electronic signatures and emailing of documents! We are always looking to streamline our process and become the friendliest and easiest Mortgage Broker for Home Loans
Apply Online
We offer simple online mortgage applications with electronic signatures and emailing of documents! We are always looking to streamline our process and become the friendliest and easiest Mortgage Broker for Home Loans
Apply Online
Sunday, September 12, 2004
Mortgage Information site live.
Please use the extra information for any step of the mortgage process. Everything from the insurance, to the deciding on what program to choose. There is a place we will be listing houses as a spotlight promotion on what we feel are hot deals.
We have actually to avoid use of this site and continue our growth in Martellmortgage.com
We have actually to avoid use of this site and continue our growth in Martellmortgage.com
Client from Florida gives props to the Martell Team of Sterling Home Mortgage!
"Hi! This is Richard from Florida and I wanted to thank you very much and everyone on your team, the closing went PERFECTLY! We survived Hurricane Charley and Francis but I'm not sure about Ivan yet-still to be determined. So you guys enjoy your day and thank you again for everyones help- I really appreciate that- Thank you."
This is an example of how you can expect to be satisfied by Sterling Home Mortgage. Richard was moving from Phoenix, Arizona to Tampa Bay, Florida. He is a retired realtor with limited income. Richard was pre approved going stated no ratio. When he arrived in Florida, he choose a realtor whom would help him with his real estate transaction. This realtor decided to put the pressure on the mortgage team of martellmortgage.com. She had the client sign the contract for 3 weeks without any room for an extention. Normally this would not be a problem for our team, however, there was the problem of Hurricane Charles and Hurricane Francis came through Florida within a span of about 2 weeks. We had the appraisal ordered prior to the storms but due to all homes in the disaster county needing to be re inspected, Thus delaying the closing. This is a file we had for 10 days in process and emailed the docs so Richard could go to signing on time. This was a quote from Richard after the closing had taken place.
Apply Today with no costs or obligation
This is an example of how you can expect to be satisfied by Sterling Home Mortgage. Richard was moving from Phoenix, Arizona to Tampa Bay, Florida. He is a retired realtor with limited income. Richard was pre approved going stated no ratio. When he arrived in Florida, he choose a realtor whom would help him with his real estate transaction. This realtor decided to put the pressure on the mortgage team of martellmortgage.com. She had the client sign the contract for 3 weeks without any room for an extention. Normally this would not be a problem for our team, however, there was the problem of Hurricane Charles and Hurricane Francis came through Florida within a span of about 2 weeks. We had the appraisal ordered prior to the storms but due to all homes in the disaster county needing to be re inspected, Thus delaying the closing. This is a file we had for 10 days in process and emailed the docs so Richard could go to signing on time. This was a quote from Richard after the closing had taken place.
Apply Today with no costs or obligation
Thursday, August 19, 2004
Friday, July 30, 2004
1031 Exchange: Important Investment Mortgage Information you need to know about your taxes!
We have the answers to your questions...
Apply Online
How much does it cost to do an exchange?
The exchange fee for property under $200k (1 for 1) is $600, with no interest paid to the exchanger. For exchange property in excess of $200k, the exchanger has a choice of two fee options. If the exchanger chooses to earn interest on exchange funds held, the fee is $750 plus $250 for each replacement property. If the exchanger chooses not to receive interest, the exchange fee is $500 plus $250 for each replacement property. Please call us for quotes on reverse and construction exchanges.
When must the investor decide to complete an exchange?
The decision to exchange must be made prior to closing of the relinquished property. The exchange agreement must be in place and delivered to all parties before the relinquished property transfer of title.
Can the proceeds from the sale of the relinquished property simply be held in escrow at closing?
The proceeds from the sale of the relinquished property should be delivered to a “qualified intermediary”. The proceeds cannot be held in escrow, unless the escrow account in question is either a “qualified escrow account” or a “qualified trust account” and not subject to the control of the investor. Any control by the investor is considered to be constructive receipt and is boot.
Arizona Home Mortgage
What is the 45-day Identification Period and when does it begin?
Section 1031 requires that the replacement property be identified within 45 days of closing on the relinquished property. This identification period is strictly enforced and violation will defeat the tax deferral.
What is the 180-day exchange period and when does it begin?
Section 1031 requires the replacement property be purchased within 180 days of closing on the relinquished property OR the date the taxpayer’s tax return is due, whichever date is first. The purchase date is considered to be the closing date. Note that for tax return due dates that fall before the 180 days, a tax return extension can be filed. However, a taxpayer can never amend their return for extension purposes.
Is there an extension allowed to either the 45-day period or the 180 period?
The IRS does not allow extensions for either the 45-day period or the 180-day period.
If the exchanger’s 45th or 180th day falls on a weekend or holiday do I get the benefit of the following business day?
No. The IRS calculates this timeline based on calendar days. There are no extensions given.
When is a 1031 exchange considered completed?
A 1031 exchange is considered complete once the exchanger has acquired title to all of the identified replacement property(s) to which the exchanger is entitled, within 180 days.
mortgage broker in AZ
Does vacant land qualify as like-kind property?
Yes, vacant land is like kind with all other types of real property. However, like other properties, in order to qualify for a 1031 Exchange, the land must be held for productive use in a trade or business or for investment.
If the relinquished property is classified as residential income property, does the replacement property need to be residential income property?
No. The like-kind requirement does not limit the type of real property acquired in an exchange. You may exchange residential income property for commercial property, commercial property for industrial property and vacant land for residential income property. Any combination of properties may be exchanged. Again, any property involved in an exchange must be held for productive use in a trade or business or for investment.
What are the requirements for deferring tax on a capital gain?
In order to defer all of the tax on the sale of investment property, first make sure that the relinquished and replacement properties are “like kind” and held for productive use in a trade or business or for investment. Second, make sure that the time lines for the exchange are met. Third, make sure that all of the proceeds generated by the sale of the relinquished property are used in the purchase of the replacement property and that the FMV of the replacement property is equal to or greater than sale price of the relinquished property. If any of the first two requirements listed are not met, no exchange is possible. If any of the third requirement is not met, a taxpayer may be able to partially defer their gain but not wholly.
Am I required to have a mortgage on the replacement property?
No. To avoid mortgage boot on the net debt relief, the replacement property financing should include dept equal to or greater than the debt on the relinquished property. If the investor wishes to reduce their overall debt, they may contribute cash out of pocket to the purchase of the replacement property. Cash contributions by the investor serve to offset net debt relief.
I have identified my Replacement Property but have not sold my investment property. Can I still do a 1031 exchange?
Yes. Reverse exchanges are recognized by the IRS and can be accomplished by the intermediary acquiring title to one of the exchange properties. Reverse exchanges are often complex transactions. Please feel free to contact us to discuss the issue in more depth.
Apply Online
Apply Online
How much does it cost to do an exchange?
The exchange fee for property under $200k (1 for 1) is $600, with no interest paid to the exchanger. For exchange property in excess of $200k, the exchanger has a choice of two fee options. If the exchanger chooses to earn interest on exchange funds held, the fee is $750 plus $250 for each replacement property. If the exchanger chooses not to receive interest, the exchange fee is $500 plus $250 for each replacement property. Please call us for quotes on reverse and construction exchanges.
When must the investor decide to complete an exchange?
The decision to exchange must be made prior to closing of the relinquished property. The exchange agreement must be in place and delivered to all parties before the relinquished property transfer of title.
Can the proceeds from the sale of the relinquished property simply be held in escrow at closing?
The proceeds from the sale of the relinquished property should be delivered to a “qualified intermediary”. The proceeds cannot be held in escrow, unless the escrow account in question is either a “qualified escrow account” or a “qualified trust account” and not subject to the control of the investor. Any control by the investor is considered to be constructive receipt and is boot.
Arizona Home Mortgage
What is the 45-day Identification Period and when does it begin?
Section 1031 requires that the replacement property be identified within 45 days of closing on the relinquished property. This identification period is strictly enforced and violation will defeat the tax deferral.
What is the 180-day exchange period and when does it begin?
Section 1031 requires the replacement property be purchased within 180 days of closing on the relinquished property OR the date the taxpayer’s tax return is due, whichever date is first. The purchase date is considered to be the closing date. Note that for tax return due dates that fall before the 180 days, a tax return extension can be filed. However, a taxpayer can never amend their return for extension purposes.
Is there an extension allowed to either the 45-day period or the 180 period?
The IRS does not allow extensions for either the 45-day period or the 180-day period.
If the exchanger’s 45th or 180th day falls on a weekend or holiday do I get the benefit of the following business day?
No. The IRS calculates this timeline based on calendar days. There are no extensions given.
When is a 1031 exchange considered completed?
A 1031 exchange is considered complete once the exchanger has acquired title to all of the identified replacement property(s) to which the exchanger is entitled, within 180 days.
mortgage broker in AZ
Does vacant land qualify as like-kind property?
Yes, vacant land is like kind with all other types of real property. However, like other properties, in order to qualify for a 1031 Exchange, the land must be held for productive use in a trade or business or for investment.
If the relinquished property is classified as residential income property, does the replacement property need to be residential income property?
No. The like-kind requirement does not limit the type of real property acquired in an exchange. You may exchange residential income property for commercial property, commercial property for industrial property and vacant land for residential income property. Any combination of properties may be exchanged. Again, any property involved in an exchange must be held for productive use in a trade or business or for investment.
What are the requirements for deferring tax on a capital gain?
In order to defer all of the tax on the sale of investment property, first make sure that the relinquished and replacement properties are “like kind” and held for productive use in a trade or business or for investment. Second, make sure that the time lines for the exchange are met. Third, make sure that all of the proceeds generated by the sale of the relinquished property are used in the purchase of the replacement property and that the FMV of the replacement property is equal to or greater than sale price of the relinquished property. If any of the first two requirements listed are not met, no exchange is possible. If any of the third requirement is not met, a taxpayer may be able to partially defer their gain but not wholly.
Am I required to have a mortgage on the replacement property?
No. To avoid mortgage boot on the net debt relief, the replacement property financing should include dept equal to or greater than the debt on the relinquished property. If the investor wishes to reduce their overall debt, they may contribute cash out of pocket to the purchase of the replacement property. Cash contributions by the investor serve to offset net debt relief.
I have identified my Replacement Property but have not sold my investment property. Can I still do a 1031 exchange?
Yes. Reverse exchanges are recognized by the IRS and can be accomplished by the intermediary acquiring title to one of the exchange properties. Reverse exchanges are often complex transactions. Please feel free to contact us to discuss the issue in more depth.
Apply Online
Monday, July 19, 2004
COFI - What is it and how is it calculated.
Arizona Mortgage Broker offering Online Applications!
• What is the 11th District monthly weighted average cost of funds index?
One of the most popular adjustable rate mortgage indexes currently issued nationwide is the 11th District monthly weighted-average cost of funds index, also known as the COFI. Calculated and published by the Federal Home Loan Bank of San Francisco since August 1981. The COFI reflects the actual interest expenses incurred during a given month by all savings institutions headquartered in Arizona, California, and Nevada – the three states that make up the 11th District of the Federal Home Loan Bank System. Each savings institution in the District provides relevant data to the Bank according to an agreed-upon timetable, which enables the Bank to review the data, calculate the index, and publish it on schedule.
• What does "cost of funds" mean?
The Cost of Funds Index is not an interest rate. It reflects the average paid by savings institutions for their various sources of funds over a specified period of time. Deposits in checking and savings accounts – including certificates of deposit account, transaction accounts, and passbook accounts are the primary source of funds for most savings institutions. Other sources of funds include loans obtained through the credit programs of the Federal Home Loan Bank (known as "advances") and money borrowed from other financial institutions.
• Why is the COFI so popular as an adjustable rate mortgage index?
Consumers like the cost of funds index because it does not move up or down as rapidly as market interest rates (such as prime rate, the discount rate, or Treasury bill rates). This is because most savings institutions rely on fixed rate deposits of medium and long-term maturities as a primary source of funds. Because rates on these deposits are not affected by changing market interest rates until the deposit matures, the total interest expense paid by savings institutions in a particular month reflects, to a significant degree, interest rates that were prevalent in previous months or years.
* How is the monthly COFI calculated?
The monthly index is a ratio of monthly interest costs to total funds, expressed as a percentage. Interest costs, the numerator of the cost calculation, include the total amount of interest paid or payable during the month on all checking and savings accounts, all Federal Home Loan Bank advances, and all other borrowings, i.e. C/Ds. Funds, the denominator of the cost calculation, consist of the simple average of the sum of the two most recent month end balances of total deposits, Federal Home Loan Bank advances, and other borrowed money. The resulting quotient is the weighted average cost of funds paid by the 11th District savings institutions for that month. Because the number of days in each month differs, the quotient is multiplied by an adjustment factor that is calculated by dividing an average month (based on a 12-month, 365-day or 366-day year) by the actual number of days in that month. The adjustment factors are 1.086 for February, 1.014 for 30-day months, and 0.981for 31-day months. In leap years, the adjustment factors are 1.052 for February, 1.017 for 30-day months, and 0.984 for 31-day months. The product is annualized by multiplying by 12.
Monthly Weighted Average Cost of Funds Index for 11th District Savings Institutions:
The monthly COFI is computed from data reported by savings institutions that are members of the Federal Home Loan Bank of San Francisco. For July 2000, 50 institutions reported COFI data:
July 2000
(Dollars in Thousands)
Interest Costs on Deposits, Advances, and other Borrowings
(July 2000) $1,420,689.00
Average Funds
(Month end June 2000 plus month end July 2000 divided by 2)
Deposits $162,258,542
Advances $94,468,327
Other Borrowings $50,771,244
Total Funds
$307,498,113
Weighted Average Cost of Funds
(July 2000)
Ratio $1,420,689 / $307,498,113
Expressed as a Percentage x 100 = 0.4620
Monthly Adjustment Factor x 0.984 = 0.4546
Annualized x 12 = 5.4555
Rounded to the third decimal place 5.456%
Comparison to June 2000 Index Value
July 2000 June 2000
Index value (COFI) -> 5.456% 5.357%
Average total funds $307.5 billion $298.7 billion
Average deposits 162.3 billion 161.5 billion
Average advances 94.5 billion 91.6 billion
Average other borrowings 50.8 billion 45.5 billion
Total interest expense * 1398.0 million 1333.2 million
* Adjusted for the number of days in the month. The adjustment factors for 2000 are 1.052 for February, 1.017 for 30-day months, and 0.984 for 31-day months.
The 11th District’s Cost of Funds Index (COFI), comprised of many separate S&Ls in CA, AZ and NV, doesn't dramatically increase when Mr. Alan Greenspan (Fed. Chairman) raises the Prime Rate, nor does it have to increase when the Stock Market increases. The reason it doesn't, is because only about 47% of the estimated $300 billion dollars in total funds deposited is actually borrowed (i.e. Advances & Borrowings) from the 11th District Federal Bank via the Fed. Funds Rate which has a lower interest rate than the Prime Rate. The rest of the money that is borrowed is not really affected, as it has been deposited into Checking and Savings, Money Market accounts and C/Ds. In addition, it takes about 9 months for a Fed. Funds increase or decrease to really affect the over-all economy.
Try to think of this pool of money ($300,000,000,000) as a big bath tub. Turning on the spigot represents (hypothetically) people buying 1, 3 and 5 year C/Ds. Let's assume that on 01/01/2002, folks are receiving 2% Rate-Of-Return (ROR) on their 1 yr. C/Ds, 2.5% on their 3 yr., and 4% on their 5 yr. C/Ds. Because it takes between 1-5 years for the C/D's to come to maturity, and since the C/D's are not an actual cost or expense to the Savings and Loans until the time when they have to be paid back, the average cost of funds doesn't move that rapidly when these Savings and Loans (S&Ls) start to offer higher returns on their new C/Ds.
Let's assume that on 01/01/2003, these S&Ls are in a good mood, and they decide (out the kindness of their heart) to start offering CDs at higher RORs. Let's assume that now the 1yr.C/D has a ROR of 2.5%, the 3yr. has a 3% ROR, and the 5 yr. has a ROR of 4.5%. Back to the "bath tub" analogy: So now we are assuming that when we "turn on the spigot", higher rates of C/Ds are spilling out into our bath tub, or pool of monies borrowed. This of course means that our S&Ls will have to increase their cost of doing business, or cost of funds. But, since the only C/Ds that are coming to maturity (in our example) are the 1 yr., and they are only paying back 2%, and because we are talking about an est. $300,000,000,000 in monies deposited or borrowed, the cost of funds, or the ROR going out of the bath tub drain, doesn't really affect the entire (average) pool of money in our bath tub. Remember that it will take another 12 more months for the 2.5%, 1 yr. C/D to affect the avg. pool of deposits. It take 5 years for the 5 yr. C/D's to affect the avg. pool of deposits.
Now, let's talk about the brother and sister of the COFI, the COSI, or Cost Of Savings Index, and the CODI, or Certificate Of Deposit Index:
COSI:
One of the largest Savings and Loans in the 11th District (CA ,AZ, NV), offers a mortgage program tied to its own "cost of savings." Simply put, this one Lender, borrows money from consumers in the form of deposits, i.e. C/D's, checking and savings accounts, and then lends the money out as home mortgages. The interest rates (ROR) in effect on these deposits are the basis for the COSI. The COSI is not based on actual interest paid on deposit accounts, but rather on a weighted annualized rate of all interest rates in effect on deposit accounts as of the last day of each month.
The main differences between the COSI and COFI are:
1. COSI is derived from One (1) Savings and Loan instead of many S&Ls.
2. COSI has a much smaller pool of monies borrowed or deposited.
3. COSI is derived from Checking, Savings and C/Ds. Borrowings/Advances from the Fed. Funds is not in the equation.
Historically, the COSI has also moved up and down much less rapidly than indexes based on the PRIME Rate, the Federal Reserve discount rate, or Treasury bill rates. This is because COSI is composed primarily of fixed-rate deposits of varying maturities (i.e. C/D's.) Since rates on these deposits are not affected by changes in market interest rates until the deposits mature, the average interest rate on deposits in a particular month reflects, to a significant degree, interest rates that were in effect in previous months. Thus, when market interest rates for deposits move up or down, COSI will lag and generally not move as rapidly or to the same extent. Since the COSI is almost identical to the COFI, as COSI historically, has moved almost step-in-step with the COFI, we whole heatedly also recommend the COSI.
When is the Index Announced? The COSI is computed on the last day of each month calendar month and is announced on or near the last business day prior to the fifteenth day of the following calendar month. For example, when the February COSI is announced on or near the last business day prior to the fifteenth of March. It is in effect until the announcement of the March COSI in April.
• What is the 11th District monthly weighted average cost of funds index?
One of the most popular adjustable rate mortgage indexes currently issued nationwide is the 11th District monthly weighted-average cost of funds index, also known as the COFI. Calculated and published by the Federal Home Loan Bank of San Francisco since August 1981. The COFI reflects the actual interest expenses incurred during a given month by all savings institutions headquartered in Arizona, California, and Nevada – the three states that make up the 11th District of the Federal Home Loan Bank System. Each savings institution in the District provides relevant data to the Bank according to an agreed-upon timetable, which enables the Bank to review the data, calculate the index, and publish it on schedule.
• What does "cost of funds" mean?
The Cost of Funds Index is not an interest rate. It reflects the average paid by savings institutions for their various sources of funds over a specified period of time. Deposits in checking and savings accounts – including certificates of deposit account, transaction accounts, and passbook accounts are the primary source of funds for most savings institutions. Other sources of funds include loans obtained through the credit programs of the Federal Home Loan Bank (known as "advances") and money borrowed from other financial institutions.
• Why is the COFI so popular as an adjustable rate mortgage index?
Consumers like the cost of funds index because it does not move up or down as rapidly as market interest rates (such as prime rate, the discount rate, or Treasury bill rates). This is because most savings institutions rely on fixed rate deposits of medium and long-term maturities as a primary source of funds. Because rates on these deposits are not affected by changing market interest rates until the deposit matures, the total interest expense paid by savings institutions in a particular month reflects, to a significant degree, interest rates that were prevalent in previous months or years.
* How is the monthly COFI calculated?
The monthly index is a ratio of monthly interest costs to total funds, expressed as a percentage. Interest costs, the numerator of the cost calculation, include the total amount of interest paid or payable during the month on all checking and savings accounts, all Federal Home Loan Bank advances, and all other borrowings, i.e. C/Ds. Funds, the denominator of the cost calculation, consist of the simple average of the sum of the two most recent month end balances of total deposits, Federal Home Loan Bank advances, and other borrowed money. The resulting quotient is the weighted average cost of funds paid by the 11th District savings institutions for that month. Because the number of days in each month differs, the quotient is multiplied by an adjustment factor that is calculated by dividing an average month (based on a 12-month, 365-day or 366-day year) by the actual number of days in that month. The adjustment factors are 1.086 for February, 1.014 for 30-day months, and 0.981for 31-day months. In leap years, the adjustment factors are 1.052 for February, 1.017 for 30-day months, and 0.984 for 31-day months. The product is annualized by multiplying by 12.
Monthly Weighted Average Cost of Funds Index for 11th District Savings Institutions:
The monthly COFI is computed from data reported by savings institutions that are members of the Federal Home Loan Bank of San Francisco. For July 2000, 50 institutions reported COFI data:
July 2000
(Dollars in Thousands)
Interest Costs on Deposits, Advances, and other Borrowings
(July 2000) $1,420,689.00
Average Funds
(Month end June 2000 plus month end July 2000 divided by 2)
Deposits $162,258,542
Advances $94,468,327
Other Borrowings $50,771,244
Total Funds
$307,498,113
Weighted Average Cost of Funds
(July 2000)
Ratio $1,420,689 / $307,498,113
Expressed as a Percentage x 100 = 0.4620
Monthly Adjustment Factor x 0.984 = 0.4546
Annualized x 12 = 5.4555
Rounded to the third decimal place 5.456%
Comparison to June 2000 Index Value
July 2000 June 2000
Index value (COFI) -> 5.456% 5.357%
Average total funds $307.5 billion $298.7 billion
Average deposits 162.3 billion 161.5 billion
Average advances 94.5 billion 91.6 billion
Average other borrowings 50.8 billion 45.5 billion
Total interest expense * 1398.0 million 1333.2 million
* Adjusted for the number of days in the month. The adjustment factors for 2000 are 1.052 for February, 1.017 for 30-day months, and 0.984 for 31-day months.
The 11th District’s Cost of Funds Index (COFI), comprised of many separate S&Ls in CA, AZ and NV, doesn't dramatically increase when Mr. Alan Greenspan (Fed. Chairman) raises the Prime Rate, nor does it have to increase when the Stock Market increases. The reason it doesn't, is because only about 47% of the estimated $300 billion dollars in total funds deposited is actually borrowed (i.e. Advances & Borrowings) from the 11th District Federal Bank via the Fed. Funds Rate which has a lower interest rate than the Prime Rate. The rest of the money that is borrowed is not really affected, as it has been deposited into Checking and Savings, Money Market accounts and C/Ds. In addition, it takes about 9 months for a Fed. Funds increase or decrease to really affect the over-all economy.
Try to think of this pool of money ($300,000,000,000) as a big bath tub. Turning on the spigot represents (hypothetically) people buying 1, 3 and 5 year C/Ds. Let's assume that on 01/01/2002, folks are receiving 2% Rate-Of-Return (ROR) on their 1 yr. C/Ds, 2.5% on their 3 yr., and 4% on their 5 yr. C/Ds. Because it takes between 1-5 years for the C/D's to come to maturity, and since the C/D's are not an actual cost or expense to the Savings and Loans until the time when they have to be paid back, the average cost of funds doesn't move that rapidly when these Savings and Loans (S&Ls) start to offer higher returns on their new C/Ds.
Let's assume that on 01/01/2003, these S&Ls are in a good mood, and they decide (out the kindness of their heart) to start offering CDs at higher RORs. Let's assume that now the 1yr.C/D has a ROR of 2.5%, the 3yr. has a 3% ROR, and the 5 yr. has a ROR of 4.5%. Back to the "bath tub" analogy: So now we are assuming that when we "turn on the spigot", higher rates of C/Ds are spilling out into our bath tub, or pool of monies borrowed. This of course means that our S&Ls will have to increase their cost of doing business, or cost of funds. But, since the only C/Ds that are coming to maturity (in our example) are the 1 yr., and they are only paying back 2%, and because we are talking about an est. $300,000,000,000 in monies deposited or borrowed, the cost of funds, or the ROR going out of the bath tub drain, doesn't really affect the entire (average) pool of money in our bath tub. Remember that it will take another 12 more months for the 2.5%, 1 yr. C/D to affect the avg. pool of deposits. It take 5 years for the 5 yr. C/D's to affect the avg. pool of deposits.
Now, let's talk about the brother and sister of the COFI, the COSI, or Cost Of Savings Index, and the CODI, or Certificate Of Deposit Index:
COSI:
One of the largest Savings and Loans in the 11th District (CA ,AZ, NV), offers a mortgage program tied to its own "cost of savings." Simply put, this one Lender, borrows money from consumers in the form of deposits, i.e. C/D's, checking and savings accounts, and then lends the money out as home mortgages. The interest rates (ROR) in effect on these deposits are the basis for the COSI. The COSI is not based on actual interest paid on deposit accounts, but rather on a weighted annualized rate of all interest rates in effect on deposit accounts as of the last day of each month.
The main differences between the COSI and COFI are:
1. COSI is derived from One (1) Savings and Loan instead of many S&Ls.
2. COSI has a much smaller pool of monies borrowed or deposited.
3. COSI is derived from Checking, Savings and C/Ds. Borrowings/Advances from the Fed. Funds is not in the equation.
Historically, the COSI has also moved up and down much less rapidly than indexes based on the PRIME Rate, the Federal Reserve discount rate, or Treasury bill rates. This is because COSI is composed primarily of fixed-rate deposits of varying maturities (i.e. C/D's.) Since rates on these deposits are not affected by changes in market interest rates until the deposits mature, the average interest rate on deposits in a particular month reflects, to a significant degree, interest rates that were in effect in previous months. Thus, when market interest rates for deposits move up or down, COSI will lag and generally not move as rapidly or to the same extent. Since the COSI is almost identical to the COFI, as COSI historically, has moved almost step-in-step with the COFI, we whole heatedly also recommend the COSI.
When is the Index Announced? The COSI is computed on the last day of each month calendar month and is announced on or near the last business day prior to the fifteenth day of the following calendar month. For example, when the February COSI is announced on or near the last business day prior to the fifteenth of March. It is in effect until the announcement of the March COSI in April.
Thursday, July 08, 2004
Mortgage trends heading to ARMs?
In the wake of rising mortgage interest rates, many borrowers are turning to alternative types of loans to either finance the purchase of a home or refinance an existing mortgage. The traditional 30-year, fixed-rate mortgage has long been the loan of choice for most borrowers. But rising interest rates can rapidly change the preferences of consumers. Now, adjustable-rate mortgages (ARMs) are becoming more popular, with initial rates substantially lower than fixed-rate loans. Look for Cash Flow Option ARMs for the lowest interest rates.
In recent weeks, about a third of new mortgage applications have been for ARMs. That reflects an increase of about 14 percent from a year ago. To save even more money spent on mortgage payments, an increasing number of borrowers are opting for an interest-only loan. Many rationalize that this type of mortgage will leave additional funds for strategic investments.
Most interest-only loans are for a specified number of years. It then reverts to an amortized loan for the remainder of its term, requiring interest and principal payments. These loans usually carry a slightly higher interest rate than a conventional amortized mortgage.
Arizona Home Mortgages
Also, keep in mind that while it’s an interest only loan, there is no lowering of the principal balance. The only equity that accrues in your home is from the value appreciation of the property. Many financial professionals believe this type of loan is best suited for affluent borrowers, especially those who have good reason to anticipate higher incomes in the future. They often caution against an interest-only loan for those who simply don’t have the income to support an amortized mortgage.
Hybrid ARMs are also experiencing a growing popularity at this point. These loans offer a fixed-rate for several years – usually 5 to 7 years – then revert to an ARM. The interest rate is significantly lower that a 30-year fixed-rate loan, yet the borrower has assurance that the rate will not change for a period of years. Other mortgages available today include ARMs that can be converted to a fixed-rate loan. There are dozens of varieties of mortgage plans offered to consumers in today’s market. The challenge is to pick the one that meets your personal needs most precisely.
Quick Qualifier
In recent weeks, about a third of new mortgage applications have been for ARMs. That reflects an increase of about 14 percent from a year ago. To save even more money spent on mortgage payments, an increasing number of borrowers are opting for an interest-only loan. Many rationalize that this type of mortgage will leave additional funds for strategic investments.
Most interest-only loans are for a specified number of years. It then reverts to an amortized loan for the remainder of its term, requiring interest and principal payments. These loans usually carry a slightly higher interest rate than a conventional amortized mortgage.
Arizona Home Mortgages
Also, keep in mind that while it’s an interest only loan, there is no lowering of the principal balance. The only equity that accrues in your home is from the value appreciation of the property. Many financial professionals believe this type of loan is best suited for affluent borrowers, especially those who have good reason to anticipate higher incomes in the future. They often caution against an interest-only loan for those who simply don’t have the income to support an amortized mortgage.
Hybrid ARMs are also experiencing a growing popularity at this point. These loans offer a fixed-rate for several years – usually 5 to 7 years – then revert to an ARM. The interest rate is significantly lower that a 30-year fixed-rate loan, yet the borrower has assurance that the rate will not change for a period of years. Other mortgages available today include ARMs that can be converted to a fixed-rate loan. There are dozens of varieties of mortgage plans offered to consumers in today’s market. The challenge is to pick the one that meets your personal needs most precisely.
Quick Qualifier
Wednesday, July 07, 2004
Arizona Home Mortgage Applications online from Sterling Home Mortgage
Look here for your Mortgage Application Online.
Arizona Mortgage Application
Call for a low interest rate on Cash Flow Arms that gives you a choice of payments every month. You will have a choice of a minimum payment, interest only payment, 30 year fixed payment or a 15 year fixed payment. These are great programs for a low interest loan with programs as high as 95% loan to value.
Arizona Mortgage Application
Call for a low interest rate on Cash Flow Arms that gives you a choice of payments every month. You will have a choice of a minimum payment, interest only payment, 30 year fixed payment or a 15 year fixed payment. These are great programs for a low interest loan with programs as high as 95% loan to value.
Wednesday, June 30, 2004
Feds move interest rates up .25%
Arizona Home Loans here!
In an attempt to keep the economy in check, the Federal Reserve increase a key short term mortgage up by .25%. This is the first increase in nearly 4 years. The federal funds rate has been increased to 1.25%, up from a 46 year low, from 1.00%. This rate has been increased by Fed Chairman Alan Greenspan and his Open Market Committee. Commercial banks are expected to raise their short term rates by the same .25%. The current prime rate is 4.00% and is expected to increase to 4.25%.
E-Z Online Home Qualifier HERE!
Sterling Home Mortgage has everything you need from Zero down home loans to cash flow ARMs. Get fast answers by using our Official Home Loan Applications online or get some info by using our fast and easy Quick Qualifier.
In an attempt to keep the economy in check, the Federal Reserve increase a key short term mortgage up by .25%. This is the first increase in nearly 4 years. The federal funds rate has been increased to 1.25%, up from a 46 year low, from 1.00%. This rate has been increased by Fed Chairman Alan Greenspan and his Open Market Committee. Commercial banks are expected to raise their short term rates by the same .25%. The current prime rate is 4.00% and is expected to increase to 4.25%.
E-Z Online Home Qualifier HERE!
Sterling Home Mortgage has everything you need from Zero down home loans to cash flow ARMs. Get fast answers by using our Official Home Loan Applications online or get some info by using our fast and easy Quick Qualifier.
Friday, June 25, 2004
Monday, June 21, 2004
Maricopa County, Arizona 2008 FHA Valuation Increase
Maricopa County, Arizona homes are now able to get higher financing through FHA. These limits currently go up to $346,250. Please view the site below for counties outside the Maricopa County Arizona area. You can find homes for sale in these areas below.
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FHA Mortgage Limits in all states!
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Homes for sale in Arizona
AHWATUKEE
Arrowhead Country Club
Arrowhead Lakes
Arrowhead Legend
AVONDALE
BUCKEYE
CAREFREE
CAVE CREEK
CHANDLER
EL MIRAGE
FOUNTAIN HILLS
GILBERT
GLENDALE
GOODYEAR
GUADALUPE
LITCHFIELD PARK
MESA
PARADISE VALLEY
PEORIA
PHOENIX
QUEEN CREEK
SCOTTSDALE
SUN CITY
SUN CITY GRAND
SUN CITY WEST
SUN LAKES
SURPISE
TEMPE
TOLLESON
WICKENBURG
YOUNGTOWN
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Arizona Home Mortgages online!
___________________________________________________________
FHA Mortgage Limits in all states!
___________________________________________________________
Homes for sale in Arizona
AHWATUKEE
Arrowhead Country Club
Arrowhead Lakes
Arrowhead Legend
AVONDALE
BUCKEYE
CAREFREE
CAVE CREEK
CHANDLER
EL MIRAGE
FOUNTAIN HILLS
GILBERT
GLENDALE
GOODYEAR
GUADALUPE
LITCHFIELD PARK
MESA
PARADISE VALLEY
PEORIA
PHOENIX
QUEEN CREEK
SCOTTSDALE
SUN CITY
SUN CITY GRAND
SUN CITY WEST
SUN LAKES
SURPISE
TEMPE
TOLLESON
WICKENBURG
YOUNGTOWN
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Arizona Home Mortgages online!
Saturday, June 12, 2004
Save $300 off your closing costs when you close your loan with Sterling Home Mortgage by MyArizonaHomeMortgage.com Team
This offer is good until the end of October 2006. Use our online mortgage application to apply for your loan, Email us to let us know you are completing the application process for a 300 dollar credit, and you will save $300 at closing. Only valid with online application from selected consultant. You must let us know you saw this special at our initial meeting or first email. We are not a discount broker and do not offer this without mentioning it to us.
Arizona Home Loans
Arizona Home Loans
Sunday, June 06, 2004
Mortgage news of Sterling Home Mortgage
Welcome to the new Blog of Sterling Home Mortgage by
Arizona mortgage refinance"
Here is where you will find the hot news, the trends, the new programs, special offers, upcoming events and much much more. Stay Tunned!
Arizona mortgage refinance"
Here is where you will find the hot news, the trends, the new programs, special offers, upcoming events and much much more. Stay Tunned!
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