Archives for August 2008

Please Help Angie fight Breast Cancer

Angie wants to walk in the Breast Cancer 3-Day event but needs to raise $2,200 or she will not be allowed to participate.  Angie is walking for her Aunt Em and so far has raised just over $500.  She has a ways to go to make the required amount to participate in the walk.   And does it really matter to us who she’s walking for?  We don’t know Aunt Emily and you may not know Angie.  We do know people who are fighting breast cancer.  I  personally lost a dear friend and co-worker this past year.  I’ve lost family members.  We have all lost someone to breast cancer.  Here is a woman who wants to do something by walking for 3 days (60 miles, I believe) and needs help in order to do so.  Breast cancer touches all of us.

Please consider making a donation for towards breast cancer and to allow her to walk for her Aunt Emily and for all of us.  Donate what ever you can.  For more information, or to donate, please click here.


First Time Home Buyer Tax Credit

Update February 17, 2009:  The American Recovery and Reinvestment Act has modified this tax credit posted here.  If you're a first time home buyer who purchased January 1, 2009 – December 31, 2009; click here.  If you purchased from April 9, 2008 – December 31, 2008; this post still applies to you. 

Please check with your CPA or tax advisor to see how this impacts you.

With the recent passage of HR 3221, people who have not owned a home for the lastUnclesam  3 years may qualify for an interest free loan from Uncle Sam of up to $7,500. Here's a quick skinny on how this works:

First time home buyers may receive a tax credit of up to 10% of the purchase price of the home (not to exceed $7500).   This is a "tax credit" meaning that you receive the credit (if you want it) after you file your income taxes.   For example, this means that when you file your taxes in 2009 and you owe $5,000 to Uncle Sam and you qualify to have a tax credit in the amount of $7,500; you would receive a refund of $2,500.   However, this is a refundable credit (aka interest free loan) that must be paid back each year to the IRS (when you file your taxes) over the next 15 years.

If you sell your home before the tax credit is repaid to Uncle Sam, then the full amount is due or if your property that you received the tax credit for is no longer your primary residence (i.e. you convert your home to a rental).

This credit does not apply if the first time home buyer is buying a home from a relative.

This tax credit is only available for purchases made between April 9, 2008 and July 1, 2009 for adjusted gross incomes of up to $75,000 ($150,000, if married, filed jointly) and phases out up to $95,000 ($170,000, if married, filed jointly).

Should you take advantage of this opportunity? 

Sure!  Who wouldn't want a $7,500 interest free loan?  Two things I would consider using this credit for if I were a first time home buyer:

  • investing into an interest bearing savings account to build my "emergency fund".
  • pay off a nasty high interest credit card (freeing up a monthly cash flow).
  • fund your IRA.

Just understand that this is essentially an interest free loan.  This is not "down payment assistance".  You will be paying this back over the next 15 years (or sooner if you sell, rent out the property or convert it a second home)…but you just can't beat "interest free".

For more information, click here.

Friendly reminder:  I am not a tax professional, I am a Mortgage Planner assisting families who need mortgages in beautiful Washington State.   Always consult with your CPA, financial or tax advisor.

Watch for more posts on the effects of HR 3221.

Local Title Company Raises Rates 30%

Normally this wouldn’t be big news…but when Northpoint Title decided to drop their rates well below market and agressively try to pull existing title orders from other companies only to raise their rates one month later, I think it’s worthy some attention. Here’s an example of an email from a Northpoint rep to a real estate agent (dated June 16, 2008):

"Just checking in to see what you thought about the new title rates.  Can you believe we are 28% lower??  This is fantastic!   Here is a price comparison on an average sales price of $275,000:

Fidelity/Chicago: $840.00

FATCO/Talon: $840.00

OUR RATE:  $605.00

This is a big difference in the bottom line for your clients.  Let me know if you have any titles  you would like me to pull over.  I would be thrilled to help you out!"

Northpoint is a Landamerica "venture".  This email excludes the other local Landamerica title companies (which represent 25% of the total resale market in King County alone), Commonwealth of Puget Sound and Rainier Title who’s title rates (at the time) were 33% higher than Northpoint at this price point.

This tactic was used an attempt to gain title business on existing transactions without any regard to what was negotiated in the purchase and sale agreement.   Not to mention the effort or cost involved in producing the all ready provided title commitments. 

Northpoint justified their deep rate cut because they were a "green" title company, promoting being paperless which many title companies are (this is not unique).  From a separate Northpoint email dated June 16, 2008:

"I have some good news!  Northpoint’s paperless workflow system has effectively reduced our waste and costs, resulting in tremendous costs savings.  To help consumers in today’s challenging real estate market, we ahve decided to pass this savings on to your clients.  We filed new, lower rates with the Office of Insurance Commissioner and the rates became effective on Tuesday, June 10th…Please pass along this good news to your clients.  I look forward to working with you."

On July 7, 2008, Northpoint suddenly was not green anymore nor were they planning on passing any savings along to consumers.  Just shy of one month, they filed a rate increase following their huge marketing blitz all based on rate.  Presentations were being made to offices promoting the low rates even after the new higher rate was filed with the State.

Effective August 1, 2008, Northpoint’s rates are the same as Commonwealth of Puget Sound and Rainier Title.  They are 33% higher than what they’ve been pushing (and pulling) over the past month.   They are in line with the other title companies rates.

Title rates are not changed on a whim.   If you’re a long time reader of Mortgage Porter, you know that my background is title insurance and escrow and that my husband is in the title industry.   As a former manager, I can tell you that title rates are discussed and studied several weeks if not months.   Not to mention the time and effort it takes to file rates with the State.  (Washington title rates are public record, filed in Olympia).

In my twenty+ years in the real estate industry, I have never witnessed a title company use what appears to be bait and switch.      


My Noisy Neighbors

These Barn Swallows moved in next door and are chirping up a storm.  I think they are sweet tweet.