TedCo Software Financial Matters Blog

Can you be helped by the President’s “Making Home Affordable” plan which is designed to help distressed homeowners refinance or modify their mortgages?

FinancialStability.gov is a new government web site that can help you find out if help is available for you.

The four basic eligibility requirements are addressed by these questions:

• Is your home your primary residence?
• Do you have a Fannie Mae or Freddie Mac loan?
• Are you current on your mortgage (haven’t been more than 30 days late in the last 12 months)?
• Is the amount you owe on your first mortgage about the same or less than the current value of your home?

Even if you don’t believe you will qualify for help refinancing or getting a loan modification, you should still work through the evaluation pages at FinancialStability.gov. You don’t have to enter any personal information to explore the site and if you don’t qualify, the site offers suggestions about other options you can pursue.

A search for “‘upside down’ mortgage” on Google returns 687,000 results. “housing crisis” returns 2,270,000 results.

In fact, housing news is so focused on the real estate bubble, that it’s difficult to find information about managing a mortgage loan responsibly. You’ll read more about home buyers walking away from their home than about paying off a mortgage early.

But suppose you didn’t buy more home than you can afford. Suppose, you’re like many homeowners and you can comfortably make your mortgage payments. Suppose, you even want to pay your mortgage off early.

How do you crunch the numbers? Use Real Estate Calculator Suite, a Windows-based collection of real estate and financial calculators designed to make financial math easy.

Making additional payments towards the principal of a loan is a great way to reduce the total amount of interest you will pay over the term of the loan. The Prepayment Calculator shows you the effects of making these prepayments (paying additional amounts to more quickly reduce the principal of your mortgage).

Here’s a quick example:

Amount Borrowed: $100,000
Interest Rate: 8.75%
Term in Months: 360
Annual Property Taxes: $1,200
Annual Insurance: $1,200
Annual PMI Payments: $600
Total Monthly PITI Payment: $1,036.70
Total Interest Over Term: $183,212.97
Total Interest and Principal: $283,212.97

Using the Prepayment Calculator to calculate the savings of adding an additional $100.00 to your monthly payment, you’ll find that you’ll shorten the term of your loan from 360 months to 238 months (save 10 years) and save a total of $72,330.29!

And you’ll save the time and money by simply adding an additional $100 to each monthly payment!

Here’s a screenshot of the Prepayment Calculator:

Learn more and download a free trial version at Wheatworks.com

Homebuyer complaints about the slow responses of mortgage companies to borrowers’ requests for information about problems with their mortgage loan appear daily in the media. This morning’s New York Times has “The Silence of the Lenders” which offers a suggestion by Mr. Moe Bedard, president of Loan Safe Solutions, which may make your pen mightier than a telephone or email.

Mr. Bedard describes the use of a “qualified written request under Section 6 of Respa”. RESPA is the “Real Estate Settlement Procedures Act”, a Federal law which protects borrowers from unlawful activity by lenders.

The U.S. Department of Housing and Urban Development offer a sample qualified written request letter that shows what information must be included in your qualified written request for information. The sample letter is here:

HUD RESPA Sample Written Complaint to Lender Letter

The benefit for borrowers? Under Section 6 of RESPA lenders and loan services are required to acknowledge your request within 20 business days and must try to resolve the issue within 60 business days.

It’s important to remember that your qualified written request for information must not be included with your payment. It should be sent, instead, to your lender’s customer service address. You should also continue to make your required mortgage and escrow payments.

To learn more about RESPA, visit http://www.hud.gov/offices/hsg/sfh/res/respareg.cfm

If you’ve read Wheatworks’ Financial Blog often enough, you’ve read the blog entries announcing software updates. This blog is one way Wheatworks communicates with our clients and customers about the tweaks, new features, and upgrades that are added to the financial software products Wheatworks develops.

People expect software updates. Updates usual do two things: add features and fix problems.

Have you ever considered updating your house? Updating your home can do the same thing for it as updating software does: add features and fix problems. And home updates aren’t necessarily expensive.

In fact, you probably already update your home without thinking of it in those terms. Minor updates (probably not worthy of notice) include replacing light bulbs or tightening screws on a doorknob. If your skill set allows, a step up from that might be a little plumbing. Easy plumbing updates can include installing a new faucet to replace the original kitchen faucet which has started leaking around the base.

Changing old washing machine hoses is another good, easy update. And it’s excellent, cheap insurance. If you blow a washing machine hose when you’re out of town your house will be flooded before you return.

Looking for a quick bathroom update? Add sturdy grab bars to the tub or shower area. When you slip and need them, you’ll be glad they’re there for you. Just make certain you mount them securely, fastening them to studs behind the tub surround. Poorly mounted grab bars are dangerous.

How do you determine what to update? Walk through your house with a tablet and pen. Enter a room and ask, “what does it need?” Write your answers. While most people think “home improvement” requires big bucks, it doesn’t.

Frequent, small upgrades can quickly add personal value to your home. It’s often these little things that count most in determining how much you enjoy home ownership.