Following the Mortgage Dollar

Ever wondered what really happens to your house payment?

It seems logical that it would go to the lending company that made the loan to buy the home -- and it does, but it takes a longish trip along the way.

If your mortgage stayed in your lending company's portfolio, the lender would probably have to wait many years before the loan was paid up. And the relatively small monthly mortgage payments wouldn't provide enough money to enable the lender to continue making home loans.

But most mortgage loans don't stay with the lenders who made them. To obtain more money to lend, most lenders sell their mortgages on the secondary market -- a large network of investment companies and quasi-government agencies, including the industry giants Fannie Mae and Freddie Mac.

If your mortgage is sold to one of these organizations, you may never know it, because the mortgage's new owner will often use your original lender to service the account.

But you money doesn't stop its journey at that point either. The purchasing organization must also replenish their money supply, so they can keep on buying mortgages. They pool you loan with thousands of others and sell shares in the pool to individual investors and big financial institutions. Countless people obtain income by investing in these mortgages.

Because of this, when you buy a home, you're not only helping yourself, you're also helping our economy.

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Property Tax Reform: Is it Really Dead?

Perhaps we should autopsy property tax reform to see what killed it. By real reform I mean more than the stop-gap measure that is in the works. Yes, the special interest groups played a part in the downfall of this last attempt to curve the runaway costs of living in NJ. It was naïve to think that the Governor and legislature could pass a tax reform package that would really give New Jersey an overhaul especially this close to an election year. That legislators could or would police themselves and end practices that drain the state’s revenues, well we got a clue when they balked at changing rules that allow dual office holding, seems just plain wishful thinking. Instead in a slight of hand move unionized workers’ benefits and pension plans became the fall guys. Legislators can continue to hold down two positions in state government and in effect rob state revenues that double benefits without demanding any real work.

Is it any real surprise that the legislature will pass only about half of the 98 special committee’s recommendations? Not really. Blame the special interest groups for trying to prevent their membership from having to bear the brunt of the reform effort, blame the Governor for hearing the pleas of the people and calling a special session of the legislature, blame New Jersey residents for wanting lower taxes in the first place; but, whatever we do, don’t blame the legislators themselves who gave up the fight for real tax reform before the first bill was drafted.

Read the article.

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Tip of the Day: Paint

Stumbled across this article today and thought it would be fun. A friend to sellers, buyers and renters alike, paint can do many things to help create a mood. It is a low-cost way to freshen a room. It can help reduce the recurrence of mold and mildew and depending on the play of light in the room can appear to deepen or lighten itself. For about $20-$45 per gallon of paint you can revitalize a room or change it entirely using different application techniques. There is nothing else that can do so much in a room for such a price.

Read the article.

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Hamilton Transit Village Back On Again

Well, it looks like the transit village is on again in Hamilton -- almost anyway. Seems the squabbling town council and the mayor met again with transit company representatives and agreed to act in the public interest and get more public input and further studies into the proposal to create a mixed use site at and around the Hamilton Train Station. The Republican council and Democratic mayor agreed to put partisanship aside and act for the public good much like their neighbors in West Windsor, who are also getting a transit village. The complaint of disruption the proposed project would create around the station is moot because the traffic pattern around the station is already changing due to parking expansion. The station sits alone with many, long abandoned, commercial properties. The transit village would definitely vitalize that area. If done carefully the Hamilton Station area could well become a destination in New Jersey in its own right allowing visitors to check out Hamilton’s attractions or use Hamilton as a base to hop over to Philadelphia or New York for big city shopping or entertainment. Hopefully the servicing the people attitude will last long enough to allow this project to move ahead.

Read the article.

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Blunder Costs Ewing Township $40Gs

Looks like the folks in Ewing Township had a bit of a blunder with a land deal. Seems the tax collector sold a tax lien on property the township did not own. The township’s tax collector sold the lien on property out by the Trenton/Mercer Airport. The lien was purchased by Capital Asset Research Corporation. When CARC tried to foreclose on the property, it discovered the property was actually owned by Mercer County rather than the township.
CARC was awarded $51,000 from Superior Court but struck a deal with the township for $40,000. Ewing Township may be able to recoup some of the money for this mess from the tax collector’s bonding company.
Read the article.

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Energy Conscious Get Knocked in the Wallet

Okay when I read this article I thought, no good deed goes unpunished. Do something environmentally conscious and what do you get: knocked in the wallet. It seems if you spend the money to have solar panels installed to provide energy for your home, then township assessors come along and counts the panels as a home improvement and ka-ching! You pay more in property taxes.
Folks it really does not make sense that on the one hand the state, encourages people to use less fossil fuel and solar energy is just what is need to fight global warming. Those hearing the call and having the means invest in solar energy and thereby use less fossil energy. But then the township turns around and taxes the improvement? That is a really good way to get resident cooperation and participation in energy conservation efforts.
Though I have not come across a property yet that has solar paneling in its assets, either for purchase or sale. I would imagine it would be a good selling point; however if townships are going to use the panels to raise the taxes that could be make them a liability.
Read the article

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Real Estate Investing: Foreclosure

The number of properties nearing or in foreclosure has increased to 1.05 percent in the third quarter of 2006 from 0.99 percent in the second quarter. In 2005 the rate was 0.97 according to the Mortgage Bankers’ Association. Thinking of investing in a property that is in the foreclosure process? While there are bargains out there, some research is definitely needed to make sure everything stays fair and meets your profit taking goals. Things that can make a foreclosure less than ideal are liens on the property, repair work, and holding costs (the funds needed to keep the property in “showcase” condition while awaiting a buyer).
Amy Hoak does a pretty good job explaining things for the real estate investor. It is worth a read.

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West Windsor Proposes Tax Hike

Well, it is beginning. Governor Corzine has not even signed the 20 percent tax benefit for homeowners and already a municipality has proposed to raise its property taxes 7.5 percent to $.29 cents per $100 assessed property value. That works out so that a home assessed at $574,800 would pay an extra $115: $1667. Where have these township people been? The Governor is has legislation on his desk that will force municipalities to only raise taxes by no more than four percent. Why create a budget that ignores that?
This is the first work session for township officials so perhaps it is their wish list stage and some serious trimming will occur at other meetings. The police and emergency services, municipal courts, and community development still have to be discussed. Hopefully West Windsor officials are letting these "others" know the budget is already over the Governor’s high mark, and thereby prompting those entities to expect severe trimming. Perhaps by announcing the high proposal township officials are like Barack Obama, when he announced the misdeeds of his youth -- it is a preemptive measure but bares little resemblance to the end product. Meantime, one can only hope.
Read the Report

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Tip of the Day: Cabinet Hardware

Love Tim Carter of Ask The Builder. Thought his response to Lois was just right. Finding hardware that matches the rest of the style of the kitchen is important. I had a CMA appointment were every cabinet had a different knob on every cabinet door in the kitchen. The wife had just removed the original hardware over time and replaced it with whatever struck her fancy at the time. No two cabinet doors or drawers had the same pull. It was amazing. I explained that buyers might not necessarily have her artistic eye and that we needed to make things easy for buyer to imagine living in the space. She was willing to make the changes and kitchen cabinetry became an asset rather than a liability.
Read Tim's cabinet knob advice

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Tax Plan Passes Senate

Well, they took two months longer than they said they would and there seems to be some doubt whether the bill will be sustainable or not but the tax bill (S20/A1) is on its way to Governor Corzine’s desk.
There was a bit of drama with this vote because Senate leader Richard Codey (D) held the voting board open for two hours. He had four members of his party who either voted no or abstained from the vote altogether. Senator Codey brought the Senators back yesterday in effort to pass the bill and vowed to keep bringing them back until the bill passed. With some behind the scene lobbying of Republicans for votes by Gov. Corzine and Codey, the bill finally passed (28/10) and is now on it way to Governor Corzine’s desk where he is expected to sign it.
That the bill is bipartisan even though Senate Minority Leader Leonard Lance (R) was against the bill means there is hope for property tax reform. Granted this bill may not be sustainable, granted it is not the sweeping change really needed to bring property taxes down in the future or adequately fund schools districts, but it is a start. The legislature is taking a long time to learn to walk but at least it is mobile at last.
Read the Article

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Property Tax Relief Legislation in Senate Review

The tax relief bill is one step closer to reality. It comes before the State Senate (S20) today. The relief effort will only be as successful as the local governments will allow it to be. The credit program allows homeowners whose earnings fall between $100,000 and $250,000 to receive a credit on their property tax bill. While the cap placed on the amount local government may increase taxes in a given year, and the Senate allotting $2.05 billion to the program at least the first year of the program may work out well for homeowners. Since the four percent cap on increases in local levies has exceptions, how long the amount allotted to the program will last is anybody’s guess. Ideally, the amount homeowners receive should remain at 20 percent no matter what local governments do -- whether that is indeed the case remains to be seen. Still it is a beginning.
Read Dunstan McNichol's story

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County Superintendent Bill in Review

There is a bill working its way through the New Jersey Senate (S19), sponsored by Senator Bob Smith (D), which will create a county level school superintendent. The plan was to create a position to hold local school districts accountable for their spending and thereby lower property taxes. Basically this position would approve or cut budgets. While the idea of a superintendent with the ability to cut budgets is a good one the bill working it way through Senate readings includes a process where local districts can appeal the decision of the superintendent which could very easily render the office of the county superintendent ineffective. Why was the process included in the bill you might ask? It seems some Senators are involved in local government and they did not want the superintendent to have the very power the position needs to effectively bring down New Jersey property taxes. Folks, it looks like the superintendent will have a stick, maybe even a big stick to encourage local governments to work together but it also looks like the Senate bill gives local governments a saw.
Read The Times of Trenton article

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Tip of the Day: Moving Made Easier

Moving is no picnic, whether from an apartment to a house or a one house to another, but here are a few suggestions that may make the job easier.

Make a list of the people and companies who will need change of address notices. Sit down and make as complete a list as possible. Don’t forget to add that investment company from whom you only receive quarterly reports, insurance companies, any magazine subscriptions, and the IRS.

If you are moving out of state don’t forget to sign the necessary forms for your health care providers to transfer your records. It is a good idea to get a copy of all prescribed drugs and even eyeglass and contact lens prescriptions.

Transfer the content of your safety deposit box to the new bank location in advance and transfer funds to the new account if you must move your account from on bank to another rather than just new branch. If you have direct deposit paycheck it will be important to setup the new bank account well before the move depending on your company’s requirements.

While numbering boxes and writing on the boxes the room to which they belong will help, assigning priority to boxes also helps. “Open me first” boxes should hold items you may need as soon as you reach the new location like bathroom items, light bulbs, bedding, night clothes, work clothes, or school clothes.

If you are changing cities, a good real estate professional can put you in touch with an agent in your new community who will help you get settled – even if you do not plan to buy a home right away.

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Making the Sale

It is about pricing. Buying and selling houses is 80% about pricing. There is nothing magic to it. Price the property correctly for the market and it sells, do not price it properly and it will sit on the market. The other 20% is about timing. It is a buyers market and timing is a bit tricky, but if the price is correct the property will sell.
The problem is that sellers want the price their neighbor got for a property sold during the height of the seller’s market. That’s not going to happen, it is a buyer’s market now and buyers are taking their time and shopping around before making offers.
Sellers also want to get a specific amount from the sale of their home, even though the market may not bear that price. There are no bidding wars to help drive up prices – to help today’s seller get exorbitant prices. There is enough inventory on the market for buyers to just look elsewhere and that is exactly what they are doing.
Sellers have to price to sell rather than price with emotions. It is difficult to look objectively at the place where you have spent years living life. Where each room holds memories of people and past events; but, objectivity is exactly what is needed to price a home correctly. Being objective about houses is a realtor’s day job. The realtor works to get the seller realistic returns on their investment. In a buyer’s market that can be more challenging but meeting that challenge is why I love this job!
Read the article: Home market not so comfy

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Around Town: Property Tax News

Lawrence township council has proposed a 3 cent increase in property taxes to 68-cent/$100 which would increase the average homeowner’s bill about $49. They will discuss the proposed budget “in detail” on February 6.
Read the story

In state government, the effort to reform property taxes has senate democrats seeing the reform effort as a waste.

"By the time all is said and done, (the proposals have) all been watered down so much that there's really nothing there. They're nothing more than shells," said Sen. Shirley Turner, D-Lawrence, Mercer County.
After seeing much of his work on reforms whittled down by other lawmakers and interest groups, Sen. Robert Smith, D-Piscataway, compared his efforts to those of Sisyphus, who in Greek mythology was doomed to forever roll a boulder up a hill, only to see it roll back down.
Smith said, "I went into this believing anything was possible and anything was on the table, but you can't get past those interest groups."

Well folks, it looks like business as usual in the state legislature – something potentially good shot down in its infancy. I cannot say I am surprised but I will admit to hoping for better.
Read the story

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New Jersey Educators Weigh In

Well the New Jersey Education Association has weighed in on Governor Corzine’s property tax reform proposal over the weekend. Joyce Powell wrote the ad for the Association. She pretty much says what we all know – that “credits and caps” of Governor Corzine has a fatal flaw. I think I will just quote her here

The core of Gov. Corzine’s plan is a combination that he calls “credits and caps:” significant property tax credits for most residents, combined with strong caps on future property tax increases. It is an appealing offer, but with a fatal flaw. While it addresses the issue of funding for education, it does nothing to deal with the cost of providing education.
… New Jersey arrived at this crisis understand that property taxes are a symptom, not the root cause of the problem. For years, the state has failed to provide adequate funding to school districts to raise the necessary funds through the only means available to them: property taxes.

Ms Powell has a point. Where is the money for schools going to come from if not the state or property taxes? Since it is true in the 1990’s Gov.Whitman decreased the amount of money available to the state with her decrease in income tax, then it really is no surprise that municipalities had increase in property taxes to make up the difference for the money no longer received from the state or have schools suffer. Duh! It is not rocket science here. So what’s the legislature going to do? Probably the quick fix of “credits and caps” but not even make a stab at the root cause of property taxes and so we will have this conversation again in a few years.

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Tip of the Day:Top Ten Mortgage Banker Tips

The Mortgage Bankers of America list the following as their top ten tips for homebuyers. Thought they were worth repeating here, with my two cents thrown in.

1. Check your credit report. It really is the most important of all. The credit report will let you know if you will look attractive to lenders. Knowing what they see is to your benefit.


2. Develop a monthly budget. Know what your monthly expenditures are and determine what is 25% to 28% of your income. It is what lenders are going to be looking at so if you look first you will have some idea of the mortgage payment you can afford.


3. See a lender first. I would switch this one with the next one and encourage buyers to begin early thinking about and sorting the features they need vs want in a house, then go lender shopping. I encourage buyers to make a list of everything they want in a home and then assign priorities to the items sorting needs from wants. I encourage them to revisit the list as they go through the search for a lender process. It helps separate the first emotional response to home buying.


4. Needs vs. Wants (see above)


5. Take time to learn important terms. It is especially necessary for first-time homebuyer to learn the lingo of real estate.


6. Thoroughly investigate the mechanics of the deal - are there additional costs/fees that you need to consider?


7. There are various types of mortgage packages. Take your time ask, questions and take the time to understand the package you and your lender put together.


8. Get pre-qualified. It's fast, it easy, and you do not have to have just one. The reason to get pre-qualified is that it tells you how much money you are likely to have toward your home purchase.


9. Visit as many homes as possible. The best home for you is out there waiting for you to come along and find it.


10. Work, interactively with a mortgage lender. For the process to go smoothly the homebuyer must be willing to answer all the questions the lender may ask so being readily available is important.

The homebuying process, with the right team supporting you, will be a pleasant memory and you home a place to enjoy rather than a burden with the correct mortgage package.

Good Luck and Happy Hunting!

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Tip of the Day: How Much Housing Can You Afford?

There are so many different kinds of mortgages available now that people with special requirements can probably find something that suits them perfectly. But becuase of the great variety, there is no simple, accurate formula that can tell you how big a house payment lenders will qualify you for.
Still, the Mortgage Bankers Association of America does have a way for you to make a rough estimate of how much you can afford if you are choosing a 30-year fixed rate loan -- the most popular mortgage now.
The MBAA says that, in general, you monthly housing costs (including mortgage payment, taxes, insurance and other fixed expenses) should be between 25% and 28% of your local monthly income. Those monthly housing costs plus other long-term debts (expenses extending more than 10 months into the future, such as car payments or other installment loans), should not exceent 36% of your before-tax monthly income.
But be aware that there may be exceptions to the above guidelines. And you might be able to qualify for a larger mortgage using a different kind of loan

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Apple iphone – Just Another All-in-One?

Took a look at the new Apple iphone online. The convenience of having all the tools of the trade available in one handheld item is tempting. The sleek design is worth the price if - and this is an important point - if you are among those who never misplace anything and who's kids don't touch your stuff. If you have never left your phone at home and had to return for it or left your camera at work, while you went to view a potential listing or found your four year old had climb your five drawer chest of drawers to play with your PDA/camera then an iphone is worth a look. Even if you have not plans of purchasing the thing it is worth a look. I admit it is inconvenient to not have the camera with you on a listing appointment but if your leave this camera somewhere you might well miss a lead's call. Another consideration, is that if the phone has to go to the shop, so does the camera, the address database - you get the idea. I may grumble about keeping track of my PDA, camera, and cell phone but the truth is keeping the items separate according to their duties works for me, for now.
It is supposed to be available through Cingular for a year before it becomes available through other services and go for about $500.
Check out the iphone

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Affordable Housing Bill Battle Ahead

Well, the sides are being chosen and the rhetoric has begun in the fight to end Regional Contribution Agreements (RCA) here in New Jersey. Though the Supreme Court said that all New Jersey town must ensure that low and moderate income residents have affordable housing, the more affluent suburban towns have used RCA’s to shift their responsibility to others -- mainly cities.
Now on the one side you have the cities that have been benefiting from the practice and who want the funds to keep coming. On the other side you have the suburbs that fear an influx of low to moderate income residents would tax their services and encourage sprawl. There is some validity to the sprawl claim but New Jersey is one of the most densely populated states in the nation, a certain amount of sprawl goes with the territory. It seems a bit unfair that low to moderate income residents are forced to live in cities because suburban towns have dumped off their responsibility to provide affordable housing. It will be interesting to watch how this plays out.

The bill, A3857 is here for review.
Read the article here

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