Author: Benchmark

New Rules for Home Loans: How Will They Affect You?

In January, 2014, new home mortgage lending rules aimed at strengthening protections for consumers went into effect in the United States. Created by the Consumer Financial Protection Bureau — a federal agency responsible for regulating financial protection for consumers — the new rules come in the wake of the banking crisis that left millions of Americans in foreclosure, underwater on their home loans or struggling to make payments that they were never financially qualified to make. The law tightens restrictions on the banking industry, spelling out clearly what constitutes a qualified mortgage and placing limits on the fees and terms of some home loans.

However, many lenders already have tightened their lending criteria significantly since 2012, so some of the restrictions will not come as much of a surprise. Borrowers who do not qualify for low-interest mortgage loans will still have the option of applying for a mortgage backed by the Federal Housing Authority; they will just pay more for the loan.

Some of the requirements of the new law seem glaringly obvious from a consumer’s point of view. For example, self-employed borrowers or those whose income includes regular overtime or commission income will have to provide proof of how much money they make. Just asserting that you make 20 percent more than your base pay in overtime every month will no longer work. Additionally, loans to borrowers with an income-to-debt ratio of more than 43 percent are limited.

Another restriction imposed by new law is the elimination of interest-only loans, which were popular right before the housing market collapsed and greatly contributed to thousands of foreclosures in parts of the United States. Consumers who relied on these loans to purchase homes later discovered that they could not meet the higher payments they faced when the interest-only period ended, causing them to default and lose their homes. Adjustable rate mortgages—another popular lending strategy used to help low-income borrowers qualify for a home loan — are still allowed. However, the borrower must be qualified to meet the highest possible payment within the first five years. In other words, you cannot qualify for an adjustable mortgage with very low initial payments that will increase substantially in two to three years unless you are in a position to pay those higher payments now. Further restrictions limit mortgage terms to no more than 30 years and the total cost of points and fees to 3 percent of the loan (for loans of $100,000 or more.) The law also prohibits lenders from providing financial incentives to loan officers for steering customers into high-interest loans or large loans that they cannot afford to repay.

In addition to lending guidelines, the new CFPB regulations contain stricter rules regarding the mortgage banking industry’s obligation to keep consumers informed about the status of their loans. Mortgage servicer’s must now send monthly statements, credit payments on the first day they are received and notify borrowers when their payments are 36 days past-due. Additionally, banks cannot begin foreclosure proceedings until at least 120 days after the last payment was received. Homeowners who file a completed application for assistance and are working with the bank to avoid foreclosure are also protected under the new law.

Undoubtedly, the mortgage banking industry’s response to the new regulations will be some initial belt-tightening, Nevertheless, according to Keith Gumbinger, spokesperson for the country’s largest publisher of consumer loan information, HSH.com, “…everybody has been preparing for the change for months.” The new law simply codifies much of what the industry already has put in place. What’s more, the protections it affords consumers…while they come too late for the many thousands of families who lost their homes…ensure that future home loan transactions are open, honest and above board.

Credit Card Myths Uncovered

by Benchmark

Advice can be helpful in many cases, but following misguided or erroneous advice, even when well-intended, can have a devastating impact. The same is true of advice on bolstering your credit score. Unfortunately, there is a variety of mistaken credit advice floating around that can actually make yours worse. Here are some common myths that you should disregard when trying to get a better credit score.

Inquiries Hurt

Too many inquiries can cause your score to fall slightly, but the idea that score inquiries hurt is overblown. Indeed, with many scoring types, inquiries made within a certain period are actually considered to be a single one. There are good reasons for this. Say you want to buy a car. The dealer will often look to several banks for financing, and it would be wrong for you to be penalized for it. Furthermore, if you have a credit account, the company will regularly review your credit status. This method, called a “soft pull”, doesn’t affect your score. Another example of a “soft pull” is inquiring about your own credit score, so don’t be afraid to check.

Debt = Good Score

This claim is patently untrue. If you have more debt than credit, your overall credit score will take a big hit. Your repayment habits also impact this. Repaying the full balance every month doesn’t help. It’s much more important to make regular payments on time. In fact, just by being dutiful with your payment schedule, you can achieve an excellent score with minimal or no debt.

Debit Doesn’t Impact Credit

Debit card activity isn’t turned over to credit companies, but using one does have an effect. If your bank account is protected from overdrafts by a line of credit, it can have either a positive or negative impact. If you don’t make any payments on the loan, or if you max it out, your score will suffer. However, if you use this carefully, it can improve your credit standing. You should also carefully look over your account details regularly. It’s common for people to be unaware that they’ve gone above their line of credit.

Co-Signing Doesn’t Matter

When you sign onto another person’s loan and it’s significant enough to upset your income to debt balance, your credit is circling the drain. This can cause you to be denied for any future loans you may need. The lending company might accept a note claiming that you’re not paying on the loan, or they might not. Either way, you’ll still be considered responsible for whatever you sign your name on.

Fun Family Spring Break Activities

by Benchmark

With cold weather lifting and warm weather on the horizon, families are preparing for an exciting spring break. Instead of being surprised with bored faces on the first vacation day, plan your entire week with fun ideas that explore your neighborhood or just entertain you at home. Any budget works with simple ideas that are just plain fun for kids and adults.

Expand Your Mind

Keep everyone’s minds busy with enhancement activities over spring break. Visit a local museum you were meaning to see, from natural history to art. If you plan ahead of time, you could take advantage of free or discounted days, depending on the institution. Take a look at your community events. Many cities offer week-long art classes for kids, or even exercise classes for the entire family. Trying something new allows everyone to find a potential hobby that they may like to pursue in the future.

Road Trip

Take a road trip to a destination 100 miles away, for example. Many botanical gardens and fields are in bloom during spring break. Take a look at the flowers and plants. Afterward, eat at a local restaurant that locals enjoy. Take in a parade or other outdoor event as well. With spring break overlapping in many communities, there may be several events celebrating spring’s arrival.

Game Day

Rainy days do occur over spring break, but you can battle any boredom with game day. Set up several board games, and create a friendly competition amongst family and friends. Teach kids the art of chess, Parcheesi or Chinese checkers for a throwback to older game days. If you prefer video games, try a singing or band game that brings everyone together. Dancing games are perfect as well. The key is to have everyone involved for the most fun.

Get Close To Nature

You may be cooped up inside with work and school on most days, but spring break allows you to explore your neighborhood. Go outside and explore local mountains, beaches or parks. Walk out on a pier to watch the surfers and waves. Hike up into the mountains for a unique experience with nature. Because most of these activities are free, you save money while gaining a new view of the world.

Keep everyone mentally and physically active this spring break. By mixing different activities over several days, both kids and adults will be pleasantly surprised at how fast the week flies by.

Make Your House a Home – Top 10 Feng Shui Tips

by Benchmark

Feng Shui is an ancient Chinese art designed to balance the energy in a space while making it more inviting and cohesive. Here are a few suggestions to enhance your home and inspire you as well.

1. Clean Up Your Clutter

One of the most important Feng Shui principles is to clear away any unnecessary clutter. Feng Shui states that we are energetically connected to everything we possess. Having too many unnecessary things in your space literally drains your energy. Go through your entire home and remove anything you no longer love or use.

2. Rearrange Your Furniture

Your furniture should be placed where you can see who’s entering the room. Ideally, you should never walk into a room and see the back of someone sitting in a chair or sofa. This creates a feeling of disempowerment and unease.

3. Make the Entryway to Your Home Inviting

The entryway to your home is considered the portal where all opportunity can enter. It should make you and everyone else inspired and eager to enter. Implement special touches like colorful pots of flowers, a clean doormat, and a fresh coat of paint on your front door. Your home’s entryway is the first impression your visitors will get and says a lot about you and the home you live in.

3. Care for Your Home

Fix or replace anything in your home that is broken, rotting, or cracked. How you care for your home reflects how you care for yourself.

4. Color Affects Everything

Color affects us on both a conscious and subconscious level. Look at the colors in your home. Do they make you feel safe, nurtured, and inspired? Color is a key element in affecting our everyday mood.

5. Room Function

Make sure every room in your house is conducive to its function. For example, it doesn’t make sense to put exercise equipment in a bedroom where you rest and sleep.

6. Create a Friendly Atmosphere

Sharp-edged furniture sends the message your home is unsafe. Remove other unfriendly items like kitchen knife racks or spiky pot hooks as well. Every element in your home should feel comfortable and secure.

7. Create Flow

The path meandering through your home should flow easily. Do not place furniture where it will obstruct a path. Lack of movement inside your home may indicate a lack of movement regarding your career, relationships, and health.

8. Forget Trends

Remove anything in your space you feel obligated to keep. Forget popular trends and only surround yourself with things that inspire you.

9. Little Things Mean A Lot

Little things like keeping the toilet seat down or replacing the handle on a drawer may not seem like much, but they actually convey a sense of order and mindfulness. Keeping things in order equates to a peaceful existence.

10. Invite Mother Nature into Your Home

What is it about nature that makes us feel one with the world? Nature essentially realigns our energy field with the rest of the Universe and makes us feel whole.

Once you understand the primary principles of Feng Shui and incorporate them, you’ll begin to notice a shift in the way you feel. It’s called peace and happiness.

Top 10 Tips When Building A New Home

by Benchmark

Top 10 Tips When Building A New Home

A lot of people don’t want to buy a house that’s on the market. They want their house to truly be their own. In some of these cases, these people will probably look into building their own home. This is an option that some people may not even take into consideration. But don’t let that stop you!

While building your own home can be an exciting venture, it can also be quite challenging. Here are the top 10 tips you need to know before you decide you want to build your own home.

1. Have a Clear Budget

One of the most important things is ensuring that you aren’t over-spending. It’s very easy to get carried away and fill your home with everything you want. This can make the price add up extremely quickly. The cabinets, flooring, and lights can always be upgraded later. Make sure you have a clear amount that you are okay with spending.

2. Pick a Good Builder

Not every builder is equal. It’s important to make sure your builder is reputable.

3. Pick a Good Locale

You want to make sure you’re close to everything you need. If you have kids, you may want to make sure that your new house is close to a school.

4. Keep Everything in Writing

Your interpretation of what you want and your builder’s interpretation of what you want may vary. Write everything down and go over everything with your builders. This ensures that your expectations and wants are very clear.

5. Don’t Make Unnecessary Changes

During the idea and planning stage, something may seem better on paper than in real life. Not everything is going to look the way you anticipated. If it’s something that you can see yourself getting used to, there’s no need to make a change. If it’s completely unbearable, you can make the change. However, remember that making changes will cause a delay and add to your costs.

6. Keep Your Relationship Professional

It’s important that your relationship with your builder remains professional. It may be a little too awkward to hire someone like your brother or father to build your house.

7. Be Involved

When you hire your builders, don’t just let them go on without any guidance or supervision. It’s important that you are involved in the process. This allows you to check up on progress and you can spot any issues before time runs out. You don’t want to show up on the last day of building and notice a ton of things that could have been fixed previously.

8. Prepare for Delays

No matter your builder says, the timetable for building a house always varies. Don’t let your expectations get too concrete. it’s important to be flexible.

9. Be Understanding

It’s important to make sure that you aren’t being too demanding of your builders. You may come to find that one of your ideas or plans will not come to fruition. Don’t get upset and let it go

10. Have Temporary Housing

As mentioned previously, you want to be prepared for delays. If the building process goes on longer than anticipated, it’s important that you have a place to stay.

How much cash do I need to buy a house?

by Benchmark

One of the first questions potential home buyers ask is “how much cash do I need to buy a house?” Most of the time, some cash will be needed for a down payment and closing costs. The exact amount of cash will depend on several factors, including the type of loan.

Conventional loans

A conventional loan is made by a bank, mortgage company, or another type of financial institution without government insurance. Conventional loans typically require a down payment in the 5% – 20% range, depending on location and specific loan structure. For some people, this will price them out of using this loan product. However, the ability to put down a large amount of cash brings certain advantages with it. 20% down will usually eliminate the need for Private Mortgage Insurance. A large down payment means a smaller mortgage payment giving you less overhead on a monthly basis.

VA Loans

VA loans are administered by the Veterans Administration. This program was originally created to help veterans purchase a home by providing loans with low down payments and low interest rates. Because VA loans are guaranteed by the federal government, it is still possible to buy a home with up to 100% financing. Other benefits of VA loans are that no PMI is required and loans are usually a little bit easier to qualify. Although the loans are administered by the VA, they are made through a private lender.

FHA Loans

Loans obtained under the guidance of the Federal Housing Administration carry low down payments, usually 3.5% or less. For a $100,000 home, then, a person would need about $3,500 down. One advantage to FHA loans is that the down payment can actually come in the form of a gift. This means it could be a gift from parents or another relative. It will be necessary, though, to document that the funds are available and that the donor intends to provide them as a gift. Every situation is different so be sure to address your goals with your loan officer and Realtor so they can advise the best program for you.

Other Type Loans

Other type loans are available, such as those for investment property. Additionally, down payments are sometimes provided through governmental assistance and charities. More information can be shared by contacting your Benchmark loan officer and discussing how much cash you will need to buy a house.

Simple Tips to Winterize Your Home

by Benchmark

When winter’s cold blast approaches and the warmth of summer is a distant memory, it’s time to winterize your home to ensure you keep heating and other costs at bay. Here are some simple tips on how to winterize your home this season.

Seal up Windows and Doors

Nothing acts more like a beacon to escaping heat than drafty windows and doors. When windows and doors are poorly insulated, you’re saying goodbye to your hard-earned cash as your costly heat goes right out the door. It’s easy to detect a leak — just walk around your home and light a candle near each window and door. If the flame flickers, cold air is getting in. Caulk the leaks to seal them and keep your toasty air in, helping you to save on your energy bills.

Close Unused Doors and Vents

If there are any rooms you do not use frequently in the winter, such as guest rooms and finished basements, keep the doors closed and shut the heating vents to those rooms to conserve energy. No sense in heating a room when no one’s in it. You’ll get more even distribution of heat throughout the main rooms, like your bedroom, the living room and the kitchen, where you need it most.

Reverse the Ceiling Fans

You probably never thought much about the direction of your ceiling fan blades but there’s a real benefit to reversing their direction when the winter hits. Most ceiling fans come with a switch that you can simply flip to make the blades go in the opposite direction. Make sure they’re rotating in a clockwise motion rather than counterclockwise, to encourage the warm air (which naturally wants to rise) to direct downwards.

Check Your Alarms

This includes your smoke and carbon monoxide detectors as well as your security alarms and surveillance systems. Ensure outdoor security cameras are properly secured to the home to prevent slipping and shifting due to high winds and snow drifts.

Stash an Emergency Supply

Could you survive a few days or a week without power? If not, it’s a good idea to always have an emergency supply as a backup in case you lose power during a storm. You’ll need a fully-stocked first aid kit complete with sanitizers, bandages, OTC medications and backup prescriptions, as you may not be able to get to the store in the event of an injury or a critical situation where your child has a food allergy, for instance, and you need an epinephrine pen. In your emergency supply, you’ll also need plenty of dried and canned goods, several gallons of water, flashlights with extra batteries, manual can openers, matches, fully charged cell phones and a fire extinguisher. Keep emergency numbers handy in case you need them at a moment’s notice. Stay safe this winter and do what you can to prepare.

Tax Tips for Homeowners Claiming a Home Office Deduction

by Benchmark

A recent survey by the Small Business Administration indicates that nearly half of all businesses are based in American homes. These home-based businesses for the self-employed run the gamut from accounting services to providing medical care. American professionals surveyed by Telework Research Network indicate that the number is expected to grow in the next five years. With that number of Americans going to the self-employment route to earn money, it’s imperative that these small entrepreneurs know what the rules are when reporting income to the IRS. One of the primary things to learn is how to use the home office deduction. Here is a brief breakdown of the rules.

Evidence to Show that the Home is the Primary Base of that Business

To use the home deduction, the entrepreneur must use a part of the home to conduct business regularly. That part of the home must be used exclusively for business. To meet that requirement, it’s best that an actual office be set up. A good way to meet that requirement is to set up a phone, a desk, filing cabinets, a computer station and other things that are needed to conduct business in that room. All material goods in this office may be written off as expenses for the business. That would include the cost of the computer, paper, business forms and even stamps. Curtains, desks, rugs and chairs can also be deducted.

Deducting Expenses

Hooking up a phone and Internet line into the home office is a monthly expense that can be deducted. These are classified by the IRS as ordinary and necessary expenses that are essential to the business. All lawful deductions must meet the necessary expenses requirement in order to qualify as a deduction. Deducting a portion of the mortgage payments and real estate taxes is also allowed as are repairs, utilities, insurance and depreciation.

Calculating the Deductions

All deductions will be based on the percentage of the home used for business. This will be calculated by measuring the number of square feet used for business in the home. For example, if one-quarter of the home is used for business, one-quarter of all utility bills can be lawfully deducted as a home office expense. Form 8829 explains how this is done.

Keep Records

All receipts for the business should be filed away for reference when calculating the home office deduction. These deductions will be entered in Schedule C. Publication 587 titled “Business Use of Your Home” explains in detail how to keep records and what the IRS recognizes as allowable deductions.

Get Your Closet Organized While It’s Cold Outside

by Benchmark

Its winter time and thoughts of going outside in the cold just gives you the chills in most of the country. So, why not look for something productive to do inside like cleaning out and organizing your closet? Closets are usually taken for granted because you can just toss things inside them and forget about it.

Think about how nice it would be to have a neatly organized closet.

A disorganized closet can look like it went through a storm, but with a little patience and by following some of the tips below, your closet can be quickly transformed into an organized space.

Get in Season

To get a fresh start on your closet, take out all the clothes that are out of season and neatly store them away in a plastic container or cedar chest. This way, they will be easily available when you are ready to use them again.

What Really Fits

Next, take out all the clothes you cannot or won’t wear again and give them to a local charity. This includes items on shelves in the closet as well as shoes. This creates plenty of space for more organization. Afterwards, vacuum, clean up any cobwebs and dust the closet. Start working from the top, down.

Get Organized

Next is the fun part – organizing your clothes. One great way of organizing clothes and shoes is by color. Start with the lightest colors and end with the darker colors. Clothes should be placed neatly on hangars and all facing one way. If you share a clos
et with a spouse, use a divider and organize the other person’s clothes in the same manner.

Tackle the Shoes

Shoes should be arranged in the same manner, from lightest to darkest. Use a shoe organizer or some shelves to give yourself more space in the closet. Continue this process with the rest of your closets until they all look the way you want them to.

The Small Stuff

A closet organizer serves a wonderful purpose helping you organize closets. You can find closet organizers in all sizes, and they serve any type of function you might need them for. They come in several styles and different prices ranges to fit all budgets. If you want variety in your closets, you have options.

Now you have organized closets that are easy to maintain and much nicer to look at.

We hope these tips help with your closets and if you need any help with mortgage and refinance questions, please contact us.

Stick to Your New Year Resolution with These 5 Tips

by Benchmark

New Year’s Resolutions are hot topics this time of year with many honestly wanting to make changes that will help them to be healthier, wiser and more organized people overall. While some stick with their goals for a few weeks or possibly even a few months, a very low percentage of individuals actually keep their resolutions for an entire year or incorporate their goals as sustainable parts of their lives. These five tips will help individuals make their goals more attainable.

1. Defined and Achievable

First, resolutions should always be easily defined and should be achievable. Many people set generalized goals for themselves, such as being thinner, becoming healthier or learning how to sew. However, without specific goals, chances are that this resolution will fall by the wayside before January is even completed. For example, instead of resolving to become thinner or even lose 20 pounds, one should resolve to hire a personal trainer, work out for 30 minutes 5 days each week or count and limit calories to 1,500 each day.

2. Start Small

Second, the best resolutions begin with small changes that gradually become larger. Someone who wants to run a marathon would find it impossible to start suddenly running 10 miles a day. It would be easier and less discouraging to commit to a running program that gradually immerses the individual in the exercise.

3. Tell Someone

Third, telling family and friends can be a great help when making a resolution. They will be an encouragement to the individual who is making life changes. Not only will they be the cheering team, but also they will be able to hold the individual accountable. People are much less likely to quit new routines if they know that someone will be asking for updates.

4. Think Positively

Fourth, positive thinking is necessary. If individuals have no faith that they can make a change, they will be discouraged from the start. Although fear or worry is normal when starting something new, these thoughts should not be allowed to take root in one’s mind. Positive, uplifting thoughts should be the focus.

5. Stay Strong

Fifth, those making resolutions should strengthen their willpower. They may be tempted to have just one cookie or stay in bed late just one time. Often, the best way to do increase willpower is to distract oneself when these tempting thoughts come. Distraction can be as simple as getting up and taking a walk or opening a new book or magazine.

After many years of making resolutions and failing to keep them, this is the year to make a change. The best resolutions are attainable and easily started. While individuals require willpower and positive thinking to succeed, family and friends may offer the extra boost of strength that is needed.

We hope this helps you stay committed to those goals for 2014. We are to help if one of your goals is home ownership. Contact us today.