Metro Albuquerque Real Estate: Mortgage and Financial Information

The information on this page has been provided by people involved in the mortgage and financial industry. Information has been obtained from sources deemed reliable and not guaranteed by this website.

Financial and Mortgage Information

"There has never been a better time to Live Albuquerque," says Forbes Magazine! Albuquerque was just ranked in Forbes Magazines "Smart Places to LIve" Survey for 2006. The magazine ranked 50 U.S. cities in terms of housing prices, cost of living, economic vitality, education, health care, local arts and recreational facilities. Albuquerque, N.M was ranked as #3. Kiplinger's editors said they weighed affordability and livability, "places that are vibrant and fun, and where a dollar still goes a long way."

Three Major Catagories of Home Mortgages

You’ve probably been reading in the news about the turmoil in the financial markets recently, centering on the mortgage market. I would like to explain what is happening, and hopefully give you a bit of insight on the implications for the sale of a home.

There are 3 major categories of mortgages in this country, as follows:
“A” - Fully qualified mortgages, under $417,000, for credit-worthy clients. These mortgages are sold in the secondary market to Fanny Mae, Freddie Mac, etc.

“Alt-A” - These mortgages include “Jumbos” (over $417,000), “Stated Income,” “No-Docs” or “Limited Docs” loans, and others that don’t meet all criteria for the secondary market. The borrower typically qualifies based on credit scores, but doesn’t provide all the necessary information, or the dollar amount of the loan is greater than $417,000. These mortgages are sold to investors directly.

“Sub-Prime” - These mortgages don’t meet the criteria for the secondary market. They are typically for borrowers with lower credit scores, and generally carry higher interest rates. These mortgages are sold to investors directly.

Sub-Prime Market: As you’ve probably read, the Sub-prime mortgage market has been in trouble for some time. Investors are shying away from this market due to increased foreclosure rates, that have (over time) not been adequately compensated for by higher interest rates. Funds have really dried up in this segment of the market, and not many loans are being made today.

Alt-A Market: Investors quite suddenly have begun to shy away from this market as well, and are insisting on much higher interest rates. For example, Wells Fargo raised their rates for Jumbo loans from 6.875% to 8% this week. The reason for this is that nationally, the Real Estate market has lost much of its “exuberance.” Instead of expecting to sell their properties at a profit if they couldn’t meet their payments, borrowers are discovering that the underlying real estate, if it can be sold at all, may be sold at a loss.

The Federal Reserve, as well as Central Banks abroad, has injected considerable new reserves into the system, which has removed some of the panic mentality in the marketplace. Nevertheless, things should continue to tighten in the Alt-A and the Sub-Prime marketplace, which is directly dependent on investors for funding.

“A” Market: On the other hand, since there is liquidity in the system, more funds should begin to flow into the “A” mortgage market. This should perhaps cause downward pressure on interest rates in this market, and increased availability of funds. This is the largest and perhaps the most important segment of the market.

Implications for Mortgage Brokers: Look for a fall-out of some mortgage brokers. Last week, 115 major U.S. mortgage lenders actually shut their doors and ceased lending. These lenders were unable to find investors for the loans they had promised, and the end was sudden for them. This caused many of the headlines in the financial press. The survivors in this market will be those mortgage lenders who have been scrupulous about their lending criteria, and have followed all guidelines without “cutting any corners.” They will also have access to large financial reserves, in order to survive any disruptions that may come.

Summary: For most homes in Albuquerque, there will be plenty of mortgage funds for qualified buyers. However, at the lower end and also at the top end there will be reduced availability of funds. Interest rates for these loans should increase as well, which means that fewer people will qualify for these loans.

The Albuquerque real estate market is strong, and promises to remain so. Employment is strong and the economy is vibrant. The underpinnings of the real estate market are generally positive in Albuquerque. Our city is a “shining star” nationally! However, there will be influences from the outside - the mortgage market - that will affect some buyers. By removing some buyers from the marketplace, there will be increased downward pressure on prices. This should particularly affect the upper and the lower end of the market, while the middle part of the market should remain in good shape.

Official Free Credit Report Site.

As of September 1st, residents of all US states and territories have the right to obtain one free credit report from each of the three credit bureaus per year. Be sure to take advantage of this opportunity, as a clean credit rating has become as important as receiving a clean bill of health from your physician. From a potential employer to your insurance company ? more and more people are using your credit rating as a way to judge if you are a good risk.

The only authorized site from which to obtain your free credit report is www.annualcreditreport.com.

The free credit report will only give your credit history, not your credit score. If you do want to know your number, you can pay an add-on fee, or your mortgage professional may be able to help you on this count as well.

You are entitled to receive only one free report from each bureau per year, so consider staggering the requests. For example, make a note on your calendar to order one from TransUnion in January, one from Equifax in May, and one from TRW in September. In essence, this will allow you to order three credit reports per year and provide you the ability to monitor your credit throughout the year.

With the tremendous concern about identity theft in recent years, a further layer of protection is available for a fee, of course, but it is quite nominal. As an example, for $100 per year, Equifax is offering unlimited credit reports, notification of any key changes in credit history, $20,000 worth of identity theft insurance, and up to $4,000 in lost wages to cover taking time off from work to clear credit matters. Trans Union offers a similar program with quarterly access to your credit reports and $25,000 in identity-theft insurance for approximately $50 per year. But if you are considering one of the above policies, first contact your homeowners insurance company your policy just might include some identity theft insurance already.

Each of the three major credit reporting companies can be reached at:
Equifax: 800-685-1111 www.equifax.com
Experian: 888-397-3742 www.experian.com
Trans Union: 800-916-8800 www.tuc.com
Thanks to Scott Cummings at Cummings Financial, 505-884-8600, scott@cummingsfinancial.net

ribbon Patrick F. Montrose - REALTOR®, BA, MA, MAT
Associate Broker
Certified Relocation Specialist
Coldwell Banker Legacy Realtors
6767 Academy Road NE
Albuquerque, New Mexico 87109
Pat@PatMontrose.com
(505) 857-2344 Office Direct Line
(505) 239-4253 Mobile
(505) 281-9249 Fax

FHA Loan Limits for 2006 in:

Bernalillo County:	1 Unit	$200,160	2 Unit	$256,248	3 Unit	$309,744	4 Unit	$384,936
Sandoval County:	1 Unit	$200,160	2 Unit	$256,248	3 Unit	$309,744	4 Unit	$384,936
Torrance County:	1 Unit	$200,160	2 Unit	$256,248	3 Unit	$309,744	4 Unit	$384,936
Valencia County:	1 Unit	$200,160	2 Unit	$256,248	3 Unit	$309,744	4 Unit	$384,936
Santa Fe County:	1 Unit	$362,790	2 Unit	$464,449	3 Unit	$561,411	4 Unit	$697,696

In addition, the guarantee amount for loans guaranteed by the Department of Veterans Affairs (VA) is 25% of the conforming loan limit. Therefore, the maximum, no down payment, VA-guaranteed loan will be set at $417,000 for 2006.

MFA/FHA First Time Homebuyers Program
* 100% LTV -5.95% 0+0 (no points, no origination fees)
* 97% LTV - 4.95% 1+1 or 5.50% 0+0 (can be combined with small second mortgage at 5.495%)
* Home price up to $204,432
* Income Limitation- $54,200 for single person, $62,330 for family of three or more
* MUST be owner occupied (no investor purchases permitted)

Thanks to Bess Daunis, Senior Loan Officer, Legacy Mortgage, 505-857-2216, Bessdaun@aol.com for the above information.

Home Ownership Versus Renting

Nearly a full third of households are still renting...but if you are one of them, you could be paying a hefty price. Additionally, the children of the baby boomer generation are close to or at the home buying age, but these "echo boomers" could mistakenly decide to put off the purchase of a home because of all the noise about a "bubble" in home prices. Is there a "bubble"? The simple answer is "no". Even if interest rates move a bit higher, it won't be enough to cause a nationwide slide in home prices. The key to a healthy housing market is the job market. If the payment on a new home might be slightly higher due to increased interest rates, it generally won't stop someone from purchasing the home of their dreams...but if they feel their job is in jeopardy, it might be enough to stop them from making a move. So with the currently low levels of unemployment and the beefy gains in job creations, it looks like the housing market will remain vibrant. Although it will be difficult to sustain the double-digit gains that much of the country has seen, price declines are highly unlikely. Expect a more moderate rate of appreciation, perhaps closer to the historical 6-7% range, which is still very good.

It is important to note that housing tends to be localized. So if the job market in your area is weak, housing prices could under perform the rest of the country. But this talk of a housing bubble has been going on for a few years now, and those who were unfortunately victimized by continuing to rent instead of purchasing a home are painfully mulling over their missed opportunity. But is it too late? Even with the more moderate levels of appreciation expected?procrastinating on that home purchase could cost you a bundle. Let's look at an example. If you are paying rent at $1,500 per month and your landlord increases your payment by a modest 5% each year, you would wind up paying just about $100,000 over a 5-year period! Worse yet, after forking over $100,000, you still would have nothing to show for it. And speaking of having nothing to show for it - how about any improvements you might make to a rental property? It's not uncommon for renters to freshen up the paint, install new light fixtures or plant some nice flowers outside. But guess what?all your efforts, labor and the benefit of that improvement belong to the landlord, not to you. With the extensive variety of programs to help buyers obtain a mortgage with little to even zero down payment, the very same money could have been used towards home ownership. Even using a standard 30-year fixed program, a mortgage of $300,000 could be obtained with a total monthly mortgage payment - including property taxes and insurance - of around $2,200. Assuming a 25% tax bracket, this would be equivalent to the average amount spent on rent during the same period after your tax benefit. And the benefits of home ownership are quite considerable. Because the mortgage is being paid down each month, equity is being built. After 5-years, the $300,000 mortgage would be reduced to $279,000, adding $21,000 to your net worth. Home appreciation can add an even bigger chunk. If your home appreciates at a modest 5% per year, the value of a $300,000 home would increase to $383,000 after 5-years. Subtract the remaining mortgage of $279,000 and you have a whopping $104,000 of additional net worth! Even if the appreciation level were at 3.5% or half the historical norm, the result would be $77,000 of additional net worth. But if laying out the initial increase in monthly payment and having to wait for your tax benefit to show up next April is a tough nut to crack, the IRS wants to help. Instead of waiting to file for the tax benefits derived from your new home purchase, you can simply adjust the amount of your withholding. This allows you to have less tax withheld from each paycheck so you can handle the new mortgage payment more comfortably throughout the year. In essence, you are taking your tax refund as you go instead of letting Uncle Sam hold it all year, interest free.

Visit www.irs.gov and use the IRS withholding calculator. This very handy tool can quickly show you the effect a change in withholding will do to your net paycheck. Remember to balance this with the expected refund and it is always a good idea to check with your tax advisor. Don't be victimized by the bubble hype. Buying a home is a big step, but it is almost always one in the right direction.

Home Price Analysis for Albuquerque

I have recently received a report from the National Association of Realtors (NAR) titled "Home Price Analysis for Albuquerque." The report covers Price Activity, Affordablity, Local Fundamentals, and Risk Factor. The report also addresses the hot topic that is referred to as "The Housing Bubble" and how Albuquerque is not effected by it. If you like to look over statistics and charts, this is the report to read, just drop me an E-mail and request a copy, and I send you the report, in PDF File format, to look over. Just click below to open up an e-mail preaddressed to me, to request a copy.

Automated Telephone Systems and How To Talk To A Real Person!

The latest credit card TV commercial says it all...The main character can't get a hold of a live person at his credit card company to answer a simple question on his statement. He tries in frustration, but continues through an almost endless series of prompts and silly questions. He has to shout his password, "big boy", in a crowded subway car because the machine can't hear him. Finally he gets a live person, but loses his reception as the train enters a tunnel.

Technology has come a long way and most innovations are great, but sometimes there can be a little too much of a good thing. And, most would agree that without human interaction, this technology can be nothing more than a frustrating, time consuming process. Just think about the last time you phoned an 800 number to check a balance or ask a quick question about a charge. You picked up the phone, dialed the number, and just wanted to connect with a human. But, before you knew it you found yourself tangled in a phone tree with a synthesized voice instructing you to press one for English, two to check a balance, three to obtain last payment date, four to blah, blah, blah, and never received the prompt for a human. So, you pressed any number on the phone pad hoping to connect with a human and just dug yourself a bit deeper in the tree.

Well, there is a way to connect with a human. A frustrated group of volunteers, tired of the phone trees, have created a very helpful website. The website contains a database of "800" numbers for companies and helpful tips on how to connect with a human without raising your blood pressure, wasting your time, or getting lost in a phone tree. Simply go to www.gethuman.com and with just a few clicks of the mouse you can obtain a detailed list of "800" numbers and tips for each company listed on how to "get human" with a customer service representative.

Presently the website has a database of about 400 companies (and growing) listed either alphabetically by company name, or you can search by type of business. The business directory has everything from credit card companies to utilities. So let's see how simple it really is. Say you want to phone American Express, just go to the www.gethuman.com site, lookup American Express, dial the 800 number, and follow the "Get Human" instructions to hit zero repeatedly and viola, it works! Additionally, after using this feature, you can quickly rate each company by clicking on the company name. This will allow "Get Human" to monitor the effectiveness of the express method and rate the overall customer service for other individuals to view.

BELIEVE IT…OR NOT?

Could it be true? Microsoft and AOL have merged…and all you need to do to help them with their market research is to forward an email? And then Bill Gates will send you a huge check to reward you for your services? And this time, it's definitely real, because the person at the beginning of the email chain named "pdiddy234" really did receive a check! It's true!

Whoa. If you believe this one, there are all kinds of unsavory folks out there waiting to dish you more of the same. It's just like Mom and Dad used to tell you - if it sounds too good to be true, it probably is. Scammers, spammers, phishers…they're out there in full force, and waiting to jump into your inbox, hoping they can rope you, your friends, and your family into their nasty corral. They pull at your heart strings with notes about missing or sick children or money needed for seemingly good causes…but then may attempt to nab your personal information to take advantage of your great credit. And worse yet, they often do it so well that you feel the need to pass this "important" or dramatic information along to all of your friends, family members, colleagues, and sometimes clients. But what if you passed along information that created a financial hardship for someone you know? No matter how legitimate an email looks, it pays to do a little research and get the facts about emails before you hit forward.

Let's take a look at two easy sites you can use to check those emails out…or just visit to see some of the funny, interesting, and downright scary spam emails currently floating about the net. You can get all of the dirt on the emails that you are receiving with just a few clicks of the mouse. You can visit www.truthorfiction.com to check the story out quickly and easily. Categories of topics are clearly listed, along with their determination of if the email story is indeed Truth…or Fiction. This site also lists many of the current viruses and worms traversing the internet, and gives you tools and information to help remove them.

Another great site is www.snopes.com, helping you easily find out if the email you received is the truth, a hoax, or something in between. Simply hit the "Inboxer Rebellion" icon, then choose the topic that the email may fall under (e.g., boycotts, charity, missing and sick children, petitions, phishing expeditions, etc.), and each claim listed under that category will be marked with a color-coded indicator. For example: green identifies true statements, red identifies false statements, and yellow identifies statements of undetermined or ambiguous veracity. Treat the findings like driving a car, green means go and red means stop. So, if the email you receive is marked with a green dot, feel free to forward on, if red trash it, and if yellow, do a bit more research before passing it along…or do your email list a favor and just delete it.

Additionally, think twice before sending the poems, stories and clips that tell the recipient to send on to more people within a certain period of time, so that they will enjoy good luck, prevent disaster, meet the person of their dreams…etc. Do your friends really appreciate receiving these? And how does this reflect back upon you? It may be all in fun, but think twice before blindly hitting forward.

We all like to share valuable, interesting or funny information, or attempt to help someone who appears to be in dire need. And it is so easy to go into your address book, choose the emails of recipients and just hit forward. But taking the time to do a little research first and think twice before forwarding will save you money, time…and perhaps even a friendship.

WHAT'S IN YOUR WALLET THIS HOLIDAY SEASON?

If you're like most Americans, quite a few credit cards, that are already getting warmed up for upcoming gift buying sprees. In recent years, there has been an explosion in the number of credit card issuers, and perhaps more confusingly, the types of rewards being offered with those credit cards. So now, not only do you need to consider the rate and terms of your credit card...but what rewards or other benefits it offers. So what types are out there - and which is best for you?

Airline Miles: If you travel frequently, then maximizing your airline miles may be the very best reward. And if you primarily fly on a single carrier, you will do the best to take their affiliated credit card, as they typically offer 'bonus' opportunities to earn extra miles. If you do fly multiple carriers, you may need to use another option, but most reward cards offer airline miles as a choice. But watch carefully, as there are usually restrictions or blackout dates on when you may be unable to use your rewards-earned airline miles.

Cash Back: Discover was the first card to offer a cash back incentive program, and in fact, that marked the beginning of rewards programs in general. There are several items to consider when focusing in on cash back cards, most importantly being the fine print. Some of the better cash back offers do have tiers where you do not earn the most cash back until after certain amounts of spending on a yearly basis. So if you do not use your credit card very often or do not spend enough to make the required spending levels, you can lose out.

Store Cards: Cards issued by particular merchants can be some of the most valuable cards out there if you are a frequent shopper at that store. Typically, you will be given special offers or invitations to sales events, discounted prices, even up to 5% cash back or earned gift cards with that store.

Points Cards: Many rewards cards offer general purpose points that can be redeemed for a wide variety of items, including airline miles, cash back, gift cards from a variety of places, gifts to charity or simply merchandise. These cards can be very beneficial due to the flexibility that they offer - but here are a few general suggestions.

First, do not buy merchandise directly from the reward program. These products, often electronics, are routinely of poor quality or old models. Best way to purchase is to redeem your points for a gift card at a store you can buy the item at, which generally provides more bang for your points than straight cash back anyways. Next, look carefully at all of the reward levels, as sometimes you can get a better reward ratio if you save up your points over time. For example, 1000 points often translates to a $5 gift card, but saving up 6000 points may translate into a $50 gift card - ten times the value for only six times the points! Last, some vendors offer a statement credit versus a cash rebate - and generally offer a higher dollar amount for a credit rather than cash, although the money spends just the same.

The most important advice is to look carefully at the cards you are presently carrying - and know the terms and benefits. If you would like me to help you look over your credit situation in general and ensure that your debt is positioned properly - just give me a call. I am glad to help, and have strategies and suggestions that might make your credit situation much merrier this holiday season.

The Mortgage Market View...

"THERE WAS A TIME WHEN A FOOL AND HIS MONEY WERE SOON PARTED...BUT NOW IT HAPPENS TO EVERYBODY." Adlai E. Stevenson

The latest Retail Sales numbers showed the consumer is still out there spending...but many of our expenditures have gone up right under our noses, without us getting any extra enjoyment out of them. Rising gas prices, increased interest rates for borrowed money, higher minimum monthly credit card payments...expenses are getting higher every day, and it may be crimping our normal monthly spending style. And not knowing where your money is going each month often gives you a general sense of unease when your head hits the pillow at night...and may eventually cause you a major financial hardship.

There are many phenomenal budget programs available for your computer, such as "Quicken" or "Money", but starting with even a little simple planning can put your mind at ease and allow you to spend, knowing that you have control of your monthly income and expenses. Don't worry if the word "budget" gets you feeling uneasy and makes your palms sweat - hey, relax. Just think of a budget as you would a healthy diet. You don't have to starve, but you may just have to cut back on a few tasty expenses to accomplish your goals. And who knows...you may actually be better off than you thought, and can splurge a little. Let's take a look.

A good budget is written down and includes as much information as possible. Start by determining your current monthly income. Use the net income (amount received after taxes and any insurance benefits are deducted) and anything additional such as part time work, interest, rental, or bonus income. Next, determine your monthly expenses. Obtain and keep a receipt for every item purchased, especially if you frequently use cash for purchases. Receipts should include everything from groceries to Starbucks coffee...even minor purchases can add up quickly. Although you usually need to have some pocket cash on hand, many people choose to use debit or credit cards more often than cash, purely to have a better record of money spent. At the end of the month grab the receipts, your checkbook, and any credit card statements and start categorizing your expenses.

Expenses should be classified into the following categories:

Household - this would include rent or mortgage, utilities (gas, electric, water, etc.), cable television, Internet, phone, and any additional items such as a housecleaning service or pool service. This category could also include the many things you frequently buy for your home such as paper towels, cleaning products, plastic baggies, lawn and garden supplies and the like.

Food - separate food expenses by groceries and dining. Dining out would include lunch and dinner expenses for every member of the family.

Transportation - this would include all expenses related to an auto (e.g., auto payment, insurance, fuel, and maintenance). Additionally, include public transportation, tolls, and parking expenses.

Healthcare - include monthly health care fees such as medical, dental, prescriptions, and insurance co-pays.

Looking good - all of the items that make you, you. Clothing, shoes, dry cleaning, toiletries, haircuts, manicures, etc.?

Entertainment - include all of the "just for fun" items. Movies, concerts, vacations, subscriptions, sporting event tickets, and hobbies.

Miscellaneous - include all additional monthly expenses such as banking fees, credit cards, savings, education, gifts, donations...and don't forget pet expenses.

It is important to note, some expenses will vary on a monthly basis and an average will need to be calculated. For example, utilities can change each and every month. To come up with the average, simply add the actual amount paid for twelve months and divide the total by twelve to create a monthly average - and adjust as needed over time. Additionally, any expenses such as insurance premiums that are paid annually should be divided by twelve to create a monthly average as well.

Once all items have been categorized and listed, simply total the income and subtract all of the expenses. The remaining number will clearly determine if you are coming up short, breaking even, or have money left over. If you have money left over, meet with your financial planner and discuss investment strategies that will maximize those extra dollars.

If you come up short or barely break even, it is important to determine areas that you can trim expenses. Look at trimming dining out, entertainment, or looking good expenses. Although it may sting a little in the short run, you'll know that you are on the path to a great financial future.

If cutting expenses still does not provide enough cash flow to help you sleep better at night, contact me for a complimentary loan and financial analysis. We can work together and decide if a referral to a great financial planner who can help you with your budget is a good fit right now, and there are also many great loan options available, which may help provide the cash flow plan that will put your mind at ease and allow you to build your financial future.

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The information on this page is presented as a service by Patrick Montrose - Realtor.

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