Paula Henry

This is the top of the main-content

Archive for July, 2008

Use The Inflation Calculator To Check If Your Income Is Keeping Up With “Life”

July 28th, 2008 categories: Indianapolis Real Estate News, Real Estate Financing

Use the Bureau of Labor Statistics inflation calculator to see how 2008 dollars compare to other yearsThe phrase “Consumer Price Index” can be intimidating and unclear to Americans.  It’s an economic term, after all, and not a part of everyday American language.

It even has its own abbreviation to add to the confusion — CPI.

So, when a layperson hears that “CPI is rising”, it’s not always clear what it means. The tendency, therefore, is to ignore the news.

This is one reason CPI is commonly substituted with the more down-home expression of ”Cost of Living”.

In contrast to the term “CPI”, the phrase “Cost of Living” is a lot more clear.  When people hear that the Cost of Living is rising, instinctively, they get it.  And now they can see how it works in numbers, courtesy of the Bureau of Labor Statistics.

The Inflation Calculator at the government Web site helps a person compare household income to the changing Cost of Living between any two years since 1913.  For example, a U.S. household earning $48,201 in 2007 would have to increase that income to $50,868 just to keep up with “life”.

CPI touched a 17-year high in June, jumping 5.000 percent year-over-year.  Without a 5.000 percent increase an income, a household falls behind.

Tags: ,

Authored by Paula | Discussion: No Comments »

Indianapolis Real Estate at the Bottom of the List

July 21st, 2008 categories: Indianapolis Real Estate News, Indy Home Buyers, Indy Market Trends

Home buyers seem to be concerned about the future value of the home they buy today. And, rightfully so! The national media makes it sound like all real estate markets are in deep trouble. Not the case; all real estate is local. If you are in the market to buy a home in Indianapolis, you will love the latest news from PMI Group.

PMI Mortgage Insurance Company recently released it’s Market Risk Index of the 50 largest Metropolitan Statistical Areas (MSA). These are the people who insure residential mortgage loans.

In plain english, the company rates major cities for the risk of property values being less in two years than they are today. At the bottom of the list is Indianapolis-Carmel. They rate the entire area of Metropolitan Indianapolis. In this case, it’s a good thing to be at the bottom.

The Indianapolis-Carmel area has less than 1% chance of property values declining in two years.

This is the list of cities who rank at the bottom.

  • Milwaukee-Waukesha-West Allis, Wisconsin
  • Cleveland-Elyria-Mentor, Ohio
  • Austin-Round Rock, Texas
  • Denver-Aurora, Colorado
  • Charlotte-Gastonia-Concord, North Carolina-South Carolina
  • Kansas City, Missouri-Kansas
  • Columbus, Ohio
  • Cincinnati-Middletown, Ohio-Kentucky-Indiana
  • Indianapolis-Carmel, Indiana
  • San Antonio, Texas
  • Houston-Sugar Land-Baytown, Texas
  • Pittsburgh, Pennsylvania
  • Dallas-Plano-Irving, Texas
  • Fort Worth-Arlington, Texas

To read the full report, click here.

Related Posts:

Indianapolis Real Estate Due to Bounce Back

Compare Real Estate Markets in the US

Indianapolis Ranked 6th Best Bargain Market

 

Tags: ,

Authored by Paula | Discussion: 4 Comments »

Don’t Cash That Check

July 20th, 2008 categories: Indianapolis Real Estate News, Real Estate Financing

  

Another Repurcussion of the Indianapolis Property Tax Issue

We all love receiving an unexpected check in the mail. UsuaBank_check_scanning_2lly, our first response is, “Great, a refund”. Well……….if you are one of the Indianapolis homeowners who recently received  a bonus check from your mortgage company, don’t run to the bank to cash it until you know the repurcussions of doing so.

Here’s the deal – Our infamous Indianapolis property tax issue has created yet another payment balancing fiasco -this time for your mortgage company.

You see, the C-bill or reconciliation bill recently mailed was also mailed to your mortgage company. Your mortgage company has no idea the bill was a reconcilliation bill; they only know they have money set aside in an escrow account to pay your tax bill when it arrives. Their paperwork is computer generated and it is highly unlikely there is someone auditing your account – that is, unless you get behind in your payment.

Real Life Example

So, what’s happening – let me give you a real life example. My daughter called me two days ago to ask me if the check she received for $1500.00 was actually “hers”. She knows I have been trying to educate people about the property tax situation in Indianapolis for the last few years.

She said her mortgage company sent her the check and her payment was recalculated at $200.00 less per month. Exciting, yes! Reality, NO! The mortgage company recently paid her $200.00 reconcilliation bill as if it were her first half taxes. Her first half taxes are normally $1200.00. The computer did what it is programmed to do; kicked out a refund and reset the monthly payment.

Yes, she can cash the check, but what will happen. In a few months, when the actual property tax bill comes out, there will be no money in her escrow account for the mortgage company to pay the bill. They WILL pay the bill, because they don’t want a tax lien on the home, but next year, when the computer realizes there is not enough money, they will charge her double or she will have to pay the shortage to keep her payment at the current amount.

By the time the second half taxes have been mailed out, she will owe about $2500.00, just to keep her payment the same as it was before the reconcilliation bill.

What To Do With The Check

You will probably have a difficult time explaining the situation to someone at the mortgage company. Heck – I can’t even explain it so it makes sense

My suggestion to my daughter was to either send the check back as a credit to her escrow account, which may or may not work. Mortgage companies are only allowed to keep a certain amount in an escrow account. You may be able to work something out with your mortgage company.

If that doesn’t work, I told her to send the additional amount in her payment each month and make sure it is applied to her escrow account. Instead of paying the current $900.00 payment – she should continue to pay $1100.00, as she always has. If not, next year her payment will probably go up to about $1500.00 for a year, until she has paid the back taxes. Her mortgage company will recalculate the difference twice – once for the next years taxes and once for the back taxes owed to her escrow account.

This solution still may not solve the problem, though. Our May tax bills should be out in the next few months, then the November tax bills will be late. Hopefully, she will have enough in her escrow account, so the computer doesn’t kick out another “alert”.

My prediction is, it will continue to be an accounting nightmare for mortgage compaies and homeowners until 2012, when we finally get to the 1% cap on property taxes. At that point, it will probably turn into an Assessors nightmare, but that’s a story for another time.

Please note, this only applies to Indianapolis residents in Marion County, not all of the Metropolitan Indianapolis area. Here’s some links for to help answer questions you may have about property taxes.

Marion County Tax Estimator

Citizens Guide to Property Taxes

Related Posts:

Indianapolis Property Tax C-bill

Indianapolis Property Taxes

Tags: ,

Authored by Paula | Discussion: No Comments »

Avon Indiana Real Estate

July 18th, 2008 categories: Avon Real Estate

Search Avon Real Estate by Price

Less than $100,000

$100,000 - 150,000

$150,000 - 200,000

$200,000 - 250,000

$250,000 - 300,000

$300,000 - 350,000

$350,000 – 400,000

$400,000 – 450,000

$450,000 – 500,000

$500,000 – 550,000

$550,000 – 600,000

$600,000 – 700,000

Over $700,000

Avon Indiana Condos

Search All Avon Indiana Homes

Search All Vacant Land Available in Avon

 

Tags: ,

Authored by Paula | Discussion: No Comments »

FHA Mandatory Loan Fees Increase For Some, Fall For Others

July 18th, 2008 categories: Indianapolis Real Estate News, Indy Home Buyers, Real Estate Financing

The FHA risk-based pricing matrix

For the first time in its history, the FHA changed its funding fees and mortgage insurance structure this week.  FHA-insured home loans are now subject to a risk-based pricing adjustment, as shown by the table above. 

Because of risk-based pricing, FHA home loans are now more expensive for borrowers with less-than-ideal credit profiles, and less expensive borrowers with perfect ones.

Prior to the changes, most FHA borrowers paid an up-front fee of 1.500 percent, plus on-going annual mortgage insurance payments equal to one-half-percent on the amount borrowed.

FHA-insured mortgages have grown in popularity this year because, while the guidelines of other mortgage products have tightened, FHA program guidelines have remained loose.  FHA allows 3 percent downpayments on purchases, for example, and allows “cash out” refinances to 95 percent.

Fannie Mae and Freddie Mac do not.

(Image courtesy: FHA.gov)

Authored by Paula | Discussion: No Comments »

« Previous Entries