Spring Cleaning Your Finances

Winter’s over and spring is (finally) upon us! For many of us, the warmer weather also means spring cleaning.  This year, CNN Money offers consumers some helpful tips to help you spring clean your finances.

The CNN experts suggest: “Consolidate accounts to boost your odds of earning higher interest and lower your fees, and be sure to shred old financial documents you no longer need.”

This video is available on CNN Money’s website, as well as their Youtube channel.

Weigh In on the CFPB’s Draft Monthly Mortgage Statement

If you have a hard time making sense of everything included in your monthly mortgage statement, you now have a chance to help get that changed.  Earlier this week, the Consumer Financial Protection Bureau (CFPB) announced that they are seeking public input on a draft monthly mortgage statement designed to make it easier for homeowners to understand their loans and help avoid any extra costs or fees.

According to CFPB Director, Richard Corday:

“This draft statement shows consumers the breakdown of their mortgage payments – what money goes to the loan principal, interest, and fees…This information will help consumers stay on top of their mortgage costs and hold their mortgage servicers accountable for fixing errors that crop up. Given the widespread mortgage servicing problems we’ve seen over the past few years, consumers need clear disclosures they can count on.”

The draft, pictured below, is also available via CFPB’s website.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, most borrowers must receive periodic statements with specific information about their account, most typically typically from their mortgage servicers.  According to CFPB. statements must include information regarding:

  • the principal loan amount
  • the current interest rate
  • the date on which the interest rate may next reset
  • a description of any late payment and penalty fees
  •  information about housing counselors
  • a telephone number and email address that may be used to contact the mortgage servicer

Currently the CFPB is testing out a prototype monthly statement with consumers to make it as user-friendly and useful as possible. In a press release posted on their website, the CFPB explained:

“In order to broaden the input it receives as it develops a standard statement, the CFPB is also posting the prototype online to solicit general feedback from consumers, industry stakeholders, and other interested parties. The public will have further opportunity to provide comment on a version of the draft standard form when CFPB proposes a rule on it later this year. The development and publication of a consumer tested and publicly-vetted monthly statement will benefit consumers and facilitate compliance by mortgage servicers and creditors.”

The prototype is scheduled to become available for public comment sometime this summer.

For more information about the draft statement and how to comment, visit: http://www.consumerfinance.gov/a-model-form-for-mortgage-statements/

Freddie Mac and Fannie Mae Loan Limits for 2012

The 2012 loan limits for Freddie Mac and Fannie Mae have been released.

HousingLogic.com reports that the largest loan guaranteed by Fannie Mae or Freddie Mac will remain the same size in 2012 everywhere in the United States, except for in Fairfield County, Connecticut, where the limit will rise to $625,500, which is the same maximum loan size available in other high-cost areas.

According to HousingLogic, “In areas where homes are more affordable, the conforming loan limits will stay the same in 2012 for home buyers and home owners who want to refinance:

To check the loan limit in your area, visit the Federal Housing Finance Agency website.

Same Price, Lower Cost

According to the KCM Blog, an increasing amount of research continues to build the case  that it makes great financial sense to purchase a home today.

Whether it be rent vs. buy ratios, income-to-price ratios or income-to-mortgage payment ratios, purchasing a home right now is a bargain compared to historic norms. Now we want to look at the COST of a home today compared to pre-peak prices.

According to the most recent S&P Case Shiller price index, residential real estate values have returned to 2003 1Q PRICEs. That, in itself, says something. However, when you factor in mortgage rates, the case for buying a home today becomes even more compelling.

In 2003, 30 year mortgage rates stood at 5.88%. Today, they are 4%. How does that impact the actual COST of a home? On a home purchased for $250,000, here is the difference in monthly cost:

That means you’re saving $285.30 a month, $3,423.60 a year and $102,708 over the life of a 30 year mortgage.

You buy the home for the same PRICE but the COST is over $100,000 less.

Maybe this is why so many financial advisors are saying that this could be one of the greatest times in history to purchase a home.