PAM DENT

Jump into Greener Pastures


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[email protected]

Mortgage Closing Scams

The American bank robber, Willie Sutton, was asked why he robbed banks and his answer was “because that is where the money is.” During his 40-year career, he stole about $2 million but Internet scammers are stealing many times that amount in phishing schemes preying on unsuspecting home buyers.

These crooks know where the money is because buyers have the down payment and closing costs and are expecting to transfer it to the close the sale of their home. The FBI, in their 2018 Internet Crime Report, stated victims lost over $149 million and the CFPB estimates the losses at over $1 billion as a result of fraud in real estate transactions. The scammers want to take advantage of the situation while it is still in the buyer’s account.

Commonly, during the closing process, scammers will send spoofed emails to homebuyers from someone they expect to hear from regarding the transaction like the real estate agent or the settlement agent. They will include false instructions for the closing funds.

Following these suggestions can help to protect you and possibly, avoid scams:

Call before you click to verify the wiring instructions to transfer funds. DO NOT use the phone number or email in the email request. Use a trusted source, preferably, in person, of contact information.
Confirm everything independently with your real estate agent and closing officer. Confirm the actual instructions with the bank before transferring money.
Verify immediately, within four to eight hours, with the title company and real estate agent that the money was received. If it has not been received, notify the bank immediately to determine if it can be cancelled.
If you believe you have been the victim of a phishing scheme, call your bank immediately and ask them to issue a recall notice on the money transfer. File a complaint with the FBI at www.IC3.gov and report it to your local FBI office.

The Consumer Financial Protection Bureau has released two documents in an effort to inform consumers about wire fraud scams that commonly occur during closings: Mortgage Closing Checklist and Mortgage Closing Scams.

This is for information purposes only and should not be considered legal advice.

Your Charlottesville Home and the Property Tax Deduction

Your Charlottesville Home and the Property Tax Deduction

Important Information to Verify with Your Lender

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If you have a mortgage with an escrow account to pay your property taxes and insurance for your Charlottesville home or Charlottesville horse farm, you expect the company servicing your loan to pay this year’s taxes during this year so that you can deduct them on your 2014 income tax return.  After all, your monthly payment includes 1/12 the annual amount so there will be money available for them to be paid on time.

IRS requires that expenses must actually be paid in the year that a deduction is to be taken.

The predicament occurs when you’ve made your payments but the mortgage company didn’t pay the taxing authority in the tax year they were due.  If they paid your 2014 taxes in January of 2015, they wouldn’t be deductible for you until you file your 2015 income tax return.

 

Verify with your lender after you make the December payment that they did indeed pay your property taxes.  The question for your lender’s customer service is: “Have you or will you pay the 2014 property taxes this year so I’m eligible to deduct them on my 2014 income tax return?” 

Mortgage – FHA and VA Assumptions

FHA & VA Assumptions

Not many buyers have assumed a mortgage in the past 25 years. Most people think it was because FHA and VA in the late 80’s began to require that buyers qualify for the assumptions. Not having to qualify for a mortgage would certainly benefit certain buyers.

If a homeowner must qualify for an assumption like a new loan, they’ll generally choose the mortgage with the lower interest rate.  Over the past 25 years, rates have been trending down but it appears that rates have bottomed out and will gradually increase.   As they continue to rise, the lower rates on the FHA and VA loans created in the last few years will appeal to buyers even if they do have to qualify for the assumption.

There are significant advantages to assuming one of these government insured mortgages if the current interest rate on a new loan is higher:

1. Mortgage is further into amortization schedule
2. Lower interest rate loans amortize faster than higher interest rate loans
3. Lower closing costs than a new mortgage
4. Easier to qualify than on a new mortgage
5. No appraisal required

FHA assumptions are only allowed as owner-occupied residents. The borrower must meet current FHA guidelines for borrowers. The total debt ratio including house payment to be assumed cannot exceed 41% of borrowers’ monthly gross income.
VA loans are also assumable with buyer qualification. However, in order for the veteran Seller to have their eligibility reinstated, the buyer must also be a veteran with eligibility.

A 1% difference in the current rates and a lower assumable mortgage rate begins to make it very attractive to assume a mortgage. When the differential becomes even greater, assumptions will become more prevalent than they’ve been in over twenty years.

Mortgage shopping Guidelines

If you are a first time homebuyer, shopping for a mortgage can be an intimidating and overwhelming process.  It helps if you know in advance what to expect and what you will need to do.

  • Obtain your credit report and take action to make any necessary repairs to your credit.
  • Shop for a mortgage.  Don’t just go to one lender.  Different lenders have different programs.  You need to find the program that best suits your particular financial needs.  Check with mortgage brokers, mortgage lenders, credit unions as well as banks.  Also check and see what mortgage or downpayment assistance programs exist in your locality and if you qualify for any of them.
  • Find out the total costs involved in each loan: monthly payment, annual percentage rate (APR), the number and cost of points, broker, origination and underwriting fees, administrative costs, mortgage insurance, and commissions, escrow and closing costs.
  • Check the terms for different kinds of loans; the amount of down payment, the term of the loan, and whether the loan is a fixed or an adjustable mortgage and what are the terms of each.
  • Negotiate.  Ask the lender if they can offer better terms.
  • Once you have decided on the loan you want, you may want to obtain a rate lock.
  • Obtain a written loan comittment.

Read the article Beginner’s Guide To Mortgage Shopping in Realty Times.

I would be happy to talk with you about any questions that you might have about the Charlottesville, Virginia real estate market.

Click here to search all homes for sale in Charlottesville, Virginia, Albemarle County and Central Virginia.

Shopping For Real Estate in Central Virginia – Lock in Your Interest Rate

If you are shopping for a mortgage in today’s volatile mortgage market, it is a good idea to lock in the interest rate and loan costs.  In the first half of 2008 interest rates ranged from 5.48% in January to 6.45% recently.  The purpose of a rate lock is to protect a home buyer from rising interest rates by guaranteeing the interest rate that your mortgage will have.  Otherwise, by the time your purchase has closed if rates have risen, a buyer could end up with a mortgage payment that they could not afford.  since the lock is for a specific period of time, usually from 15 to 60 days, it is necessary to be sure that your home purchase can close within that time period.
For a more in depth article read Mortgage Rate Locks Become Crucial in Realty Times.

If you would like information on the Central Virginia real estate market, I would be glad to assist you.

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Contact Pam

Pam Dent
Phone: (434) 960-0161
Email: [email protected]
Gayle Harvey Real Estate Inc.
198 Spotnap Rd, #C-5,
Charlottesville, VA 22911


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