A recent issue of Wall Street Journal's SMART MONEY focused on three towns in Delaware and profiled their affordability for retirees. As a whole, the tax situation favors retirees because there is no sales tax, Social Security benefits are tax-exempt, income tax rates max out at 6.95% and seniors can exempt $12,500 of investment and pension income from state taxes.
Philadelphia is just a short drive from northern Delaware, and a couple of hours drive in either direction takes you to Baltimore, Washington D.C., and New York City.

If you choose to move to the beach, remember that Rehoboth Beach is called "the Nation's Summer Capital," and can be pricey. The median home costs $650,800 and the cost of living is 81% higher than the national average.

Historic Old New Castle, on the other hand (the main street is seen at the right) has a median home price of $210,000 and a population just under 5,000 for the whole city of New Castle. It has many historic homes, sits on the Delaware River with a view of New Jersey, but you will need to travel a mile or so down the road to get to a large grocery store, and it's about a 15 minute drive from Wilmington, the State's largest city.

Another town in Delaware that was profiled was Newark, which is the home of the University of Delaware. This brings many activities, plays, musicals, a walkable downtown with over 30 restaurants, parkland, walking and bike trails. One of my favorite activities is Ag Day, held each year in April near the Agriculture buildings at the University. The picture at the left is of Miss New Castle and a Paws for Life dog, who were attending the Ag Day festivities. The University Botanical Gardens hold a big plant sale that day in the greenhouses, and I always come home with some new specimens for my garden. Newark has a population of almost 30,000 and a median home cost of around $270,000. The University is in the process of developing the closed Chrysler plant location for high tech and energy saving companies, and utilizing the rail tracks and Amtrak station in town.

So what are you waiting for? Hop on I-95, cross those bridges, get those Amtrak tickets or tickets to Philadelphia International Airport, and come to DELAWARE!!

Guarantee Fee Increase will Negatively Impact Home Loan Rates

In December 2011, Congress reached a last-minute deal to fund the payroll tax cut extension. The payroll tax extension will provide a 2% tax reduction for individuals earning up to $106,800, so the tax extension will be very helpful for many Americans who are struggling during these tough economic times. But like so many things in our tangled economy, there's a flip side. In this case, the tax cut deal has a rippling effect that will impact the mortgage world.

Here's what's happening and what it means to home loan rates:

What is happening and why? To put it bluntly, the passage of the payroll tax cut extension is being funded via a mandate to Fannie Mae and Freddie Mac (the nation's largest providers of mortgage money) to increase their guarantee fees or "g-fee's" by at least 10 basis points on the rate. So rather than giving a par rate of 4.00%, for example, the par rate is now increased by at least 10 basis points, or approximately 4.10%. But as you probably know...home loan rates are priced and offered in .125% increments, so this will most likely impact the consumer by .125% in rate. Whether you agree or not on the politics behind this cost being passed along to folks who are taking out mortgages, the Congressional Budget Office recently estimated that the increase will ultimately pay for about $35.7 Billion of the cost of the payroll tax extension.

What exactly is this "g-fee"? The guarantee fee or "g-fee" is an amount charged by mortgage-backed securities (MBS) providers, like Freddie Mac and Fannie Mae, to help protect against credit-related losses in the overall mortgage portfolio. In other words, it acts a lot like insurance and helps lower the overall risk...which means home loans can be offered at terrific interest rates to borrowers that have good – but not perfect – credit.

What exactly is the impact of the rate increase? For example, for a $200,000 home loan, the increased g-fee (assuming a .125% increase in rate) would equate to $250 more per year in interest, or $7,500 more over 30 years. Someone buying or refinancing a home can certainly choose to buy down the cost with cash up front – but most folks will not do this.

Who will this impact? The change will impact all new borrowers of Fannie Mae and Freddie Mac loans. The bill will also impact Federal Housing Administration (FHA) loans by increasing the annual mortgage insurance premium that borrowers pay by one-tenth of a percent.

When will it start? Officially, the increase to guarantee fees will begin on April 1, 2012. However, the increase is already starting to be seen in rate sheets right now, since home loans being originated now will likely not be closed, pooled and securitized until April...and therefore will need the increased g-fee priced in earlier.

How long will this be in effect? The increase will be effective through October 1, 2021.

The bottom line is that the g-fees will be going up...and this will impact homebuyers looking to obtain a home loan through Fannie Mae, Freddie Mac and FHA.

The good news is that home loan rates are still at historic lows right now, and it's a great time to purchase a new home or refinance. If you or anyone you know has any questions, please call or email!

John R. Thomas
Certified Mortgage Planner - NMLS 38783 Primary Residential Mortgage
248 E Chestnut Hill Rd
Newark, DE 19713
302-703-0727 Office
www.Delawaremortgageloans.net

Townsend Delaware Mortgages are provided by Primary Residential Mortgage located at 248 E Chestnut Hill Rd, Newark, DE 19713. The Branch Manager is John R. Thomas and he is a certified mortgage planner (CMP). He is the author of the book, Your Guide to Buying Your First Home in Delaware.

If you have questions about obtaining or qualifying for a mortgage loan in Middletown, Delaware then Call John Thomas at 302-703-0727 to have all your questions answered whether you are inquiring about purchasing a home in Delaware or refinancing your current home in Delaware. You can also APPLY ONLINE for a Delaware mortgage loan.

Townsend Delaware Mortgage Rates can change daily and are also based on the loan program you are going to use. If you would like to view weekly video updates you can view the YouTube Channel Delaware Mortgage Rates Weekly Update.

John R. Thomas
Certified Mortgage Planner - NMLS 38783
Primary Residential Mortgage
248 E Chestnut Hill Rd
Newark, DE 19713
302-703-0727 Office

Pike Creek Delaware Mortgages are provided by Primary Residential Mortgage located at 248 E Chestnut Hill Rd, Newark, DE 19713. The Branch Manager is John R. Thomas and he is a certified mortgage planner (CMP). He is the author of the book, Your Guide to Buying Your First Home in Delaware.

If you have questions about obtaining or qualifying for a mortgage loan in Middletown, Delaware then Call John Thomas at 302-703-0727 to have all your questions answered whether you are inquiring about purchasing a home in Delaware or refinancing your current home in Delaware. You can also APPLY ONLINE for a Delaware mortgage loan.

Pike Creek Delaware Mortgage Rates can change daily and are also based on the loan program you are going to use. If you would like to view weekly video updates you can view the YouTube Channel Delaware Mortgage Rates Weekly Update.

John R. Thomas
Certified Mortgage Planner - NMLS 38783
Primary Residential Mortgage
248 E Chestnut Hill Rd
Newark, DE 19713
302-703-0727 Office

City of Wilmington HAP program has been suspended indefinitely and doesn't appear that it will come back. The HAP program provided up to $10,000 for down payment and closing cost assistance for purchasing vacant homes in the zip codes 19801, 19802, & 19805. The City of Wilmington has given any people with current reservations of funds 60 days from the reservation to close the loan or they lose the money.

The City of Wilmington has stated that they will not be renewing the program and have directed prospect home buyers in Wilmington, Delaware that need down payment assistance to look at the State of Delaware mortgage revenue bond program which is commonly called the Delaware Bond Program. This program provides up to $10,000 as a a second mortgage for first time home buyers only that meet the income restrictions for the program. If you would like more information on the Delaware First time home buyer program through the state of Delaware you can call John R. Thomas at 302-703-0727, John is the branch manager for Primary Residential Mortgage which is one of the preferred lenders authorized for the Delaware Mortgage Revenue Bond Program for first time home buyers as well as the Delaware SMAL loan for down payment assistance.

If you need to be pre-approved for a Delaware mortgage loan or Delaware first time home buyer program, call 302-703-0727 or APPLY ONLINE NOW.

John R. Thomas
Certified Mortgage Planner - NMLS 38783
Primary Residential Mortgage
248 E Chestnut Hill Rd
Newark, DE 19713
302-703-0727 Office
www.DelawareMortgageLoans.net