Tag Archives: Brandon Nicely

How Is A Credit Score Broken Down?

Credit scores.  Can’t understand them, but without a good one – or lots of cash – buying a house is not attainable.

Without a good credit score, the best interest rates aren’t available to you.

Without the best interest rates available to you, homes at good values rapidly become unaffordable.

A while ago, Marianne Lane gave us a two-part series on credit scores.  I was cleaning some things up yesterday, and came across a visual of how a credit score is actually determined, and I thought this might be even more helpful.

Clear as mud, right?

Two quick points that I’ve noticed – (1) it seems that lenders are really looking at borrowers with 620 credit scores and higher, and (2) pay down any open accounts (credit cards, etc.) that you can, but don’t necessarily close them.  Your lender can help you with this as well.

Brandon Nicely Reminds Us – Again – About the First-Time Tax Credit

A question came in for Brandon Nicely on the blog over the weekend from Josh.  He wrote:

Q: Brandon, what problems have you seen first-time buyers experience in applying for their tax credit?

A: By now, most everyone has seen the basics of the tax credit:

  1. Sign a contract by April 31st, and close by July 1st
  2. If you haven’t owned a home for the last three years you’re eligible for up to $8000 back, and up to $6500 if you’ve owned your principle residence for 5 out of the last 8 years
  3. No repayment necessary if you live in the house for at least 3 years
  4. You can file an amendment to your 2009 tax return, and get the funds this year

That stuff’s simple.  But some of the information on the tax credit is not quite as clear.  Here are some other points to remember:

  1. You must file IRS Form 5405 with your tax return, and attach a copy of your settlement statement
  2. Must close on the new home before claiming the tax credit on your tax return
  3. It must be a primary residence (no second home or investment properties qualify)
  4. Properties purchased from a family member, or in-law, do not qualify

Feel free to call or email me if you have further questions, or need help obtaining the credit!


Brandon is a branch partner at Alcova Mortgage.  He enjoys doing his taxes, firewalking and competitive eating, but not necessarily in that order.  You can reach him at brandon@alcovamortgage.com, or 877-552-7150.

Brandon Nicely Recaps the First-Time Buyer Credit

From Brandon:

As we wind down to the expiration – again – of the first-time buyer credit, I thought it would be a good chance to recap some of the questions we keep hearing in my office regarding the credit.  Don’t wait until the last few days to get serious

If you’re looking at taking advantage of either the $8000 first-time buyer credit or the $6500 move-up credit, you must meet these guidelines:

  1. Must sign a contract by close of business on April 30th 2010 and close by close of business on June 30th 2010
  2. Must be your Primary Residence
  3. Must close before claiming credit
  4. Must file IRS 5405 with the tax return and you must attach a copy of your settlement statement to the return
  5. There’s no need to repay the credit unless one of the following take place:
    – You convert home to rental or business use within 3 year period
    – You sell home within 3 years
    – You foreclose on home within 3 years

People are asking questions about audits.  While I’m not a tax attorney – and I’d recommend consulting one – you’ll probably need:

  1. Mortgage statement with the property address
  2. Automobile registration matching property address
  3. Bank statement matching property address
  4. Pay-stub matching property address

Resources: If you have questions go to IRS.gov and search “first time homebuyer credit“.  If I can be of assistance, please contact me and let’s see how we can help.


Brandon is a branch partner at Alcova Mortgage.  He enjoys doing his taxes, firewalking and competitive eating, but not necessarily in that order.  You can reach him at brandon@alcovamortgage.com, or 877-552-7150.

How Interest Rates Work

Brandon Nicely wants you to know that interest rates aren’t quite as scary as one would think.  Here’s a video to prove it:


Brandon is a branch partner at Alcova Mortgage. He enjoys doing his taxes, firewalking and competitive eating, but not necessarily in that order. You can reach him at brandon@alcovamortgage.com, or 877-552-7150.

New Forms Make Understanding the Details Easier

wrote a couple of months ago about the new Good Faith Estimate and HUD-1 forms that went into effect on January 1 2010, and they’re here – they’re now in the system and home buyers and sellers will now see them being used.

The mortgage process shouldn’t be smoke and mirrors; for a long time, borrowers would hide fees in different places,

making it seem like a lender’s fees were lower when in reality they were charging the same – or more, in some cases – than their competitors.  That’s not an indictment of the mortgage industry, just an observation that, as with anything in life, there are snakes in the grass and unscrupulous lenders would take advantage where they could.  In reality, a borrower ought to be able to look at multiple lenders through the same lens.  The new Good Faith Estimate, and HUD-1, allow for that.

Personally, I can’t wait to start using these forms – they’ve been available to lenders for a couple of months now, but I haven’t seen anyone in the New River Valley area using them yet.  And speaking of lenders in the area, Brandon Nicely of Alcova Mortgage wanted to remind you:

One item that they actually left out of the Good Faith Estimate is total funds to close (they show closing cost but do not show total cash needed for closing anywhere on the form).

I’m reasonably confident that most borrowers would know that “total funds to close” is the amount of money that they’ll need to bring to the closing table, but nevertheless it’s worth pointing out.

“Looking Back, Looking Ahead” – By Sarah Cox, The Roanoke Times 12/27/09

Last Sunday, Sarah Cox wrote a post entitled “Around The Property“, and she followed it up this week with a piece entitled “Looking Back, Looking Ahead”.  While the article is supposed to be about what buyers should expect in 2010, it probably should also be titled “False Hope”.

Reflecting on the past year, broker Mary Wright of NRV Gateway Realty, Sales Director Diana Blair of RE/Max 8, and Brandon Nicely of Alcova Mortgage shared their thoughts about real estate in 2009.  Blair noted that in both September of 2008 and 2009, the average price per square foot of homes on the market was the same – $116 – indicating, to her, that sales prices held steady.

“Over a 15-month period, the percentage change was .8 percent or .008, which is good … we made it through the worse economic setback since the Depression with a slight change since the Depression with a slight change in price per square foot pricing.  The percent change for the last 12 months is up 4.5 percent.”

Wright reflected back to December 2005, pointing out that was when NRV Gateway first opened its doors.

“Business was brisk for us all back then.  Now, our national has weather a recession that has lasted over 18 months.”

But she hastened to add that the New River Valley has been somewhat insulated from economic downturns in the past, although every family in the area has been affected in some manner this time around.

“It has been difficult for sellers and agents alike.  Home values have declined and buyers still expect discounts,” she said.  It is a tough pill to swallow when buyers who bought at the top of the market now are discovering the pressure of dropping home values.”

“But”, said Wright, “this is a cyclical business, and this, too, will pass.  I think the events of this last year have been character building, and I’m hoping familiers will emerge strong[sic] than ever, with better savings strategies, and more supportive of each other.”

Nicely said 2009 will be “the year to remember” for anyone involved in real estate.  The government kept interest rates low, helping millions to refinance, although the new HVCC (Home Valuation Code of Conduct, which went into effect May 2009) appraisal process caused hurdles.

Nicely said the new code caused some appraisals to come in lower than expected, leaving some homeowners unable to refinance.  Then, more than 150 banks failed, causing underwriting guidelines to change.

On the positive side, the First Time Homebuyer Credit of $8,000, together with low rates, helped keep the mortgage industry alive in a “very tough economy,” he said.

While 2009 was a year of transition, said Nicely, he forecasts 2010 as the year of moving forward.

“We have seen most lending practices put in place, and now everyone can start to adapt to them,” he said.

This adaptation takes in account, he pointed out, that three years ago it was 360 degrees different.  He also said the homebuyers credit – which has been extended to April 2010 – will keep homebuyers signing contracts.

“The government has informed everyone they will not continue to buy mortgage-backed securities throughout 2010, like they did in 2009, so everyone should be prepared to see rates rise a half-point through June 2010 and another half-point by December 2010.”

Wright is more cautious about the first half of 2010, saying she’s been hearing that the first six months will be tough and the last half better.

“Sarah Bohn of Northwestern Mutual presented a graph showing economical milestones since the Great Depression,” she said.

Wright continued, adding that some of those “troughs” were deep and wide, covering years during the Depression.

“What really caught my eye tough[sic] was the sharp upswing immediately following those tough economic periods that seemed to soar even higher than the downturn.  This was repeated time after time throughout history.  I’m optimistic we will see history repeat itself.”

Nicely repeated the mantra that seems to be going around:  “There will be no better time to buy in history between now and April.”

Why?  He pointed out that rates are at an historic low, government is “handing out cash for signing a contract,” and prices are at their lowest levels in years.

Wright recalled “Shift,” a book by Gary Keller that recommends sellers trade up in a down market.

In Keller’s book, he writes, “There is only one certainty in the real estate business – that it is cyclical, and what goes up must come down.  ‘Shift’ teaches agents the foundational tactics that jump-start your business in tough times, and power it forward in good times.  ‘Shift’ is not about teaching agents how to have a good week or year; it is about showing them how to have a great career.

From last week

I appreciate enthusiasm, and while real estate in the New River Valley isn’t falling through the floor it’s not going gang busters, either.   I will continue to say that my enthusiasm in 2010 will be tempered.  Home buyers and sellers in the New River Valley need to pay attention to unemployment in our area – many areas of the greater NRV are really struggling, despite having unemployment rates lower than the national average.  Unemployment is going to be a huge component of where the New River Valley real estate market heads in the foreseeable future.

None of us have a crystal ball, but we have access to the same data, and the data shows that things aren’t exactly as reported.  Based on what’s available, 2010 will see continued opportunities for buyers and sellers as prices and interest rates move more towards center … plain and simple.  I disagree with Brandon in his assessment that there’s no better time in history to buy a home than right now.  While it’s true that mortgage rates are lower than they’ve ever been, home buyers should still be paying attention to falling prices and bringing money to the table.

And consumers don’t care what Gary Keller has to say to agents, do they?

Four Reasons To Consider Buying Your First Home

Why should I look into buying my first home?  Let me give you 4 quick reasons:

  1. Increase net worth – In a comparison of renters versus homeowners, the Federal Reserve Board of Consumer Finance found that the average net worth of renters was $4,000, while that of homeowners was $184,400.  A home plays a huge part in your financial future.
  2. Tax deduction – One of the largest tax deductions available is the amount of interest paid on a mortgage.  On a $150,000 loan, at a 5.5% interest rate, you can write off as much as $8,000 as deductions.  Consult your tax adviser to determine your status.
  3. Long-term Appreciation – Over the last few years, home prices have corrected and become more affordable.  While that is good news for buyers, it has overshadowed the long-term appreciation on a home’s value.  From 1950-2002, US home prices appreciated at an annual growth rate of 4.8%.  If you only use a 3% appreciation rate on a home purchased today at $150,000, that home will be worth $364,000 in 30 years.
  4. The government is handing out $8,000 to first-time buyers if they purchase a home and keep it for 3 years.


Brandon is a branch partner at Alcova Mortgage. He enjoys doing his taxes, firewalking and competitive eating, but not necessarily in that order. You can reach him at brandon@alcovamortgage.com, or 877-552-7150.

“Around The Property” – By Sarah Cox, The Roanoke Times 12/20/09

Sarah Cox of The Roanoke Times recently did a piece reflecting on the real estate market in 2009 – it looks like it’s going to be a multi-part story, below is copy of the first part.  Images embedded are my own, taken from the Virginia Employment Commission website.

How was 2009 in real estate terms?  Those who wanted to buy were sitting pretty.  Those who needed to sell learned that positioning their homes for a buyer’s market was a new experience compared to previous years.

According to Diana Blair, sales director for RE/Max 8, buyers are now paying 95 to 99 percent of the list price.

“We do not overprice homes.  We list them to sell.  Buyers need to look at homes in their price ranges in our area market,” she advised.

Blacksburg/Christiansburg/Radford unemploymentBlair said homebuyers looking at national trends think that they can make “bargain offers,” but in the New River Valley, that may not always be the case.

“While that trend may be a reality in some distressed markets, it is not a trend in the NRV market,” said Blair.  “The good news for both buyers and sellers is that buying a home here is a safe and great investment since our market does not tend to fluctuate.”

L. Garrett Weddle, a REALTOR with Coldwell Banker Townside, agreed, saying that he looks for an improved market next year.

“At the beginning of the downturn, it was very difficult to get sellers to realize they had to reduce their price expectations.  Now I find it difficult to get buyers to increase their price expectations.  In my mind, that may indicate we have bottomed out and can look for better expectations on both sides this coming year.”

Jeremy Hart, a REALTOR with NRVLiving/Coldwell Banker Townside, described 2009 as a year of “tempered enthusiasm.  While most areas of the country have seen major price declines coupled with drastic increases in short sales and foreclosures, the greater New River Valley residential market continues to be relatively stable.”

He cautioned that because the New River Valley is slightly behind other areas of the state (notably Northern Virginia and Hampton Roads), “it’s not time to say we’re completely out of the woods.”

Hart said he spoke with Brandon Nicely at Alcova Mortgage about this topic, and Nicely’s take was, “Since we didn’t see a lot of Pay Options ARMS (adjustable rate mortgages) during the 2004-07 rush, he doesn’t expect a major swing in refinances other than from those who are current and paying on their existing mortgage.”

Hart reminded readers that the main topic of conversation this past year was the First-Time Homebuyers Credit, which has been extended to April 2010.  “The credit has certainly helped get some people off the chain link fence, but it’s not been without criticism, either, namely from people wondering just where the source of the money to repay these credits will originate,” he pointed out.

His final point is that buyers had their pick of the market in 2009, and currently inventory levels (as of Dec. 1) were at a 10-month level.

“While buyers aren’t getting homes for pennies on the dollar, it does mean that sellers need to be more aware of price than ever before,” he said.

Steve Bodtke, a REALTOR with RE/MAX 1st Realty in Blacksburg, called it Economics 101:  “When you consider low rates,County Unemployment good prices, and (potentially) a tax credit of up to $8,000, there is no reason you should not at least consider making a purchase or a move to a home more fitting to your needs.”

For this reason, he said he thinks 2010 will be a very good year with reduced inventory in the New River Valley market.

I appreciate enthusiasm, and while real estate in the New River Valley isn’t falling through the floor it’s not going gang busters, either.   I will continue to say that my enthusiasm in 2010 will be tempered.  Home buyers and sellers in the New River Valley need to pay attention to unemployment in our area – many areas of the greater NRV are really struggling, despite having unemployment rates lower than the national average.  Unemployment is going to be a huge component of where the New River Valley real estate market heads in the foreseeable future.  Stay tuned to The Roanoke Times to see how Sarah’s forecast looks for 2010.

How Many New River Valley Loans Are Resetting in 2010?

I was asked by a local reporter recently for some end-of-year thoughts on the New River Valley real estate market, and while I haven’t yet started working on the 4Q report yet, I started to wonder how many loans in the NRV will be resetting in the coming year. Peoples mind might be asking themselves, “ Can I get a loan with bad credit?

A loan “resets” when its’ initial time period – 1 year, 3 year and 5 years is common – expires and it resets to a different interest rate.  Typically, you’ll see resets in Adjustable Rate Mortgages – mortgages that have an initial rate of say 4.5%, and then will reset to a higher (often 2% or more) percentage rate after the initial time period.  This is what’s gotten many homeowners around the country in trouble, as their low-interest rate payments have jumped significantly to where they’re now unmanageable.  Since the NRV is quite a bit different than the national trends in terms of real estate, I thought I’d ask Brandon Nicely his thoughts on what we should expect to see in 2010.  Keep in mind, we’re both cautiously bullish on the market in 2010.

Just to start out so no one is left in a panic:  Our area will not see a significant hit with adjustable rate mortgages like some other states especially California.  All the talk about ARMS and the fear of more adjustments in 2010 are correct but this is nationally not locally.  Currently we are seeing ~ $2 billion per month of option arms recasting or changing the terms of payment on the loan.  In 2010 we are going to see $8-10 billion per month start to recast.  The majority of these are from California and Arizona, and the big concern here is individuals are not able to refinance do to the sharp decline in property value.  When the ARMs adjust and payments start to increase you will see more foreclosures.

Business Week came out with a chart that shows how Pay Option ARMS will be recasting over the next few years:

Option ARMs

To give you an idea of what happens with a Option ARM, here is an example on a $460,000 loan.  Initially, the first year payment is $1,479, which of course is absurdly low.  But by the time we hit the first 5 year adjustment the payment can jump up to $3,747!  The payment more than doubles!  These loans were made throughout the bubble from 2004 to 2007, and a large number of these will have major adjustments in 5 years (that is why we are seeing the first batch now).  The issue you have is that most borrowers who took out these type of loans have lost all the equity they have in the house, as the balance on your mortgage increases instead of going down.  So with rates at historic lows they cannot refinance, and even if they could the payment they are used to at $1500 would be more around $2500 with the lower rates.  What will happen is that once payments start to recast and borrowers realize they have no equity in the home ,they will walk away and another rush of foreclosures will occur.  Again, this is more for the West Coast and specifically California where property values have decreased as much as 50% in 1 year.

A lot of individuals are under the assumption that low rates the past 12 months have allowed all sub-prime and option ARM clients to refinance and we are now moving forward.  That is an incorrect statement.  The individuals who are refinancing are clients who are not in trouble with their mortgage but simply clients who have some equity and have paid their mortgage on time. All banks have tightened underwriting guidelines, and unless you have a strong financial situation with a good equity position in your home you cannot refinance and take advantage of the lower rates.  No lender is going to take a $400k mortgage on a home that is worth $300k.

My outlook for the New River Valley is a good one in 2010 with home sales increasing slightly as we did not see a rush of Pay Option ARMs like other states.


Brandon is a branch partner at Alcova Mortgage. He enjoys doing his taxes, firewalking and competitive eating, but not necessarily in that order. You can reach him at brandon@alcovamortgage.com, or 877-552-7150.


To Point, Or Not To Point – THAT Is The Question

To pay points or not to pay points:  Everyone has heard the term “buying down the rate”, or “paying points”, but what does105497713_47e417f3a5 it really mean and should you be paying these?

Before you decide whether you should pay any points you need to know what points actually are, how long you intend to be in the loan and to compare current rates to historical trends.

Points are up front fees paid to obtain a better interest rate on a loan.  One point equals one percent of the loan amount, so if you pay a point up front it will result in a lower interest rate, and a lower monthly payment.

If you are taking out a $200,000 mortgage and decide to pay 1 point that will be a cost of $2,000.  The savings per month on average by paying the point will be around $50 per month.  It will take you about 3 years and 3 months to save the $50 per month to get back your investment of $2,000.  This means if you plan on selling the home within 3 years, do not pay any points.  If you are planning on keeping the home for 10 years it would end up saving you $4,000 over the 10 year period.  When rates are at historical lows it is sensible to pay points only if you plan to live in the home for an extended period of time because it is unlikely rates will go down.

Small extra:

Do you think the Tax credit is working?  45% of all existing home sales last month (October 2009) were purchased by first time buyers.

Photo from Chris Owens.

Brandon Nicely


Brandon is a branch partner at Alcova Mortgage.  He enjoys doing his taxes, firewalking and competitive eating, but not necessarily in that order.  You can reach him at brandon@alcovamortgage.com, or 877-552-7150.