The retail price of gasoline is rising nationwide, now up 30 percent since the New Year.

It’s a similar run-up to what we’ve seen for retail gas prices in each of the last 5 Spring Seasons.

For people trying to time the mortgage market’s bottom, clues about the future of mortgage rates may be at the local gas station.

Rising gas prices are indicative of the rising cost of energy and, indeed, crude oil is closing in on its 2009 highpoint.  As these energy costs grow, so do inflationary pressures on the U.S. economy.

Inflation, of course, is awful for mortgage rates. When it’s present, mortgage markets deteriorate and rates tend to rise — often sharply and with little advance warning.

So, for today’s homebuyers-in-process and would-be refinancers, prices at the pump may foreshadow bad news for the future of housing affordability.  Even a modest, quarter-percent increase would have a palpable effect on payments, adding $372 in annual costs to a $200,000 home loan.

Since last week, gas prices are already up by 10 cents per gallon.

Both mortgage guidelines and the economy have tightened since 2006, bringing more attention to “joint homeowners” — non-spousal partners that buy and share a home as roommates.

The practice is not new, but, anecdotally, co-purchasing is becoming more common.

In the video above – filmed two years ago but still on-target today – real estate expert Barbara Corcoran provides good advice for co-purchasing partners.  Like any business relationship, it’s important to plan ahead.

• Hire an attorney to draft contracts and agreements
• Have a plan for when one or both parties wants to move or sell
• Consider life insurance policies on each other

The over-riding theme for co-purchasing arrangements is to be prepared.  Done right, however, they can create two proud homeowners where there would have otherwise been none.

It’s Tax Day today and who among us doesn’t love a legitimate tax deduction?The IRS expects to process 138 million tax returns this year and accompanying those returns will be a melange of tax deduction requests.

Most will be run-of-the-mill including such staples as mortgage interest, vehicle mileage, and child care deductions. Others, however, will be less ordinary.

On its website, TurboTax pays homage to some of the most off-the-wall, offbeat tax deductions through the years permitted by the IRS.

Among the “weirdest deductions allowed“:

• A bodybuilder’s body oil so his muscles would glisten in competition
• A private airplane for owners of investment properties
• Landscaping for a sole proprietor that meets clients at home
• A swimming pool for a man with emphysema

Tax deductions are prized by U.S. taxpayers. Hopefully, your 2008 tax returns included some good ones, too.

When conforming mortgages adjust, they’re often tied to an interest rate index called LIBOR.

LIBOR is an acronym for London Interbank Offered Rate. But what LIBOR stands for isn’t as important as the role it plays.

LIBOR is an interest rate at which banks borrow money from each other.  Therefore, when banks feel the banking system as a whole is unsafe, LIBOR rises to compensate.

It’s why LIBOR spiked last October after Lehman Brothers failed.  Financial institutions wondered what other institutions would fail and that added risk to the system.

Since October, however, and because of massive government interventions worldwide, LIBOR has been on a steady retreat.  Moreover, with close to $30 billion in conforming mortgages scheduled to adjust by Labor Day, the timing couldn’t be better for homeowners with conforming ARMs.

Typically, a Fannie Mae- or Freddie Mac-backed mortgage adjusts once annually.  The adjusted interest rate is always equal to some constant — usually 2.250 percent — plus the rate of LIBOR on the date of adjustment.

As a math formula, the ARM formula might like this:

New Mortgage Rate = LIBOR + 2.250 percent

In October, when LIBOR was above 4 percent, a homeowner’s ARM may have adjusted to 6 1/2 percent.  Today, that same ARM would move to four-and-a-quarter.

As a strategy play, it might make sense to let your ARM adjust because the rate will remain low, but with fixed rate mortgages hovering near 5 percent, locking up a long-term rate may be smart, too.

Talk to us to review all of your choices.

There are 138 million taxpayers in the United States and, according to the IRS, 20 percent of them file their taxes within 7 days of April 15.  In a holiday-shortened week, that means that 27 million people had better get a move on.

And while a portion of this year’s last-minute filers will file with storefront operations like Liberty Tax Service or H&R Block, many others will self-prepare with the help of tax software from TurboTax or TaxCut.

If you’re a member of the do-it-yourself crowd, consider taking a review of this year’s tax law changes before starting your returns.  The stimulus package signed into law this past February made a profound impact on tax liability and the list of changes may be helpful for you.

A few of the new, allowable income tax deductions for 2008 include:

• Mortgage debt forgiveness in the event of a short sale
• An additional standard deduction on real estate taxes paid
• $8,000 tax credit for homes bought since January 1, 2009

TurboTax offers 4 tax filing choices online, ranging in price from $100 to free.  If you’re among the 27 million yet to file, choose whichever program fits best – just choose it before April 15.

Filing could take several hours.  Plan accordingly.

The basis of most mortgage lending is credit scoring.  In general, the higher a person’s credit score, the lower his offered mortgage interest rate.Despite the many credit scoring models in use today, however, just 3 are relevant to American homeowners:

• The Equifax BEACON^® score
• The Experian Fair Isaac Risk Model
• The TransUnion EMPIRICA^®

Generically, these scoring models generate what are commonly known as “FICO” scores.

FICO scores are measurements of probability.  The higher a person’s credit score, by definition, the less likely a person is to default on his home loan.  This is one reason why credit scoring has added importance lately — mortgage lenders are very careful about what they’re lending and to whom.

Notably, minimum FICO thresholds have been added to all types of mortgage loans.

FICO scoring has 5 main components as listed above.  Payment history and credit capacity are two of the largest pieces, but a myriad of other factors contribute to a credit score, too.  For example, the longer your reported history of managing credit, the more favorably your credit score will respond.

The myFICO.com website does a terrific job with credit education, explaining in plain language the ins-and-out of credit scoring and ways to boost your score.  It also makes a free, 20-page PDF available for download.

Whether you’re a homeowner or lifetime renter — consider it required reading.

USA Today ran this 2008 Foreclosures By State heatmap last week, reminding us of a simple truth: Headline statistics can be misleading.

According to data compiled by RealtyTrac, 1 in 8 U.S. homes were in various stages of default or delinquency at the end of 2008.  This is a fact and it was widely reported by the press.

However, as the heatmap plainly shows, in stripping out just 35 of the nation’s 3,232 counties, we can decrease the number of foreclosures nationally by half.

In other words, yes, 1 in 8 U.S. homes face mortgage trouble.  In your neighborhood, though, the ratio is likely much, much lower.  Real estate is a local phenomenon.  National statistics rarely apply.

When the White House first introduced the Making Home Affordable program in February, it was positioned as a mortgage program with two goals:

1. To help financially-needy homeowners get mortgage relief
2. To help homeowners who’ve lost equity qualify for today’s low rates

Wednesday, in a much-anticipated announcement, the U.S. Treasury introduced new details about Making Home Affordable.

It also created an ”Am I Eligible For Making Home Affordable” form on its website.

In the press release, the Treasury detailed the President’s original blueprint.  Namely, it provided explicit loan modification instructions that will assist up to 4 million delinquent homeowners and their respective mortgage servicers.

The modification guidelines are a thorough 17 pages long and leave little question about the loan modification process, and how it must be carried out.

But for as much ink committed to helping delinquent homeowners, the Treasury gave surprisingly little guidance to the estimated 5 million homeowners for whom deteriorating home equity has rendered refinancing impossible.

For these Americans, the Treasury instead offers a basic Q&A and directs homeowners to call Fannie Mae and/or Freddie Mac to confirm their eligibility. The “refinance plan”, in summary, says that a homeowner who has paid his mortgage as agreed and whose home value is “about the same or less” as the amount owed on his first mortgage may be eligible.

That’s about as much as the Treasury could say.

If after browsing the website, you still have questions about the Making Home Affordable program, call us with specific questions.

As part of the American Recovery and Reinvestment Act of 2009, the IRS has officially released Form 5405 – better known as the First-Time Homebuyer Credit Form.True to tax code standards, the 10-field form is accompanied by 3 pages of instructions.

Form 5405 is a helpful, go-to resource for home buyers with questions about the tax credit.

For example, the form distinguishes tax consequences for homes bought in 2008 versus 2009, and clearly defines the term “first-time home buyer”.

In addition, Form 5405 highlights the math behind the tax credit.  In general, the First-Time Homebuyer Credit is equal to the lesser of:

• $8,000 for homes bought in 2009
• 10 percent of the home’s purchase price

Married couples filing separately are entitled to half of the expected credit, and homes sold within 3 years are subject to a credit repayment in the year the home ceases to be the “main home”.

Form 5405 is a comprehensive reference.  However, be sure to check with your accountant for specific questions about your personal returns and how the First-Time Homebuyer Credit may impact your finances.  There is no substitute for professional, paid advice.

Mortgage delinquencies are on the rise nationwide, but the news may not be as bad as it appears at first glance.Using anonymous data from its national credit database, TransUnion reports that 4.58 percent of American homeowners were at least 60 days past due on mortgage payments last quarter.

Comparing the statistic to the data from a year ago, the credit reporting agency goes on to say that mortgage delinquencies are up 53 percent.

Although fair, the comparison carries a distinct, negative connotation because if we flip the data to its positive, the statistics don’t seem nearly as menacing.

Consider: In the last quarter of 2008, 4.58 percent of homeowners were delinquent on their respective mortgages.  The positive sign, therefore, is that 95.42 percent of homeowners were not delinquent on their home loans.

Furthermore, in looking at TransUnion’s data for the 5 largest states in the Union, it’s clear that the national delinquency rate is being skewed by California and Florida.  New York and Texas, for example, exhibit delinquency rates below the national 4.58 percent marker.

North Dakota’s delinquency rate hovers near 1 percent.

Headlines are designed to attract eyeballs and nothing else. To get the complete story, therefore — the real story — it never hurts to dig a little deeper into the facts.

(Image courtesy: TransUnion)