Well for those few who read this, It has been some time since I last addressed the world. I am busy with teaching a class at the University of Utah where I have been an adjunct faculty member for the better part of 23 years. Wow! How the world of mortgage finance has changed in that time.
I am sending this out to remind you that this is a great time to buy a home. home prices are down and interest rates are very low. Today you could lock a 35 day lock at 4.5% on a 30 year fixed and a 5 year Interest only ARM at 3.875% Those are great rates and make for lower payments that would help a person qualify for a larger loan on the same income or to qualify with less income. What a great time to be in the market, particularly if you do not have to sell a home to buy. It is a great time for parents to help their children get into a home by helping with the down payment or closing costs.
We are now doing some loan modifications. If you or someone you love is having a hard time meeting their home loan obligations, even if they are still current on their payments, we can help. To obtain a loan modification, it is better if FNMA owns your loan. You can go to a FNMA site and find out if they own your loan. If they own it, the modification process is facilitated through the FNMA home affordable program. What is required is pretty much all the documentation of income, debts, assets, and credit scores that would be included in a new loan. They do require tax returns even for the not self employed. The key to successfully modifying your home loan is to have endured a hardship in the recent past. Some thing like lost job, under employment, unexpected demands on your resources or what ever is causing you to feel in danger of not being able to cope with your current home loan or loans. Our expertise is to help you describe your hardship, we do not create or manufacture hardships.
It is not guaranteed that the lender will accept your story even if it is well documented, however, if they do, they will lower your terms of the loan to what you can reasonably afford based on your current income and debt situation. Our fee is not too heavy and a portion of it is refundable in the event we are not successful. Our pricing is less than the folks that advertise on the radio since we do not have to build that expense into our price. That also means that we need word of mouth, person to person, referrals from you, my friends and contacts to generate business. So we are good at it, less expensive than our competitors, have a guarantee, and need your help to locate clients.
Back to the topic of new loans, this is good time to refinance as well. If you have a rate over 5.5% or an ARM or a second mortgage with a variable rate, you should consider consolidating your loans into your home loan to lower your rate and payment. While rates are generally very low, your specific rate depends on a number of factors. First factor is your credit score. if youa re in the 740 or above range, you qualify for the best rate. If your score is lower, your rate will be higher depending on how much lower it is. The next item is property type. The best rates are for owner occupied single family detached homes. Other types of housing carry some premium to the rate. The next factop is the loan to value ratio, that is the loan size divided by the appraised value. The lower the loan to value ratio, the better the rate and the higher the loan to value ratio the less attractive the rate. Finally, the purpose of the loan has an impact on the rate. If you are seeking more than your first mortgage balance plus closing costs it is called a "cash-out" refinance and depending on the loan to value and your credit score, the rate may be higher. Any second mortgage or HELOC that was not part of the original purchase financing is considered "cash out" and will put you into this category. None the less, depending on the current rate and terms of your existing debt, it may still be a net benefit for you to refinance.
Since the loan to value is such an important factor, the appraisal that determines the Loan to value is critical to the deal. On most purchase transactions, the appraisal is not an issue. However, on a refinance, the appraisal can be a huge issue. I have had a number of clients who have asked for a refinance only to discover that the appraised value is too low to make it work. We do our best to try ti find out what the value is before we order an appraisal since you have to pay up-front for it and if it kills the deal you own an apprasial.
There is hope for those who's loan is owned by FNMA. They have a program they call REFI plus which is designed to allow you to refi your loan in a falling market as long as the loan to value is less than 105%. They will also not require mortgage insurance on the new loan even if it is above 80% loan to value, if you can show that the original loan did not have mortgage insurance. So you can go to the FNMA site http://loanlookup.fanniemae.com/loanlookup/ to see if FNMA owns your loan. BE certian to have the address the same as the address on your mortgage billing statement. If they own your home loan, you may qualify for the REFI plus or for a Home Affordable loan modification. You can copy this email address to your browser and determine if FNMA owns your loan in 2 minutes.
WE hope that you do not miss out on these great programs for purchase, refinance, or loan modification simply becasue you are not aware of them. That is the purpose of this Blog, to enlighten and educate you to things that you want to know.
Thanks for being a reader, pass this site along to anyone who would be interested in this type of information.
Friday, May 21, 2010
Thursday, April 1, 2010
No April Fool Joke
This is not an April Fool post. Rates are moving up and moving quite rapidly. Every day for this week rates have crept up the cumulative total is about 1/4% or slightly more. There are two things any reader should consider. First rates are moving up in spite of the FED stating they would try to keep rates down for a bit longer since the recovery is not coming along as well as had been expected. So even iwth the FED pressuring the market, rates are inching upwards. That is a bad sign. It means that whatever you have in mind, refinancing, consolidating, or purchasing, you should get on with it quickly. Second, the Federal Tax Credit program is going to end on April 30 and if you are planning to purchase, you should do it quickly, before the end of the month. Many are going slow, planning or hoping this will be renewed the second time. I think it will not be renewed and that anyone who does not buy before April 30 will have thrown away money. For you sellers, that means that your home will drop another $8000 after April 30. Since the net price to most potential buyers has been seen as $8000 less than the actual price, the actual price will probably have to fall to match the prior actual or net price. So you sellers, if you get an offer this week, take it. In May, that same offer will be $8000 less.
What are we to make of these two points? That there is some urgency in whatever you plan to do. If you are trying to sell, be quick about it or lose some money. If you are trying to buy, you will lose the tax credit but then will probably try to negotiate the same lower net price as with the tax credit but will meet with more resistance so try to do it now. If you plan to refinance to consolidate or for any other reason, rates may be rising so move quickly to apply and lock the rates now.
The tough economic times are not over, the recovery has not started for most people. Most of us do not feel better about our economic lives today than we did 3 months ago. We may have a vague sense of light at the end of the tunnel, but it may be an oncoming train. Beware of that light. Do not wait for rates to fall, they may not fall at all, we very well may have seen the bottom of this rate cycle. I hope we have a few more months of low rates, but remember they are artificial and are being held in place by a weakening system of FED hopes and moves. The rates will go up and sooner rather than later. When the bond market gets free, the realization of the huge federal borrowing that will occur over the next 5 years will cause the cost of borrowing for everyone, including the Federal Government will go up sharply. The days of rates below 5% will be a fond but growingly distant memory.
What are we to make of these two points? That there is some urgency in whatever you plan to do. If you are trying to sell, be quick about it or lose some money. If you are trying to buy, you will lose the tax credit but then will probably try to negotiate the same lower net price as with the tax credit but will meet with more resistance so try to do it now. If you plan to refinance to consolidate or for any other reason, rates may be rising so move quickly to apply and lock the rates now.
The tough economic times are not over, the recovery has not started for most people. Most of us do not feel better about our economic lives today than we did 3 months ago. We may have a vague sense of light at the end of the tunnel, but it may be an oncoming train. Beware of that light. Do not wait for rates to fall, they may not fall at all, we very well may have seen the bottom of this rate cycle. I hope we have a few more months of low rates, but remember they are artificial and are being held in place by a weakening system of FED hopes and moves. The rates will go up and sooner rather than later. When the bond market gets free, the realization of the huge federal borrowing that will occur over the next 5 years will cause the cost of borrowing for everyone, including the Federal Government will go up sharply. The days of rates below 5% will be a fond but growingly distant memory.
Thursday, March 25, 2010
WE at Walker Mortgage are going to begin helping people with "loan modifications". There are a lot of shady characters doing it now for pretty steep fees. We think that we can do it as well as anyone and for a more reasonable fee. We will have a two part fee structure, a component that is non-refundable and a component that is refundable if we are not successful. That will be fair to both the client and to us. There is work and expense involved even if the lender rejects our plea. So there has to be some compensation for the work of getting it ready.
The world is full of people who will take your money and give little or nothing in return. WE have a long reputation of doing what we promised and of having fair pricing. That is what we will continue to do with the modification program. Fair and honest effort to benefit the customer. Local hands on face to face interaction with the customer with a good attorney in the loop to help if needed. While most of the modifications do not require legal help, some do and we are prepared with a solid experienced attorney to help when needed.
Who qualifies for a loan modification. First the loan must be owned by either FNMA or FHLMC or as you have come to know them, Fannie Mae and Freddie Mac. Second, you must have had a serious and probably long term financial setback. Such things as lost job, divorce and lost income, illness with loss of income, under-employment with accompanying loss if income may be qualifying examples of serious financial setback. However, you must have some demonstrated ability to repay on some schedule. The unemployed or those with minimal income may not qualify. The modification is supposed to reduce the loan terms to something affordable based on verified income. You need not be delinquent but delinquent loans may be modified. In the event that there is serious delinquency including Notice of Default, there is still hope for a modification. Finally, the lender must agree with us about the danger inherent in your financial reversal and the possibility of success with the modified terms.
Our experience, our integrity, and our ability to help will be put to work for you in seeking relief of your stress through loan modification. We can help, tell all of your friends or associates and family about us.
Watch for the actual announcement, but before the end of April we will be operating.
The world is full of people who will take your money and give little or nothing in return. WE have a long reputation of doing what we promised and of having fair pricing. That is what we will continue to do with the modification program. Fair and honest effort to benefit the customer. Local hands on face to face interaction with the customer with a good attorney in the loop to help if needed. While most of the modifications do not require legal help, some do and we are prepared with a solid experienced attorney to help when needed.
Who qualifies for a loan modification. First the loan must be owned by either FNMA or FHLMC or as you have come to know them, Fannie Mae and Freddie Mac. Second, you must have had a serious and probably long term financial setback. Such things as lost job, divorce and lost income, illness with loss of income, under-employment with accompanying loss if income may be qualifying examples of serious financial setback. However, you must have some demonstrated ability to repay on some schedule. The unemployed or those with minimal income may not qualify. The modification is supposed to reduce the loan terms to something affordable based on verified income. You need not be delinquent but delinquent loans may be modified. In the event that there is serious delinquency including Notice of Default, there is still hope for a modification. Finally, the lender must agree with us about the danger inherent in your financial reversal and the possibility of success with the modified terms.
Our experience, our integrity, and our ability to help will be put to work for you in seeking relief of your stress through loan modification. We can help, tell all of your friends or associates and family about us.
Watch for the actual announcement, but before the end of April we will be operating.
Friday, March 19, 2010
New way to pay for Mortgage Insurance
Recently one of our investors informed us that they have a new single premium mortgage insurance plan for loans with 10% down. This plan is for single family residences no condo properties and is a very reasonable alternative to standard mortgage insurance which involves a monthly payment for a very long time. Basically the cost of this mortgage insurance is a one time payment of 1.35% of the loan amount. This eliminates any and all monthly mortgage premium payments for the life of the loan. It can save a significant amount of money if you have the home for more than 2 years.
For example, under the old monthly payment system if you purchased a home for $200,000 with standard mortgage insurance payments the mortgage insurance portion of the payment would be $93 per month for 120 months. If, you used the single pay plan the upfront cost would be $2430. So if you plan to have this home for longer than 26 months the single pay would be much less costly. Over say 5 years you would save $3348 and over 10 years you would have saved nearly $9000.
Another benefit of this plan is you can qualify for more house on the same income. How much more? You can qualify for nearly $20,000 more home on the single premium plan than with the monthly premium plan.
Where to get this extra 1.35% at closing? It can come out of the seller concessions, the mortgage broker can price it into the rate or you can have a gift from parents for this portion of the cost.
So if you are looking at buying a home soon, and if you have 10% down, this is a great plan for you.
Just a note to remember. When you have a 10% down payment, about 1/2 of that can be a gift from a family member. The lenders require you have at least the first 5% down as your own (borrower) funds. The rest of the down payment can be a gift as can all or part of the closing costs.
For example, under the old monthly payment system if you purchased a home for $200,000 with standard mortgage insurance payments the mortgage insurance portion of the payment would be $93 per month for 120 months. If, you used the single pay plan the upfront cost would be $2430. So if you plan to have this home for longer than 26 months the single pay would be much less costly. Over say 5 years you would save $3348 and over 10 years you would have saved nearly $9000.
Another benefit of this plan is you can qualify for more house on the same income. How much more? You can qualify for nearly $20,000 more home on the single premium plan than with the monthly premium plan.
Where to get this extra 1.35% at closing? It can come out of the seller concessions, the mortgage broker can price it into the rate or you can have a gift from parents for this portion of the cost.
So if you are looking at buying a home soon, and if you have 10% down, this is a great plan for you.
Just a note to remember. When you have a 10% down payment, about 1/2 of that can be a gift from a family member. The lenders require you have at least the first 5% down as your own (borrower) funds. The rest of the down payment can be a gift as can all or part of the closing costs.
Monday, March 15, 2010
Hope for small down payments
Monday, March 15, 2010
The days of 100% mortgages are pretty much over unless you are a qualified veteran. What to do if you do not have a 20% down payment.
FHA remains a good source of minimal down payment loans, minimum FHA down is 3.5% as of this writing. FHA has one other advantage in the manner in which it treats non-occupying co-borrowers. It is very friendly and allows parents to co-sign with children and actually carry the day in qualifying. The children occupants need to have adequate credit but the income of the parents can carry the day for loan qualification. That is not necessarily what parents should want, to be tied to the debt load of the adult child, but if that is not a concern for you, it is a good solution. It is also true that the entire 3.5% down payment may be a "gift" from the same or other parents. I have a truism that I remind folks about from time to time, everyone makes a down payment on their home, most at the time of purchase and some at the time of sale. If you have the minimum down payment and you need to sell too soon, you will have to increase that down payment at the time of the sale.
Now the conventional side. There are still a few companies that will finance 95% of the purchase price on a single family residence. That does not include condominiums, town homes or most Planned Unit Developments. The cost of the mortgage insurance is high, nearly 1% but it is none the less available and the mortgage insurance premiums may be tax deductible for some borrowers. The best part of this type of loan is that your down payment stays with the home. You can have gifted funds if you get them gifted far enough in advance. The parents co-signature is not much help and is pretty much discouraged.
So a comparison between FHA and the 5% down payment conventional will reveal that beginning in April, the FHA up front portion of the Mortgage insurance will increase to 2.25% of the loan amount. That is a big fee. The impact is softened by the fact that the fee is included in the loan amount, but that effectively shrinks the down payment or contributed equity from 3.5% to 1.25%. So if you purchase a home at say $160,000 with an FHA loan you put down $5,600 and then the loan balance is increased by $3600 so you have left only $2000 in equity. Then the FHA on going mortgage insurance premium of .5% is included in your payment. So what you have in the end is a loan of $158,000 at some rate plus .5%. If the rate is 5% your payment will be $848.18 plus the mortgage insurance component of $66 for a combined total of $914 plus taxes and insurance.
If on the other hand you make the same purchase with a conventional loan at the same rate with the required 5% down your loan will be $152,000 and your payment will be $815.97 plus the mortgage insurance component of $121 for a combined total of $937. this payment is actually $24 per month higher but consider the equity. You have put down $8,000 and it is still there. If you were to sell this home some time soon, you would have a balance $6,000 less on the conventional than on the FHA version. How important is that $6000? To be factual, $2400 of that $6000 was your increased investment so you are really out $3600. If you put the $24 you were to save on the FHA version into a bank each month is would take over 12 years for you to accumulate the $3600.
So which is better for you? It depends on a number of factors. First do you qualify on your own income and debt ratios? If you do, then FHA is less necessary for you to qualify. Second do you have excellent credit? To obtain a 95% loan your credit must be very strong. Third, do you have the down payment? If not, the FHA allows more flexibility to obtain it as a gift at closing but if the gift can be given about 90 days prior to applying for a loan, then it will be accepted.
In conclusion, if you have excellent credit, good income and reasonable debt and can obtain a 5% down payment, that is the best way for you to finance a new home.
Stay tuned for more tips and comparisons
The days of 100% mortgages are pretty much over unless you are a qualified veteran. What to do if you do not have a 20% down payment.
FHA remains a good source of minimal down payment loans, minimum FHA down is 3.5% as of this writing. FHA has one other advantage in the manner in which it treats non-occupying co-borrowers. It is very friendly and allows parents to co-sign with children and actually carry the day in qualifying. The children occupants need to have adequate credit but the income of the parents can carry the day for loan qualification. That is not necessarily what parents should want, to be tied to the debt load of the adult child, but if that is not a concern for you, it is a good solution. It is also true that the entire 3.5% down payment may be a "gift" from the same or other parents. I have a truism that I remind folks about from time to time, everyone makes a down payment on their home, most at the time of purchase and some at the time of sale. If you have the minimum down payment and you need to sell too soon, you will have to increase that down payment at the time of the sale.
Now the conventional side. There are still a few companies that will finance 95% of the purchase price on a single family residence. That does not include condominiums, town homes or most Planned Unit Developments. The cost of the mortgage insurance is high, nearly 1% but it is none the less available and the mortgage insurance premiums may be tax deductible for some borrowers. The best part of this type of loan is that your down payment stays with the home. You can have gifted funds if you get them gifted far enough in advance. The parents co-signature is not much help and is pretty much discouraged.
So a comparison between FHA and the 5% down payment conventional will reveal that beginning in April, the FHA up front portion of the Mortgage insurance will increase to 2.25% of the loan amount. That is a big fee. The impact is softened by the fact that the fee is included in the loan amount, but that effectively shrinks the down payment or contributed equity from 3.5% to 1.25%. So if you purchase a home at say $160,000 with an FHA loan you put down $5,600 and then the loan balance is increased by $3600 so you have left only $2000 in equity. Then the FHA on going mortgage insurance premium of .5% is included in your payment. So what you have in the end is a loan of $158,000 at some rate plus .5%. If the rate is 5% your payment will be $848.18 plus the mortgage insurance component of $66 for a combined total of $914 plus taxes and insurance.
If on the other hand you make the same purchase with a conventional loan at the same rate with the required 5% down your loan will be $152,000 and your payment will be $815.97 plus the mortgage insurance component of $121 for a combined total of $937. this payment is actually $24 per month higher but consider the equity. You have put down $8,000 and it is still there. If you were to sell this home some time soon, you would have a balance $6,000 less on the conventional than on the FHA version. How important is that $6000? To be factual, $2400 of that $6000 was your increased investment so you are really out $3600. If you put the $24 you were to save on the FHA version into a bank each month is would take over 12 years for you to accumulate the $3600.
So which is better for you? It depends on a number of factors. First do you qualify on your own income and debt ratios? If you do, then FHA is less necessary for you to qualify. Second do you have excellent credit? To obtain a 95% loan your credit must be very strong. Third, do you have the down payment? If not, the FHA allows more flexibility to obtain it as a gift at closing but if the gift can be given about 90 days prior to applying for a loan, then it will be accepted.
In conclusion, if you have excellent credit, good income and reasonable debt and can obtain a 5% down payment, that is the best way for you to finance a new home.
Stay tuned for more tips and comparisons
Friday, March 12, 2010
This is the first post for this Blog. When you read this Blog, you will find interest rates, programs, and other helps for you to make educated decisions about financing or refinancing your home, second home, or investment property.
What makes this Blog or the source worth your reading time? Terry Walker is the owner of Walker Mortgage, LLC located in Salt Lake City and serving the entire State of Utah. Terry has been in lending business at some level since 1972. In my spare time I teach finance classes at the University of Utah. I have supervised or participated in originating well over 30,000 home loans in Utah, California, Arizona, Wyoming, abnd Nevada. I currently only offer services in Utah.
Walker mortgage is a Boutique Mortgage Broker shop with a very small group of dedicated professionals. We are in our 13th Year in Utah. As you have watched our industry shrink, 13 years seems like a very long time to survive in this ever changing industry.
When you apply for a loan or seek the counsel of Terry Walker as your mortgage guide, you deal with him directly, no processor or clerks to get in the way. You deal with me and with me only application to closing. You are buying the 38 years of experience and you have access to that expertise at each step of the process with no junior helpers, no processors, no clerks between you and Terry.
Now is a great time to consider buying a home. interest rates are historically very low, prices are low, sellers are making great concessions, and believe it or not, lenders are actively mamking loan. While it is true that qualfiying is harder, you must have good credit and actual down payment, it is still possible to obtain a 95% conventional loan.
What you need is a guide, someone to take you through the jungle that is mortgage lending in 2010. Someone who has been through this jungle many times and can help you navigate the terrors of obtaining a loan without pain or high cost.
Give me a call, 801-652-5153 to see what you can do to obtain a home. AS you know, the $8,000 tax credit is scheduled to expire at the end of April, if that is important to you, you have about 10 days to get a home under contract and still close by the end of April.
Stay tuned to other interesting observations regarding this dynamic industry and how you can get the best loan for your circumstances.
What makes this Blog or the source worth your reading time? Terry Walker is the owner of Walker Mortgage, LLC located in Salt Lake City and serving the entire State of Utah. Terry has been in lending business at some level since 1972. In my spare time I teach finance classes at the University of Utah. I have supervised or participated in originating well over 30,000 home loans in Utah, California, Arizona, Wyoming, abnd Nevada. I currently only offer services in Utah.
Walker mortgage is a Boutique Mortgage Broker shop with a very small group of dedicated professionals. We are in our 13th Year in Utah. As you have watched our industry shrink, 13 years seems like a very long time to survive in this ever changing industry.
When you apply for a loan or seek the counsel of Terry Walker as your mortgage guide, you deal with him directly, no processor or clerks to get in the way. You deal with me and with me only application to closing. You are buying the 38 years of experience and you have access to that expertise at each step of the process with no junior helpers, no processors, no clerks between you and Terry.
Now is a great time to consider buying a home. interest rates are historically very low, prices are low, sellers are making great concessions, and believe it or not, lenders are actively mamking loan. While it is true that qualfiying is harder, you must have good credit and actual down payment, it is still possible to obtain a 95% conventional loan.
What you need is a guide, someone to take you through the jungle that is mortgage lending in 2010. Someone who has been through this jungle many times and can help you navigate the terrors of obtaining a loan without pain or high cost.
Give me a call, 801-652-5153 to see what you can do to obtain a home. AS you know, the $8,000 tax credit is scheduled to expire at the end of April, if that is important to you, you have about 10 days to get a home under contract and still close by the end of April.
Stay tuned to other interesting observations regarding this dynamic industry and how you can get the best loan for your circumstances.
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