Topdot Blog

Mortgage Help?

2008-05-03T19:36:00.002-04:00

In a customer service industry like the mortgage business one must always try to bring the utmost professionalism to the transaction. After all we help people with their largest asset and it is always a high stakes game. Judging someone's financial picture and then determining their viability is a big responsibility, and not one we take lightly. It is always our goal to listen to anyone and everyone we can and to do whatever we can to truly help.

Unfortunately the industry has changed and there are so few loan programs available these days. It is very difficult to qualify for a new loan, and so many families are no longer afforded "help". While I applaud some of the product eliminations, I think it wrong to be so exclusive.

We work with clients to the best of our ability, but if we cannot find someone to buy the loans we cannot offer them. With guidelines so strict we often have to decline families that really should get a loan. Appraisals come in low, income doesn't qualify and various other events happen that cancel the transaction. Clients end up angry with us, because we are the messenger in these events. I guess that is just part of the job.

My hunch is that programs will loosen and funds made more really available, but there is no telling when that will happen. Hopefully sooner rather than later...

Where have all the FHA mortgages gone?

2008-04-30T22:03:00.004-04:00

As a concerned homeowner or soon to be homeowner you might be asking yourself that very question. The market has changed, that is for certain...but has it disappeared?

Most loan programs have been eliminated. Many deservingly so, but others are just victims of the collateral damage of the refinance boom of the past 10 years. Investors are gun shy and they are all trending ultra conservative, leaving you the consumer with very few options.

The changes and industry shakeup will be a good thing long term, but it is a tough run right now for everyone involved. Buyers, sellers, refinancers, mortgage brokers, bankers etc... Everyone is trying to make sense of the business and are hoping they can still make loans happen.

FHA loans have become the safety net for many, but it is very important to understand one very important fact. It is not a sub-prime replacement at all. It is a return to make-sense lending based on the true story and entirely designed to help clients either stay or get back on track.

The guidelines are broad and there are many options. At the moment however, the buyers of these loans have begun to implement their own restrictions leaving many more people out in the cold. They need to realize that their guidelines are too restrictive and they are turning away good clients that will pay their loans back. We all can only hope that soften their stance and start getting back on track themselves...

Out of debt in the New Year...

2007-12-25T20:44:00.001-05:00

Christmas brings with it good times with the family, reflections on the year that has passed and unfortunately a lot of credit card debt. All those gifts you bought came with a price, and you end up having to pay it off in the months that follow. I suppose that is your unwanted Christmas gift to yourself.

Many people will jump on the yellow brick road and try to pay off those bills over time (a nearly impossible task indeed) Many will fall behind and damage their credit in the process. Few will take the time to really sit down and determine what makes the most sense for them--consolidate their debt into one manageable payment.

A mortgage refinance in the New Year makes a lot of sense. Mortgage rates are still at historic lows with people (even those with fair credit) qualifying for 30 year fixed rates in the low 6's. Credit card rates are typically much higher, and this is a great way to save on unnecessary interest charges. Also, if you close a loan in January of 2008, your first mortgage payment will be due March 1. This means you will have some relief in payment for awhile.

Starting the New Year with a list of resolutions for a better you is important. Perhaps a new mortgage should be on yours?

Fix my Arm Mortgage

2007-11-23T12:20:00.000-05:00

ARM loans were certainly en vogue over the past few years. The lower initial rate made homes much more affordable to people looking to get involved in the American dream of home ownership. Cost of living was high, and real estate prices inflated. In order to get something respectable, people were forced to stretch to make it work. ARM loans, especially interest only ones were the only way to go for most.

Now people are starting to experience the downside of those ARMS. As they begin to adjust and payments increase they are forced into action. Due to depreciation or some major change in their lives, they now don't have the same options they had back when they last took out a loan. Equity has diminished, and some lenders don't see them in the same light as before. Standards in lending have changed, and anybody with less than perfect scenarios are being left out in the cold. Now they are not in the driver's seat as they perhaps may have been in the past. Even with no change in behavior, nor any delinquent credit people are no longer able to get the coveted "prime" loans.

This is why taking a look at your ARM now, and exploring a fixed rate alternative is highly recommended. Even if your ARM will not adjust for awhile, a fixed rate loan might make most sense. Rates on 30 year fixed loans are still (historically speaking) very low. Instead of waiting until you "need to" make a change, you might want to do something when you "can" make a change.

FHA loans Saving lives

2007-11-16T08:28:00.000-05:00

As the mortgage market has taken big hits this year, homeowners have been left out in the cold. Banks have closed, programs dried up and options have decreased drastically.
Many Americans have gotten by over the past few years, by constantly tapping into the equity in their homes. As values have softened, and available credit has tightened refinancing has quickly become a very difficult task. Now we are facing all time records in foreclosures nationwide, which of course is a very bad thing.

The Federal Government has stepped in and loosened some of their guidelines to help make funds available to Americans in need. FHA lending is currently helping people save their homes, and get their lives back on track. HUD has worked diligently to evaluate their guidelines and to create programs for today's mortgage market. Ultimately we all have one goal--help people stay in their homes, and have manageable monthly mortgage payments.

These programs are in no way meant to replace the wild west mentality of the sub prime market of late, but rather to employ a true common sense mentality when analyzing a homeowners life. Sometimes things happen that are out of our control, and everyone could use some help getting back on track. FHA loans can help you do just that.

The Mortgage Gloom?

2007-02-15T09:00:00.000-05:00

I have noticed recently that a lot of mortgage companies are going out of business or are facing major woes in today's economy. Of course the shift had been anticipated, but it has become increasingly clear that many of these companies did not take the necessary steps to hedge their bets. My high school Lacrosse Coach always used to say "Failing to prepare, is preparing to fail." I guess they could have used his advice.

I think it is actually a good thing that these recent developments are leading to a reduction of mortgage broker/banker options. There have been way too many companies in our business that know very little about what they are doing and have been putting clients into the wrong loans. This business is not about tricking or pressuring a client through persuasion to take out a loan. We have an obligation to listen, evaluate and provide the most sound option. I believe that sales is defined as helping people make decisions that are good for them.

While the mortgage industry seems to be in disarray, it is still a fundamental component of the US economy. There will be a great deal of mortgage business this year, and every year thereafter. The big upside for Joe Consumer, is that after this shake up they are more likely to find a company that is capable and that actually cares. Companies like us are highly optimistic of what lies ahead.

Happy New Mortgage

2006-12-29T17:02:00.000-05:00

As the year comes to an end, we often reflect back on the year that has passed. We also feel compelled to make some resolutions on what we will/will not do in the coming year. This past year has been an interesting one in the Real Estate Business to say the least, and I anticipate that '07 will be even wilder. I for one am very excited for it...

Some Highlights: New Fed Chairman, Housing market has cooled, Democrats took over Congress, Economy has faired pretty well, no hurricanes hit the mainland...Things are looking good.

Here are my top 5 reasons to take out a new mortgage in the coming year:

1) Rates are still very low. They have not gone up drastically (as had been anticipated) so money is still very cheap to borrow! Make the move now to get out of your ARM loan or high rate fixed loan.
2) The housing market has slowed, putting buyers in the driver's seat. Low rates to borrow money cheaply + lower purchase prices= time to buy!
3) The foreclosure market is booming. While foreclosures are definitely a very negative thing for the victim, and should be avoided at all costs they do present an opportunity for investors. Now is a great time to capitalize on this type of investment.
4) Second mortgages make a lot of sense when rates are low. A junior loan even at 12% is better than borrowing on a credit card at 20%.
5) You need to get rid of those HELOC's ( Home Equity Line of Credit). When Prime was at 4% these were attractive, but now that it is at 8.25% it isn't so strong. As Prime goes up so does your payment. These are risky, so it makes a lot of sense to refinance out of these loans and into one new fixed rate loan.
Just some thoughts....

Happy New Year!

Live close to work--Good for you, good for all of us

2006-12-18T17:54:00.000-05:00

I just found out about this great new program called the 'Smart Commute Initiative.' It basically addresses the link between affordable housing and transportation costs, and recognizes that homeowners who spend less on commuting expenses will be able to assign that money towards the purchase of a home. If buyers choose a home within a half-mile of a railroad station, or a quarter-mile of a bus stop, participating lenders will add a portion of their potential transportation savings to their qualifying income--this will increase their home-buying power and help them get more home for their money.

Transportation costs are of high concern for most working households and are often one of the biggest expenses a family has. Using mass transit instead of a car commute to and from work each day, will save homeowners a significant amount of money on travel expenses and care of an automobile. It also carries a huge benefit to the environment by helping to decrease traffic congestion, limit the impact of vehicular emissions and conserve our valuable natural resources.

So far this has only been rolled out in the Washington DC area, but depending on its success, it will be expanded in and around big cities throughout the US. Keep an eye out for these loans when beginning to look for a new home. They help you and the planet too. Cant lose!

Mortgage rates... Where are they?

2006-12-11T08:46:00.000-05:00

I find that a lot of consumers have a very inaccurate picture of where rates are, so I felt compelled to say something on the topic. Last week ( December 7th) rates were actually the lowest they have been in 2006. They have clearly steadied out, and all economic indicators point to them staying at their current levels as we enter into 2007. click here

It appears that the gents at The Federal Reserve are pretty dialed in to where the economy is headed and that their decision to maintain current interest rates, without an increase during their past two sessions has paid off. The economy has slowed enough for them to feel truly confident that inflation pressures are abating, but not so much that a recession is looming. This is a great middle ground for us all.

When the 'Fed' gets together on December 12th, I anticipate rates staying right where they are. There really doesn't appear to be a need to move them in either direction for the time being. Of course wiser men than me sit on the board, so we shall see.

Regardless, mortgage rates should stay at these attractive levels for the short term, making now an ideal time to refinance into a fixed rate mortgage. Experts anticipate more than $400 billion in ARM mortgages entering their adjustable periods over the next 12 months. With rates this low, smart consumers are cashing in now. If you have an ARM, it might be time to act!

My credit is poor...Can I still get a mortgage?

2006-12-03T14:18:00.000-05:00

Truth is, that there are loan programs for all credit types. The most important thing is to really get a good handle on just how bad your credit is. Most people are shocked I find, when I go through their credit with them. They can't understand how their score is not higher than what it actually is.

You must make on time payments, and you should always try to maintain a pretty good understanding of where your credit stands. You can access your report on sites such as click here but I would also recommend reviewing your accounts with an expert. A mortgage Banker/Broker that you trust is well suited to help you with this.

The most important type of debt to pay on time is your monthly housing obligation, usually your mortgage(s). It is obviously very important to pay all of your bills on time of course, but there are many other factors that impact your score.
>Total amount owed (outstanding balances)
>Length of credit history (how long have you maintained healthy credit lines?)
>New Credit and your complete credit mix/breakdown (New large purchases such as a home, a car or even an expensive TV can cause your score to drop when added to you credit portfolio)

The reason these all impact your rating is that your credit score is a mathematic calculation on your likelihood to pay back money loaned to you. Your score is a snapshot of your total credit risk at a particular point in time. A large new obligation added into the mix poses a risk to all of your other creditors. The concern is not how you performed in the past, but how will you maintain with this new financial burden you have just taken on?

Before you assume where your credit ranks, I implore you to speak with an expert and have them really explain it to you. You might be surprised what you find out...

Foreclosure, How to avoid

2006-11-03T11:35:00.000-05:00

I recently read in USA Today that almost 280,000 Americans lost their homes to foreclosure in the past year. That number is high, but what was even more shocking was that half of these homeowners never even contacted their lender. They fell behind and allowed things to get so out of control that they lost their home to the bank. The shame is that there are options out there, and they probably didn't know what those were.

There is definitely a misconception that "big bad banks" want to take peoples homes and put people out on the street. That couldn't be further from the truth. First and foremost, the entire mortgage business is based on lending money and earning interest on those loans. A borrower who does not have the capacity to pay is their worst enemy. If the loans they offer don't perform, that has a very negative impact in many ways.

They are usually forced to buy the loan back, and their reputation with the buyer of those loans is tarnished. Once they buy the loan back, they now have a house that they will have to try and sell in an auction. Typically that will sell for 65-70% of the appraised value. If the lien on the property is higher than that percentage, it translates into a total loss for the lender. Freddie Mac estimates that foreclosing and then reselling costs a lender $59,000 on average. That obviously isn't a great business model. Trust me, mortgage banks want to be in the money lending business, not in real estate ownership.

Now what do you do if you are falling behind? Contact your lender right away and find out what your options are. If the original mortgage company you closed with did their job right, you should have their contact info on hand. Make sure you call them first, not the bank that is currently servicing your loan. You should have a personal connection with your originating loan officer. Keep an open line of communication with him/her each month, or at least every few months.

When you speak to them (the earlier the better) ask them to lay out all of the options for you. Make sure you clearly understand, and make a plan to avoid losing your home. These include:
> Refinance to a new loan (maybe take an ARM for a short term fix)
> A loan modification with your current lender to a new manageable program
> Forbearance-Postpone the interest or payments for a fixed period of time
> Quick Sale- Allows you to sell the property for less than the loan and consider the loan paid in full

There are organizations that teach people about the potential pitfalls of homeownership. One that I feel does a stellar job in helping empower communities, and even more importantly helps people keep their homes is Neighborworks America. I strongly recommend visiting their website for useful information: www.nw.org/network/home.asp

There is nothing worse than losing your personal shelter, and there are usually ways to avoid it...It all starts with a phone call...

(More)tgage

2006-10-29T15:34:00.000-05:00

American's are beginning to better understand the ways through which they can improve their financial position with their mortgage. By mapping out their short and long term plans, it becomes clear that a mortgage is an excellent tool to help fund their lives.

When buying a home people often grapple with how much money they should put down. A larger down payment will mean a lower monthly mortgage obligation. A lower down payment can afford them greater financial flexibility, if done right.

i.e. If you purchased a home for $100,000 you could put down $20,000 and take out a loan for $80,000
$479 payment each month (30 years at 6%)

If you put 0 down and took out a $100,000 loan, your payment would be
$632 payment (30 years at 6.5%)

The difference in payment would be $155 per month (much of which is tax deductible because it is mortgage interest) If you now invested that $20,000 in a mutual fund with an annual return of 10% you would actually earn $166 in income per month. Add that to the tax deduction on the additional monthly interest and you make out better with the larger loan.

In addition, you would have the $20,000 available in case you needed it for something. We all know that we can expect the unexpected, and it is nice to have the readily available funds, for the "what-ifs" in life. Unexpected triplets, loss of a job, legal issues, hole in your roof etc...If that money were tied up in your home, you would have to take out a second mortgage to tap into it. When you do that, you would incur closing costs on that money and a second lien loan would carry with it a higher interest rate.

Most people opt to make that down payment, and rely on their credit cards to fund life's curve balls. With interest rates on those cards often above 20% that is probably not the best way to go.

Just a tip...

What type of mortgage is right for me?

2006-10-14T12:36:00.000-04:00

The only way to answer that question is to actually engage with a mortgage professional. One of our ad campaigns claims that "No two of our clients are exactly alike, neither are their mortgages." That is definitely true. Each person has a different situation, a different hook that will impact their loan. It is imperative that together you understand everything up front, before you pull the trigger on a product.

It is so important to be straightforward with a loan expert about all of your needs and your financial factors. You should never pick a product then look for the lowest bidder. Instead you should find a firm that you trust and speak with them thoroughly about your short and long term goals. Once armed with this information a good mortgage specialist, will be able to go out and find you the ideal loan. There are a lot of programs out there, and the average consumer shouldn't have to be an expert. This is where you should put your loan specialist to work for you.

If you had high cholesterol, you would first realize that you have to fix it. Then you would have to go out and figure out how to. You wouldn't just look online for the cheapest drug and buy it. You would want to engage thoroughly with a doctor (with a good reputation, that you trust) and then come up with a total plan. Some drugs work for some and not for others. In fact some drugs could have a really negative/dangerous impact on your body. Also, the Doctor might learn that you have a wildly unhealthy diet, and fixing that would also be part of the prescribed solution. In the end to fix this serious condition, you would have to take all of the necessary steps to ensure you are on the best plan. The same is true with your mortgage.

So the answer to the question of what loan is right for you, is one that can't be answered without speaking in detail first. That would be a total disservice.

Green is good

2006-10-08T10:37:00.000-04:00

No that is not a play off of Gordon Gekko's famous quote, and in fact it has nothing to do with money. I refer to the environment and our need to do all that we can, whenever and wherever we can, to protect it. What I have learned recently is that without doing much, we can truly make a difference.

I recently took a flight from Las Vegas to NY, and had a revelation. In between the post LV, drooling pass-out and defeating the guy in seat 26C in trivia ( Awesome new feature on Delta flights where you can compete in trivia knowledge for free against your co-passengers) I came across the movie "An Inconvenient Truth" that really grabbed me. For those that don't know the film, it is basically Al Gore's position piece through which he tries to hammer home the dangerous trajectory we are on regarding our planets well being. The real data that proves that the biggest threat to us, is in fact us. The good thing though is that we have the ability to start righting the ship, now!

Each of us can make a difference and the best place to start is where we live. Little things such as improving the insulation in your home, or changing your air conditioner filters more often, allow your house to not have to work so hard. Also, if we could leave our thermostats just 2 degrees cooler in the winter, and/or 2 degrees warmer in the summer we could vastly reduce the Carbon Dioxide emissions from our homes.
Another easy change is removing the common incandescent light bulbs we currently use and replacing them with fluorescent light bulbs. These are way more energy efficient and they actually last much longer. Takes away the hassle of replacing them so often! You can buy these bulbs at http://www.energyfederation.org/consumer/default.php/cPath/25_44

Point is, there are little things we can do that will protect our planet for us, and more importantly for the next generation(s) Most people feel that the careless things they do are so miniscule, that it cannot impact the big picture. Unfortunately when you add all of those people together, it truly sets us all back. So when buying your first home, or "cashing out" money through a refinance, you might consider putting some money back into your home to ensure that it is enviro-friendly. It is more important than ever before. For a list of the many things you can do visit
http://www.climatecrisis.net/takeaction/whatyoucando/

If we like this planet we live in, and plan on sticking around for awhile ( I know I sure do) we better all start saying it and actually living it...Green is good!

Brand..New Thinking...

2006-10-04T16:16:00.000-04:00

What is in a brand? It represents not only who the company is, but more importantly what it's promise is to it's clients. A strong brand is one that delivers on that promise through it's daily efforts and engagements. A brand is comprised of many components, and the combination translates into user experience. Is it good/bad/indifferent?

Most companies, especially in the banking world are scared to stand out. They have a fear of looking "silly" in the eyes of consumers and tend to keep it bland. We choose to stand out because we feel that we honestly offer a clearly different and better user experience in the mortgage industry. It is rarely found, and nobody does it quite like us. People want to be spoken to, not spoken at. They want to engage in a conversation that is about them, and not about the person selling to them.

Why would a mortgage company care about a brand? Because we help people manage their largest asset, their home. It is a high stakes financial decision, and one that should be taken seriously. There are so few firms out there, looking to roll up their sleeves and truly help people make decisions that are good for them. That is our daily/weekly/monthly/life commitment to our clients. How could you offer anything less?

So we relish in our "differentness" because we think that is precisely what our clients want and more importantly deserve....

Why have a mortgage?

2006-09-26T10:40:00.000-04:00

Mortgages are a very important component of an individual's total financial picture. They are a debt instrument people use in order to buy a home, but after that the mortgage program is often ignored. People think of them as a bad thing, but in fact they can often be one of your greatest allies.

The US has long been a nation that believes debt is bad, and that you should always aspire to be debt free. In corporations, debt and the management there of, are often used as great tools to improve or fund other more important growth projects. For individuals it can be used to help fund other life events. Mortgages, if managed correctly afford you other freedoms. Having someone you trust to navigate the waters with you is imperative.

It is crucial to make sure you are in the right mortgage. It really has little to do with rate, and has everything to do with your goals. You see a 15 year rate will typically carry a lower rate than most other loans, but the payment will be much higher than other programs ( because it must be paid over 180 months) Somebody that wants to manage cash flow should run the other way when a 15 year loan is thrown out there.

On the other hand, an Option ARM loan allows clients to select their payment each month. One of the options is an interest only payment at 1.25%. That is as low of a rate as you can find, but it doesn't pay down your loan. In fact, if you continue to make that minimum payment your loan will negatively amortize, which basically means that your amount owed will increase over time. Thereby leaving you with even more debt to pay off. This loan is great for a seasonal worker, or somebody who makes a low base income and a bonus at year's end. This is not right for people who are looking to pay down their loans, or that are undisciplined. Again, this is why one must be educated on the mortgage process thoroughly.

Mortgages can help people manage their lives more effectively. Life changes, due to different factors and it is wise to make sure that your mortgage changes with you. Is your mortgage right for you? Will it be right for where you want to be? Happy to discuss if anyone's listening.

Adam...