The Help for Home Buyers Blog

Overview of the RD Guarantee Loan in St. Clair County

2012-02-28T15:37:00.002-08:00

This is a true zero down loan! It has many features that are especially beneficial for first time home buyers. We close a lot of these. It is great vehicle to help our clients achieve their dream of home ownership.

The features are as follows:

-0% down

-6% seller concessions

-reduced mortgage

-credit scores as low as 600*

-certain repairs can be financed*

*certain restrictions apply.

Home Loan Rates Are Still Historically Low

2012-02-23T10:53:00.000-08:00

Whether you're a history buff or you're interested in buying or refinancing a home, the history of 30 year fixed interest rates over the last several decades will definitely interest you.

The following chart dates back to 1975 and shows that interest rates are in one of the lowest ranges that we have seen in some time.

I would like to see when you'd be available to spend twenty or thirty quality minutes together. During this time I can answer any questions you may have about current home loan rate opportunities and the different products that are available for purchasing a home, remodeling a home, or restructuring existing debt.

My goal is to create the best and most cost-efficient debt strategy for you and your family, so give me a call to see if you can benefit from today's low-rate environment. I look forward to speaking with you.

Home Security Tips

2012-02-23T10:32:00.000-08:00

Home security is very important to me. So, in this episode of my video blog I will share with you some very brief home security tips.

Conventional, FHA, USDA...Oh MI!

2012-02-16T14:26:00.001-08:00

Homebuyers often have a lot of questions about mortgage insurance (MI)...and understandably so. With different rules for different loan programs, the details can be confusing.

Here are a few things to keep in mind. All types of MI protect the lender in the event of default, and MI is typically required when homebuyers have less than a twenty percent deposit to put down on a home. There are two main types of MI: an Up Front Mortgage Insurance Premium (UFMIP), which is generally financed into the loan, and an additional monthly mortgage insurance premium (MIP), paid as a part of your normal monthly mortgage payment.

Here are some additional details to keep in mind:

	CONVENTIONAL "MI"	FHA "MIP"**	USDA "GUARANTEE FEE"
Basics	MI can be monthly or all up front	1% UFMIP rolled into loan amount + Monthly Premium	2% UF Guarantee Fee + Monthly Guarantee Fee
Potential Benefits	Upfront MI can save significantly on monthly payments. Conventional MI often has lower monthly payments than FHA.	Income requirements are relaxed compared to conventional MI & USDA. There is more flexibility in credit scores. Seller paid closing costs is allowable up to 6%.	The monthly premium is typically almost 1/4 the cost of FHA.
Potential Pitfalls	Seller paid closing costs is limited to 3% if ≤5% down payment. Credit requirements and income requirements are more stringent.	The monthly premium is typically higher than conventional & USDA.	There are specific geographic and income eligibility requirements. Income requirements are much more stringent than FHA.
Dropping MI	When the value reaches 78% of the original sales price, MI automatically falls off. You can request removal if the principal balance reaches 80% (i.e. accelerated payment of principal or, in some cases via an appraisal of the property showing increased value).	You must meet two tests to drop FHA's MIP: 1. You must PAY the balance down to 78% of the original sale price of the property (you can't just get an appraisal to show equity). AND 2. You must pay the monthly MIP for a minimum of 5 years.	The USDA Guarantee Fee remains on the loan for the entire term. It can never be dropped from a USDA loan until the property is sold, refinanced or the loan is paid off.

** Note that the FHA MIP example is based on a 30 year example.

If you have any questions about mortgage insurance or anything at all, call me or email me anytime. I’m always happy to help.

Sincerely,

Lester Wilkins
Blue Water Home Loans

Phone: 810-987-1200

lester@bluewaterhomeloans.com

The "Don'ts" of home buying. What NOT To Do When Buying:

2012-01-08T15:03:00.000-08:00

As you choose the path that leads to the home of your dreams, you can takeeither a pleasant Sunday stroll in the park or a gut-wrenching tiptoe through aminefield.
Here's the list of the eight most-important "don'ts" when you'reconsidering buying a new house.

Don't go it alone. It's wise to have your own buyer's agent.Don't rely on the seller's real estate agent, no matter how nice they may be.Remember, that agent's loyalty is to the seller first. Shop for an agentexperienced in representing buyers, especially if you plan to look at homes forsale by the owner (FSBO). That owner may not know about restriction anddisclosure laws, may "conveniently" forget them, or may simply notcare about them. Buyers' agents often have abbreviations on their businesscards as ABR (Accredited Buyer Representative), CBR (Certified BuyerRepresentative), or CEBA (Certified Exclusive Buyer Agent). The secret is toretain the agent before the search starts!

Don't go buying a lot of junk, or even quasi-junk. Draining your savings orrunning up credit card debt to buy a new living room set, a big-screen TV, or anew car could make a difference in your interest rate and whether you evenqualify for a mortgage. Avoid spending money until after the closing iscompleted, whether by credit or cash. Keep your debt down and as much money inyour bank account as possible. The lender will check bank and credit cardaccount history.

Don't change jobs. Unless it can't be avoided through such things as drasticlocation changes, experts say it is best not to change your employment pictureuntil after closing. A worse move is to change from a salaried position to self-employment.Lending institutions like to see steady employment and generally insist thatself-employers show a minimum of two years of successful income.

Don't mess up your credit. Don't go running around "fixing up yourcredit" without talking to a professional. For example, you may thinkyou're going to bump your score up a few notches by canceling credit cards, butcanceling the wrong ones for the wrong reasons can seriously damage your creditscore. Credit experts say it's important not to have too few or too many opencredit accounts, and the best credit is old credit. Another possible pitfall isto transfer all your credit card balances to one card to get zero balances onthe others. Your credit score will actually be higher in most cases if yourbalances are spread out across several cards.

Similarly, don't pay your bills off -- at least not all of them. Paying creditcards down to below 50 percent of the your credit limit is generally helpful toboosting your score, but paying off all your debts is only wise if you stillhave enough cash when it's over to take care of your down payment, closingcosts and prepays. In other words, don't deplete your savings to pay off yourcredit cards.

Don't make any large deposits or transfers. Today, many banks require an explanation and proof of source of funds for any large non-payroll deposits that are listed on a bank statement. What is deemed a large deposit is largely determined by the underwriter and can be as low as a few hundred dollars. The reason for the underwriter's concern is that an applicant may be borrowing money from individuals, or accepting money from an interested party to the transaction, to help with the settlement costs.

It's easy to see how this bank requirement can create a lot of frustration, especially for people who are used to moving money between their accounts, which many of us do today. The key thing to remember is that anyone applying for a mortgage should avoid transferring money between accounts or making large non-payroll deposits during the home buying or selling period. While that may feel like an inconvenience, the time and headache you'll save yourself from having to account for all your deposits will be worth it.

Don't think about lying. Lenders want to know how much cash you have to putinto the house -- truthfully. If you're borrowing the money for a down paymentand have to pay it back, it will have an effect on your ability to meet allyour obligations. If it's a gift and doesn't have to be paid back, that's fine.Whatever you do, don't borrow it from your uncle and tell the mortgage bankerit's yours -- the bank may ask you to document how long you've had it in thatbank and where you got it from. A lie could backfire and ruin the whole deal.

Don't do any spring cleaning. Don't throw out bills, bank statements, or taxreturns. A better idea than cleaning out is organizing all of your importantpapers that may be requested by a lender. Such documents my include:W-2s, 1099 income statements, recent pay stubs and tax returns for the pastcouple of years if you're self employed. While you're at it, round up yourprior title insurance policy, any canceled checks, settlement statements, orother forms of proof that you paid collections or disputed accounts.

How to Remove a Collection from Your Credit Report for Free!

2012-01-05T10:20:00.000-08:00

This video is courtesy of my good friend, Dave Sullivan, the Credit Guy. He is the most knowledgeable person I know in the credit industry.

Happy 2012

2012-01-02T11:14:00.000-08:00

First Time Home Buyer Tax Credit Offered by Blue Water Home Loans

2012-01-02T10:50:00.000-08:00

Blue Water Home Loans is pleased to announce that they are a participating lender in a first time buyer tax credit! This is a fantastic opportunity for home buyers!

Stronger Lure for Prospective Home Buyers

2011-11-27T10:22:00.001-08:00

By NICK TIMIRAOS from the Wall Street Journal

Home prices and mortgage rates have fallen so far that the monthly cost of owning a home is more affordable than at any point in the past 15 years and is less expensive than renting in a growing number of cities.

Where Housing Is Headed

View Interactive

The Wall Street Journal's third-quarter survey of housing-market conditions in 28 of the nation's largest metropolitan areas found that home values declined in all but five markets compared with the second quarter, according to data from Zillow Inc. Meanwhile, rent levels have risen briskly across the country and mortgage rates, hovering around 4%, are the lowest in six decades.

As a result, monthly mortgage payments on the median priced home—including taxes and insurance—are lower than the average rent levels in 12 metro areas, according to data compiled for The Wall Street Journal by Marcus & Millichap, a real-estate brokerage that tracked 27 metro areas. It remains less expensive to rent than to buy in 15 cities. But affordability hasn't done much to lift the sagging housing sector because many would-be buyers are unwilling to purchase a home or unable to qualify for a mortgage.

In Atlanta, which had the most favorable values for owning versus renting, the monthly payment on the average home was $539 assuming a 20% down payment during the third quarter. By contrast, the average asking rent stood at $840, according to the Marcus & Millichap data."It's one of the most striking developments of the housing downturn," said Paul Dales, an economist at Capital Economics. "The initial building blocks for a recovery are in place, but the legacy of the recession is really preventing households from taking advantage."

But real estate agents and economists say the trend hasn't boosted demand. That is because affordability alone hasn't been enough to overcome the obstacles in the way of a housing recovery. Some homeowners who would like to move up to larger properties are stuck because they can't sell their homes.

Also, while the monthly carrying costs on a mortgage are lower than average rents in some cities, home ownership carries other costs—including taxes, insurance, homeowner association dues and maintenance—which may dissuade some potential owners.

Monthly Costs: Rent vs. Own

View Interactive

Other would-be buyers can't qualify for mortgages because lending conditions are tight or because they don't have enough equity in their current homes to use as a down payments. "The reality of coming up with the down payment and the loan-qualification standards makes things much different than the raw numbers suggest," says Hessam Nadji, managing director of Marcus & Millichap. And even those who may qualify remain skittish about buying property in a market where prices could fall amid foreclosures and weak job growth.

Ryan Young illustrates the point. He is under contract to buy a three-bedroom home in Washington Grove, Md., that will have monthly mortgage, tax, and insurance costs for around $150 less than the $1,900 he is paying to rent a slightly smaller house in Bethesda, Md. He qualified for a 30-year mortgage with a 3.95% fixed rate. Still, Mr. Young says he is cautious about owning his first home with the prospect of future price declines. "Buying a house is not a good financial decision, per se, but we needed a bigger place," said the 35-year-old scientist, "and we don't want to move every couple of years into a new rental."

Other cities where owning is now cheaper than renting include Detroit, Minneapolis, Orlando, Las Vegas, Miami, St. Louis, Chicago and Phoenix.

Home ownership is also looking more affordable because after several years of declines, apartment rents will rise by around 4% this year, says Mr. Nadji. He says rents are poised "to pick up even more momentum across the country next year."

Even cities where it is still cheaper to rent than own have seen big boosts in affordability. In San Diego, the monthly cost of owning a home has averaged around 83% more than renting over the past two decades. During the third quarter, owning was 22% more expensive than renting, according to John Burns Real Estate Consulting.

Enlarge Image

Associated Press

A new development in Canonsburg, Pa. The inventory of homes on the market has fallen from levels seen a year ago, as prices and mortgage rates continued to decline.

Mortgage rates are a big reason why affordability continues to improve. In 1991, a $1,700 mortgage payment allowed a borrower to take out a $200,000 mortgage. Today, it gets that homeowner a $350,000 loan, a 77% increase in borrowing power, says Dan Green, a loan officer with Waterstone Mortgage, in Cincinnati. At the same time, low mortgage rates aren't spurring sales because few analysts expect rates to rise anytime soon. The Federal Reserve in August said it would keep rates at ultralow levels for two years. In a normal interest rate cycle, "when they go low, they don't stay for very long, and people jump in," said Mr. Dales. "This time, there is no urgency."

Affordability could continue to improve as prices slide even lower in coming months. Price declines are likely because the share of "distressed" sales, including bank-owned foreclosures, tend to rise in the winter, when traditional sales activity cools. Banks are often much quicker to cut prices to unload properties quickly, which means that the greater the share of "distressed" sales, the more prices tend to fall.

One hopeful sign is that inventories have fallen from their bloated levels of one year ago. All 28 cities in The Wall Street Journal's latest survey saw homes listed for sale fall from one year ago, when markets were reeling with a substantial overhang of properties amid a big drop in demand. Visible inventory was down sharply in several markets, including by almost half in Miami and 40% in Phoenix.

Low inventories have spurred more bidding wars at the low end of the market as investors compete for homes that they can convert into rentals. In Sacramento, it would take just 2.5 months to sell the listed inventory at the current sales pace. Las Vegas has a 4.3 month supply of inventory, according to John Burns Real Estate Consulting. But the potential supply of homes is much bigger because banks have yet to process hundreds of thousands of potential foreclosures.

Write to Nick Timiraos at nick.timiraos@wsj.com

My Credit Score Just Dropped, What Happened?

2011-10-31T05:12:00.001-07:00

You've been working really hard to increase your credit score. You've done everything you thought you were supposed to do to present yourself as a creditworthy individual. So, why did your score suddenly drop? What happened?

Unfortunately, this is a common occurrence with many consumers today, a situation that likely could've been avoided if you had only been working with a qualified credit improvement specialist from the beginning. Remember, there's no shame in seeking help with your credit. Credit scoring models are based on a number of factors that, when combined, add up to a formula that might not seem logical to those who don't deal with these kinds of issues on a daily basis.

The following are just a few examples of seemingly innocent actions that could cause your score to suddenly and dramatically drop.

I paid off my biggest credit card debt and closed the account, but my score dropped anyway. This is one of the most frustrating situations for many borrowers. You would think that paying off your biggest debt and closing your account would be a good thing - and it is. But, because of the five factors of credit we discussed in a previous article, this action could reflect poorly on your credit score because you chose to close the account. Depending on your situation, the account you closed could've been your oldest credit account with the highest credit limit, two major factors in calculating your score.

I maxed out my card, and even though I paid it off completely when I got my statement, my score still dropped. By maxing out your card, your overall credit ratios were adjusted. And even though you paid it off, your statement reflects your current status. In other words, your credit report shows that your account is maxed out, even if you pay it off the next day. The best thing you could've done here was to pay your bill before your statement arrived.

I was only one day late on my payment but I still received a 30-day late on my credit report. Unfortunately, your creditors do not distinguish the difference between one day and 30 days late. You must pay your monthly bills on time every time to avoid this penalty. Depending on which credit cards you have, you could suffer an additional penalty for being late on your credit card payments, even just one time. It's called the universal default clause, which could increase your interest rates on all your credit cards up to 28-30%, even if you're in good standing with your other accounts!

I paid off an old collection and my score dropped significantly. While it might seem illogical or even unfair, sometimes paying off a collection account can actually cause more harm than good. Remember, credit scoring models typically lend more weight to your recent activity than to the mistakes you might've made in the past. By paying off this old account, you may have inadvertently added more weight to this mistake from the past by making this item current.

Don't be shy about asking for help when it comes to your credit score. Remember, your credit is the most valuable financial tool you have at your disposal, and having an expert on your side is always smarter than learning the hard way on your own.

If you or anyone you know has questions about credit. Give us a call at your convenience. We'll be glad to review your credit and see what, if anything, needs to be done to help you meet your financial goals and needs.

Stay tuned for more great credit tips!

It's time to buy that house

2011-10-16T07:11:00.001-07:00

U.S. house prices have plunged by nearly a third since 2006, and homeownership rates are falling at the fastest pace since the Great Depression.

The good news? Two key measures now suggest it's an excellent time to buy a house, either to live in for the long term or for investment income (but not for a quick flip). First, the nation's ratio of house prices to yearly rents is nearly restored to its prebubble average. Second, when mortgage rates are taken into consideration, houses are the most affordable they have been in decades.

Two of the silliest mantras during the real-estate bubble were that a house is the best investment you will ever make and that a renter "throws money down the drain." Whether buying is a better deal than renting isn't a stagnant fact but a changing condition that depends on the relationship between prices and rents, the cost of financing and other factors.

But the math is turning in buyers' favor. Stock-oriented folks can think of a house's price/rent ratio as akin to a stock's price/earnings ratio, in that it compares the cost of an asset with the money the asset is capable of generating. For investors, a lower ratio suggests more income for the price. For prospective homeowners, a lower ratio makes owning more attractive than renting, all else equal.

Nationwide, the ratio of home prices to yearly rents is 11.3, down from 18.5 at the peak of the bubble, according to Moody's Analytics. The average from 1989 to 2003 was about 10, so valuations aren't quite back to normal.

But for most home buyers, mortgage rates are a key determinant of their total costs. Rates are so low now that houses in many markets look like bargains, even if price/rent ratios aren't hitting new lows. The 30-year mortgage rate rose to 4.12% this week from a record low of 3.94% last week, Freddie Mac said Thursday. (The rates assume 0.8% in prepaid interest, or "points.") The latest rate is still less than half the average since 1971.

Real Estate Tools at SmartMoney

As a result, house payments are more affordable than they have been in decades. The National Association of Realtors Housing Affordability Index hit 183.7 in August, near its record high in data going back to 1970. The index's historic average is roughly 120. A reading of 100 would mean that a median-income family with a 20% down payment can afford a mortgage on a median-price home. So today's buyers can afford handsome houses—but prudent ones might opt for moderate houses with skimpy payments.

For example, the median home in the greater Phoenix market, including houses, condos and co-ops, costs $121,700, according to Zillow.com. With a 20% down payment and a 4.12% mortgage rate, a buyer's monthly payment would be about $470. Rent for a comparable house would be more than $1,100 a month, according to data provided by Zillow.com.

Of course, all of this assumes mortgages are available—no given now that lending standards have tightened. But long-term data on down payments and credit scores suggest conditions are more normal than many buyers think, according to Stan Humphries, chief economist at Zillow. "If you have good credit, a job and a down payment, you can get a mortgage," Mr. Humphries says. "There's more paperwork and scrutiny than five years ago, but things are pretty much like they were in the '80s and '90s."

Not all housing markets are bargains. Mr. Humphries says Zillow has developed a new price/rent ratio that uses estimates for each individual property rather than city medians, to better reflect the choices facing typical buyers. A fresh look at the numbers suggests Detroit and Miami are plenty cheap for buyers, with price/rent ratios of 5.6 and 7.7, respectively. New York and San Francisco are more expensive, with ratios of 17.6 and 17.2, respectively. The median ratio for 169 markets is 10.7.

For investors seeking income, one back-of-the-envelope way of seeing how these numbers stack up against yields for other assets is to divide 1 by the price/rent ratio, resulting in a rent "yield." The median market's rent yield is 9.3% and Detroit's is 17.9%.

Investors would then subtract for taxes, insurance, upkeep and other expenses—costs that vary widely. But suppose total costs were 4% of the purchase price. That would still leave a 5.3% rent yield in the typical market. With the 10-year Treasury yield at 2.2% and the Standard & Poor's 500-stock index carrying a dividend yield of 2.1%, rents for residential housing in many markets look attractive.

A few caveats are in order. First, not all transactions are average ones. Even in low-priced markets, buyers should shop carefully. Second, prices could fall further. Celia Chen, a senior director at Moody's Analytics, expects prices to drop 3% before bottoming early next year and rising slowly thereafter. "If the economy slips back into recession, however, we could easily see a 10% drop," Ms. Chen says.

And property "flipping" can be dangerous even when prices are rising. That is because, absent a real-estate boom, house price gains simply aren't that exciting. Research by Yale economist Robert Shiller suggests houses more or less track the rate of inflation over long time periods.

Houses aren't the magic wealth creators they were made out to be during the bubble. But when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.

—Jack Hough is a columnist at SmartMoney.com. Email: jack.hough@dowjones.com

Boost Your Savings Account

2011-10-15T08:58:00.000-07:00

...Without Even Trying

Annual income aside, there's not a person among us who wouldn't welcome the idea of having more money in their savings account. This is the money we use on everything from yearly vacations to family presents. Come holiday time, wouldn't it be nice to have an extra thousand or so dollars at your disposal? Saving money is very important as you attempt to purchase a house. Lenders look to see a pattern of saving. Furthermore, you may need a down payment to purchase a house. Here are a few ideas that can help to make that possible. The best part is you'll hardly feel it!

Bring Your Lunch to Work - The average person spends $6 when they buy their lunch yet only $2 when they pack it themselves. That's a potential savings of $20 a week or $1,040 dollars a year.

Durable over Disposable - Using products like Handi-Wipes (semi-disposable rags) as opposed to paper towels, and a rechargeable razor rather than the disposable kind, can save you up to $200 per year.

Hold an Annual Yard Sale - You should have no problem making at least a hundred bucks. Besides, you'll get rid of all that household clutter in the process. Whatever you don't sell can be donated to charity and used as a tax write-off.

Ask for Discounts - From buying airline tickets to paying a medical bill, always ask if there's a discount to be had. The worst that can happen is you'll be told no.

Get a Library Card - As opposed to buying a book for $20 or renting a DVD for $4, get it for free. If you average 3 movie rentals a month, you'll save yourself over $140 a year.

Watch Those Utilities - Changing over to energy saving light bulbs and low flow showerheads is a great start. Also, most utility companies offer a home audit you can complete online. If not, go to http://hes.lbl.gov for a virtual inspection of your home. You may be surprised to learn how much energy (and money) you could be saving.

The good news is suggestions like these are merely a start. Only you know where your household may be wasting money. Find inefficient habits and figure out a solution. Remember, every little bit counts. The final step is when you save money on something, put the savings into an earmarked account. Then leave it alone until it's the appropriate time to use it.

Do you have any tips on boosting your savings?
If so, give me a call and tell me about them!

Getting Ready to Move? Here's a Checklist!

2011-10-05T19:49:00.001-07:00

4 WEEKS PRIOR TO MOVE: __ Set up a "move" file or folder __ Set up a "move" calendar. __ Have a garage sale. __ Collect financial, tax and employment documentation needed for your loan. __ Donate un-needed furniture to charity. __ Contact insurance company to transfer policies (life, auto, homeowners). __ Contact doctors, dentists for copies of medical records. __ Contact schools for copies of student records.
3 WEEKS PRIOR TO MOVE: __ Review tax deductions on moving expenses. __ Arrange cut-off date for utility companies (telephone, gas, electricity, water, garbage, cable television). __ Call friends and relatives to let them know you are moving. __ Request change of address kit from post office. __ Check out voter registration information for the new area. 2 WEEKS PRIOR TO MOVE: __ Transfer stocks, bonds, bank accounts and contents of safe deposit boxes. __ Prepare a list of clothing that will not be packed with household goods. __ Take time to check off previous listed items while you still have time! 1 WEEK PRIOR TO MOVE: __ Label items you will need to access easily and place them in separate room or closet. __ Clean out your refrigerator and let it air out at least 24 hours before moving. __ Drain outdoor equipment: Water hoses, propane tank from BBQ grill, gas and oil from lawnmowers. __ Discard all aerosols, paint, oils, and other flammable or toxic chemicals. __ Schedule with utility companies to have utilities turned on at your new home. MOVING OUT DAY: __ RELAX!!! __ Remember, items packed last will be unloaded first. __ Conduct a final review of the house, including attic, stairwells, closets, cupboards, storage, garage, and behind doors. MOVING IN DAY: __ Have the house ready for delivery prior to the truck's arrival. __ Take a break, sit back, relax and ENJOY YOUR NEW HOME!!

Take the stress out of moving by being organized! Give us a call if there's anything we can do.

Rural Development - Rural Housing Gets Annual Fee On Top of Decreased Upfront Fee

2011-09-26T09:24:00.000-07:00

If you are familiar with the Guaranteed RuralHousing loan offered through the USDA’s Rural Development department, then youknow that the loan program does not require the payment of monthly mortgageinsurance. They do have an upfront “guarantee fee” that is financed into theloan (although this amount may be paid from the buyers funds at closing).

This will change on October 1^st 2011. Rural Development isimplementing a monthly mortgage insurance premium along with their upfrontguarantee fee. Currently the guarantee fee is 3.63% of the loan amount andthere is no monthly mortgage insurance. October 1^st the guarantee fee will be reduced to2.00% and a monthly factor of .30% of the loan amount paid over 12 months.

So, what does this mean for home buyers? Here isa comparison:

Current October1st

Sale Price	$100,000	$100,000
Loan Amt.	$103,630	$102,000
Interest Rate	4.500%	4.500%
Loan Payment	$525	$517
Monthly M.I.	$0	$25
Total Loan Pmt	$525	$542

As you can see, the new monthly payment will behigher by $17….not really a deal breaker. Especially since this is one of only two zero down mortgageloans in existence!

As a reminder, the Rural Housing loan offers thefollowing features to home buyer:

$0 down payment
Low monthly mortgage insurance
Flexible credit and qualifying ratios (scores down to 600)
Seller can contribute up to 6% of the sale price towards buyers closing costs
No pre-payment penalty
No loan limits
Some counties have geographic restrictions
Income restrictions vary by county

So, even though the monthly payment will beslightly higher on Rural Housing loans after October 1^st, it isstill a great option for home buyers!

If you have any question, please feel free tocontact me at 810-987-1200.

This blog is a repost of Jim Papthedore's mortgage blog

Score: What is it Good For? The Elements of a Credit Score

2011-09-23T07:55:00.001-07:00

A credit score is an extremely important financial tool. It provides access to the financing you need in order to buy a car, a home, or pay for college tuition, among other things. Since higher scores equate to lower costs and vice versa, it's vital to understand the factors involved in calculating your score. Here are the five elements that make up a credit score, in order of importance:

Payment History: 35% impact. Paying debt on time has a positive impact. Late payments, judgments, and charge-offs have a negative impact. Delinquencies that have occurred in the last two years carry more weight than older items.

When applying for a mortgage, every point in your credit score can make a big difference. So don't make any major financial or credit decisions - even paying off an old debt or delinquency - without first discussing it with your mortgage professional.

Outstanding Credit Balances: 30% impact. This factor marks the ratio between the outstanding balance and available credit. Ideally, consumers should make an effort to keep balances as close to zero as possible, and definitely below 30% of the available credit limit when planning to enter into a loan transaction within 3-6 months.

Credit History: 15% impact. This marks the length of time since a particular credit line was established. A seasoned borrower is stronger in this area.

Type of Credit: 10% impact. A mix of auto loans, credit cards, and mortgages is more positive than a concentration of debt from credit cards alone.

Inquiries: 10% impact. This quantifies the number of inquiries (or requests for credit) that have been made on a consumer's credit history within a 6-12 month period. Each individual inquiry - up to 10 - can hurt your credit score by as much as 5 to 30 points. Any additional inquiries thereafter will not affect your credit score.

In other words, don't start the loan process until you're ready to act. Otherwise each individual credit inquiry could cost you. However, scoring models have now been adjusted to count multiple "hard" inquiries within a 45-day period as a single request. So, when you're ready, your credit will be too.

If you or anyone you know has any questions about credit scores or what can be done to repair them, please don't hesitate to call.

Biggest Credit Myths, Mistakes, and Misconceptions

2011-09-23T07:54:00.001-07:00

Good credit is well worth the effort it takes to both achieve and preserve it. If you have good credit, the following tips will help you keep it that way. If you are looking to improve your credit, however, now is the time to get started. Give us a call. We'll review your credit and find out exactly where you stand. In the meantime, if you plan on entering into a loan transaction in the next 6 to 12 months, you simply cannot afford to make the following credit mistakes:

Don't fall behind on existing accounts. This includes your mortgage and car payments. One 30-day late can cost you anywhere from 30-80 points or more depending on the other factors being reported on your credit reports.

Don't pay off old collections or charge-offs during the loan process. Paying collections will decrease your credit score immediately due to the "date of last activity" becoming recent. If you want to pay off old accounts, do it through closing, and make sure that 1) you validate that the debt is yours, and 2) the creditor agrees to give you a letter of deletion.

Don't close credit card accounts. If you close a credit card account, it will appear to FICO that your debt ratio has gone up. Also, closing a card will affect other factors in the score such as length of credit history. If you have to close a credit card account, do it after closing, and make sure that it is an account you’ve opened more recently. Remember, 10% of your credit score is made up of your Mix of Credit, so it is important that you have at least 1-2 major credit cards open and in good standing.

Don't max out or overcharge your credit accounts. This is the fastest way to bring about an immediate drop of 50-100 points in your credit score. Try to keep your credit card balances below 30% of their available on your monthly statement, and especially during the loan process. If you decide to pay down balances, do it across the board. Meaning, make an extra payment on all of your cards at the same time.

Don't consolidate your debt onto 1 or 2 credit cards. It seems like it would be the smart thing to do; however, when you consolidate all of your debt onto one card, it appears that you are maxed out on that card, and the system will penalize you as mentioned above. If you want to save money on credit card interest rates, wait until after closing.

Don't do anything that will cause a red flag to be raised by the scoring system. This would include adding new accounts, co-signing on a loan, or changing your name or address with the bureaus. The less activity on your reports during the loan process, the better.

Don't do it alone. If you feel that the credit challenges you're facing are too much, or you don't have enough time to do the work necessary to improve your own credit, don't lose hope and give up. Give us a call. We can help. In many cases, small changes to your credit profile could yield big results that could save you thousands of dollars on your mortgage. However, if professional credit repair does become necessary, we'll gladly provide you with a referral to an experienced professional credit repair specialist you can trust.

Stay tuned for more great credit tips!

Credit Repair Service: What to Expect

2011-09-23T07:53:00.000-07:00

Google the term "credit repair" and 19 million results are instantly generated. With so much information available, and so much of it conflicting, how do you know which credit repair company is legitimate and which ones are really just looking to take advantage of desperate consumers?

The following are steps you can take to know exactly what to expect from a legitimate credit repair company and the valuable services they provide:

Get a referral from your mortgage professional. Not only do we work with credit repair specialists on a regular basis, our business depends on your success. It's in our best interest to make sure you are represented by professionals who are experienced in dealing with creditors, the credit bureaus, and collection agencies.

Interview your candidates. Make sure they understand and can explain to you how credit scores are calculated. Remember the 5 factors that make up a credit score that we discussed in a previous article? Without a detailed knowledge of the specific elements that make up your credit score, how can they possibly create a successful strategy to increase your score?

Don't believe the hype. Credit repair takes time. Don't fall for advertisements from companies promising miracles in just a few days or weeks. Remember, it took time for your score to get where it is, and it will take a legitimate credit professional time to fix it, depending on your situation. For the most part, expect 3 to 6 months for the best results, and up to a year or more if you have more serious problems like bankruptcies or identity-theft issues.

Don't spend more than $1,500. Depending on your situation, expect to spend between $800 and $1,500 for a legitimate credit repair company. Again, if you have serious credit challenges such as charge offs, collections, public records or identity theft issues, expect to be in the higher range and vice versa. In today's market, where FICO scores one point below 740 could cost you thousands of dollars in interest and monthly payments, you'll be glad you made this investment in your financial future.

Monitor your progress. Be sure to communicate with both your mortgage professional and your credit repair representative throughout the process. To ensure success, we all need to be on the same page. With the right team of professionals, you can expect your credit score to increase between 10 to 220 points over the course of 6 weeks to 6 months. That's going to save you a lot of money on your mortgage, credit cards, auto loans, and even student loans.

Credit repair is a valuable, worthwhile service when you're working with the right company. If you have questions about credit repair and how it affects your chances of securing a mortgage or refinance, don't hesitate to call. We'll be glad to review your credit and see what, if anything, needs to be done to help you meet your financial goals and needs. Also, we will be happy to refer you to some excellent credit repairs specialists.

If you or anyone you know has any questions about credit scores or what can be done to repair them, please don't hesitate to call.

5 Ways to Raise Your Credit Score - And Fast

2011-09-23T07:51:00.000-07:00

If you are looking to improve your credit score quickly, now is the time to get started. Give us a call. We'll review your credit and find out exactly where you stand and where you need to get to. In the meantime, here are some great strategies you can utilize right away to give your score a little boost.

Create Some Balance: While paying down installment debt (car, school, mortgage, etc.), on time, and as agreed, shows responsibility and will definitely boost your credit score, paying down or paying off revolving debt, such as credit cards, can cause a quick and significant jump in your credit score. The trick is to get and keep your balances below 30% of your credit limit on each card on your monthly statements. For faster results, attack those cards with balances closer to their respective credit limits first, as opposed to those cards with simply the highest debt. Remember, if you pay off any credit cards completely, do not close your accounts without discussing it with your mortgage professional first. Cancelling those cards may inadvertently undo all of your hard work.

Know Your Limits: Make sure that your credit card issuers are reporting the correct limits on your accounts to the three major credit bureaus. Without an available limit, your account will appear to be maxed out at its highest reported balance each month. This could cost you up to 80 points in certain instances. Some creditors, such as American Express® and certain cards issued by Capital One®, actually have a policy of not reporting available credit. However, most companies will report your credit limits if you ask them in writing.

Take Some Credit: If you have a credit card account in very good standing, make sure that all three credit bureaus know about it. Just like your credit limits, some creditors don't report your information to all three credit companies - this is why credit scores often vary between bureaus. If this is the case, give them a call to find out why. Correcting this oversight could provide a significant boost to your score. Also, if you're in very good standing, ask your creditor for a lower rate or higher credit limit. This will increase the gap in the debt you owe versus the credit you have available. Sometimes hinting about closing an account can suddenly bring out the generous spirit of certain card issuers. Give it a try. The worst they can say is no.

Protect Your Interests: Your credit score is calculated based solely on the information available to the credit bureaus. If you have a HELOC, make sure it's listed as a mortgage or an installment account on your credit reports and not a revolving debt. If you had a bankruptcy, be sure that all items associated with the bankruptcy are being reported as included in the bankruptcy with a zero balance. This action could increase your score by 50-100 points. Because simple mistakes like these can wreak havoc on your credit score, it's important to monitor your credit every four to six months.

Even the Score: If you find information on your credit report that you believe is inaccurate or incomplete, then you have the right to dispute it free of charge. For the fastest results, visit the appropriate credit bureau's website and file a dispute online. If supporting documents are necessary, you have to file your dispute by mail.

If you'd like more information or a copy of our Sample Dispute Letter, give us a call right away. We'll be glad to help you in any way we can or, if it becomes necessary, refer you to credit professionals you can trust.

If you or anyone you know has any questions about credit scores or what can be done to repair them, please don't hesitate to call.

Know the Score: Three Steps to Better Credit

2011-09-23T07:50:00.001-07:00

If you are looking to buy, invest in, or refinance real estate now or in the coming months, your credit is going to play a more significant role in today's tight-fisted credit environment than it has in the past. It's that simple. Would-be borrowers need to address any and all credit issues now to avoid having to pay for it later.

But, here's the kicker. Nearly 80% of all credit reports contain errors of some kind. Recent studies also indicate that about one-fourth of these reports contain mistakes so egregious that applicants could actually be denied credit! Don't let this happen to you.

Step One: Get Your Report
The three main credit bureaus, Equifax, Experian®, and TransUnion®, are required by law to provide you with a free copy of your credit report once every 12 months. To request your free copy (one from each company) visitAnnualCreditReport.com or call 1-877-322-8228. (Note: free credit reports do not include credit scores. Scores can either be purchased online or pulled by your mortgage professional.)

While you're online, be sure to visit www.optoutprescreen.com as well. This will help you avoid the hassle of becoming a "trigger lead" and being bombarded with unsolicited mortgage offers, and make life a lot easier throughout the mortgage process.

Step Two: Dispute Inaccuracies
Study your credit reports and make sure everything is accurate. If you do find any discrepancies, you can legally dispute mistakes or outdated items for free. Once notified of a mistake on your report, a credit bureau has thirty days to investigate and respond. If the information can't be confirmed, then the item should be removed. (If you'd like more information on this process, give us a call. We'll send you our Sample Dispute Letter to help get you started).

Step Three: Meet With Your Mortgage Professional
Now that the information on your report is accurate, what if there are still some items in your credit history you would rather forget about? All is not lost. For some, small changes to your credit profile could yield big results that could save you thousands of dollars. For others, enlisting the services of a professional credit improvement company may be required. This important process can take up to six months or more, so don't wait. Give us a call. An experienced mortgage professional can share other insights into the ins and outs of credit scoring and credit repair.

Stay tuned for more valuable credit tips.

TIPS FOR A SMOOTH LOAN APPROVAL

2011-09-23T06:31:00.000-07:00

Here is a list of helpful tips to ensure aneffortless loan process. These DO’s and DON’Ts will help avoid any delays withyour loan approval.

DO call us if you have any questions

DO continue living at your current residence

DO continue making your mortgage or rent payments

DO continue to use your credit very sparingly

DO keep working at your current employer

DO keep your same insurance company

DO stay current on all existing accounts

DON’T apply for new credit (even if you seem pre-approved)

DON’T buy any furniture via credit or with closing funds

DON’T change bank accounts

DON’T make any large deposits

DON’T close any credit card accounts

DON’T consolidate your debt onto 1 or 2 credit cards

DON’T finance any elective medical procedure

DON’T join a new fitness club

DON’T make a major purchase (car, boat, fur, jewelry,etc.)

DON’T max out or over charge on your credit card accounts

DON’T open a new cellular phone account

DON’T open a new credit card

DON’T pay off any loans or credit cards without discussingit with us

DON’T pay off charge offs without a discussion with usfirst

DON’T pay off collections without a discussion with usfirst

DON’T start any home improvement projects

DON’T take out a new loan

DON’T transfer any balances from one account to another

If you encounter a special situation, it is best tomention it to us right away so we can help you determine the best way toachieve your goals. 810-987-1200.

Understanding the Home Appraisal Process

2011-09-21T05:59:00.001-07:00

Consumers are often baffled by the home appraisal process. They may feel their home is worth a certain dollar amount, and therefore, the appraised value doesn't make sense to them. It is important to know that appraisal guidelines are dictated by the lenders. In many states, the lenders must disclose the purpose of the appraisal, as each situation carries its own set of rules.

In essence, lender guidelines force appraisers to put a fair market value on a home based upon comparable sales in the area where the home is located, as the home must be bracketed according to size and value. For example, there is no set amount associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, and the local marketplace supports the value of a pool at $15,000, that item will be bracketed as [$15,000] on the appraisal.

Upgrades can usually be expressed at full value in newer homes since they required investing additional money onto the cost of building the home. On the other hand, the amount invested in upgrading or remodeling an older home is rarely reflected in full in the final appraisal. The reason is the home had value in its original condition, and again, the value of the upgrades must be supported by comparable examples within the same marketplace.

These comparisons must be drawn from current market activity within the last six months. Some lenders may want to look at both closed and pending sales to see if there is any room for negotiation. This is a safeguard to prevent appraisers from over-valuing the home in question. It is further stated in the guidelines that appraisers can only place a value on homes that have closed escrow. However, when property values rapidly increase within a marketplace, appraisers are generally permitted to make concessions and put more weight on the evidence provided by comparisons to pending sales and listings. This allows for a "real time" appraisal.

Although there is no formal standard to speak of, most lenders give the appraiser a 5% margin of error. If the file is reviewed and the appraiser is off by 8%, there is a good chance the value will be cut by the full 8%. It is in the best interest of both the appraiser and the homeowner not to push the value up higher than the market will support, otherwise the property evaluation may be exposed to a strict appraisal review.

As a loan executive, I make it a point to follow lender guidelines at all times, and work within the systems they provide. This promotes a good relationship with the lender, and smooth closure for my borrowers. As always, you are welcome to contact me if you have any questions.

Call me directly for a free consultation.

Rates Near 2011 Lows

2011-09-19T13:56:00.001-07:00

You may have heard that home loan rates have improved and are back down to near historic levels. In fact, I've been slammed with emails and phone calls from people who wanted to take advantage of this wonderful situation.

But you need to keep the following in mind…While some people say good things come to those who wait, others say to strike while the iron is hot. In this case, the "iron is hot" with rates at exceptionally low levels. And while weak economic reports here in the U.S. and the economic crisis in Europe are two of the main reasons rates have improved recently, signs of inflation are beginning to creep into our economy–and that never bodes well for home loan rates. That's why it's more important than ever to act now.

Give me a call if you want to see if you can take advantage of this window of opportunity to save significantly on your monthly budget. I look forward to hearing from you!

Quick Tips for Getting Started on Your Home Purchase

2011-09-18T07:30:00.001-07:00

Buying a home can be a complex process, but it doesn't have to be. With a little preparation, you can save a lot of time and hassle by having all of your documents ready when your mortgage professional needs them.

To start with, the lender will need personal information to verify employment for you and your co-borrower (if there is one). They will also need information regarding all of your debts and assets.

In order to expedite the paperwork process, start gathering the following items:

Most recent paystubs for one month.

W2s from the last two years.

Signed copies of your last two years' tax returns, including all schedules that were filed.

If you are self-employed, a year-to-date profit and loss statement.

Homeowner's insurance company name and number.

Most recent bank statements for two months.

Most recent statements from any retirement and investment accounts for two months.

What costs are involved?
Within 3 days of your application, your Loan Officer must provide you with a good faith estimate of closing costs. Along with any down payment, you will have to pay closing costs as well. This is a brief rundown of some of the fees that could be associated with your new mortgage:

Application/Processing Fee – Charged by the loan officer to process your loan application.

Appraisal Fee – Charged by the appraiser to determine the current value of the property.

Closing Fee – Charged by the closing agency (escrow, attorney, title) to ensure the close of your transaction.

Credit Report Fee – Charged by the credit reporting agency to provide your credit report to your loan officer and/or lender.

Title Search/Title Insurance Fees – Charged by the title company to ensure the property is free from liens or title defects.

Origination Fee – Paid to the originator to obtain a lower interest rate. This is usually expressed in the form of points. One point equals 1% of the loan amount.

Discount Points – Paid to the lender to secure a lower interest rate.

Miscellaneous Fees – VA and FHA loans may have other fees associated with them. Private Mortgage Insurance (PMI), document preparation, notary, recording and tax service are other fees which may fall under this category.

Let us help you evaluate your personal situation and assist you in finding the loan program that works best to meet your individual goals and needs.

Call me directly for a free consultation.

Don't Make That Big Deposit or Transfer!

2011-09-17T08:02:00.001-07:00

You've probably heard the saying, "When you fail to plan, you plan to fail." That is especially true when it comes to buying a home today. Underwriters are following strict guidelines–and that means even things like bank deposits and transfers are under scrutiny.

Here's some insight on how underwriters analyze bank statements...and what you need to know and do (or not do) during the loan process.

Today, many banks require an explanation and proof of source of funds for any large non-payroll deposits that are listed on a bank statement. What is deemed a large deposit is largely determined by the underwriter and can be as low as a few hundred dollars. The reason for the underwriter's concern is that an applicant may be borrowing money from individuals, or accepting money from an interested party to the transaction, to help with the settlement costs.

It's easy to see how this bank requirement can create a lot of frustration, especially for people who are used to moving money between their accounts, which many of us do today. The key thing to remember is that anyone applying for a mortgage should avoid transferring money between accounts or making large non-payroll deposits during the home buying or selling period. While that may feel like an inconvenience, the time and headache you'll save yourself from having to account for all your deposits will be worth it.

Let me know if you have any questions at all about this or if there's anything I can do to help you at this time!

Choosing the Right Real Estate Agent

2011-09-17T08:00:00.000-07:00

Choosing the Right Real Estate Agent

Choosing the right person to represent you in negotiating your home purchase is a major decision. Whenever you see the designation of REALTOR® (with a registered trademark) you can rest assured that person is a member of the NATIONAL ASSOCIATION OF REALTORS® (NAR), and has a commitment to meeting the standards of the organization. My team and I have a network of professionals that have done a great job for our clients in the past, and we can provide you with a referral to a qualified representative, and pre-approval to shop as a cash buyer.

How will you know which REALTOR® is right for you?

Seek to work with an experienced Real Estate professional that works with buyers on a regular basis. A real pro will go the extra mile to show you that they will look out for your best interest and gain your respect. Sincerity is a key word here. This type of Real Estate Agent will act promptly to get you information about their team and their methods of doing business, along with quotes and references from past clients.

Once you set an appointment to meet with a Real Estate Agent and his/her team, they should be rolling out the red carpet for you. You should have a personal introduction to each person you are expected to have contact with throughout the buying process. They should go out of their way to establish a long-term relationship with you, rather than thinking of you as a one-time transaction.

An experienced buyer's representative will ask many questions regarding your goals rather than tell you what they think you want to hear. He/she will also take your finances into consideration so that they can help you make the purchase you qualify for. They will seek to exceed your expectations in every way by having a system in place that provides complete customer satisfaction.

What can an experienced REALTOR® do for you?

An experienced professional will have access to the computerized Multiple Listing Service (MLS), which changes daily. He or she can provide you with new listings to consider as they become available, and will also include important demographics and market value information on the area you are seeking to buy a home. This person will serve as a strong negotiator on your behalf and provide guidance every step of the way. In the long run, using a trained professional will save you time and money. It is important to let your Real Estate Agent know what your goals are so he/she can eliminate the listings that do not meet your criteria.

Likewise, it is equally important to let my team know what your goals are so we can provide you with financing that fits your current and long-term goals. Our job is not just to close a loan for you, but to help you build a strong financial future by assisting you with managing that debt in the future. We use an extensive database system that allows us to run reports and determine when refinancing is appropriate and beneficial.

Call me directly for help finding a qualified REALTOR® you can trust.

The Art of Home Purchase Negotiation

2011-09-17T07:59:00.001-07:00

The Art of Home Purchase Negotiation

There is much give and take involved in negotiating a property purchase. That's why it's important to have a checklist of what you want to get out of the deal as a buyer. Bear in mind, the home must be appraised and the lender will be looking at the fair market value on a given property. Since property values fluctuate, your Real Estate Agent should do a comparative market analysis so you are aware of what the trends are for the area in which you are shopping. This will give you an idea as to whether the seller's asking price is realistic. You will also want to know how long the property has been on the market, and if any price reductions have occurred during that time.

Make sure your Real Estate Agent is on the same page with you so he/she is able to represent you properly. You also want to know that you are working with an agent that is experienced in representing the buyer. Not all agents have the ability to provide strong representation for both a buyer and a seller. If you have not yet selected a Real Estate Agent to represent you, my team and I can provide you with contacts that have a proven track record of success with our clientele.

Remember a good deal is mutually beneficial.

The seller will also have a wish list of what they want out of the negotiation. Listen attentively to determine what their hot buttons are. You can use this information to leverage what you want out of the deal at some point along the way.

Find out if the seller has a deadline. Perhaps they have already purchased their new home, or have to relocate because of a commitment to a new employer. Find out what the seller's current mortgage balance is and use this to your advantage.

On the other hand, if the seller wants to move because they can't manage upkeep on the home, or don't want to invest in repairs, these problems will be passed on to you. If you are prepared to go into a deal that involves a fixer-upper, there is an FHA financing program designed to provide funds for both purchase and repair. My team and I can provide you with more information on FHA loan programs and secondary financing.

You would also want to know if the seller is planning this move because there are problems in the neighborhood. Take a walking tour of the area and ask the residents what the neighborhood is like. You can also ask the local police department about the crime rate, or check the local newspaper for crime listings. Don't be afraid to ask questions.

When the seller is intent on getting their way on a certain point, make sure you are getting something in return. Typically the built-in amenities such as the dishwasher and garbage disposal will stay with the home. You can negotiate other items in exchange for something that ranks high on the seller's wish list. Be prepared to split the difference so everyone involved is satisfied with the negotiation. A win-win situation for both the buyer and the seller is critical to a smooth close.

Keep it simple and be direct, but above all, know that my team and I are here to assist you.

Call me directly for a free consultation.

Interest Rates When is the Best Time to Lock?

2011-09-17T07:55:00.001-07:00

Interest Rates When is the Best Time to Lock?
When it comes to mortgage loans and interest rates, it's never a good idea to gamble. That's why I typically advise my clients to lock in an interest rate at the earliest opportunity. This is just one step of the standardized system we have put in place to ensure the best possible loan experience for each borrower that we work with. A mortgage loan cannot be closed without a locked-in rate, and there are three main elements to take into consideration: Interest Rate Points or fees Length of the lock Locking in a rate does not obligate the borrower to commit to the loan until the loan is actually closed. The lock is merely a security measure designed to eliminate the risk of market volatility throughout the duration of the purchase or refinance transaction. As long as the loan is approved and funded before the end of the lock period, the borrower will receive the interest rate quoted.

When a lender permits an extended lock-in period, the borrower will likely face a higher interest rate or additional fees that could be quoted as points. In other words, the borrower pays for the lender to take on the extended risk of being exposed to potential changes in the market.

For example, let's say a 30-day rate lock commitment costs the borrower one-half point, while a 60-day rate lock commitment costs one full point. If the borrower in this scenario needed the extended lock period, but did not want to pay points, then an alternative would be to accept a slightly higher interest rate. In this case, a 60-day lock would typically have a higher interest rate than a 30-day lock.

Our standard procedure is to lock in a rate as quickly as possible. My team and I want our clients to know that while interest rates fluctuate daily, most lenders do not want to lose any business because of it. If a significant rally causes interest rates to drop 0.25% or more, we know that we can most likely renegotiate the rate. In many cases, lenders prefer this option over losing the loan to another lender. On the other hand, if we'd allowed our clients to sit on the fence and not lock in their rate, we would have exposed them to market volatility without a safety net. Then, if rates were to increase, the borrower might no longer qualify for the loan they want - a situation that we want to avoid at all costs.

By knowing our clients' needs and working intimately with them to make the right decisions early on, my team and I are proud to say that we have helped them to achieve their home ownership dreams.

If you'd like to learn more about the loan programs we have available, please call me!

Stop Paying Your Landlord's Mortgage!

2011-09-17T07:54:00.001-07:00

Stop Paying Your Landlord's Mortgage!

It's staggering when you think about the cost of living, especially if you're a renter and not a home owner. If you are currently paying $1,000 a month for rented housing, then over the next three years, your property management company will effectively have reaped $36,000 of your hard earned cash! You're paying their mortgage when you could be building equity in your own property.

What if I don't have the money to buy a home right now?

There are many loan programs available that offer low and no down payment options. Some programs permit gift money as a down payment, and often sellers are willing to make a contribution to your purchase if they want to sell the home quickly.

There are many benefits of home ownership to consider, most of all, tax deductions. Let's take a look at how advantageous this can be as a homeowner:

How much is tax deductible?

Tax deductions vary, but the IRS has laid out solid rules. They also have several tax publications full of helpful information worth taking the time to read. Publication 530, Tax Information for First-Time Homeowners, is very thorough, as is Publication 936, Home Mortgage Interest Deduction. For quick reference, you can refer to Tax Topics 505, Interest Expense, and 504, Home Mortgage Points.

These publications often refer to local and state guidelines, so you may want to consult a CPA to answer all the questions that arise from reading these materials. Here are a few tips you should know up front:

Real Estate taxes are deductible on a primary residence. Real Estate taxes are paid at settlement or closing, or through an escrow account.

Mortgage interest is deductible on a loan to purchase, build or improve your home. Your lender will provide you with a Mortgage Interest Statement (Form 1098) to list the total interest paid during the year. This should include any deductible points paid for that year.

Pre-paid interest is deductible in the year it is paid. At the close of a real estate transaction, borrowers usually pay for the interest on their loan that falls between the closing period and the first of the next month. Mortgage payments are made "in arrears" so when a loan is closed mid-month, there is interest due to the new lender which must be paid in advance.

If you are building a home, the interest on the construction loan is deductible. The construction period cannot exceed 24 months prior to the date that you move in if you claim this as your primary residence.

Call me to discuss your specific needs and we'll find the program that's right for you.
We have a variety of low down payment and no down payment programs available.

Credit Tips That Will Score Lower Interest Rates

2011-09-17T07:53:00.000-07:00

Credit Tips That Will Score Lower Interest Rates

A good credit score translates into lower interest rates for home-shopping borrowers. In a mortgage lender's eyes, the higher your score is, the less risk you are, and the more likely it is you will pay off your debt. For this reason, borrowers with lower scores usually end up paying higher interest rates on their loans.

If this is you, don't panic. There are a number of things you can do to adjust your credit score to receive a favorable review from the underwriter. Here are a few suggestions:

Should I pay off all my past due balances and charge-offs?
This is usually a good idea, but you only need to worry about the past due balances and charge-offs that have occurred in the last two years. Items more than two years old have little effect on your current credit score. In fact, if you pay off delinquent items over two years old, it can actually bring your credit score down - something you don't want to do. Bringing that score up means you'll get a better interest rate on your loan.

Should I close existing credit card accounts that I don't use?

No. Part of your credit score is based upon credit history. If you have old credit cards that you don't use very much, you still have the benefit of the credit history they represent.

Rather than trying to pay off all your credit cards, you can move part of the debt from one card to another to even out the distribution of debt. Try to keep balances as close to zero as possible, and definitely below 30% of the available credit limit when trying to purchase a home. Also, if your credit provider will increase your line of credit, the ratio of debt to available credit is automatically reduced.

When married couples have separate credit card accounts, the debt can be transferred from one spouse to another to clear up credit issues for the other spouse. That spouse with clean credit can be designated as the sole borrower on the loan, but ownership of the home can still go in both names.

What about errors on my credit report?

If you have items that are showing up on your credit report that you know you have already paid, request that these items be removed by the credit bureau. They are obligated to rectify this within 30 days.

If there are items on your credit report that are less than two years old, send in your payment if possible and mark the back of the check with the following notation: "Accepting this check is evidence that the transaction is complete and this charge will be deleted from my credit record." If necessary, the cancelled check will be proof that this should be promptly removed from your credit report if it interferes with the closing of your loan.

Call me directly for a free consultation.

Planning Your Mortgage and Seeking Pre-approval

2011-09-17T07:51:00.001-07:00

Planning Your Mortgage and Seeking Pre-approval

The Benefits of a Professional Consultant

Choosing the right lender is a key element to managing your mortgage. As a mortgage consultant, my goal is not just to provide you with a loan, but also to help select the one most beneficial to you and your long-term goals, and then, help you manage that debt over time. There are not many lenders out there who provide this type of personalized service.

My job is just beginning when your first loan closes. I will continuously monitor rates on your behalf, and stay in touch with you to make sure we remain on target with your financial goals.

Seek Pre-Approval

What's the difference between pre-qualification and pre-approval?

Pre-qualification is the starting point in your search for mortgage financing. A quick snapshot is taken which includes income, existing debt, savings, length of employment, etc. All of these factors will then be analyzed to determine your loan eligibility.

Pre-approval is written documentation that shows you have the support of a lender who is willing to finance you. It means an underwriter has reviewed your loan application. Based on your income, debt ratio and savings, the underwriter provides the dollar amount you are eligible to borrow. Now you can shop around for houses that fit into that loan amount category.

Here is the nice thing about the pre-approval: It gives you the leverage to shop as a cash buyer! With a pre-approval in hand, you now have the power to negotiate. The seller will take your offer much more seriously knowing you are already approved by a lender. Pre-approval can also shorten the time it takes to close, making even a lower bid attractive to sellers who are seeking to move quickly.

What will my monthly payments be?

The amount of your monthly payment depends on what loan program you choose. We like to provide our clients with an easy-to-read spreadsheet that narrows their choices down and compares different loan programs that meet both current and long-term goals. You will have the opportunity to select a program you feel comfortable with before you make an offer on a home.

What does it cost to get pre-approved?

Pre-approval is FREE! You have absolutely nothing to lose and everything to gain.

Give us a call to begin your pre-approval process. We have a network of Real Estate professionals ready to provide you with excellent service!

Call me directly for a free consultation.

How Purchase Loans Are Made

2011-09-17T07:46:00.000-07:00

How Purchase Loans Are Made
A Step-By-Step Walkthrough

1.		Pre-approval - Get pre-approved for a mortgage and know in advance exactly how much house you can afford. Completing this step will also increase your negotiating power since you'll be viewed as a "cash buyer".

2.		Loan Search - Put yourself in the hands of an experienced mortgage professional, someone who will help you to determine which financing options best suit your needs today and in the future.

3.		Loan Application - It's crucial to supply the lender with as much information as possible, as accurately as possible. All outstanding debts as well as assets and income should be included.

4.		Documentation - Paperwork supporting the application must also be submitted. Information commonly sought includes pay stubs, two years' tax returns, and account statements verifying the source of the down payment, funds to close and reserves.

5.		The Hunt - Begin shopping for a house. Once you find the right one, the terms of the sale will be negotiated, including the price and potentially the terms of the loan being sought.

6.		Appraisal - Lenders require an appraisal on all home sales. By knowing the true value of the home, the borrower is protected from overpaying.

7.		Title Search - This is the time when any liens against the property are discovered. A lien may have been placed on a property to ensure payment of outstanding debts by the owner. All liens must be cleared before a transaction can be completed.

8.		Termite Inspection - While most purchase loans do not require a formal inspection for termite and water damage, some loans (especially government loans) allow for the possibility. If problems are found, repairs may be necessary.

9.		Processor's Review - All pertinent information will be packaged by your mortgage professional and sent to the lending underwriter, including any explanations that may be needed, such as reasons for derogatory credit.

10.		Underwriter's Review - Based on the information put together by the loan professional, the underwriter makes the final decision regarding whether a loan is approved.

11.		Mortgage Insurance - Many lenders require private mortgage insurance when borrowers put down less than 20 percent on a loan.

12.		Approval, Denial or Counter Offer - In order to approve a loan, the lender may ask the borrowers to put more money down to improve the debt-to-income ratio. The borrower may also need a bigger down payment if the property appraises for less than the purchase price.

13.		Insurance - Lenders require fire and hazard insurance on the replacement value of the structure. Flood insurance will also be required if the property is located in a flood zone. In California, some lenders require earthquake insurance on condominiums.

14.		Signing - During this step, final loan and escrow documents are signed.

15.		Funding - At this point, the lender will send a wire or check for the amount of the loan to the title company.

16.		Confirmation of Funding - The lender authorizes the disbursement of loan proceeds.

17.		Closing - Documents transferring title will now be officially recorded by the County Recorder.

18.		Congratulations, you are now a homeowner!

If you'd like to learn more, please give me a call. I'd be happy to speak with you!

Avoid Changes to Your Financial Profile During the Loan Process

2011-09-17T07:04:00.001-07:00

Avoid Changes to Your Financial Profile
During the Loan Process

Once your loan package has been sent to the lender, there are a number of things you should avoid doing that will change your financial picture. Remember, the lender is looking for stability and consistency. If you want the best interest rate, keep that in mind. Here are a few things to consider:

The lender is looking to see what your source of down payment is.

Your lender will most likely ask you to provide proof of your liquid assets. This includes bank statements for checking and savings accounts, verification of investments, and any other liquid assets. Some of the things they ask for may seem trivial, but keep in mind, if you are planning a move to a new home, it's important to have all documentation readily available. If the lender asks for cancelled checks or deposit receipts to meet certain conditions, you want to be able to find these things quickly to avoid delaying the closing of your loan. Make sure your paper trail is easy to document, and don't move money from one account to another.

Major purchases tip the scales against your favor.

Avoid making any major purchases. You might be thinking about purchasing new appliances for the new home. This is not the time to do it. Avoid making any major purchases on jewelry, appliances, furniture, vacations, or anything with a significant price tag.

Buying or leasing a car can make a negative impact on the way the lender views your financial status. This is a big ticket item that dramatically affects your debt-to-income ratio. You may feel you have room in your budget to purchase a new car, and think this is a worthy investment if you are looking for a home that will mean a longer commute for you on a daily basis. But by tacking a car payment onto your existing debt, you reduce the amount that you will qualify for in a home loan. A $400 a month car payment can reduce your approved loan limit by as much as $50,000. Think about doing this after your loan is approved if you really need it.

If you have to change jobs, you may be asked to document why this change occurred.

If you are changing jobs to increase your income, that's a no-brainer for the lender. If you have an erratic work history to start with, another job change may make it look worse for you.

If you are an hourly wage employee, most likely a job change will have no effect on your ability to qualify for a loan. If you have a track record of a consistent amount of overtime or consistent bonuses over the last two years, the lender views this favorably. If you change jobs, there is no way of knowing if the new employer will pay overtime. Many do not! If you work on a salary + commission or straight commission basis, it has a dramatic effect on your stability. If you are considering starting your own business, again, this is something to consider after your loan is funded.

Call me directly for a free consultation.

How Much Money Should You Borrow?

2011-09-17T07:03:00.001-07:00

How Much Money Should You Borrow?

While it might be tempting to borrow whatever amount of money your lender is willing to give you, it's important to think carefully about how much you'll actually need to borrow in order to purchase a new home. From the down payment to taxes to insurance and interest rates, there are many factors to consider when making this important, life-changing decision.

Contrary to popular sentiment, there is no standard formula for accurately calculating the specific dollar amount you should borrow when purchasing a new home. Many websites do offer special borrower calculators that claim to factor in important variables, and yet final results vary vastly from one site to the next. Other websites offer general rules of thumb, suggesting that you should never borrow more than 2 1/2 to 3 times your gross annual income, or that 28%, 32%, or even 40% is the maximum amount of debt you should ever take on.

And, while these insights may be helpful as you begin thinking about the overall borrowing process, meeting with a reputable loan professional and getting yourself pre-approved (not pre-qualified) is really the only way to know the exact amount of money you can and should borrow. By getting pre-approved, you not only increase the chance of finding the perfect house for your needs, you also become a "cash buyer", instantly increasing your bargaining power.

As a mortgage professional, I see my role differently than a traditional loan officer. While my job is to match you with the best mortgage available for your specific needs, I feel that it's also my duty to make sure it's the most responsible product as well. After all, what if something unforeseen or unexpected were to occur? What if you have an accident or you lose your job?

Whether you choose to work with me or not, be aware. A lender will often offer you the maximum amount of money that you qualify for, whether you actually need the full amount or not. Because of this, it's vital to sit down with a professional you can trust to figure out your complete financial picture.

If you or someone you know could benefit from this type of free consultation, give me a call. I would be happy to assist you!

What Lenders Look for in Home Loan Applications

2011-09-17T07:00:00.000-07:00

What Lenders Look for in Home Loan Applications

Once your loan application is filled out and sent to the lender for review, the first thing they will look for is your ability to pay back the loan you are requesting. My team and I have a streamlined loan process to help you get your ducks in a row prior to this review. A grand slam loan package is in perfect order and answers all the important questions up front. We know what the lenders are looking for, based on long-term relationships with them and extensive knowledge of guidelines for a multitude of loan programs that are available today.

What is the lender looking for when they review the loan application?

The lender wants to know about your personal financial picture, including savings and credit history and your employment stability. The co-borrower's history is also taken into consideration. The lender also considers the loan amount and appraised value of the home you are looking to purchase. Not every applicant is approved the first time through the process. If the underwriter has any questions or concerns, he or she will require certain conditions be met before they approve the loan. Pre-approval prior to house hunting lets you know exactly how much you are qualified to borrow in advance.

What can I do on my end to make it easier?

Before taking out a home loan it helps to establish a consistent record of paying your bills on time. If you have utility bills that are overdue, bring these up to date. Make sure you are paying credit card installments in a consistent and timely manner.

We can help you evaluate your debt-to-income ratio to determine what mortgage payment will be comfortable and affordable for you on a monthly basis. Aim for having enough savings to cover your down payment, closing costs if necessary, and two month's expenses in case of emergency. We'll help you find the loan program that works for you.

If I just started a new job six months ago, can I still apply for a loan?

A stable employment history is important, but the lender does take human factors into consideration. If you've recently completed college or vocational training, or were released from the military, you have good cause to have a lack of consistent work history. If your profession is seasonal, and gaps in employment are normal in your field, there are loan programs that can work with your situation. If you are a freelancer or do contract work, the lender will look for consistency in income over the last two years.

Consistency is the key word in the lender's mind. But know that lenders have developed many different loan structures to meet the needs of the general public. When your grandparents bought their first home, they probably put 50% down and made a lump sum payment when the note was due. Times have changed, and so have loan programs. My team and I stay on top of current mortgage trends. We monitor rates daily and have a support network of Realtors®, CPAs, Financial Planners and Credit Repair Consultants to lend you additional assistance.

Call me directly for a free consultation.

The Help for Home Buyers Blog

Overview of the RD Guarantee Loan in St. Clair County

Home Loan Rates Are Still Historically Low

Home Security Tips

Conventional, FHA, USDA...Oh MI!

The "Don'ts" of home buying. What NOT To Do When Buying:

How to Remove a Collection from Your Credit Report for Free!

Happy 2012

First Time Home Buyer Tax Credit Offered by Blue Water Home Loans

Stronger Lure for Prospective Home Buyers

By NICK TIMIRAOS from the Wall Street Journal

Where Housing Is Headed

Monthly Costs: Rent vs. Own

My Credit Score Just Dropped, What Happened?

It's time to buy that house

Real Estate Tools at SmartMoney

Boost Your Savings Account

...Without Even Trying

Getting Ready to Move? Here's a Checklist!

Rural Development - Rural Housing Gets Annual Fee On Top of Decreased Upfront Fee

Score: What is it Good For? The Elements of a Credit Score

Biggest Credit Myths, Mistakes, and Misconceptions

Credit Repair Service: What to Expect

5 Ways to Raise Your Credit Score - And Fast

Know the Score: Three Steps to Better Credit

TIPS FOR A SMOOTH LOAN APPROVAL

Understanding the Home Appraisal Process

Rates Near 2011 Lows

Quick Tips for Getting Started on Your Home Purchase

Don't Make That Big Deposit or Transfer!

Choosing the Right Real Estate Agent

Choosing the Right Real Estate Agent

The Art of Home Purchase Negotiation

The Art of Home Purchase Negotiation

Interest Rates When is the Best Time to Lock?

Stop Paying Your Landlord's Mortgage!

Stop Paying Your Landlord's Mortgage!

Credit Tips That Will Score Lower Interest Rates

Credit Tips That Will Score Lower Interest Rates

Planning Your Mortgage and Seeking Pre-approval

Planning Your Mortgage and Seeking Pre-approval

How Purchase Loans Are Made

Avoid Changes to Your Financial Profile During the Loan Process

Avoid Changes to Your Financial ProfileDuring the Loan Process

How Much Money Should You Borrow?

What Lenders Look for in Home Loan Applications

What Lenders Look for in Home Loan Applications

Avoid Changes to Your Financial Profile
During the Loan Process