Dec

30

Questions For Your Mortgage Lender

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More and more, consumers are learning that there is much more to getting a mortgage than just the interest rate and points. As a consumer, here are some questions for your mortgage lender.

A good mortgage planner is more in the advice business than the lowest price business. With tightening guidelines, often the question first is “Will the loan be approved?” But moreover, the borrowers’ concerns need to involve some of the answers to these non-price questions:

1. What type of lender should I use?

There are three basic types of lenders. Mortgage BROKERS promote a broad product menu, competitive pricing, and entrepreneurial approach; however, BROKERS cannot lock, commit, or approve your loan because they are not actual lenders. Banks and Credit Unions rely on financial strength, direct lending capabilities, and stability; however, the have limited product menus and often a “cover my ass” mentality. Mortgage BANKERS blend the best of both- direct lending ability, financial strength and stability, wide product offerings, competitive pricing and the entrepreneurial spirit.

2. What loan products should I be considering?

Make sure your lender has multiple types of products (Conventional, FHA, VA, State Mortgage Agency Products, etc.). While most people today do choose a 30 year fixed, it is not always the wisest choice. Borrowers need to consider how long they will be staying in the home and any changes in their income during that time period before just accepting the same loan as everyone else. Additionally, with many properties in need of some renovations or repairs, you need to explore the FHA 203K Program discussed in last week’s blog.

3. Should I lock or float my interest rate?

Most mortgage planners are trained to dodge this question. I believe you should be hiring an expert who should have an informed opinion about the direction of rates….in the short term and the long term. Weighing numerous factors ranging from your projected closing date to upcoming economic reports, a good mortgage planner can counsel a client into saving money. While no one can predict with absolute certainty, you need to reach a comfort level that the lender you choose has the best information and your best interest at heart.

4. What are mortgage rates based on?

There is only one correct answer. It is the pricing of Mortgage Backed Securities. (Unfortunately, too many people answer the 10-year Treasury Bill.) If you get the wrong answer on this basic question, what else don’t they know?

5. How do economic releases impact rates?

How will a Jobs Report, a Fed Board Meeting or Inflation Number affect your home loan? Your mortgage planner should know, should explain it to you, and keep you informed.

6. Can I improve my chances of approval while keeping costs low?

Sometimes even minor improvements in a credit score, the amount of your down payment, or how you position your assets can make a big difference. During your counseling sessions, your mortgage planner should be advising you on how the “little things can make a big difference’”

Good advice, whether it’s from your doctor, lawyer, real estate agent or lender, can be invaluable. Finding a lender who is an expert….who has your goals in mind…and who offers creative solutions is one of the most important factors in a successful real estate transaction.

By Dean Hartman
Chief Planning Officer
Continental Home Loans

For more information on the mortgage process, please sign up for one of the daily webinars listed below, hosted by Dean.
Every Morning at 10:00

Nightly at 7:00 Registration

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Dec

21

Insider Secrets To An Optimal Credit Score

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As you prepare to apply for credit (like a home mortgage) understand that it is significantly better to have your best possible credit profile before applying. Working to improve your score during the mortgage process can be done, but there are two problems. One, time to clear up items can become an obstacle when compared the time you are anticipating a closing. And two, lower scores upfront can give an underwriter an additional reason to be uncomfortable with a file. “Sooner, rather than later” should be the mantra of credit score improvements. Here are some tested ways to do it:

Credit Cards – Revolving Debt proportions

1. Look on the credit report for revolving debt (not installment loans, or “open” accounts)
2. As a general rule of thumb, the balance should be no more than 30% of the credit limit. So, if it’s more than that, have you should make every attempt to pay it down.
3. If there are many revolving accounts with high balances, you will most probably need to pay down most or all of them for the best score.
4. If there is nothing derogatory on the credit report, just high balances on revolving debt, you can often improve the score significantly. But, if there are many derogatory items on the credit report, paying down revolving debt may not help the score very much.
5. Many lender have software programs that can quickly determining for you which (if any) revolving accounts need to be paid down, and to what balance.

Collections/Judgments:

1. Paying off or satisfying such a derogatory account does not normally improve the score because the derogatory account still exists, and so still hurts the score. In fact, paying off an old collection may even make the score drop.
2. However, for collections, the borrower can ask for the account to be completely removed or deleted. If you have not yet paid the collection, you can use that as a bargaining chip.
3. If there are many collection accounts, removing just 1 or 2 may not do much good. You always need to look at the overall credit picture.
4. Charge-off accounts behave a little differently than collections. You can sometimes gain points by paying those off.
5. Your lender likely has a What-if Simulator to experimentally see what affect removing an account has on the score.

Late Dates

1. When you look at the overall credit report and you see LOTS of late dates, especially ones from within the last year, there is not much you can do to help the score…those lates simply need to drift into the past.
2. However, if you just see 1 recent late date on 1 account, and just 1 other recent late date on another account, you should call those creditors and ask…beg…for those single late dates to be removed as a courtesy. It may also be that the late dates were a mistake, but don’t push the creditor to admit to making an error. Just ask them to remove it as a courtesy since you have an otherwise perfect payment history with that creditor.
3. Your lender can use the What-if-Simulator to experimentally see what affect removing a late date has on the score.

Authorized User Accounts-removing or adding

1. Piggybacking on someone else’s account can help or hurt your score.
2. If that account has recent late dates, you can most probably improve the score by having the actual account holder remove you as a user.
3. If the account is a revolving credit card and it’s “maxed out,” you might also improve the score by removing it, but only if you will still have other revolving credit cards on your report.
4. What about adding someone as an authorized user to a credit card? This may help, but the better course of action is to get the actual card holder to make it a joint account with you. This guarantees that the account will show up on the credit report within a month or two. But be careful…the account should have a lot of history, no late dates, high credit limit, and low balance.

Other things to help

1. Keep old revolving credit cards open…don’t close them.
2. Regularly check your credit report to catch errors early. You get a free one each year from each bureau. Don’t do all 3 bureaus at the same time…space it out throughout the year.

While I trust that some of your questions were answered in this blog, I bet many questions were also raised about your individual circumstance. Credit Score Optimization is one of the central reasons why you should engage the expertise of a good loan officer right now.

By Dean Hartman
Chief Planning Officer
Continental Home Loans

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Dec

18

How Will The Foreclosure Mess Impact Prices

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If you’re wondering how will the foreclosure mess impact prices, then this article is for you. Three months ago, it was revealed that many banks were guilty of improperly processing the paperwork on their foreclosures. Most banks at the time declared a foreclosure moratorium while they reviewed their paperwork and corrected any errors. Today, we want to give you an update on the situation and explain how the housing market will be affected.

The banks have admitted to some procedural errors. The severity and intent of these errors is still being investigated and the proper sanctions are being debated (one state attorney general is threatening jail time). However, there seems to be no evidence that families were incorrectly forced from their homes.

So what does mean to the housing market?
When this discounted inventory enters the market, it will put downward pressure on house values. Foreclosures entering the market put downward pressure on the non-distressed properties trying to sell. A foreclosure is competition to other homes as they sell for a 41% discount.

When will this inventory come to market?
Celia Chen of Moody’s Analytics on when this inventory is expected to hit the market:

The “robo-signing” scandal is beginning to show up in U.S. foreclosure data. The inventory of homes in foreclosure rose sharply in the fall, reflecting the fact that a number of large mortgage servicers placed a moratorium on foreclosures midway through October, and were thus unable to complete these foreclosures and reduce inventories. Servicers have already lifted some of these moratoriums and it is likely business will return to usual by the beginning of 2011.

…sales of REOs to third parties and other types of distress sales such as short sale or auction sale to a third party will step up in the first quarter of next year as servicers resolve the foreclosure processing issues.

What impact will it have on house prices?
Prices will be affected. The question is to what degree. Ms. Chen explains it simply:

…the larger the ratio of distress sales to normal, nondistress sales, the greater the downward pressure on prices.

How many distressed sales are out there? According to Daren Blomquist, managing editor of the RealtyTrac:

“Even with this big drop in November we do have a continuing building inventory of properties in foreclosure or REO. We’re estimating those properties plus delinquencies to equal 3 million to 4 million homes waiting to hit the market.”

Bottom Line
With the enormity of the challenge, prices can be impacted in a big way. Ms. Chen in her report said she sees a 5% decline in prices through the first three quarters of 2011.

Should you have any questions about short sales or foreclosures, please call me at (631)881-5959 or email me.

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Dec

18

Where Buyers Are Looking For Real Estate

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Many homeowners always ask about having their home advertised in a newspaper. I say to them usually, it depends on the home being sold. And usually they give me a strange look that says, “………….what?”

Newspapers don’t sell real estate and neither does the internet. But, knowing where buyers are looking for real estate and putting my marketing dollars there, does increase the chances of having me sell my clients’ homes.

I am the real estate professional. I am a professional salesperson in the real estate business. I am also successful so I must know what I’m doing but when I try and tell a homeowner that their home shouldn’t be advertised in the newspaper, they look at me like I’ve never sold a home before in my life.

This is not something I tell every homeowner. I size up the homes I visit and determine a marketing strategy for each home. For instance, a starter home that offers three bedrooms, one bathroom, a livingroom and an eat-in-kitchen, really has no place in a newspaper advertisement.

Why?

The answer is so simple, I have to delay putting it right here in this article.

Remember, I am the professional. I “do” real estate for a living. I have information about everything real estate, including (and especially) where my marketing dollars should be spent to effectively sell a home (perhaps yours someday).

Now if I truly understand the business of real estate, one of the main controls over my business is knowing how and where to market my clients’ homes. Otherwise, I wouldn’t be very successful at selling all my listings.

And of course, being the professional that I am, I absolutely have information about where buyers are looking for real estate.

Where Buyers Are Looking For Real Estate

Information is power and fortunately, I seek it out and share it here with you.

When you look at this National Association of Realtors Profile of Buyers And Sellers from 2010, the first thing you see is…well you don’t see “Looked in Newspapers” to find real estate. Mainly because, most buyers use the internet.

Now that doesn’t mean that no one looks at the paper to locate real estate for sale. On the contrary, there are some people who still open up the paper to read the fine black and white print along with 1 or no photos instead of looking online and viewing dozens of pictures of the same home, in color, with much more information than the newspaper provides. Those people exist.

And to bring this discussion back to my starter home, I want to ask a question. Who buys 3 bedroom home with 1 bathroom typically?

The answer is first-time buyers.

What is the age of a first-time buyer? Let’s say it’s 20 to 34 years old. Are they looking in the newspaper to find real estate?

No, they are online or on their mobile phone, viewing 100′s of homes either on the Multiple Listing Service or on a website like Zillow.com.

Now if a home has four bedrooms, two and a half bathrooms, a full basement, living room, dining room, two car garage that offers updated kitchens and baths priced at $450,000, this home will receive an entirely different marketing strategy and will be a great home for advertising in the newspaper because the buyer interested in this home will most likely be a “move-up” buyer.

A “move-up” buyer is 35 to 50 and will use the newspaper to find a home because they are part of the generation that was raised reading newspapers and looking to them for information. The younger generations (X, Y, and soon Millenial’s) are more inclined to rely on the internet to find information from news to real estate.

The marketing of your home has to match who will be your most-likely buyer prototype.

If you’re thinking of selling your home on your own, please pay attention to the second step most buyers make when looking for a home to buy. They call a real estate agent.

Should you have any questions about the value of your home or are looking to purchase a home, please feel free to call me at (631)881-5959.

Check Out 18 Hill Avenue, Nesconset $319,000

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Dec

15

Demand for Housing Will Increase in 2011

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If you’re wondering if the demand for housing will increase in 2011, read this article. The last Pending Home Sales Index from the National Association of Realtors (NAR) showed a substantial 10.4% month-over-month increase. According to NAR the index measures:

housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos and co-ops. A signed contract is not counted as a sale until the transaction closes. Modeling for the PHSI looks at the monthly relationship between existing-home sale contracts and transaction closings over the last four years.

This increase confirms a growing feeling that demand for housing has begun to rise.

Both NAR and Fannie Mae expect an increase in sales over the upcoming five quarters. Here are their projections:

Bottom Line

Sales will increase over the next several quarters. The increase will initiate a housing recovery. However, price increases will not take place until current inventory levels diminish. That could take 12-18 months.

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Dec

30

Questions For Your Mortgage Lender

Dec

21

Insider Secrets To An Optimal Credit Score

Dec

18

How Will The Foreclosure Mess Impact Prices

Dec

18

Where Buyers Are Looking For Real Estate

Dec

15

Demand for Housing Will Increase in 2011

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