Question: I am currently 62 years old and would like to apply for a reverse mortgage loan with you. My house value is about $750K and I only owe about $160K. I am retired and do not work but rely on a low alimony payment from my ex-husband. I understand I can get some cash upfront and also receive a monthly distribution on my equity. Please advise.Ken Go: A simple explanation on reverse mortgage. It’s a type of loan that will charge you interest, fees and has some guidelines just like any other loan. The minimum age is 62 years old and the maximum loan amount for that age is around $200K. The lender will charge you a hefty fee for this loan and your interest payments will accrue into your loan balance. An example in this situation, the total fees charged towards the balance of the loan is about $16K, a monthly deferred interest is around $1200.00 and the maximum cash out is only around $33K. I suggested for the borrower to get a regular deferred loan program with a very low minimum payment, the total fees was less than $5k and she was able to cash out $100K.
Thursday, 8 October 2009
Compare Reverse Mortgages to Conventional Loans
Tuesday, 8 September 2009
Second Mortgage over 10%, Can I Refinance It?
Question: About 10 months ago I purchased a property with no money down, my credit scores were in their high 500’s and our property value now has gone up by 20% since we purchased the property. I have a prepayment penalty on my loan and I would like my payments to be reduced. What should I do?Ken Go: This caller, I spoke with about 4-5 months ago, I reviewed their credit history and advise them a few things. I recommended for them to apply for two more credit cards because they have very few trade lines. I advised them to pay off the small credit cards, use only one major card and do not close any open accounts. With the payments of the mortgage being on time, two new credit accounts and two other open accounts with zero balances. The scores of this borrower increase to 660 in 5 months. I am not recommending for them to pay off the first mortgage due to a very high prepayment penalty. They also still want to enjoy the interest only payment on it. So, we refinance their second mortgage to a 7% fixed rate mortgage, which lowered their payments by $80.00 with some cash out to pay off minimal debts. This client knows they will refinance this loan again when they are ready for a fixed rate mortgage. That is why this loan they got is a “NO CLOSING COST” loan; nothing was also added towards the loan balance.
Friday, 14 August 2009
Neighborhood Program - No Down Payment or Closing Costs
No money down homebuyers program that might actually work!
I recently attended a Neighbor Assistance Program Seminar and would like to share this information to you. This program offers homebuyer (FIRST TIME OR NOT) and homeowners an opportunity to buy a house with absolutely no down payment and no closing cost. It's also an opportunity for homeowners to refinance their predatory loan to a much a better rate of interest. Not only that, they are offering rates about .50% lower than your conventional financing. Is that true, you will ask me? I was doubtful myself that is why I spent almost an entire Saturday listening to what they have to offer. This is not a government program; this company is a non-profit organization that gets certain grant from this conventional lender in order to offer these types of loans. It is true but it's not that easy, you pay either way: the easy way with your dollars, or this way with your time. I will narrow down what I found out from the seminar, and this is something for you to consider if you qualify for it.
For purchasing a home, here are the requirements:
1. Currently, maximum sales price for
CONDO/SFR: $ 362,790.00
Two unit property: $ 464,449.00
Three unit property: $ 561,411.00
Four unit property: $ 697,696.00
2. Attend and graduate from their workshops
3. Complete evaluation forms and daily expense diaries.
4. Qualify for the house when evaluated, sometimes they will accept unconventional method of qualifying you for your income. For example, if you don’t have pay stubs, they will review your previous year’s bank statements to average out your deposit.
5. Credit is not an issue, but you have to resolve and explain late pays.
6. Pay for taxes, interest and insurance fees at closing.
** This process is not going to be a 30 day process, I think it might take between 3-6 months to be able to qualify and buy, because this program educates you and slowly walks you through a budgeting process to help you manage your money well and avoid foreclosure. But, since prices are currently unstable this might be a good time for someone to start this process and wait out the market. Plus, you are not paying anything for the loan, they have the right to make you wait and properly prepare for this home.
** If you are buying a fixer upper, they will allow you to cash out money to make the house livable, funds will not be use to paint your walls or buy your furniture. But if you are buying a house with roof or plumbing problems that can be assessed into the loan for you to use.
For Refinancing predatory loans, here are the requirements:
1. You have to be paying off a loan rate higher than 10%.
2. You have to fully qualify with terms same as above.
3. You have to be owner occupying the house.
4. Of course, you have to attend all their workshops and be evaluated just like if you were to buy.
Things to remember:
1. You have to be able to qualify for the program and afford what you are buying. No stated income or easy qualifying here.
2. You have to prepare yourself to attend workshops and multiple consultations on how to manage your money, debts, expenses etc…
3. Your credit is not a big factor but will be evaluated and you will have to explain and reassure them that your tardiness will not happen again. Tax liens and judgments will have to be paid.
4. Your income, if not verified by pay stubs or W-2’s, will have to be proven with bank statements showing you are depositing those amounts.
5. You don’t have to be a first time homebuyer and could already own a property to qualify.
This organization is going to lend you the money but will make sure you can really afford the house before signing over the paperwork. They will spend a lot of time with you analyzing you debts and spending habits. This is truly a good program to get into, even if you just go in to be educated and learn how to manage your money properly. I think we all need that once in a while to wake us up and not over spend. We have to learn sometimes to say no to our adult children who still live with us and do try to make it on their own.
I have referred some of my callers already because this is a good program.
I recently attended a Neighbor Assistance Program Seminar and would like to share this information to you. This program offers homebuyer (FIRST TIME OR NOT) and homeowners an opportunity to buy a house with absolutely no down payment and no closing cost. It's also an opportunity for homeowners to refinance their predatory loan to a much a better rate of interest. Not only that, they are offering rates about .50% lower than your conventional financing. Is that true, you will ask me? I was doubtful myself that is why I spent almost an entire Saturday listening to what they have to offer. This is not a government program; this company is a non-profit organization that gets certain grant from this conventional lender in order to offer these types of loans. It is true but it's not that easy, you pay either way: the easy way with your dollars, or this way with your time. I will narrow down what I found out from the seminar, and this is something for you to consider if you qualify for it.
For purchasing a home, here are the requirements:
1. Currently, maximum sales price for
CONDO/SFR: $ 362,790.00
Two unit property: $ 464,449.00
Three unit property: $ 561,411.00
Four unit property: $ 697,696.00
2. Attend and graduate from their workshops
3. Complete evaluation forms and daily expense diaries.
4. Qualify for the house when evaluated, sometimes they will accept unconventional method of qualifying you for your income. For example, if you don’t have pay stubs, they will review your previous year’s bank statements to average out your deposit.
5. Credit is not an issue, but you have to resolve and explain late pays.
6. Pay for taxes, interest and insurance fees at closing.
** This process is not going to be a 30 day process, I think it might take between 3-6 months to be able to qualify and buy, because this program educates you and slowly walks you through a budgeting process to help you manage your money well and avoid foreclosure. But, since prices are currently unstable this might be a good time for someone to start this process and wait out the market. Plus, you are not paying anything for the loan, they have the right to make you wait and properly prepare for this home.
** If you are buying a fixer upper, they will allow you to cash out money to make the house livable, funds will not be use to paint your walls or buy your furniture. But if you are buying a house with roof or plumbing problems that can be assessed into the loan for you to use.
For Refinancing predatory loans, here are the requirements:
1. You have to be paying off a loan rate higher than 10%.
2. You have to fully qualify with terms same as above.
3. You have to be owner occupying the house.
4. Of course, you have to attend all their workshops and be evaluated just like if you were to buy.
Things to remember:
1. You have to be able to qualify for the program and afford what you are buying. No stated income or easy qualifying here.
2. You have to prepare yourself to attend workshops and multiple consultations on how to manage your money, debts, expenses etc…
3. Your credit is not a big factor but will be evaluated and you will have to explain and reassure them that your tardiness will not happen again. Tax liens and judgments will have to be paid.
4. Your income, if not verified by pay stubs or W-2’s, will have to be proven with bank statements showing you are depositing those amounts.
5. You don’t have to be a first time homebuyer and could already own a property to qualify.
This organization is going to lend you the money but will make sure you can really afford the house before signing over the paperwork. They will spend a lot of time with you analyzing you debts and spending habits. This is truly a good program to get into, even if you just go in to be educated and learn how to manage your money properly. I think we all need that once in a while to wake us up and not over spend. We have to learn sometimes to say no to our adult children who still live with us and do try to make it on their own.
I have referred some of my callers already because this is a good program.
Friday, 31 July 2009
What can I afford?
Can I Afford to Buy a House?Be Sure to Include in All the Costs
Ken Go (888)822-5363
Potential buyers sometimes forget to factor in the property taxes, homeowners insurance and the possibility of depreciation, as well as the costs associated with closing the transaction, moving, purchasing major appliances, and home, landscape and pool maintenance, not to mention furnishings and design accessories once you move in.
The days of calling up the landlord to fix your problems come to an abrupt halt when you're a homeowner. You'll be responsible for everything from malfunctioning appliances to leaky faucets to broken heating and air conditioning units and everything in between. And if you buy an older home, you'll probably eventually encounter costly repairs, such as replacing the roof or windows.
To determine whether you can afford to buy a home, you should do the following:
1. Determine the property value of homes that interest you. The property value is determined by comparing the prices of homes recently sold of similar size in the same neighborhood. Your real estate agent will be able to provide this information to you.
2. Review different mortgage loan types and compare their required down payment amounts to the money you have available. Make sure you will have a payment that is affordable for a duration of three to five years, include that taxes and insurance. Don’t cheat yourself with the low rates or the negative amortization loans that is available.
3. Get a letter to guaranteed your closing costs, including points , taxes, recording, inspections, prepaid loan interest, title insurance and financing costs from your mortgage lender or a real estate professional. These will generally add up to between 2 and 3 percent of the property value. You'll receive an estimate of these costs from your lender after you apply for a mortgage but request for a guaranteed rate and fees.
4. Add the down payment requirements and the closing costs together to determine the amount of money you'll need right off the bat. But you're not done yet.
5. Think about the actual move. Will you hire a moving company or rent a truck? Either way will cost you. The more stuff you have, the more it will cost.
6. Property taxes. Many lenders will require an impound account in which monthly payments for property tax (and often insurance) are paid together with the monthly mortgage payment. You can figure your average annual tax rate will be about 1.25 percent of the purchase price of your home. For new homes, ask about Mello Roos ( Its an act that allows county, city or special district to finance public facilities and services thru homeowners).
7. Next, budget for maintenance and repairs.
8. If you have other income that will come in to help you pay the mortgages, make sure they are on going to be at least two to three years guaranteed and you should have an alternative plan if that fails.
Once you crunch the numbers and find you come up a bit short, investigate ways to reduce your debts or creatively increase your income—it can come from a variety of sources.
My advise to new homeowners: Make sure you can afford the payments and don’t cheat yourselves with short term loans or negative amortization loans that will get you in trouble.
For existing homeowners that are having problems paying: Don’t refinance only to be able to keep your head above water for a few months, if you cant really pay the mortgage sell your house and repurchase later when you can afford it then.
And of course, you'll want to weigh perhaps the biggest benefit of all—having a place to call your own.
Ken Go (888)822-5363
Potential buyers sometimes forget to factor in the property taxes, homeowners insurance and the possibility of depreciation, as well as the costs associated with closing the transaction, moving, purchasing major appliances, and home, landscape and pool maintenance, not to mention furnishings and design accessories once you move in.
The days of calling up the landlord to fix your problems come to an abrupt halt when you're a homeowner. You'll be responsible for everything from malfunctioning appliances to leaky faucets to broken heating and air conditioning units and everything in between. And if you buy an older home, you'll probably eventually encounter costly repairs, such as replacing the roof or windows.
To determine whether you can afford to buy a home, you should do the following:
1. Determine the property value of homes that interest you. The property value is determined by comparing the prices of homes recently sold of similar size in the same neighborhood. Your real estate agent will be able to provide this information to you.
2. Review different mortgage loan types and compare their required down payment amounts to the money you have available. Make sure you will have a payment that is affordable for a duration of three to five years, include that taxes and insurance. Don’t cheat yourself with the low rates or the negative amortization loans that is available.
3. Get a letter to guaranteed your closing costs, including points , taxes, recording, inspections, prepaid loan interest, title insurance and financing costs from your mortgage lender or a real estate professional. These will generally add up to between 2 and 3 percent of the property value. You'll receive an estimate of these costs from your lender after you apply for a mortgage but request for a guaranteed rate and fees.
4. Add the down payment requirements and the closing costs together to determine the amount of money you'll need right off the bat. But you're not done yet.
5. Think about the actual move. Will you hire a moving company or rent a truck? Either way will cost you. The more stuff you have, the more it will cost.
6. Property taxes. Many lenders will require an impound account in which monthly payments for property tax (and often insurance) are paid together with the monthly mortgage payment. You can figure your average annual tax rate will be about 1.25 percent of the purchase price of your home. For new homes, ask about Mello Roos ( Its an act that allows county, city or special district to finance public facilities and services thru homeowners).
7. Next, budget for maintenance and repairs.
8. If you have other income that will come in to help you pay the mortgages, make sure they are on going to be at least two to three years guaranteed and you should have an alternative plan if that fails.
Once you crunch the numbers and find you come up a bit short, investigate ways to reduce your debts or creatively increase your income—it can come from a variety of sources.
My advise to new homeowners: Make sure you can afford the payments and don’t cheat yourselves with short term loans or negative amortization loans that will get you in trouble.
For existing homeowners that are having problems paying: Don’t refinance only to be able to keep your head above water for a few months, if you cant really pay the mortgage sell your house and repurchase later when you can afford it then.
And of course, you'll want to weigh perhaps the biggest benefit of all—having a place to call your own.
Tuesday, 21 July 2009
Should I combine my first and second mortgage into one loan?
"I have an 6.75% first mortgage with a balance of $360,000, and a 10% second mortgage with a balance of $90,000. The second mortgage brought our total mortgage debt at the value of the property at that time, which is why the rate is so high. Our house has since appreciated about 10-15% in value, and I’m sure I can profit by refinancing. My question is, should I refinance the second only or should I refinance both, and if I refinance both should I take out two new mortgages or should I consolidate the first and second into a new first? It is all too confusing.”It is confusing. The best choice depends on a number of factors including:
Rates and points available on new loans. Critically important are the terms of new loans to refinance, relative to the terms on the existing loans. This will depend on what has happened to mortgage interest rates, the value of your property, and your credit rating since you signed for the original loans. When you have two mortgages, you must obtain price quotes on a new first for the amount of the balance on the existing first, and on a new second for the amount of the balance on the existing second. You also need a quote on a new first for the amount of the balance on both existing loans.
How long you expect to be in your house. Refinancing typically involves immediate costs to obtain future benefits -- the longer you have the mortgages, the larger the refinancing benefit.
Current value of your house. Appreciation in the value of your house may make it possible to refinance the first mortgage without purchasing mortgage insurance. If large enough, appreciation could allow you to roll both loans into one without paying mortgage insurance.
Remaining term on existing loans. The shorter the remaining term on your existing loans, the smaller the refinancing benefit. With a shorter remaining term, you pay off the existing loan faster, which reduces the cost of the higher rate on that loan.
Term on new loans. The shorter the term on your new loan(s), the larger the benefit from refinancing. While shorter terms increase the cost of monthly payments, this is more than offset by the more rapid pay down of the loan balance.
Your income tax bracket. The tax savings on interest payments usually reduce the net benefits of refinancing. The higher your tax bracket, the smaller the benefit of an interest rate reduction on a new mortgage. However, if the remaining term on the existing loan is short, expect the reverse -- the refinance benefit can be larger for a high tax bracket borrower. Complexities such as these make refinancing two mortgages perplexing.
If you could consolidate both of the existing loans into a single new first mortgage at 5.875% and one point, the savings over 6 years would be even greater -- $7187. Every case is different but we can help you analyst your situation and determine how much you would save by refinancing or not.
Thursday, 4 June 2009
Too late the hero
Regrets of not checking with different lenders prior to signing Loan Documents.
Ken Go (888) 822-5363
JR – I was referred to by a previous client of yours, here is my current scenario. I have been trying to get a second mortgage to finish my home improvement project that I started about 3-4 months ago. I finally got a lender from a flyer that gave me these pricing quotes: 11.99% second mortgage with a 617 credit score, a combined Loan to Value of 90% and a total loan cost of $7,000.00 with no prepayment penalty. I have just signed but have three days right of recession to cancel this loan. I had a time share that went into foreclosure about two years ago but just got report less than 6 months ago on my credit. Am I getting a descent loan?
Ken Go - Immediately, I got all the information needed to see if my sources would be able to offer a better deal for JR. I have only three days to guarantee an approval and a rate. After my interview with JR, I know I have some qualifying issues; I then turned to my underwriter for a full loan approval. This loan was submitted the second day, I got the escrow and title insurance open within a day and I used his old appraisal from another lender to complete my file. Unfortunately, it was the end of the month and underwriters are always trying close existing loans, my file was delayed on the approval. Spoke with JR, he needed to close because his project was held up long enough, apparently he has been delayed by about three weeks already. Due to his situation I am not allowed to guarantee my rates and fees to him.
The fourth day, my full approval came in with rates of 8.50% and a total cost of $2,400.00 and no prepayment penalties. He could have saved at least $5K just on the cost of the loan, not including the rate difference. So I called JR, but it was too late. He realized that he made a mistake and told me that he will definitely learn from this and make better choices next time. BTW, he also just told me that after reviewing the signed documents, his loan had a prepayment penalty which was contradictory to what was sold to him.
RP – This caller is a previous client who specifically requested for me to write about her experience. I would like to cash out some money from my equity; you give me a very good rate of 5.5% on my first mortgage. But I needed to pay for my children’s education and needed to pull money out again. However, someone referred me to call another lender who said they could refinance my entire loan to a 5.625% first mortgage with the same amount of cash out I needed.
Ken Go – my suggestion for her is not to touch the first mortgage due to the existing low mortgage rate they currently have, the rates where about .50% higher to refinance to a new first. I told her to go ahead with the lender referral but be careful and not to pay anything upfront until she got a full loan commitment in writing. I said if they are that low, call me back for me to refer them to my callers. She then insisted that this person can really give her those rates and that this person promised her.
She called me back after one week and told me that the loan commitment came at 6.5% and the cash out amount was 25% less than what she needed. She told me to go ahead with the process and now we are signing loan documents.
JC - I closed escrow on a house last October and am currently having problems with my payments. Everything went so fast at closing my agent/lender (one person) kind of talked me into closing and promised that homes would go up and I would refinance this loan to a lower payment. Our combined income is about $7K but this loan payment is almost $4K fixed for one year then turns into an adjustable. I have other expenses and bills that I needed to pay too. I called the agent to see if he could refinance my loan, but he told me to wait till next year because of my prepayment penalty on this loan.
Ken Go – Refinancing should not be your option, lets do the math together you have a 650K loan amount, you are only paying interest only now at 6.5% on your first and a fully amortized loan on the second. You are already having difficulties paying that loan balance, if you were to refinance you would have to add the cost of the loan and the prepayment. Even if you would reduce the rates by .50% (which you can’t) your payments will actually go higher. Here are your options: cut your expenses, reduce your cost of your utilities, and re-amortize your auto and credit card payments to a longer term. If you do that, you have just increase your interest payments by another 10-20% and you would really just worked for your mortgage. The smarter way is to sell; you have a little bit of equity that will cover the cost of the prepayment penalties and an agent. Re-organize yourselves and buy at a later time and make sure you get a fixed term payment that you can afford.
Lenders are feeling the pinch now a day and are starting to tighten their screws in this loan business. Don’t get me wrong, they still want to do loan but they will be pickier and will start to ask for more loan conditions. Open your ears and keep your eyes open, my advice to everyone about 6 months ago is that this market will cool down and we have to be very careful with our investments. Buy what you can afford, be realistic and forecast yourself three to five years from today and know where you want to be. Listen to the old timer sitting next to you telling you that back in their days, everything is on a cash basis. What you can’t buy with cash you won’t own. Don’t get carried away with credit cards, 0 down loans or 1% percent loans, they are illusions of money that you don’t have. This I can advise from the heart because I was once a victim of huge credit card debts and got beyond myself with them.
Ken Go (888) 822-5363
JR – I was referred to by a previous client of yours, here is my current scenario. I have been trying to get a second mortgage to finish my home improvement project that I started about 3-4 months ago. I finally got a lender from a flyer that gave me these pricing quotes: 11.99% second mortgage with a 617 credit score, a combined Loan to Value of 90% and a total loan cost of $7,000.00 with no prepayment penalty. I have just signed but have three days right of recession to cancel this loan. I had a time share that went into foreclosure about two years ago but just got report less than 6 months ago on my credit. Am I getting a descent loan?
Ken Go - Immediately, I got all the information needed to see if my sources would be able to offer a better deal for JR. I have only three days to guarantee an approval and a rate. After my interview with JR, I know I have some qualifying issues; I then turned to my underwriter for a full loan approval. This loan was submitted the second day, I got the escrow and title insurance open within a day and I used his old appraisal from another lender to complete my file. Unfortunately, it was the end of the month and underwriters are always trying close existing loans, my file was delayed on the approval. Spoke with JR, he needed to close because his project was held up long enough, apparently he has been delayed by about three weeks already. Due to his situation I am not allowed to guarantee my rates and fees to him.
The fourth day, my full approval came in with rates of 8.50% and a total cost of $2,400.00 and no prepayment penalties. He could have saved at least $5K just on the cost of the loan, not including the rate difference. So I called JR, but it was too late. He realized that he made a mistake and told me that he will definitely learn from this and make better choices next time. BTW, he also just told me that after reviewing the signed documents, his loan had a prepayment penalty which was contradictory to what was sold to him.
RP – This caller is a previous client who specifically requested for me to write about her experience. I would like to cash out some money from my equity; you give me a very good rate of 5.5% on my first mortgage. But I needed to pay for my children’s education and needed to pull money out again. However, someone referred me to call another lender who said they could refinance my entire loan to a 5.625% first mortgage with the same amount of cash out I needed.
Ken Go – my suggestion for her is not to touch the first mortgage due to the existing low mortgage rate they currently have, the rates where about .50% higher to refinance to a new first. I told her to go ahead with the lender referral but be careful and not to pay anything upfront until she got a full loan commitment in writing. I said if they are that low, call me back for me to refer them to my callers. She then insisted that this person can really give her those rates and that this person promised her.
She called me back after one week and told me that the loan commitment came at 6.5% and the cash out amount was 25% less than what she needed. She told me to go ahead with the process and now we are signing loan documents.
JC - I closed escrow on a house last October and am currently having problems with my payments. Everything went so fast at closing my agent/lender (one person) kind of talked me into closing and promised that homes would go up and I would refinance this loan to a lower payment. Our combined income is about $7K but this loan payment is almost $4K fixed for one year then turns into an adjustable. I have other expenses and bills that I needed to pay too. I called the agent to see if he could refinance my loan, but he told me to wait till next year because of my prepayment penalty on this loan.
Ken Go – Refinancing should not be your option, lets do the math together you have a 650K loan amount, you are only paying interest only now at 6.5% on your first and a fully amortized loan on the second. You are already having difficulties paying that loan balance, if you were to refinance you would have to add the cost of the loan and the prepayment. Even if you would reduce the rates by .50% (which you can’t) your payments will actually go higher. Here are your options: cut your expenses, reduce your cost of your utilities, and re-amortize your auto and credit card payments to a longer term. If you do that, you have just increase your interest payments by another 10-20% and you would really just worked for your mortgage. The smarter way is to sell; you have a little bit of equity that will cover the cost of the prepayment penalties and an agent. Re-organize yourselves and buy at a later time and make sure you get a fixed term payment that you can afford.
Lenders are feeling the pinch now a day and are starting to tighten their screws in this loan business. Don’t get me wrong, they still want to do loan but they will be pickier and will start to ask for more loan conditions. Open your ears and keep your eyes open, my advice to everyone about 6 months ago is that this market will cool down and we have to be very careful with our investments. Buy what you can afford, be realistic and forecast yourself three to five years from today and know where you want to be. Listen to the old timer sitting next to you telling you that back in their days, everything is on a cash basis. What you can’t buy with cash you won’t own. Don’t get carried away with credit cards, 0 down loans or 1% percent loans, they are illusions of money that you don’t have. This I can advise from the heart because I was once a victim of huge credit card debts and got beyond myself with them.
Friday, 1 May 2009
Mortgage rates going higher
Control your interest rates from rising.
Ken Go (888)822-5363
Consumer credit rates
Extra costs due to your interest rates rising will stretch consumers and those with bad credit will suffer the most! We all have benefited from a booming economy with low interest rates and rising property values, but this could bring a rude awakening for the unprepared.The combination of high gas prices, higher energy costs, interest rates on the upswing and troubling levels of debt and credit use could spell catastrophe for many. If you have debts, you need to get them under control right away. Credit spending has become a bad habit for everyone. It’s easy to fall behind on payments and get into big trouble especially when you mix in unexpected personal problems. If you have credit card debt or significant balances on your lines of credits then I urge you to consolidate them immediately. Don’t procrastinate combine your mortgages if you can, consolidate these bills now into a second mortgage and improve your cash flow instantly!Today on CNN, they are talking about credit card companies seriously considering raising minimum credit card payments from 3% of the outstanding balance. What is going to happen to your budget if they do increase your minimum monthly payments on your credit cards to 4% or maybe even 5%?Can you afford paying $200, $300, $500 or maybe even 1,000 more each month?Hopefully they will not go through with it and things will remain as usual, but what if they go ahead with it. How are you going to survive? My suggestion to you is, pay off these credit cards today! Consider consolidating them into a second mortgage.
Home Mortgage rates
If you have a home mortgage that is adjustable or will adjust in the next couple of years. You should seriously consider converting your loan to a fixed rate mortgage. Here are some changes in the index market just within the last six months. 11th District COFI indexes went from 2.972 to 3.604 (21% increase), LIBOR went from 4.0882-4.8260 (18%), One Year Treasury from 3.77-4.91 (30%). If you don’t know what these indexes are, you are to get yourself educated. These indexes are the vehicle wherein your adjustable rate mortgage programs are tied to. Even if you loan is fixed for two years, they have indexes that will come to place once your second year anniversary comes to the picture. “After the limited initial periods end, the monthly payment for the holder of this nontraditional mortgage must increase-even if interest stays flat-and the size of that increase can be very substantial,” Comptroller of the Currency John C. Dugan said. Make your move to try to weight your option to convert your adjustable rate to a fixed rate mortgage.
If you have a line of credit on your home, that rate has gone up one full percent just six months ago, should you be worried. Yes, of course, try to either combine that into one loan or refinance your line of credit to a fixed rate second mortgage. I am terrified when I have talk to several readers not realizing that they could have gotten fixed second mortgages when they were applying for a loan. Your best options for second mortgages are if your credit is up to the lenders par and you have some equity in the property.
There are many variables that can influence the rates on long-term debt instruments, but an understanding of key economic indicators can provide clues to the future direction of interest rates.
Gross Domestic Product (GDP) – the output of goods and services produced by labor and property located in the US – and is the most important indicator.
Consumer Price Index (CPI) – is a measure of the average change over time in prices paid by urban consumers of a fixed market basket of consumer goods and services. Tied to inflationary concerns.
Producer Price Index (PPI) –is a family of indexes that measures the average change over time in the selling prices received by domestic producers of goods and services.
Payroll Employment – The government's employment report provides employment, hours and earnings estimates based on payroll records of business establishments. The payroll employment is the most significant indicator of current economic trends each month
Unemployment Rate - The government's employment report provides information on the unemployment rate and the number of unemployed persons by occupation, industry, duration of unemployment, and reason for unemployment.
Consumer Credit - Consumer credit data tracks debt levels for auto financing and commercial banking credit and are considered a fairly good indicator of consumer spending. Consumer credit report is generally considered to have little impact on interest rates.
Housing Starts - Housing starts is one of the leading economic indicators. A higher-than-expected increase in housing starts triggers economic growth and is considered inflationary, causing bond prices to fall and yields and interest rates to rise. Likewise, decline or declining trend in housing activity slows the economy and can push it into a recession, causing yields and interest rates to fall.
Getting yourself informed at all times is a great way to determine your next move, timing is key to anybodies success in this ever changing world we live in.
Ken Go (888)822-5363
Consumer credit rates
Extra costs due to your interest rates rising will stretch consumers and those with bad credit will suffer the most! We all have benefited from a booming economy with low interest rates and rising property values, but this could bring a rude awakening for the unprepared.The combination of high gas prices, higher energy costs, interest rates on the upswing and troubling levels of debt and credit use could spell catastrophe for many. If you have debts, you need to get them under control right away. Credit spending has become a bad habit for everyone. It’s easy to fall behind on payments and get into big trouble especially when you mix in unexpected personal problems. If you have credit card debt or significant balances on your lines of credits then I urge you to consolidate them immediately. Don’t procrastinate combine your mortgages if you can, consolidate these bills now into a second mortgage and improve your cash flow instantly!Today on CNN, they are talking about credit card companies seriously considering raising minimum credit card payments from 3% of the outstanding balance. What is going to happen to your budget if they do increase your minimum monthly payments on your credit cards to 4% or maybe even 5%?Can you afford paying $200, $300, $500 or maybe even 1,000 more each month?Hopefully they will not go through with it and things will remain as usual, but what if they go ahead with it. How are you going to survive? My suggestion to you is, pay off these credit cards today! Consider consolidating them into a second mortgage.
Home Mortgage rates
If you have a home mortgage that is adjustable or will adjust in the next couple of years. You should seriously consider converting your loan to a fixed rate mortgage. Here are some changes in the index market just within the last six months. 11th District COFI indexes went from 2.972 to 3.604 (21% increase), LIBOR went from 4.0882-4.8260 (18%), One Year Treasury from 3.77-4.91 (30%). If you don’t know what these indexes are, you are to get yourself educated. These indexes are the vehicle wherein your adjustable rate mortgage programs are tied to. Even if you loan is fixed for two years, they have indexes that will come to place once your second year anniversary comes to the picture. “After the limited initial periods end, the monthly payment for the holder of this nontraditional mortgage must increase-even if interest stays flat-and the size of that increase can be very substantial,” Comptroller of the Currency John C. Dugan said. Make your move to try to weight your option to convert your adjustable rate to a fixed rate mortgage.
If you have a line of credit on your home, that rate has gone up one full percent just six months ago, should you be worried. Yes, of course, try to either combine that into one loan or refinance your line of credit to a fixed rate second mortgage. I am terrified when I have talk to several readers not realizing that they could have gotten fixed second mortgages when they were applying for a loan. Your best options for second mortgages are if your credit is up to the lenders par and you have some equity in the property.
There are many variables that can influence the rates on long-term debt instruments, but an understanding of key economic indicators can provide clues to the future direction of interest rates.
Gross Domestic Product (GDP) – the output of goods and services produced by labor and property located in the US – and is the most important indicator.
Consumer Price Index (CPI) – is a measure of the average change over time in prices paid by urban consumers of a fixed market basket of consumer goods and services. Tied to inflationary concerns.
Producer Price Index (PPI) –is a family of indexes that measures the average change over time in the selling prices received by domestic producers of goods and services.
Payroll Employment – The government's employment report provides employment, hours and earnings estimates based on payroll records of business establishments. The payroll employment is the most significant indicator of current economic trends each month
Unemployment Rate - The government's employment report provides information on the unemployment rate and the number of unemployed persons by occupation, industry, duration of unemployment, and reason for unemployment.
Consumer Credit - Consumer credit data tracks debt levels for auto financing and commercial banking credit and are considered a fairly good indicator of consumer spending. Consumer credit report is generally considered to have little impact on interest rates.
Housing Starts - Housing starts is one of the leading economic indicators. A higher-than-expected increase in housing starts triggers economic growth and is considered inflationary, causing bond prices to fall and yields and interest rates to rise. Likewise, decline or declining trend in housing activity slows the economy and can push it into a recession, causing yields and interest rates to fall.
Getting yourself informed at all times is a great way to determine your next move, timing is key to anybodies success in this ever changing world we live in.
Tuesday, 21 April 2009
What can tenants do when the owners are no longer paying the mortgage?
What can tenants do when the owners are no longer paying the mortgage?
I hope this would be the last stages of the foreclosures that are occurring in our state. I had predicted that the past 3-6 months might have reduce the homeowners with Sub-Prime loans that are going into foreclosures. But we have a new problem here in our state, which is “Unemployment” and that has been the leading factor for this new trend of homeowners not able to pay their mortgages.
For homes that are tenant occupied, here are some Recent Laws:
Helping Families Save Their Homes Act of 2009 ----
1) Federal Law took effect May 20, 2009.
2) Law requires that for any residential real estate foreclosure, the immediate successor in interest to the property (i.e. foreclosing lender or third party purchaser) to send a Notice to Vacate effective at least 90 days after the date of the Notice to the “bona fide” tenant.
3) To be a “bona fide” tenant All of the following must be met:
a. The tenant is not the borrower, former owner or their immediate family member.
b. The lease or tenancy was an arms-length transaction, and
c. The lease or tenancy requires that rent that is not substantially less than fair market rent, unless subject to federal, state or local rent controls.
4) Additionally, the Notice must advise any tenant that entered into a “bona fide” lease of the tenant’s right to occupy the property through the end of the lease term, unless the successor in interest intends to use the property as a principal residence in which case the 90 day Notice would still be in effect.
5) Notice must still be given, but Successor in interest is not required to abide by the terms of the lease if it was oral: month to month; set to expire within 90 days after the foreclosure sale; entered into subsequent to receiving the first foreclosure notice.
California Foreclosure Prevention Act --- effective June 15, 2009
1) The lender must wait an additional 90 after the expiration of the three-month waiting period before a Notice of Sale can be filed if ALL the following conditions are met:
a. The loan was recorded from January 1, 2003 to January 1, 2008;
b. The loan is secured by a first deed of trust; and
c. The borrower occupied the property as the borrower’s principal residence at the time the loan became delinquent
2) It is possible for a lender to receive an exemption from the new law by implementing a comprehensive loan modification program that is approved by either the Department of Corporations, the Department of Real Estate or the Department of Financial Institiutions.
3) This law is set to remain in effect from June 15, 2009 to January 1, 2011.
So, far Loan Modifications for homeowners in need of such assistance has proven to be unsuccessful, lenders are prolonging the foreclosure process, which in tern could either help the homeowners find other sources of income to come up with the mortgage payments or for them to wait for better modification solutions in place compared to what is available.
I believe and repeatedly explain to my callers that in order to understand how a Bank/Lender can help you, you should see the big picture and not get emotional or personal about this. Banks will always put themselves ahead of you, remember that. Therefore when you are calling a bank to ask for help, remember here are the reasons why they should or can help you:
1) Your loan is a “Negative Amortization Loan”, these loans are called the “Teaser Loans” the banks are trying to get rid of these types of loans as fast as they can.
2) You have a predatory loan ( loans rates that are either short term adjustables or high interest yielding fixed rates ).
3) You qualify for hardship for hardship due to some of these major factors:
a. Death in the family.
b. Lost of employment or reduction of employments hours.
4) The key factor why a bank would want to help you is that they have to see that you can make your payments once they have decided to modify your loan. They need to see the “Ability to Repay” the debt. They will calculate your possible lower rates including the taxes and insurance to assure these obligations paid consistently every month. Otherwise, once after the trial period you might fall back into the same scenario and not able to pay again.
By understanding how the lenders sees you as a borrower that will eliminate a lot of confusion about why lenders would rather foreclose rather than modify. Another major factor is that your lenders ( BOA, Chase or Wells Fargo ) to name a few might not be the actual “INVESTOR” of your loan, they might just be servicing the loan. That means any type of modification to the original note has to be approved by them.
Please call for to discuss your situation and hopefully I have the answer you are looking for.
I hope this would be the last stages of the foreclosures that are occurring in our state. I had predicted that the past 3-6 months might have reduce the homeowners with Sub-Prime loans that are going into foreclosures. But we have a new problem here in our state, which is “Unemployment” and that has been the leading factor for this new trend of homeowners not able to pay their mortgages.
For homes that are tenant occupied, here are some Recent Laws:
Helping Families Save Their Homes Act of 2009 ----
1) Federal Law took effect May 20, 2009.
2) Law requires that for any residential real estate foreclosure, the immediate successor in interest to the property (i.e. foreclosing lender or third party purchaser) to send a Notice to Vacate effective at least 90 days after the date of the Notice to the “bona fide” tenant.
3) To be a “bona fide” tenant All of the following must be met:
a. The tenant is not the borrower, former owner or their immediate family member.
b. The lease or tenancy was an arms-length transaction, and
c. The lease or tenancy requires that rent that is not substantially less than fair market rent, unless subject to federal, state or local rent controls.
4) Additionally, the Notice must advise any tenant that entered into a “bona fide” lease of the tenant’s right to occupy the property through the end of the lease term, unless the successor in interest intends to use the property as a principal residence in which case the 90 day Notice would still be in effect.
5) Notice must still be given, but Successor in interest is not required to abide by the terms of the lease if it was oral: month to month; set to expire within 90 days after the foreclosure sale; entered into subsequent to receiving the first foreclosure notice.
California Foreclosure Prevention Act --- effective June 15, 2009
1) The lender must wait an additional 90 after the expiration of the three-month waiting period before a Notice of Sale can be filed if ALL the following conditions are met:
a. The loan was recorded from January 1, 2003 to January 1, 2008;
b. The loan is secured by a first deed of trust; and
c. The borrower occupied the property as the borrower’s principal residence at the time the loan became delinquent
2) It is possible for a lender to receive an exemption from the new law by implementing a comprehensive loan modification program that is approved by either the Department of Corporations, the Department of Real Estate or the Department of Financial Institiutions.
3) This law is set to remain in effect from June 15, 2009 to January 1, 2011.
So, far Loan Modifications for homeowners in need of such assistance has proven to be unsuccessful, lenders are prolonging the foreclosure process, which in tern could either help the homeowners find other sources of income to come up with the mortgage payments or for them to wait for better modification solutions in place compared to what is available.
I believe and repeatedly explain to my callers that in order to understand how a Bank/Lender can help you, you should see the big picture and not get emotional or personal about this. Banks will always put themselves ahead of you, remember that. Therefore when you are calling a bank to ask for help, remember here are the reasons why they should or can help you:
1) Your loan is a “Negative Amortization Loan”, these loans are called the “Teaser Loans” the banks are trying to get rid of these types of loans as fast as they can.
2) You have a predatory loan ( loans rates that are either short term adjustables or high interest yielding fixed rates ).
3) You qualify for hardship for hardship due to some of these major factors:
a. Death in the family.
b. Lost of employment or reduction of employments hours.
4) The key factor why a bank would want to help you is that they have to see that you can make your payments once they have decided to modify your loan. They need to see the “Ability to Repay” the debt. They will calculate your possible lower rates including the taxes and insurance to assure these obligations paid consistently every month. Otherwise, once after the trial period you might fall back into the same scenario and not able to pay again.
By understanding how the lenders sees you as a borrower that will eliminate a lot of confusion about why lenders would rather foreclose rather than modify. Another major factor is that your lenders ( BOA, Chase or Wells Fargo ) to name a few might not be the actual “INVESTOR” of your loan, they might just be servicing the loan. That means any type of modification to the original note has to be approved by them.
Please call for to discuss your situation and hopefully I have the answer you are looking for.
Sunday, 22 March 2009
How to pick your Mortgage Broker.
Banks might be taking too long or not returning your calls, right?
If you are looking for a mortgage, you may have been advised that it’s better to go through a mortgage broker.Now a days if you are still in the business, you must have done something right, because the downfall of the SubPrime Loans has weeded out a lot of the bad brokers in our business. This seems to make sense because most major lenders (ALL THREE OF THEM) will take an average 45 days to close a loan, forget about getting pre-approved or a return call, they are so busy that they cannot handle the work loan. Brokers are experts, aren’t they? This is generally true. But it doesn’t mean that you have to accept everything the broker says, or be completely uncritical. There are some things you need to look out for.
At one time just about anyone could set up as a mortgage broker.
All brokers are supposed to offer advice and a recommendation. Beware of a mortgage broker who claims only to offer information. This may be to forestall potential complaints.
Be extremely wary of a broker who encourages you to bend the truth in order to get the mortgage you want. It’s part of the mortgage broker’s job to make sure you get a mortgage which you can afford and which is right for your circumstances.
Some mortgage brokers will tell you that they are “whole of market” when they only in fact have access to a representative panel. This may not necessarily be a bad thing in itself, but you should be careful of a broker who you think is trying to mislead you. Check just how many lenders the broker has access to.
A mortgage broker who works on a commission basis may seem cheaper. But can you really be sure that the broker is recommending the product that is best for you, rather than being swayed by the commission? Of course most brokers are honest and genuine. And they are actually bound by their professional code to give the advice that is in the client’s best interests. But if this is a worry for you, choose one that operates on a fee basis.
If you do use a mortgage broker who operates on a fee basis, avoid one who expects you to pay the bill before completion of the transaction. This can cause problems if things change or break down later on. Check at the beginning when the broker expects the fee to be paid.Always remember you are the customer. Don’t let yourself be over-awed by the broker’s expertise. A good mortgage broker will always be happy for you to check everything and ensure that everything is being done in your best interests.
Most important advise for you to follow, get all the fee and rate quotes in writing and make them guarantee it.
If you are looking for a mortgage, you may have been advised that it’s better to go through a mortgage broker.Now a days if you are still in the business, you must have done something right, because the downfall of the SubPrime Loans has weeded out a lot of the bad brokers in our business. This seems to make sense because most major lenders (ALL THREE OF THEM) will take an average 45 days to close a loan, forget about getting pre-approved or a return call, they are so busy that they cannot handle the work loan. Brokers are experts, aren’t they? This is generally true. But it doesn’t mean that you have to accept everything the broker says, or be completely uncritical. There are some things you need to look out for.
At one time just about anyone could set up as a mortgage broker.
All brokers are supposed to offer advice and a recommendation. Beware of a mortgage broker who claims only to offer information. This may be to forestall potential complaints.
Be extremely wary of a broker who encourages you to bend the truth in order to get the mortgage you want. It’s part of the mortgage broker’s job to make sure you get a mortgage which you can afford and which is right for your circumstances.
Some mortgage brokers will tell you that they are “whole of market” when they only in fact have access to a representative panel. This may not necessarily be a bad thing in itself, but you should be careful of a broker who you think is trying to mislead you. Check just how many lenders the broker has access to.
A mortgage broker who works on a commission basis may seem cheaper. But can you really be sure that the broker is recommending the product that is best for you, rather than being swayed by the commission? Of course most brokers are honest and genuine. And they are actually bound by their professional code to give the advice that is in the client’s best interests. But if this is a worry for you, choose one that operates on a fee basis.
If you do use a mortgage broker who operates on a fee basis, avoid one who expects you to pay the bill before completion of the transaction. This can cause problems if things change or break down later on. Check at the beginning when the broker expects the fee to be paid.Always remember you are the customer. Don’t let yourself be over-awed by the broker’s expertise. A good mortgage broker will always be happy for you to check everything and ensure that everything is being done in your best interests.
Most important advise for you to follow, get all the fee and rate quotes in writing and make them guarantee it.
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