Advantages of a no closing cost loan
If you hear the term "Absolutely No Closing Cost," you would assume that there are no closing costs (lender, escrow and title) involved in the loan. But actually this is really just a creative way of marketing or selling this type of loan. Is there really a absolutely no closing cost loan?
No, there is none, because when you buy or refinance your loan mortgage brokers and lenders have to make a living. And if they don’t charge you anything, that is not because they are doing it for “free.” They need to get compensated and they charge it to you one way or the other. Typically, they will charge you a slightly higher rate, maybe .250-.500% higher than the best prevailing rate. The higher rate will cover for all the closing cost that the Mortgage brokers needs to pay for.
This doesn’t mean, though, that this kind of program is not beneficial for you. Actually, I always recommend this loan especially for those who have just paid closing cost to purchase their home or refinance their home. This is to avoid paying closing cost over and over again, wasting all that cash on closing costs that could have added to your equity.
Plus, if you do not pay any closing costs, then you can keep refinancing and refinancing without decreasing the equity of your home. Of course, not every borrower is eligible for this no-closing-cost program. Normally, to be able to lower your rate by .500% without having to pay any cost, potential candidates have to have a loan amount of over $200k.
You always have to consider how many times you have refinanced in the past and figure out how much you have paid already. In the past two years, we have numerous clients that have refinanced their loans even only reducing it by less than .50%. Why did they do it? Because there is absolutely no cost involved and if your loan balance is over $400K that could be almost $100 difference in the payment every month, without any cost.
I always recommend that if you are to refinance your loan, do it sooner and try to get a more stable loan to avoid having to start your loan over again. Why right away? If you think you will have to refinance, that means that the payments you made to your existing loan are all gone and you will have to start over again. For example, if you have a 2 year fixed rate loan, you know that this is a temporary loan, why not do it right away to avoid paying any more payments to your current lender? If you had paid 12 payments and have to refinance to a new loan, that means you had paid a total of 31 years after all is said and done. I am sure a lot of you are starting loans over and over again for many reasons, but these rates have stayed low for you to take advantage of, so grab it while you can.
If you have a lot of equity and feel that you will live in your property for the rest of your life, and you are also being offered a really low interest rate, then you may consider paying closing cost to get this loan. But if it's short-term, then we will need to calculate to see how long it will take you to break even from the closing cost that you paid upfront. Sometimes it will take you 5-10 years to break even and most of the time, by then you are already ready to move on to your next home.
In every loan program, the key is to understand what you are being offered and getting into. Let me explain a little more regarding the two different types of closing cost.
One is “Re-occurring Closing Costs.” These are your interest, taxes and insurance costs of the loan. When you are buying a house, the lender will always require you to buy a year of hazard insurance, to be paid with your closing. When you are refinancing, you will also be required to prepay a year at closing, if there is an overlapping of premium due dates, your insurance carrier will usually credit the balance back to you. Interest payments are also collected for both purchase and refinance loans, we always pay our interest in the rear of the month of our mortgage payments. When someone offers you a free month of mortgage payment or for you to skip a month of mortgage payments, they are not explaining the loan to you properly. Again their are no free rides.
Another common “Re-occurring Closing Cost” is your taxes. Again, for purchase and refinance, you will always have to prepay property taxes that are due.
The second form of closing cost is the “Non-reoccurring Closing Cost” (NRCC). These are your points, lenders costs, escrow and title charges. When you are purchasing a house, your NRCC are typically tax deductable in the first year of purchase. While a refinance transaction will allow you to write off the closing costs over the term of your loan. That means if you had paid $5,000.00 in closing costs on a refinance, you will write off on about $166 per month on a 30 year loan.
I read an article in the LA Times a few weeks ago with startling statistics that people now are thinking of not paying their loan off, and would rather borrow as much as they can and as long as they can. To me, that is a trap just like your credit cards, how many people have fallen victims to that credit card money pit. Keep in mind, we are all enjoying high home values and equity, which I suppose should be called “High fly on borrowed Sky.” Once the correction on property values occur (and they will if what the think tanks are predicting comes true), you're going to need some cushioning for emergencies. Lines of credit again are to be use for short term only and not for buying cars, boats or doing major improvements to your home. They are adjustable rates that have only one direction, and that is to the roof. Please also try an fully understand your 1% loans. I just spent at least two hours explaining to a client who wanted to apply for these 1% loans. In her case, it was beneficial for her and I am putting her in with a good index adjustable loan that is tied to “COFI.” I will keep you informed on the outcome and have this client comment on her loan in the future.
Thanks for your support. Please feel free to call me at the office and I will be happy to evaluate your situation for you and give you the best possible advice. My goal is to make sure that you fully understand your loan program and get you the best possible rate. See my California home loans web site for more info.
P.S. I made a comment about the 1% loan per request from a recent reader/caller. Hopefully that would answer your question and make our readers aware of how they should review all loan papers and all cost prior to closing a deal.
Thursday, 14 October 2010
Thursday, 1 July 2010
Mortgage interest rates for 30 years @ 4.25%
Mortgage rates have been pretty steady the past few months, but recently since the market being so volatile, money was moving from stocks to bonds. The effects of that was the 10 year Treasury bonds dipped below 3% as low as 2.95%. Which has a direct effect on our mortgage rates, now the 30 years mortgage rates dropped to 4.25%, all time low. I have been in the business going on 23 years and i have never seen rates this low. Now, qualifying for these rates is another thing or getting these rates would require for the homeowners to be in a certain credit status and debt to income ratio to qualify.
Here are what is typically a qualified customer for these low rates:
* Property to be owner occupied.
* Loan amount under $417,000.00.
* Credit Score minimum @ 740 unless the loan to value ratio is less than 70%.
* Debt to income ratio needs to be below 45%, meaning all your debts ( Revolving & Installmend + PITI ) added up and if you divide it with your groos income, it should not exceed 45%.
* Employment history has to be in line with Fannie and Freddie guidelines.
* Cash out transactions will depend on the loan to value ratios to qualify for these rates.
If you happen to fall into these qualifications and guidelines, you should get these rates with no hassle. However, being in the loan business this long, every loan is different and there are no two loan that are similar.
Please CAll to see if you qualify for these rates and for free consultation, call anytime : 800-508-7048.
Here are some other great rates i would like to share with you :
15 years fixed rates : 3.75 %
5/1 ARM (Initial rates fixed for 5 years then this will turn into a adjustable) : 3.125%
7/1 ARM : (Same as above adjustments) : 3.5%
10/1 ARM (Same as above adjustments) : 3.77%
LOANS OVER $417,000.00
30 YEARS FIXED RATES : 4.625%
15 YEARS FIXED RATES: 4.125%
7/1 ARM ( Initial rates fixed for the first 7 years then will turn into an adjustable ) : 3.875%
10/1 ARM : 4.25%
These rates are all carrying .75% for conforming loans and .50% for jumbo loans.
Guaranteed fees: $ 695.00 processing and $ 780.00 underwriting ( in writing ).
Appraisal Fees : $ 340 or $ 390 depending on the loan amount.
Here are what is typically a qualified customer for these low rates:
* Property to be owner occupied.
* Loan amount under $417,000.00.
* Credit Score minimum @ 740 unless the loan to value ratio is less than 70%.
* Debt to income ratio needs to be below 45%, meaning all your debts ( Revolving & Installmend + PITI ) added up and if you divide it with your groos income, it should not exceed 45%.
* Employment history has to be in line with Fannie and Freddie guidelines.
* Cash out transactions will depend on the loan to value ratios to qualify for these rates.
If you happen to fall into these qualifications and guidelines, you should get these rates with no hassle. However, being in the loan business this long, every loan is different and there are no two loan that are similar.
Please CAll to see if you qualify for these rates and for free consultation, call anytime : 800-508-7048.
Here are some other great rates i would like to share with you :
15 years fixed rates : 3.75 %
5/1 ARM (Initial rates fixed for 5 years then this will turn into a adjustable) : 3.125%
7/1 ARM : (Same as above adjustments) : 3.5%
10/1 ARM (Same as above adjustments) : 3.77%
LOANS OVER $417,000.00
30 YEARS FIXED RATES : 4.625%
15 YEARS FIXED RATES: 4.125%
7/1 ARM ( Initial rates fixed for the first 7 years then will turn into an adjustable ) : 3.875%
10/1 ARM : 4.25%
These rates are all carrying .75% for conforming loans and .50% for jumbo loans.
Guaranteed fees: $ 695.00 processing and $ 780.00 underwriting ( in writing ).
Appraisal Fees : $ 340 or $ 390 depending on the loan amount.
Sunday, 23 May 2010
Loan Modification Frustrations
Frustrated with all the people I am talking to about “LOAN MODIFICATION”!
Caller: I am trying to find a way to lower my payments, our loan currently is going to adjust by 25% come November 08’. At this point I am already having a hard time paying the mortgage, what should I do. I heard about “Loan Modification” and have been trying to do that for two months but am not getting anywhere? I also talked to someone wanting to charge me $3000.00 for doing this for me.
Ken Go: First of all, I am repeatedly telling everyone that you should not pay anyone to help you deal with your lender or do a “Loan Modification”. There are government agencies and non-profit organizations that will help you do it for FREE. The key question here is whether you are currently late on your mortgage when you are calling your lender for a “Loan Modification”. If you are still paying them, they will more than likely not agree to help you, because currently there are about 7-8 thousand people going into foreclosure everyday nationwide. So, they will prioritize the customers that are already late, but don’t get discourage because you should still try and see if they will agree. Another thing to consider is if you can qualify for your own loan, meaning if you add up all your mortgage payments including taxes and insurance, revolving debts and installment debts, is your family income double that amount? If not, they are again most likely going to decline your request. They will tell you that you cannot qualify for your own loan, if they help you; they are thinking that it will be temporary and you will be back in the same situation 6 months down the line. So, be honest and explain to your lender how you are able to afford the payments, if you have relatives living with you helping pay the mortgage, disclose all your part time jobs. Lastly, remember to try and complete the financial package with a hardship letter explaining all your problems. Remember, these lenders are overloaded with call all day long and try to be nice to get your way. If will get frustrating that is why you have to keep trying. Also, if you put yourself in their position, they can tell you that you have signed a legal and binding contract when you took that loan out, when you cashed out money to buy your new car, when you did your home improvements or paid off your other debts that you agreed to pay them back. So, they really don’t have to help you but might. So, we are at their mercy and have to do things their way and hope for the best.
Caller: I can’t refinance my house and my loan payments are going up to a point that I cannot afford it anymore. What should I do?
Ken Go: This is a growing epidemic that is out of proportion and I get calls like this all day long. My suggestion: get your finances together be honest with yourself and see what your actual monthly expenses are, include everything even your snacks, your small vices everything. Then put down how much you are netting from your pay stubs and you will be surprise to know that you are just living on the edge every month with your paycheck. If you cannot afford the house, then you have to really decide on other options to keep yourself afloat. See yourself six month to one year from now, even if you have a fixed rate loan, can you really afford the payments? If not, then be honest and sort out options. Treat this home buying experience as a business, its not personal definitely not sentimental.
Caller: Mr. Ken Go, you are claiming that you don’t charge anything for the advice and the appointment. Right there I might have to be cautious because you said yourself nothing is free in this world?
Ken Go: Great question! I spend about 15-30 minutes explaining to a customer all these things about loan modification. I have been in the business for over 20 years and fortunately have many loyal customers that continue to refer me with clients who might want to buy,sell or refinance a house. If you are following my articles, about two years ago, I have been writing articles about “NO DOWN PAYMENT LOANS’ that the borrowers should not do that because its too risky, I have telling my callers not to buy homes since close to two years ago. Why do I do that, because I honestly find satisfaction and a sense of pride doing that? I feel that I want to do that to sort of give back to the world the blessings I get. Do I need to make money, of course I do. Let me ask you something, if I give you a good advice and honest one, later if you need some financial or real estate services who would you think about calling? Hopefully Ken Go, right? That is pretty much what I asked for are referrals on people you know that might need my services. I think that is more than fair, my business is a referral business. I do get a lot of thanks and promises of referral from my callers and basically being in this business this long; I can wait and will continue to give free and honest advises to whoever might seek for it.
IMPORTANT NOTE: Countrywide and Bank of America is current workingout a Rescue plan for their customers only. This program will allow them to lower the balance and payments, if you qualify.
Caller: I am trying to find a way to lower my payments, our loan currently is going to adjust by 25% come November 08’. At this point I am already having a hard time paying the mortgage, what should I do. I heard about “Loan Modification” and have been trying to do that for two months but am not getting anywhere? I also talked to someone wanting to charge me $3000.00 for doing this for me.
Ken Go: First of all, I am repeatedly telling everyone that you should not pay anyone to help you deal with your lender or do a “Loan Modification”. There are government agencies and non-profit organizations that will help you do it for FREE. The key question here is whether you are currently late on your mortgage when you are calling your lender for a “Loan Modification”. If you are still paying them, they will more than likely not agree to help you, because currently there are about 7-8 thousand people going into foreclosure everyday nationwide. So, they will prioritize the customers that are already late, but don’t get discourage because you should still try and see if they will agree. Another thing to consider is if you can qualify for your own loan, meaning if you add up all your mortgage payments including taxes and insurance, revolving debts and installment debts, is your family income double that amount? If not, they are again most likely going to decline your request. They will tell you that you cannot qualify for your own loan, if they help you; they are thinking that it will be temporary and you will be back in the same situation 6 months down the line. So, be honest and explain to your lender how you are able to afford the payments, if you have relatives living with you helping pay the mortgage, disclose all your part time jobs. Lastly, remember to try and complete the financial package with a hardship letter explaining all your problems. Remember, these lenders are overloaded with call all day long and try to be nice to get your way. If will get frustrating that is why you have to keep trying. Also, if you put yourself in their position, they can tell you that you have signed a legal and binding contract when you took that loan out, when you cashed out money to buy your new car, when you did your home improvements or paid off your other debts that you agreed to pay them back. So, they really don’t have to help you but might. So, we are at their mercy and have to do things their way and hope for the best.
Caller: I can’t refinance my house and my loan payments are going up to a point that I cannot afford it anymore. What should I do?
Ken Go: This is a growing epidemic that is out of proportion and I get calls like this all day long. My suggestion: get your finances together be honest with yourself and see what your actual monthly expenses are, include everything even your snacks, your small vices everything. Then put down how much you are netting from your pay stubs and you will be surprise to know that you are just living on the edge every month with your paycheck. If you cannot afford the house, then you have to really decide on other options to keep yourself afloat. See yourself six month to one year from now, even if you have a fixed rate loan, can you really afford the payments? If not, then be honest and sort out options. Treat this home buying experience as a business, its not personal definitely not sentimental.
Caller: Mr. Ken Go, you are claiming that you don’t charge anything for the advice and the appointment. Right there I might have to be cautious because you said yourself nothing is free in this world?
Ken Go: Great question! I spend about 15-30 minutes explaining to a customer all these things about loan modification. I have been in the business for over 20 years and fortunately have many loyal customers that continue to refer me with clients who might want to buy,sell or refinance a house. If you are following my articles, about two years ago, I have been writing articles about “NO DOWN PAYMENT LOANS’ that the borrowers should not do that because its too risky, I have telling my callers not to buy homes since close to two years ago. Why do I do that, because I honestly find satisfaction and a sense of pride doing that? I feel that I want to do that to sort of give back to the world the blessings I get. Do I need to make money, of course I do. Let me ask you something, if I give you a good advice and honest one, later if you need some financial or real estate services who would you think about calling? Hopefully Ken Go, right? That is pretty much what I asked for are referrals on people you know that might need my services. I think that is more than fair, my business is a referral business. I do get a lot of thanks and promises of referral from my callers and basically being in this business this long; I can wait and will continue to give free and honest advises to whoever might seek for it.
IMPORTANT NOTE: Countrywide and Bank of America is current workingout a Rescue plan for their customers only. This program will allow them to lower the balance and payments, if you qualify.
Tuesday, 18 May 2010
Short Sale Deficiency Judgements
Will I be liable for the deficiency balance on my defaulted mortgage balance?
Caller: My property was foreclosed 6 months ago and I am still getting a bill for the mortgage balance of my property. What can I do about the debt? The bank already sold the house to another buyer.
Ken Go: That is what happens if you let your property go to foreclosure, you did not request for debt forgiveness and the lender is after you for the deficiency judgment. Meaning, if you owe $500K on your property and the lender after paying all the fees, interest, legal and agent fees net about $400K only, you will owe them $100K. I am advising my readers to consider a short sale after failing to modify their loans and rates, and letting the property go into foreclosure as a last resort. Think about it, if you let go of the property just like that, the bank will have to wait for the legal process to kick in before taking over the property, that means you would have incurred legal fees, let alone the wait time that is wasted due to the process of bank take over. Then, the bank will also hire an agent and pay their commission to sell the house, all those cost of the bank selling will also go on your bill. So, you basically just increased your debt balance and hopefully your property is not damaged or vandalized where there will be again incurred cost, because again you will have to pick up those cost. Therefore, do I make sense when I say lets short sell it and ask the bank to accept a smaller payoff? What to do then, maybe talk to the lender to discount the balance if you have money to settle, or talk to a lawyer as far as how to avoid the debt.
Caller: I wrote about this caller a few weeks ago, who wanted me to help her request for a loan modification, she is $18K behind and have no way to pay the debt off to be current. I assisted in calling and providing the lender with the necessary documents to have her loan modified. Just recently the lender approved her modification package. What they did was they put the loan balance of 18K on top of her loan and kept her rate and increased her payments by about $100.00. I her case, she wanted to keep the house and has the ability to pay her mortgage but not to bring the loan current, so this will work out for her and now she wont have to worry about the 18K debt.
She got an advice from someone saying that don’t pay your mortgage for 2 months before calling the lender and asking for a loan modification. Problem is the 2 months quickly became 6 months and now she can’t keep up. So, before you get an advice make sure that person is qualified to make comments.
Caller: I was defrauded by a countryman, I was behind on my home that I owned for 18 years and was lead to believe that this person was going to use a straw buyer (fake buyer) to buy that property back for the caller. The Agent requested for $10K as an escrow deposit for the supposedly straw buyer. After a few months of communication with the agent, he suddenly stops calling. When chased after, the office has no record of the escrow ever being opened. What should I do? My home was foreclosed because I have a notice to move already and the bank won’t talk to me any more.
Ken Go: At this point, you have to report that agent to Federal Trade Commission, www.ftc.gov or call 1-877-ftc-help. I can’t even tell you if you will ever get your money back. I would report them to the local authorities too. Unfortunately, as far as your house, since the Trustee sale occurred you are out of options. Best is to report this person to avoid other people to fall for their scams. This is by the way a Federal offense for those who are getting ideas about scamming other homeowners.
Caller: I was approach by a lawyer’s office to who wanted to help me do a loan modification with my houses that I have. I own a vacation that is still ok but due to my interest rates being high, I might not be able to afford it anymore. I refinanced my home to be able to buy the vacation home and my current residence also has a high interest rate that I am paying.
Ken Go: Before paying someone $2-4K to help you do loan modification, take note of these things. There are non profit agencies out there that will help you negotiate with your lender for free. You can also do that yourself, of course when you have to do it yourself you have to be patient and much disciplined to follow up on those calls and documents the lender might require. But for you that could save you $5K, don’t you think it’s worth it, having a Law Office behind you doesn’t always mean success? My suggestion is for you to try to sell the home and at the same time request for a loan modification, vacation home you can’t afford is not a vacation home. If you sell see how much money you will have saved not having to pay the mortgage on that property, truthfully how often to visit your vacation home? Be frugal, now is not the time to spend carelessly. There was an article about a Law firm that targeted Filipino homeowners in distress and they were soliciting for Loan Modifications. I believe they are knee deep in trouble with the Law and I am curious to see how they get out of this mess.
If you have a Freddie Mac or Fannie Mae loan there is a Making Home Affordable program that you might qualify for, please inquire with us. I have seen rates as low as 2% approved for 5 years from this program.
Caller: My property was foreclosed 6 months ago and I am still getting a bill for the mortgage balance of my property. What can I do about the debt? The bank already sold the house to another buyer.
Ken Go: That is what happens if you let your property go to foreclosure, you did not request for debt forgiveness and the lender is after you for the deficiency judgment. Meaning, if you owe $500K on your property and the lender after paying all the fees, interest, legal and agent fees net about $400K only, you will owe them $100K. I am advising my readers to consider a short sale after failing to modify their loans and rates, and letting the property go into foreclosure as a last resort. Think about it, if you let go of the property just like that, the bank will have to wait for the legal process to kick in before taking over the property, that means you would have incurred legal fees, let alone the wait time that is wasted due to the process of bank take over. Then, the bank will also hire an agent and pay their commission to sell the house, all those cost of the bank selling will also go on your bill. So, you basically just increased your debt balance and hopefully your property is not damaged or vandalized where there will be again incurred cost, because again you will have to pick up those cost. Therefore, do I make sense when I say lets short sell it and ask the bank to accept a smaller payoff? What to do then, maybe talk to the lender to discount the balance if you have money to settle, or talk to a lawyer as far as how to avoid the debt.
Caller: I wrote about this caller a few weeks ago, who wanted me to help her request for a loan modification, she is $18K behind and have no way to pay the debt off to be current. I assisted in calling and providing the lender with the necessary documents to have her loan modified. Just recently the lender approved her modification package. What they did was they put the loan balance of 18K on top of her loan and kept her rate and increased her payments by about $100.00. I her case, she wanted to keep the house and has the ability to pay her mortgage but not to bring the loan current, so this will work out for her and now she wont have to worry about the 18K debt.
She got an advice from someone saying that don’t pay your mortgage for 2 months before calling the lender and asking for a loan modification. Problem is the 2 months quickly became 6 months and now she can’t keep up. So, before you get an advice make sure that person is qualified to make comments.
Caller: I was defrauded by a countryman, I was behind on my home that I owned for 18 years and was lead to believe that this person was going to use a straw buyer (fake buyer) to buy that property back for the caller. The Agent requested for $10K as an escrow deposit for the supposedly straw buyer. After a few months of communication with the agent, he suddenly stops calling. When chased after, the office has no record of the escrow ever being opened. What should I do? My home was foreclosed because I have a notice to move already and the bank won’t talk to me any more.
Ken Go: At this point, you have to report that agent to Federal Trade Commission, www.ftc.gov or call 1-877-ftc-help. I can’t even tell you if you will ever get your money back. I would report them to the local authorities too. Unfortunately, as far as your house, since the Trustee sale occurred you are out of options. Best is to report this person to avoid other people to fall for their scams. This is by the way a Federal offense for those who are getting ideas about scamming other homeowners.
Caller: I was approach by a lawyer’s office to who wanted to help me do a loan modification with my houses that I have. I own a vacation that is still ok but due to my interest rates being high, I might not be able to afford it anymore. I refinanced my home to be able to buy the vacation home and my current residence also has a high interest rate that I am paying.
Ken Go: Before paying someone $2-4K to help you do loan modification, take note of these things. There are non profit agencies out there that will help you negotiate with your lender for free. You can also do that yourself, of course when you have to do it yourself you have to be patient and much disciplined to follow up on those calls and documents the lender might require. But for you that could save you $5K, don’t you think it’s worth it, having a Law Office behind you doesn’t always mean success? My suggestion is for you to try to sell the home and at the same time request for a loan modification, vacation home you can’t afford is not a vacation home. If you sell see how much money you will have saved not having to pay the mortgage on that property, truthfully how often to visit your vacation home? Be frugal, now is not the time to spend carelessly. There was an article about a Law firm that targeted Filipino homeowners in distress and they were soliciting for Loan Modifications. I believe they are knee deep in trouble with the Law and I am curious to see how they get out of this mess.
If you have a Freddie Mac or Fannie Mae loan there is a Making Home Affordable program that you might qualify for, please inquire with us. I have seen rates as low as 2% approved for 5 years from this program.
Wednesday, 21 April 2010
Getting a loan from the builder due to their incentives program?
Builders are becoming more dominating than ever. They almost always require the buyers to go thru their own lender. Here is why I feel that builder incentives are not beneficial for the homebuyers.
Now a major home mortgage industry group wants the federal government to take a closer look at these deals, calling some of them clever violations of real estate settlement and antitrust regulations. The National Association of Mortgage Brokers, the principal trade group for the country's more than 40,000 independent home loan brokers, says builder financing incentives frequently steer buyers to mortgage deals more costly than those competing, nonaffiliated brokers could provide. A delegation of mortgage brokers recently complained to the government's real estate settlement rules officials, asking for a nationwide investigation of builder incentive financing programs.
For Example, if you are offered carpet incentives, get the exact dollar amount that is being credited and get a detailed report on the cost of your rates and fees. Shop around and compare. Show your lenders these incentives. If they offered you an amount that might exceed a normal closing cost, find out where the difference is going to be applied to.
Good luck in your house hunting, I am currently involved in a non-profit organization helping homebuyers with absolute no money for down payment and closing cost. As soon as more information is available, I will write about it for our readers that might avail of such programs.
- The builders control the prices of homes and could offer any amount as an incentive for homebuyers to go thru their own lenders.
- Home prices of newly constructed homes are at times inflated due to the differences in upgrades between similar homes. This tells me that your neighbor might have paid more for their house only because of the improvements that are added to the sales prices. Is the amount they claim the true value of those improvements?
- Builders offer closing costs paid if you choose to go with their own lenders. Is that included in your sales price or your interest rates? Most of the time yes. Still, compare them with your conventional lenders or brokers and you will be surprised at the better services you will get from conventional lenders and brokers.
- They forced you to use their own lender in order to start the purchase transaction and reserve you a home, sort of like twisting your arm until you give up.
Now a major home mortgage industry group wants the federal government to take a closer look at these deals, calling some of them clever violations of real estate settlement and antitrust regulations. The National Association of Mortgage Brokers, the principal trade group for the country's more than 40,000 independent home loan brokers, says builder financing incentives frequently steer buyers to mortgage deals more costly than those competing, nonaffiliated brokers could provide. A delegation of mortgage brokers recently complained to the government's real estate settlement rules officials, asking for a nationwide investigation of builder incentive financing programs.
For Example, if you are offered carpet incentives, get the exact dollar amount that is being credited and get a detailed report on the cost of your rates and fees. Shop around and compare. Show your lenders these incentives. If they offered you an amount that might exceed a normal closing cost, find out where the difference is going to be applied to.
Good luck in your house hunting, I am currently involved in a non-profit organization helping homebuyers with absolute no money for down payment and closing cost. As soon as more information is available, I will write about it for our readers that might avail of such programs.
Buying Pre-constructed Homes
Buying Pre-Construction? Can your Real Estate Agent help you?
It might not seem necessary to involve a real estate professional in a transaction where a buyer can deal directly with a builder. Think again! A real estate professional representing the buyer’s interests can guide you along the right path and smooth the rough places to help ensure you make a decision you can live with (and in) for many years. Here’s how:
By now, you should be convinced of a real estate professional’s value as you search for and purchase a newly built home. You should always know and have enough knowledge of how real estate transactions are occurring on a day to day basis. Remember to trust only information that you have verified and researched. You then can enjoy individual attention and support at no cost to you. What a great way to start life in a new home!
It might not seem necessary to involve a real estate professional in a transaction where a buyer can deal directly with a builder. Think again! A real estate professional representing the buyer’s interests can guide you along the right path and smooth the rough places to help ensure you make a decision you can live with (and in) for many years. Here’s how:
- First and foremost, my concern always for streamlining a transaction is your conflict of interest. If the builder (seller) is also representing you as a buyer. They will have too much interest into the transaction that might hinder their judgments into your benefits. Builders are also requiring buyers to go thru their own lending company which I believe is a big negative.
- Just as a real estate professional calls on experience and knowledge of an area to help buyers locate pre-owned homes in a community, he or she can also direct buyers interested in newly built homes to developments and communities that match client specifications.
- An agent can suggest builders based on their reputation for delivering a high-quality product, responding quickly to issues, and being financially sound.
- An agent may be familiar with how a builder prices his products and where there may be room to negotiate price or upgrades.
- Without agent representation, you are one buyer purchasing only one home. But an agent can significantly impact a builder’s bottom line by providing a steady supply of customers. The agent’s leverage may work in your favor at the negotiating table.
- When relocating to a new area, agents can be particularly valuable resources. In addition to providing local area information regarding schools, day care or elder care services, public transportation, proposed development, and so on, once construction is under way, an agent can periodically stop by the work site; supply you with progress reports, and photograph or videotape phases of the construction.
- An agent can assist you as you face hundreds of design choices and consider which upgrades could potentially add value to the home when it comes time to sell.
- An agent can accompany you at the site while you okay the plumbing and electrical locations prior to dry walling, as well as on the walk-through or builder orientation.
By now, you should be convinced of a real estate professional’s value as you search for and purchase a newly built home. You should always know and have enough knowledge of how real estate transactions are occurring on a day to day basis. Remember to trust only information that you have verified and researched. You then can enjoy individual attention and support at no cost to you. What a great way to start life in a new home!
Thursday, 15 April 2010
Loan Mod Scams and New Incentives for Short Sale
Another falls for A Loan Modification scam and see how the Obama Administration is trying to keep defaulting owners in their homes.
Caller: Dear Ken, I just recently read your article about loans being in a Negative Amortization Adjustable Mortgage. I am so depress and don’t know what to do, my husband passed on and I am handling our finances by myself with two children in college. I went to a Loan Mod Company and paid them $ 3000.00 to modify my loan. I was told specifically to stop my mortgage payments and now I am 6 months behind my payments. I then was told to Short Sale my property thru the same company, because they claim that I don’t qualify for the Loan Mod. I cant sleep at night and I really am very depress and don’t know what to do.
Ken Go: For my readers, this is the first time I have had a caller sound like this, from the time I heard her voice I knew she was completely devastated. I was having diner and immediately move to another room to speak with her. This is her situation, she has a “Pick-A-Payment” Loan with a minimum payment of about $800.00 a month payment, her property is not upside down but has very little equity. She lives in a descent area that I am sure will recover faster than other cities. She is currently still working but has concerns about her mortgage recasting (adjusting) to a higher payment next year. She is also worried about her job security now. I told her that if she would have called me last year, I would have told her to keep her money and keep paying the $ 800.00 a month for now. Per advise of the Loan Modification Company, they wanted her to list the property for sale with them ( to line up more money in their own pocket if you ask me ) and if she listened to the Loan Mod company and short sales her property, she still has to pay around 1200-1400 for a two bedroom apartment. So, why sell right? My take on this is that the Loan Modification Company wants to short sale to make another commission. Not caring about what happens to the homeowners. I told her not to talk to the Loan Mod Company and gave her the name, number and address to :
Call State consumer protection agency 800-952-5225 –
You have to call FTC – to complain by phone or internet and then call Ca. State consumer protection to take action.
File a complain in writing detailing your situation with all name and company names to :
Office of the attorney general – public inquiry unit
PO Box 944255
Sacramento CA 94244 –
Shortcut to: https://www.ftccomplaintassistant.gov/
To file a complain and I gave her the number to her lenders Presidents Office to complain and ask for help.
Her two children will be graduating this year and I told her to sit them down and tell her about the financial trouble she is in. I told her to continue to payments and make arrangement with her lender to continue the loan. Because she has till next year before the loan will actually recast or adjust, for now that payment is affordable. By next year her children are both graduating and hopefully will be able to help make the mortgage payments.
Even if the adjusted Mortgage payments will be around $ 1600 a month, that should be affordable for a three income family. With the market condition now a days, she will have a nice size equity in 5-7 years and then hopefully can sell and retire.
This is a case of real abuse where as the Loan Mod company saw an opportunity to take money from this person who might not be too sophisticated or familiar with their own financial situation. Mainly due to her husband passing who was the main financial person of the household.
The crooks in this situation probably wants the property for themselves and will have no mercy or conscience in kicking these hardworking family from their home for many years, which is not underwater and has a minimum payment of $ 800.00.
Lesson learned, don’t stop paying your mortgage unless you are certain that by doing that it actually helps and not puts you in a worse situation
The Obama Administration in an effort to end the foreclosure crisis has a new approach: “Paying some of the them to leave”. This is latest program, which will allow owners to sells for less than what they owe and will them a little incentive to speed up the process. Now, there are more than five Million households behind on their mortgages and risk foreclosure. Come this April 15th, a program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to sell their houses through a process called Short Sale. Lenders will be compelled to accept the arrangement, forgiving the difference between market price and amount owed. “We want to streamline and standardize the short sale process to make it much easier on the borrower and much easier on the lender,” said Seth Wheeler, a Treasury Senior Advisor.
This process will allow the borrowers to suffer less damaging credit remarks and ratings. And as part of the transaction, they will get the lender’s assurance that they will not later be sued for the unpaid mortgage balance.
I will look into this new program and will be discussing about Mortgage Deficiency next week. Seems like there is a new fear amongs homeowners being foreclosed on. Which is will the lenders have the right to go after the deficiency balance even after Foreclosures? Some experts says yes and I will discuss that next week.
Caller: Dear Ken, I just recently read your article about loans being in a Negative Amortization Adjustable Mortgage. I am so depress and don’t know what to do, my husband passed on and I am handling our finances by myself with two children in college. I went to a Loan Mod Company and paid them $ 3000.00 to modify my loan. I was told specifically to stop my mortgage payments and now I am 6 months behind my payments. I then was told to Short Sale my property thru the same company, because they claim that I don’t qualify for the Loan Mod. I cant sleep at night and I really am very depress and don’t know what to do.
Ken Go: For my readers, this is the first time I have had a caller sound like this, from the time I heard her voice I knew she was completely devastated. I was having diner and immediately move to another room to speak with her. This is her situation, she has a “Pick-A-Payment” Loan with a minimum payment of about $800.00 a month payment, her property is not upside down but has very little equity. She lives in a descent area that I am sure will recover faster than other cities. She is currently still working but has concerns about her mortgage recasting (adjusting) to a higher payment next year. She is also worried about her job security now. I told her that if she would have called me last year, I would have told her to keep her money and keep paying the $ 800.00 a month for now. Per advise of the Loan Modification Company, they wanted her to list the property for sale with them ( to line up more money in their own pocket if you ask me ) and if she listened to the Loan Mod company and short sales her property, she still has to pay around 1200-1400 for a two bedroom apartment. So, why sell right? My take on this is that the Loan Modification Company wants to short sale to make another commission. Not caring about what happens to the homeowners. I told her not to talk to the Loan Mod Company and gave her the name, number and address to :
Call State consumer protection agency 800-952-5225 –
You have to call FTC – to complain by phone or internet and then call Ca. State consumer protection to take action.
File a complain in writing detailing your situation with all name and company names to :
Office of the attorney general – public inquiry unit
PO Box 944255
Sacramento CA 94244 –
Shortcut to: https://www.ftccomplaintassistant.gov/
To file a complain and I gave her the number to her lenders Presidents Office to complain and ask for help.
Her two children will be graduating this year and I told her to sit them down and tell her about the financial trouble she is in. I told her to continue to payments and make arrangement with her lender to continue the loan. Because she has till next year before the loan will actually recast or adjust, for now that payment is affordable. By next year her children are both graduating and hopefully will be able to help make the mortgage payments.
Even if the adjusted Mortgage payments will be around $ 1600 a month, that should be affordable for a three income family. With the market condition now a days, she will have a nice size equity in 5-7 years and then hopefully can sell and retire.
This is a case of real abuse where as the Loan Mod company saw an opportunity to take money from this person who might not be too sophisticated or familiar with their own financial situation. Mainly due to her husband passing who was the main financial person of the household.
The crooks in this situation probably wants the property for themselves and will have no mercy or conscience in kicking these hardworking family from their home for many years, which is not underwater and has a minimum payment of $ 800.00.
Lesson learned, don’t stop paying your mortgage unless you are certain that by doing that it actually helps and not puts you in a worse situation
The Obama Administration in an effort to end the foreclosure crisis has a new approach: “Paying some of the them to leave”. This is latest program, which will allow owners to sells for less than what they owe and will them a little incentive to speed up the process. Now, there are more than five Million households behind on their mortgages and risk foreclosure. Come this April 15th, a program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to sell their houses through a process called Short Sale. Lenders will be compelled to accept the arrangement, forgiving the difference between market price and amount owed. “We want to streamline and standardize the short sale process to make it much easier on the borrower and much easier on the lender,” said Seth Wheeler, a Treasury Senior Advisor.
This process will allow the borrowers to suffer less damaging credit remarks and ratings. And as part of the transaction, they will get the lender’s assurance that they will not later be sued for the unpaid mortgage balance.
I will look into this new program and will be discussing about Mortgage Deficiency next week. Seems like there is a new fear amongs homeowners being foreclosed on. Which is will the lenders have the right to go after the deficiency balance even after Foreclosures? Some experts says yes and I will discuss that next week.
Monday, 29 March 2010
Emotional Stress of a Short Sale
What a seller is to expect in a Short sale
I started talking about Short Sales about a year ago. The Short Sale transaction can be frustrating for everyone involved. I think most of the frustration comes from expectations not being met. The short sale is not your every day real estate transaction. This is relatively new territory for most real estate agents and definitely a new venture for the seller. This should be one of your last resorts. Talk to your bank. You might be able to renegotiate your mortgage. Again, back to my point banks don’t want to own real estate, they just don’t realize it yet. They are going to fight you tooth and nail to keep the current condition and hope you find a way to pay. A well trained real estate agent in foreclosures and short sales will be able to assist you in this process.
There are a few things that you should be prepared to do before venturing into a short sale transaction. The bank has to qualify you for a short sale. Remember, they are going to ultimately take a loss on this. Therefore, you have to establish a hardship, if they approve, they will pass this short fall onto you as a 1099 at closing. The IRS sees this as income to you and expect you to pay taxes on it. (Tax laws are changing on this regularly, check with your Tax preparer) You might not have to anymore.
Your agent will be needing a copy of a few things from you to help streamline the whole process.
Authorization to talk to you lender(s)
Most recent mortgage statement.
Most recent tax return.
Two most recent pay stubs.
Bank Account Statement(s)
A Hardship letter written in your own words.
The banks will want to see these items in order to consider your request. If there’s a second mortgage, most likely both will have to agree on a settlement before approving the short sale. Remember you agent will do their best to get the approval, but there’s no guarantees that they will accept it. It is not uncommon for one or the other lender to force it to foreclosure. The loss mitigation department sometimes have a mind of their own. They have secret formulas that they use to determine which route is more beneficial to the bank.
Your sellers agent will submit this again with another pile of documents when an offer comes through. It makes it easier on the Loss Mitigation Officer to see everything at one time (again or maybe for the first time) They have hundreds of these request coming across their desk monthly. The more your agent is organized, the quicker the response time to the sale approval. I say quicker with a little tongue and cheek. The approval process could take anywhere from 30-60 days. You don’t need any more delays than that. Especially if the foreclosure process is closing in on you. Buyers and Buyer’s agent need to be aware of this. We’ll talk about their expectations next week.
This is an emotional process, your agent should be able to help keep things in perspective and work through the hiccups of the transaction. Ultimately, you want to get someone who understand your situation, very patient and has your interest.
Watching out for your deficiency waiver and credit are both very important issues that an agent has to address. I just ran a credit on a short sale that I closed, this client had about a 720 Fico prior to the short sale, once we had closed the short sale. Their credit dropped to around 650, and both 1st and second loan showed “Account Settled”, which is what I negotiated for and got. I am very happy with the turn out of this clients credit. However, any foreclosure or short sale they will have to wait three years to be able to get another home loan.
I started talking about Short Sales about a year ago. The Short Sale transaction can be frustrating for everyone involved. I think most of the frustration comes from expectations not being met. The short sale is not your every day real estate transaction. This is relatively new territory for most real estate agents and definitely a new venture for the seller. This should be one of your last resorts. Talk to your bank. You might be able to renegotiate your mortgage. Again, back to my point banks don’t want to own real estate, they just don’t realize it yet. They are going to fight you tooth and nail to keep the current condition and hope you find a way to pay. A well trained real estate agent in foreclosures and short sales will be able to assist you in this process.
There are a few things that you should be prepared to do before venturing into a short sale transaction. The bank has to qualify you for a short sale. Remember, they are going to ultimately take a loss on this. Therefore, you have to establish a hardship, if they approve, they will pass this short fall onto you as a 1099 at closing. The IRS sees this as income to you and expect you to pay taxes on it. (Tax laws are changing on this regularly, check with your Tax preparer) You might not have to anymore.
Your agent will be needing a copy of a few things from you to help streamline the whole process.
Authorization to talk to you lender(s)
Most recent mortgage statement.
Most recent tax return.
Two most recent pay stubs.
Bank Account Statement(s)
A Hardship letter written in your own words.
The banks will want to see these items in order to consider your request. If there’s a second mortgage, most likely both will have to agree on a settlement before approving the short sale. Remember you agent will do their best to get the approval, but there’s no guarantees that they will accept it. It is not uncommon for one or the other lender to force it to foreclosure. The loss mitigation department sometimes have a mind of their own. They have secret formulas that they use to determine which route is more beneficial to the bank.
Your sellers agent will submit this again with another pile of documents when an offer comes through. It makes it easier on the Loss Mitigation Officer to see everything at one time (again or maybe for the first time) They have hundreds of these request coming across their desk monthly. The more your agent is organized, the quicker the response time to the sale approval. I say quicker with a little tongue and cheek. The approval process could take anywhere from 30-60 days. You don’t need any more delays than that. Especially if the foreclosure process is closing in on you. Buyers and Buyer’s agent need to be aware of this. We’ll talk about their expectations next week.
This is an emotional process, your agent should be able to help keep things in perspective and work through the hiccups of the transaction. Ultimately, you want to get someone who understand your situation, very patient and has your interest.
Watching out for your deficiency waiver and credit are both very important issues that an agent has to address. I just ran a credit on a short sale that I closed, this client had about a 720 Fico prior to the short sale, once we had closed the short sale. Their credit dropped to around 650, and both 1st and second loan showed “Account Settled”, which is what I negotiated for and got. I am very happy with the turn out of this clients credit. However, any foreclosure or short sale they will have to wait three years to be able to get another home loan.
Sunday, 7 March 2010
Can You Beat Rates and Fees from Major Lenders?
Question: I got two quotes from two major lenders on a jumbo loan for $500,000, one lender offered me 6.375% (3/1/06) and the other lender offered me a rate over 7%. I read about you advise on how to compare and shop for mortgage rates. But before committing to a lender I thought I would send you an email on your website and see what you could do for me.Ken Go: After interviewing the client, I got them approved that same day. I committed to lock the rate in at 6.25% (3/02/06) for the exact same program. The client now is formally approved and all we are waiting for is the final closing. With a simple phone call, the client was able to get guaranteed rates and fees from us in writing and they were able to save an extra $40.00 a month on the payment. Not a bad deal, now they know they are getting a good deal with great service. I can normally compete with major lenders if not beat them. We actually work with most of the major lenders but we get wholesale pricing, which is why we can be better than most of the major lenders.
Thank you so much for your inquiries, I enjoy very much giving advice and helping our readers obtain better financing. Please call or write to kennethgo@verizon.net , call (888)-822-5363 or visit our website for California Home Loans.
Sunday, 28 February 2010
Mortgage Mailers: Am I really pre-approved?
Isn't it annoying to get all that junk mail from companies trying to get you to apply for a home mortgage? This is a typical letter from our readers:
When a telemarketer calls, document when and where they are calling from and ask them to please put you on their “do not call list” (use those exact words). According to federal law they are not allowed to call you again. If they persist and continue to call you, you can make a report to National Fraud Information Center.
Junk Mortgage mailers:
You can write to Experian Consumer Opt Out: 701 Experian Parkway, Allen TX 75013 or call (800) 353-0809 (one call or letter gets you off all three bureaus).
I have received numerous calls from my readers claiming that they had just gotten a loan from a telemarketer or from mortgage mailers. One of them had given me full details of what occurred when she applied for a loan thru them. A call was initially received from a telemarketer and when the client replied, a representative got some information and advises that a service loan representative would call her back. One did, and after getting all necessary information they offered her a rate that she thought was good. Their processing time was very quick, within about a week and a half, the loan representative called again and said that she had been approved and that the papers are ready for signing. They scheduled a signing date, once all documents are laid down; the borrowers noticed that her closing cost was sixteen thousand dollars ($16,000). She then refused to sign; a manager called and threatened to sue the borrowers for a commission. The borrower then thought she did not have a choice and followed his instructions and signed. Now, they are closed and the commission was paid to the mortgage company from Michigan.
One lesson to be learned from this, Real estate lending law varies from state to state. Not only that, a mortgage company could be governed by Department of Real Estate or Corporations. There are major differences is all governing bodies.
I tried to inquire about mass mailing myself for my business, I found out that it is not important what you can offer the clients but how you can draw them in to you and then close them. These companies sometimes sell your information for pennies, they send out millions of mailers and when someone calls, they have professional closers to tell you anything you want to hear just to get your business. The percentage of closing if very low because most of the people hate telemarketers and mass mortgage mailers. That is why these companies always try to come up with innovative ways to send you mailers or call you.
With mortgage business slowing down, I am sure the telemarketer and the mortgage mailers will increase.
I recently got a call from a telemarketer who does not know I was in the business; I played along with their sales pitch and wanted to see how good they are in trying to get me a loan. They were offering a 1% loan with no discount points. I started asking deep questions like, what are the margin, indexes and the life cap. The representative tries to stir me into mostly the low payment that this loan offers. I ask if there was a negative amortization (increasing principal balance) on this loan. They clearly said “NO” and said that I have options and again tried to focus on the low payments again. I then ask for a good faith estimate to be sent to my fax number, I got it after 3 days. I then noticed that they are charging me an origination fee of 2%, I ask the representative about this and he said that he already gave me a discount for not charging me a discount points.
In my business, they are the same fees and that is a huge deception. I then went down the list of other closing costs: there are about $1800 in other miscellaneous fees. I then called and said I was not interested anymore, the same scenario happened, another person came into the picture and tried to talk me into this loan. He gave me some discount and said that we are ready to close. I asked this person about the negative loan, he explained it a little better but kept directing me to the minimum payment that is low. I then said I am not interested. The person I spoke with was a manager and got frustrated in trying to close me and then hung up on me.
Don’t believe your mailers or telemarketers; they are just trying to talk you into putting money into their pockets. Be very careful, so far I have not heard of a good deal with one of those specialty marketing strategies. Best to always get all details of the loan in writing and not verbal.
SPECIAL NOTE: first time buyers, I am attending a seminar to help first time buyers with no money, bad credit to buy or refinance home, please call me if you would be interested in attending it with me. It’s free and it’s going to be held in LA on March 11, 2006 10 AM to 2 PM.
Please send me your feedback if you have gotten any information from me that might have helped you.
I keep getting pre-approved mortgage offers in the mail (several a week), and this makes me very uncomfortable. Many of them are from out of state banks or companies I have never heard of. I have been told there is a way to keep these companies from sending me these offers or inquiring about my credit, but no one has been able to tell me how I should go about this. Is there an address or phone number I can contact to take care of this?Getting off a Telemarketer’s List
When a telemarketer calls, document when and where they are calling from and ask them to please put you on their “do not call list” (use those exact words). According to federal law they are not allowed to call you again. If they persist and continue to call you, you can make a report to National Fraud Information Center.
Junk Mortgage mailers:
You can write to Experian Consumer Opt Out: 701 Experian Parkway, Allen TX 75013 or call (800) 353-0809 (one call or letter gets you off all three bureaus).
I have received numerous calls from my readers claiming that they had just gotten a loan from a telemarketer or from mortgage mailers. One of them had given me full details of what occurred when she applied for a loan thru them. A call was initially received from a telemarketer and when the client replied, a representative got some information and advises that a service loan representative would call her back. One did, and after getting all necessary information they offered her a rate that she thought was good. Their processing time was very quick, within about a week and a half, the loan representative called again and said that she had been approved and that the papers are ready for signing. They scheduled a signing date, once all documents are laid down; the borrowers noticed that her closing cost was sixteen thousand dollars ($16,000). She then refused to sign; a manager called and threatened to sue the borrowers for a commission. The borrower then thought she did not have a choice and followed his instructions and signed. Now, they are closed and the commission was paid to the mortgage company from Michigan.
One lesson to be learned from this, Real estate lending law varies from state to state. Not only that, a mortgage company could be governed by Department of Real Estate or Corporations. There are major differences is all governing bodies.
I tried to inquire about mass mailing myself for my business, I found out that it is not important what you can offer the clients but how you can draw them in to you and then close them. These companies sometimes sell your information for pennies, they send out millions of mailers and when someone calls, they have professional closers to tell you anything you want to hear just to get your business. The percentage of closing if very low because most of the people hate telemarketers and mass mortgage mailers. That is why these companies always try to come up with innovative ways to send you mailers or call you.
With mortgage business slowing down, I am sure the telemarketer and the mortgage mailers will increase.
I recently got a call from a telemarketer who does not know I was in the business; I played along with their sales pitch and wanted to see how good they are in trying to get me a loan. They were offering a 1% loan with no discount points. I started asking deep questions like, what are the margin, indexes and the life cap. The representative tries to stir me into mostly the low payment that this loan offers. I ask if there was a negative amortization (increasing principal balance) on this loan. They clearly said “NO” and said that I have options and again tried to focus on the low payments again. I then ask for a good faith estimate to be sent to my fax number, I got it after 3 days. I then noticed that they are charging me an origination fee of 2%, I ask the representative about this and he said that he already gave me a discount for not charging me a discount points.
In my business, they are the same fees and that is a huge deception. I then went down the list of other closing costs: there are about $1800 in other miscellaneous fees. I then called and said I was not interested anymore, the same scenario happened, another person came into the picture and tried to talk me into this loan. He gave me some discount and said that we are ready to close. I asked this person about the negative loan, he explained it a little better but kept directing me to the minimum payment that is low. I then said I am not interested. The person I spoke with was a manager and got frustrated in trying to close me and then hung up on me.
Don’t believe your mailers or telemarketers; they are just trying to talk you into putting money into their pockets. Be very careful, so far I have not heard of a good deal with one of those specialty marketing strategies. Best to always get all details of the loan in writing and not verbal.
SPECIAL NOTE: first time buyers, I am attending a seminar to help first time buyers with no money, bad credit to buy or refinance home, please call me if you would be interested in attending it with me. It’s free and it’s going to be held in LA on March 11, 2006 10 AM to 2 PM.
Please send me your feedback if you have gotten any information from me that might have helped you.
Wednesday, 10 February 2010
Things to avoid when applying for a home loan
FIVE DONT'S TO GET THE BEST MORTGAGE
The good news is that more people than ever can buy a home. Now for something a little less palatable: it’s going to take a lot of patience, restraint and some careful planning to get there.
Here are some warning tips on what to avoid doing right now so you can get the best mortgage later on. If you are not qualified because of credit issues right now, never lose hope for you can always plan for the future. It is very possible that in a few months time you will be able to buy a home if you follow these tips.
THE FIVE BIG DON’TS
1. First off, don’t make any big purchases over the next couple of months. Besides the obvious fact that it makes less money available for the down payment, it might require to get yet another loan. A significant debt such as a $15,000 auto loan will look bad to the mortgage lender’s credit scoring systems. Plus. The human underwriter won’t want to see you adding a couple of hundred dollars per month to your monthly expenses. Generally, as a rule of thumb, you want your total debt obligation to be no more than 36% of your gross monthly income. You certainly don’t want to load up on consumer debt if you’re anticipating purchasing a home and you’re unsure of what your mortgage payment is going to be and if you think you’re within the range of exceeding that 36% requirement.
2. Don’t try for a much more expensive home if its going to be too much of a stretch in your current budget. Lender’s consider what’s known in the industry as “payment shock” when approving loans. Somebody who goes from relatively small monthly housing payment to a huge one either won’t qualify for a mortgage or will end up having to cover too much loan with too little money. You have to make sure you’re comfortable about that kind of a debt load.
3. Don’t just get prequalified for a mortgage, get preapproved. To get prequalified, a borrower need only submit credit, income and et information voluntarily to a mortgage broker or lender. That means the resulting estimate of the maximum mortgage and home that’s affordable is exactly than – an estimate. Before they can get preapproved, however, home buyers must allow their lenders to pull credit reports, check debt-to-income ratios and perform other underwriting steps. That puts a borrower much closer to obtaining a loan and locking in a rate and term.
4. Don’t forget what kind of money personality you have when getting a mortgage. By taking out a 30-year fixed rate loan rather than a 15 year mortgage and investing the money saved on monthly payments, you might earn a higher return on your money in the long run. But that approach won’t work for people who spend any extra cash laying around on dinner and a movie twice a week. They can force themselves into saving and accumulating equity faster by going with the shorter term and higher payment.
5. Last but not least, don’t forget that homeownership brings with it many burdens. The cost of defaulting on a loan is much greater than the penalty of missing a rent payment. Too many black marks on the financial history and it will be 23% interest credit card mailers that show up in the mailbox rather than the 9.9% ones your neighbor gets.
We are going the feature some tips on what to do to make sure you get the best mortgage in our next article. Watch out for it. In the meantime, call us for free advise on your credit issues, whatever financial/credit situation you may be in right now. Our office phone number is (888) 822-5363 available even in the evenings and weekends. Or contact me at (562) 508-7048 on my cellphone. You can always visit our California home loans web site for more information. Hope to hear from you. Thank so much.
The good news is that more people than ever can buy a home. Now for something a little less palatable: it’s going to take a lot of patience, restraint and some careful planning to get there.
Here are some warning tips on what to avoid doing right now so you can get the best mortgage later on. If you are not qualified because of credit issues right now, never lose hope for you can always plan for the future. It is very possible that in a few months time you will be able to buy a home if you follow these tips.
THE FIVE BIG DON’TS
1. First off, don’t make any big purchases over the next couple of months. Besides the obvious fact that it makes less money available for the down payment, it might require to get yet another loan. A significant debt such as a $15,000 auto loan will look bad to the mortgage lender’s credit scoring systems. Plus. The human underwriter won’t want to see you adding a couple of hundred dollars per month to your monthly expenses. Generally, as a rule of thumb, you want your total debt obligation to be no more than 36% of your gross monthly income. You certainly don’t want to load up on consumer debt if you’re anticipating purchasing a home and you’re unsure of what your mortgage payment is going to be and if you think you’re within the range of exceeding that 36% requirement.
2. Don’t try for a much more expensive home if its going to be too much of a stretch in your current budget. Lender’s consider what’s known in the industry as “payment shock” when approving loans. Somebody who goes from relatively small monthly housing payment to a huge one either won’t qualify for a mortgage or will end up having to cover too much loan with too little money. You have to make sure you’re comfortable about that kind of a debt load.
3. Don’t just get prequalified for a mortgage, get preapproved. To get prequalified, a borrower need only submit credit, income and et information voluntarily to a mortgage broker or lender. That means the resulting estimate of the maximum mortgage and home that’s affordable is exactly than – an estimate. Before they can get preapproved, however, home buyers must allow their lenders to pull credit reports, check debt-to-income ratios and perform other underwriting steps. That puts a borrower much closer to obtaining a loan and locking in a rate and term.
4. Don’t forget what kind of money personality you have when getting a mortgage. By taking out a 30-year fixed rate loan rather than a 15 year mortgage and investing the money saved on monthly payments, you might earn a higher return on your money in the long run. But that approach won’t work for people who spend any extra cash laying around on dinner and a movie twice a week. They can force themselves into saving and accumulating equity faster by going with the shorter term and higher payment.
5. Last but not least, don’t forget that homeownership brings with it many burdens. The cost of defaulting on a loan is much greater than the penalty of missing a rent payment. Too many black marks on the financial history and it will be 23% interest credit card mailers that show up in the mailbox rather than the 9.9% ones your neighbor gets.
We are going the feature some tips on what to do to make sure you get the best mortgage in our next article. Watch out for it. In the meantime, call us for free advise on your credit issues, whatever financial/credit situation you may be in right now. Our office phone number is (888) 822-5363 available even in the evenings and weekends. Or contact me at (562) 508-7048 on my cellphone. You can always visit our California home loans web site for more information. Hope to hear from you. Thank so much.
Monday, 8 February 2010
Refinancing Only Your Second Mortgage
After fully analyzing the client’s current loan situation. Their first mortgage rates are in the mid 5’s and it is a 5 year fixed rate mortgage that they have only been in for one year and a half. Their second mortgage rate is at 8.5%. Due to the mortgage lates their credit scores have gone down between 20-50 points between the three bureaus’. They needed to get rid of the credit card payments because the average interest rates on those cards are about 12.5%. I suggested for them to refinance just the second mortgage, the rates was higher than their initial rates by about 2% but they will have paid off all their credit card debts. They now can write off more interest deduction on their taxes, their payments were reduced by about $1500.00 due to us eliminating the credit debts. Now, they have more flexibility to concentrate on paying their mortgages on a timely manner.
Thank you so much for your inquiries, I enjoy very much giving advice and helping our readers obtain better financing.
Thank you so much for your inquiries, I enjoy very much giving advice and helping our readers obtain better financing.
Friday, 22 January 2010
lease option to buy
How a lease option could benefit both buyers and sellers.
Ken Go (888) 822-5363
It would appear the market is changing, these changes will require both seller and buyer to adapt. The seller must realize that there will be more competition in the marketplace as more homes hit gets listed “For Sale”. Price will start to play a bigger role than the condition and location. Expect to see more listing prices being reduced and expired. Buyers have to realize they are not going to “steal” any homes as far as pricing goes. At least not yet, because now the buyers are still out there looking but taking their time and they have more choices.
The idea came to me when I have a caller who asks for my advice to see if I could lower his payments by refinancing his property. Here is their situation, they purchase a property less than a year ago with no money down, and got a two (2) years fixed rate mortgage that they could not afford from the start. Their loan agent promised them that they could refinance and get their payments down within a year. Two things happened here when that loan agent said that statements, one is either that person is so smart that he or she could predict what will happen to interest rates and home values within a year or that person is flat out just saying that to close this loan. You figure it out, on top of all this the loan carries a prepayment penalty for both loan.
Anyways, I calculated his options and checked the property value. I am hitting a brick wall, cant do any better on his payments due to interest rate now are higher. The property value has not risen enough to make a 90% combined loan to value due to the prepayment penalty to be added to the loan balance.
I then remembered that I have a client who is currently working on getting their credit cleaned up and in the process of saving up money for closing cost. T hey makes over $9000.00 a month and can afford$3000.00 payments. I heard a light bulb lit up in my mind and thought that maybe somehow I could put both of them together and make it work for both.
I am suggesting to the owner of the property to sell because even if I can help him with refinancing, in six months time he would be back in my office asking me to do the same for him and now he would live mortgage to mortgage sacrificing just to be above water. I then called the callers who are currently trying to save money and work on improving their credit and see if they might be interested in a lease option to buy. How this works is, they would take over the existing payments of the seller without going thru an escrow; a lease contract is signed thru an agent for a minimal fee paid by either the buyers or sellers. Without having to apply for a new loan, once agreed the buyers can move in and continue making payments for the sellers until a given time on the contract. Then should the buyers apply for a new loan to release the sellers from the mortgage responsibility.
Facts about lease options for sellers:
1. The seller might be able to avoid paying a prepayment penalty if the contract due to be exercised after the prepayment period.
2. The seller depending on the contract might walk away with some money.
3. The seller needs to monitor the payment of the buyers because the loan is still under the sellers name until the buyer refinances the loan.
4. The seller minimizes commission and closing cost paid to agents and escrow companies.
Facts about lease options for buyers:
1. The buyers will be able to avoid having to qualify for a loan regardless of credit situation, because they might just need to take over the existing loan of the seller.
2. The buyers will be able to avoid paying high fees for closing cost.
3. The buyers must be able to afford the payments of the mortgage, tax and insurance to be proven to the seller to avoid delayed payment on the mortgage loan.
4. If the buyers have poor credit but can afford the mortgage payments, they would have the time to re-establish their credit prior to applying for a loan in the future to fully own the house outright.
As easy as it sounds, this might be a harder task than meets the eye. The match has to be perfectly beneficial for both parties. A lot of communication would have to be going on even after the contract has been exercised.
Warning: Be careful with applicants just wanting to take over your payments and move in. They could move in sign a contract with you, but never pay the lender and you will be responsible as far as the lender is concerned because they never took out a loan under their name. If they did, it would not be called a lease but a regular conventional transaction.
Advise: Employ a professional to handle and negotiate the transactions and ask for some kind of good faith deposit to show interest from the buyers. Remember, they should be releasing the sellers from the payments only but not the responsibility.
Ken Go (888) 822-5363
It would appear the market is changing, these changes will require both seller and buyer to adapt. The seller must realize that there will be more competition in the marketplace as more homes hit gets listed “For Sale”. Price will start to play a bigger role than the condition and location. Expect to see more listing prices being reduced and expired. Buyers have to realize they are not going to “steal” any homes as far as pricing goes. At least not yet, because now the buyers are still out there looking but taking their time and they have more choices.
The idea came to me when I have a caller who asks for my advice to see if I could lower his payments by refinancing his property. Here is their situation, they purchase a property less than a year ago with no money down, and got a two (2) years fixed rate mortgage that they could not afford from the start. Their loan agent promised them that they could refinance and get their payments down within a year. Two things happened here when that loan agent said that statements, one is either that person is so smart that he or she could predict what will happen to interest rates and home values within a year or that person is flat out just saying that to close this loan. You figure it out, on top of all this the loan carries a prepayment penalty for both loan.
Anyways, I calculated his options and checked the property value. I am hitting a brick wall, cant do any better on his payments due to interest rate now are higher. The property value has not risen enough to make a 90% combined loan to value due to the prepayment penalty to be added to the loan balance.
I then remembered that I have a client who is currently working on getting their credit cleaned up and in the process of saving up money for closing cost. T hey makes over $9000.00 a month and can afford$3000.00 payments. I heard a light bulb lit up in my mind and thought that maybe somehow I could put both of them together and make it work for both.
I am suggesting to the owner of the property to sell because even if I can help him with refinancing, in six months time he would be back in my office asking me to do the same for him and now he would live mortgage to mortgage sacrificing just to be above water. I then called the callers who are currently trying to save money and work on improving their credit and see if they might be interested in a lease option to buy. How this works is, they would take over the existing payments of the seller without going thru an escrow; a lease contract is signed thru an agent for a minimal fee paid by either the buyers or sellers. Without having to apply for a new loan, once agreed the buyers can move in and continue making payments for the sellers until a given time on the contract. Then should the buyers apply for a new loan to release the sellers from the mortgage responsibility.
Facts about lease options for sellers:
1. The seller might be able to avoid paying a prepayment penalty if the contract due to be exercised after the prepayment period.
2. The seller depending on the contract might walk away with some money.
3. The seller needs to monitor the payment of the buyers because the loan is still under the sellers name until the buyer refinances the loan.
4. The seller minimizes commission and closing cost paid to agents and escrow companies.
Facts about lease options for buyers:
1. The buyers will be able to avoid having to qualify for a loan regardless of credit situation, because they might just need to take over the existing loan of the seller.
2. The buyers will be able to avoid paying high fees for closing cost.
3. The buyers must be able to afford the payments of the mortgage, tax and insurance to be proven to the seller to avoid delayed payment on the mortgage loan.
4. If the buyers have poor credit but can afford the mortgage payments, they would have the time to re-establish their credit prior to applying for a loan in the future to fully own the house outright.
As easy as it sounds, this might be a harder task than meets the eye. The match has to be perfectly beneficial for both parties. A lot of communication would have to be going on even after the contract has been exercised.
Warning: Be careful with applicants just wanting to take over your payments and move in. They could move in sign a contract with you, but never pay the lender and you will be responsible as far as the lender is concerned because they never took out a loan under their name. If they did, it would not be called a lease but a regular conventional transaction.
Advise: Employ a professional to handle and negotiate the transactions and ask for some kind of good faith deposit to show interest from the buyers. Remember, they should be releasing the sellers from the payments only but not the responsibility.
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