The FED starts day 1 of a 2 day meeting today and one item on their agenda will be to look at interest rates. Many expect the FED to make a quarter point rate cut, but there are also rumors that there may be no cut at all. If a cut is made it is in an effort to help curb the liquidity problem that lenders are experiencing. The FED cannot afford to have the credit crunch continue on for too long, but there is always the looming problem of inflation on their minds.
Rates have been slowing declining recently and are amazingly low! Don't expect any cut they make to immediately impact these already low rates (we saw this on their last cut), but a cut will be a good thing for the market. We have pounded the condition of the market into the ground lately and it goes without saying that whatever steps are taken to help this crisis, it will still be a long road back. There is simply no quick fix!
Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
Tuesday, October 30, 2007
What a Mortgage Broker Should Do!
Amidst the negativity surrounding the credit crunch and housing market I thought I would shed some light on the "mortgage broker" and what a GREAT one does and does not do. First, let me say that a mortgage broker has his or her spot in the mortgage community and the good ones truly do add value to ANY mortgage transaction. I have been delivering mortgage products for over 10 years and have seen a bank, credit union, and retail lender in action. If the later had the best products and motivation to deliver them believe me I would be present at one of those institutions. The raw reality of the market is that GOOD mortgage brokers have a distinct advantage over all of those institutions. Why then do some mortgage brokers get a bad reputation? Simple, they do not and will not put the client first! There is a right way and a wrong way to deliver solid lending advice and I would like to summarize just a few of these below.
A good broker will put the client first regardless of the loan, loan size, and background of the client. I have done financing for loans $23,000 and I have done some as high as $1.7M and one thing remains true in both of these examples; I put the client first! A true mortgage lender will do what is right for the client, whether that is recommending a different loan program, suggesting they wait to buy a home, or helping them with credit issue when no monetary value will come of it we need to do what is right!
A good broker will also make the client aware of the "unknowns" in any mortgage transaction. Why would there be any "unknowns"? Most of the time we are unaware of what the homeowners premium will be, what the real estate taxes are, the exact dollar amount needed to close etc. A good lender will shed light to the client exactly what "unknowns" are and how they play a part in the lending transaction.
A good broker will know and understand what mortgage product fits the needs of the client. Whether that's a USDA loan, an ARM loan, a fixed loan, a VA or FHA product and yes at times perhaps even a product that a bank specifically has access to, for instance the Bank of America ACORN program or First National Bank's physician program. We must know what is out there and what is the best fit given the clients needs. A good broker knows his trade and takes pride in educating himself or herself daily on the market trends and changes to key products that might affect his clients loan.
My final point really should not need mentioning but you'd be surprised what goes on out there. A good broker is honest, ethical and morally forthcoming regardless of how this affects their pocket book. A good broker does the right thing, says the right thing, and lives the right thing with every phone call, every client, and every closed file! Now there are numerous other characteristics I could point out but the above are just a few key points that I would like to make.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
A good broker will put the client first regardless of the loan, loan size, and background of the client. I have done financing for loans $23,000 and I have done some as high as $1.7M and one thing remains true in both of these examples; I put the client first! A true mortgage lender will do what is right for the client, whether that is recommending a different loan program, suggesting they wait to buy a home, or helping them with credit issue when no monetary value will come of it we need to do what is right!
A good broker will also make the client aware of the "unknowns" in any mortgage transaction. Why would there be any "unknowns"? Most of the time we are unaware of what the homeowners premium will be, what the real estate taxes are, the exact dollar amount needed to close etc. A good lender will shed light to the client exactly what "unknowns" are and how they play a part in the lending transaction.
A good broker will know and understand what mortgage product fits the needs of the client. Whether that's a USDA loan, an ARM loan, a fixed loan, a VA or FHA product and yes at times perhaps even a product that a bank specifically has access to, for instance the Bank of America ACORN program or First National Bank's physician program. We must know what is out there and what is the best fit given the clients needs. A good broker knows his trade and takes pride in educating himself or herself daily on the market trends and changes to key products that might affect his clients loan.
My final point really should not need mentioning but you'd be surprised what goes on out there. A good broker is honest, ethical and morally forthcoming regardless of how this affects their pocket book. A good broker does the right thing, says the right thing, and lives the right thing with every phone call, every client, and every closed file! Now there are numerous other characteristics I could point out but the above are just a few key points that I would like to make.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Thursday, October 25, 2007
September Home Sale Data
New reports have come out for the month of September on new and existing home sales. Keep in mind this data is comprised of homes that closed in September. This means that they were deals that were struck in August when it was the height of the credit crunch! These are all national figures.
Existing Home Sales
Existing home sales dipped again in September. They were down 8% to a seasonally adjusted annual rate of 5.04 million units from an August figure of 5.48 million units. They are also down 19.1% from a year ago. The median price for all housing types also dropped by 4.2%. The area of most concern is inventory! Inventory crept up again to 4.4 million existing homes for sale. This is a 10.5 month supply! This is up from a 9.6 month supply just last month.
In the Midwest, existing-home sales were down 7.0 % and are 16.2 % below September 2006. The median price rose 1.4 % from one year ago to $170,700.
Here is how the Midwest stacks up against the other regions. South -6% decline, West- 9.9% decline, and Northeast - 10% decline.
New Home Sales
Sales of new homes posted an unexpected gain last month! Sales of new homes rose 4.8% to a seasonally adjusted annual rate of 770,000 units. While it is great to see improvement, keep in mind this is 23.3% below what it was last year at this time.
This rise in new home sales was led by a 37.7 % surge in the West. The South rose .05%, but sales fell 6.6% in the Northeast, and a whopping 19.5 % in the Midwest!
So while this data is a slight improvement, we have a long way to go. It is good that new home sales rose nationally even though these deals were struck during the height of the credit crunch (August). It is also good that the mortgage market is slowly improving. What is bad is that existing home sales are down and that the inventory for new and existing homes remains a major problem! One Chief Economist stated that he sees the existing home problem lasting though 2008 and the new home problem lasting through 2009!
Some would think that this seems strange because existing homes are already there and builders can just pull back on the new construction. While this seems logical, it is not happening. Yes new construction is slower than in the recent past, but builders are still building at an alarming pace across the county! Since this trend seems to be continuing, he has projected 2009 to be the target date.
For all you people reading this from the Midwest, you can relate to these numbers. The market has been very rough and the 19.5% drop in new home sales seems very accurate! What a swing from the 37.7% surge in the West from our 19.5% drop! At the same time we all know too well about our over abundance of inventory. The reports on inventory make it very clear what must happen.
After all this being said, I do believe we are slowing heading in the right direction. The mortgage market is starting to rebound a bit. More regulation to help strenghten the lending industry is sure to come down the pipeline eventually. Interest rates have been declining. Some large lenders are implementing strategies to curb the foreclosure epidemic. At the same time realtors are fighting hard and getting creative to rid Columbia of its inventory problem.
Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
Existing Home Sales
Existing home sales dipped again in September. They were down 8% to a seasonally adjusted annual rate of 5.04 million units from an August figure of 5.48 million units. They are also down 19.1% from a year ago. The median price for all housing types also dropped by 4.2%. The area of most concern is inventory! Inventory crept up again to 4.4 million existing homes for sale. This is a 10.5 month supply! This is up from a 9.6 month supply just last month.
In the Midwest, existing-home sales were down 7.0 % and are 16.2 % below September 2006. The median price rose 1.4 % from one year ago to $170,700.
Here is how the Midwest stacks up against the other regions. South -6% decline, West- 9.9% decline, and Northeast - 10% decline.
New Home Sales
Sales of new homes posted an unexpected gain last month! Sales of new homes rose 4.8% to a seasonally adjusted annual rate of 770,000 units. While it is great to see improvement, keep in mind this is 23.3% below what it was last year at this time.
This rise in new home sales was led by a 37.7 % surge in the West. The South rose .05%, but sales fell 6.6% in the Northeast, and a whopping 19.5 % in the Midwest!
So while this data is a slight improvement, we have a long way to go. It is good that new home sales rose nationally even though these deals were struck during the height of the credit crunch (August). It is also good that the mortgage market is slowly improving. What is bad is that existing home sales are down and that the inventory for new and existing homes remains a major problem! One Chief Economist stated that he sees the existing home problem lasting though 2008 and the new home problem lasting through 2009!
Some would think that this seems strange because existing homes are already there and builders can just pull back on the new construction. While this seems logical, it is not happening. Yes new construction is slower than in the recent past, but builders are still building at an alarming pace across the county! Since this trend seems to be continuing, he has projected 2009 to be the target date.
For all you people reading this from the Midwest, you can relate to these numbers. The market has been very rough and the 19.5% drop in new home sales seems very accurate! What a swing from the 37.7% surge in the West from our 19.5% drop! At the same time we all know too well about our over abundance of inventory. The reports on inventory make it very clear what must happen.
After all this being said, I do believe we are slowing heading in the right direction. The mortgage market is starting to rebound a bit. More regulation to help strenghten the lending industry is sure to come down the pipeline eventually. Interest rates have been declining. Some large lenders are implementing strategies to curb the foreclosure epidemic. At the same time realtors are fighting hard and getting creative to rid Columbia of its inventory problem.
Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
Wednesday, October 24, 2007
Will The Fed Act Again?
Well, the Federal Reserve Committee will meet once again on Wednesday October 31st. What will they do; keep rates unchanged, 1/4 point reduction, 1/2 point reduction? Time will tell but most analyst (80%) are predicting at least a .25% reduction and some think perhaps another half .50% will be taken and needed.
For the first time in a long time the continued housing slump and credit crunch is really making an adverse impact on our overall economic market. Just today Merrill Lynch announced that it would be forced to "write-down" over $7.9B; most of which was due to the housing crisis and the delinquency attached to it. Also, announced today was the "national" existing home sales report which reflected the lowest level in almost 8 years.
Add to the above the dilemma concerning record gas prices, increased unemployment, higher utility costs and this does not make for a healthy economy. It seems even the market is expecting further Federal help has today's 30 year mortgage rates are 6.125% down over .25% from a week ago. However, the problem is not mortgage rates or our nationally high inventory of homes. Rates could be at 3.0% but if buyer's cannot access the money to utilize the rate, what difference does it make! The credit crunch needs to be addressed, loans that could be done 1-2 years ago are now no longer available. Now with that being said, I am not a proponent of opening the flood gates of Sub-Prime and Alt-A products like we saw toward the late 90's. However, there are "tweaks" we can do to our product offerings that I believe will help "qualified" borrowers. For example; stated income loans with some verified assets, good scores and some reserves should be made available again. Also, some sub-prime (i.e. 600+ fico's, full-doc, 95% ltv) there is a need and market for this product. The problem with the above is that investors of these types of loans have gotten burned and pulled out of the market. What is needed to get them back?
Brought to you by Professional Mortgage Group
Your Columbia Missouri Mortgage Broker
For the first time in a long time the continued housing slump and credit crunch is really making an adverse impact on our overall economic market. Just today Merrill Lynch announced that it would be forced to "write-down" over $7.9B; most of which was due to the housing crisis and the delinquency attached to it. Also, announced today was the "national" existing home sales report which reflected the lowest level in almost 8 years.
Add to the above the dilemma concerning record gas prices, increased unemployment, higher utility costs and this does not make for a healthy economy. It seems even the market is expecting further Federal help has today's 30 year mortgage rates are 6.125% down over .25% from a week ago. However, the problem is not mortgage rates or our nationally high inventory of homes. Rates could be at 3.0% but if buyer's cannot access the money to utilize the rate, what difference does it make! The credit crunch needs to be addressed, loans that could be done 1-2 years ago are now no longer available. Now with that being said, I am not a proponent of opening the flood gates of Sub-Prime and Alt-A products like we saw toward the late 90's. However, there are "tweaks" we can do to our product offerings that I believe will help "qualified" borrowers. For example; stated income loans with some verified assets, good scores and some reserves should be made available again. Also, some sub-prime (i.e. 600+ fico's, full-doc, 95% ltv) there is a need and market for this product. The problem with the above is that investors of these types of loans have gotten burned and pulled out of the market. What is needed to get them back?
Brought to you by Professional Mortgage Group
Your Columbia Missouri Mortgage Broker
Monday, October 22, 2007
Professional Mortgage Group, Inc.
Times are tough for the Columbia, Missouri real estate community, every where I turn I stumble across staggering statistics which indicate to me that a different approach to marketing real estate must be taken. Our local realtors are critical to helping this fine and dedicated community emerge from the housing bubble that seems to have submerged us into record lows of housing sales. I have spoken to many “seasoned” realtor professionals and they have all stated that this market is the worst they have encountered in their tenure of selling real estate in Columbia, Missouri. We are not your ordinary lender who simply “milks the cow” we want to give back and help you develop your business, service your clients, and move your inventory. With this in mind I wanted to remind you of what Professional Mortgage Group (PMG) has done and will continue to do to help you and others move listings and help improve market conditions.
· Yard Signs w/ flyer box & flyers: This truly helps the buyer understand what programs the property qualifies for and the corresponding payments attached to those programs. “Can the payment really be that low?” YES.
· Educational Daily Blogs: This was originally intended to educate local real estate individuals (i.e. realtors, buyers, sellers, title co’s, appraisers, etc.) about changes emerging in the real estate market. However, it has really taken off and now receives hits throughout the country and is broadcasted to over 400 relevant sites. This is real and useful information to anyone involved in real estate.
· Buyer’s Guides: These were developed to help educate home buyers about the loan process and the “in’s & out’s” of purchasing real estate. Buyer’s guides are handed out to any of our/your buyers to help reduce myths about purchasing real estate and closing fall-outs.
· Featured Realtor Page: We highlight one realtor a month on our site by dedicating an entire page of information on them. We just launched this and so far have had over 378 hits on this page. Hopefully this will be a way to “give back” to our referral partners by linking qualified buyers to them.
· On-line Loan Status: This was developed to “streamline” the process for the listing agent, buyer’s agent, and the client. This tool is updated “real time” and has really been met with good response. This feature helps eliminate the time it takes to place phone calls regarding loan status!
· Service Guarantee: This completely sets the stage for both the buyer and realtor as to what can be expected of PMG. Should they fail to receive our guaranteed service, it lists who to contact. This legitimizes our dedication to providing a quality product and service as well as makes everyone aware of what to expect.
· Current Columbia, Missouri Climate: We have and will continue to provide the Columbia Missouri real estate community with pertinent and timely market statistics as seen recently in our daily blogs. We believe it is critical for a lender to know what is going on in their marketplace and how to adapt. By keeping up on this information, we are poised to help our referral partners succeed!!!
Again, we are a dedicated and highly knowledgeable staff here to help you! Our entire business model revolves around the realtor. The manner in which we deliver our products sets us apart from our competition and our surveys and testimonials prove it!
Brought to you by Professional Mortgage Group, Inc.
Your Columbia, Missouri Mortgage Broker
· Yard Signs w/ flyer box & flyers: This truly helps the buyer understand what programs the property qualifies for and the corresponding payments attached to those programs. “Can the payment really be that low?” YES.
· Educational Daily Blogs: This was originally intended to educate local real estate individuals (i.e. realtors, buyers, sellers, title co’s, appraisers, etc.) about changes emerging in the real estate market. However, it has really taken off and now receives hits throughout the country and is broadcasted to over 400 relevant sites. This is real and useful information to anyone involved in real estate.
· Buyer’s Guides: These were developed to help educate home buyers about the loan process and the “in’s & out’s” of purchasing real estate. Buyer’s guides are handed out to any of our/your buyers to help reduce myths about purchasing real estate and closing fall-outs.
· Featured Realtor Page: We highlight one realtor a month on our site by dedicating an entire page of information on them. We just launched this and so far have had over 378 hits on this page. Hopefully this will be a way to “give back” to our referral partners by linking qualified buyers to them.
· On-line Loan Status: This was developed to “streamline” the process for the listing agent, buyer’s agent, and the client. This tool is updated “real time” and has really been met with good response. This feature helps eliminate the time it takes to place phone calls regarding loan status!
· Service Guarantee: This completely sets the stage for both the buyer and realtor as to what can be expected of PMG. Should they fail to receive our guaranteed service, it lists who to contact. This legitimizes our dedication to providing a quality product and service as well as makes everyone aware of what to expect.
· Current Columbia, Missouri Climate: We have and will continue to provide the Columbia Missouri real estate community with pertinent and timely market statistics as seen recently in our daily blogs. We believe it is critical for a lender to know what is going on in their marketplace and how to adapt. By keeping up on this information, we are poised to help our referral partners succeed!!!
Again, we are a dedicated and highly knowledgeable staff here to help you! Our entire business model revolves around the realtor. The manner in which we deliver our products sets us apart from our competition and our surveys and testimonials prove it!
Brought to you by Professional Mortgage Group, Inc.
Your Columbia, Missouri Mortgage Broker
Friday, October 19, 2007
Columbia Missouri Market Statistics Part III
Part II of this post isolated July of 2007' against July of 2006'. The following information will expand a little bit and encompass the first half of 2007 vs. the first half of 2006' in Columbia, Missouri and more specifically Boone County. Like past posts the targeting of this subject will include an abundance of statistics followed by some commentary.
Units Sold: Down 118 units or (20.4%) Average Price: Up $1,116 or (.3%) Units Sold: Down 142 units or (5.7%) Average Price: Up $2,087 or (.6%)
EXISTING HOME SALES (First half of 2007' vs. 2006')
- Volume: Down $1,931,275 or (.6%)
- Units Sold: Down 24 units or (1.3%)
- Average Price: Up $2,087 or (.6%)
NEW HOME SALES (First half of 2007' vs. 2006')
TOTAL COMBINED SEGMENTS (First half of 2007' vs. 2006')
Just as I stated in the previous post, existing home sales are at least steady and holding their own. However, just the opposite can be said of the new home market. All three areas (volume, units sold, and average price) have been hit hard. This is especially true for the amount of homes being sold (down 118) over last year. The total picture is less bleak than I originally thought, however we are still down over $25M in volume and 142 homes which is a lot for this market!
Brought to you by Professional Mortgage Group, Inc.
Your Columbia, Missouri Mortgage Broker
Thursday, October 18, 2007
How ARM resets are calculated
With all the news out there of the coming deluge of ARM (Adjustable Rate Mortgage) resets on both conforming and non-conforming loans, I thought it might be a good time to explain how a lender comes up with a new payment when an interest rate adjusts.
First, some terms that you should become familiar with:
Index: This is the base rate to which the new adjusted rate will be based upon.
Some common indexes to base rates on are the U.S. Treasury's and the LIBOR. These indexes change as the markets go up and down.
Margin: This is a fixed amount to be added to the index to calculate the new rate.
In your loan documents this is stated as a number (i.e. 3.00% or 2.50%)
to be added to a specific index. It will also state when the index will be examined for purposes of calculating your new rate, usually 30 to 45 days before the adjustment date.
Caps: These refer to the maximum amount a rate can adjust at any one adjustment and over the course of the loan.
Some common caps are 1/5 (change a maximum of 1% up or down from the current rate during any one change and a maximum of 5% from the original rate), and the 2/6 (change a maximum of 2% up or down from the current rate during any one change and a maximum of 6% up or down from the original rate).
Let me show you an example:
Original Terms of 3 Year ARM
Loan Rate = 7.00%
Margin = 3.00% over the current LIBOR 45 days prior to change date
Cap = 2/6
*Note: That means that at the time of the loan the LIBOR had to be 4.00%
(7.00%-3.00%=4.00%)
Now let's say three years are almost up. 45 days before the new rate will go into effect the LIBOR is at 5.50%
To calculate the new rate you must add the margin to the index
5.50%(LIBOR) + 3.00%(Margin) = 8.50%
But, what would happen if the index had gone up to 6.50% instead.
6.5%(LIBOR) + 3.00%(Margin) = 9.50%
But that is not the new rate.
The loan had a cap of 2/6 so the most the loan rate could increase would be to 9.00%
(7.00% + 2.00% = 9.00%)
What would the highest rate be that this loan can ever have?
7.00% (original rate) + 6.00% (maximum rate per cap) = 13.00%
The same applies when the index falls. What would the new rate be if the LIBOR fell to 1.50%?
1.50%(LIBOR) + 3.00%(Margin) = 4.50%
Again the caps apply. The most the rate can go down in any one adjustment is 2.00% from the previous rate. So the new rate could not be any less than 5.00%
(7.00%(Current rate) - 2.00%(Margin) = 5.00%).
As you can see the calculation is fairly easy addition or subtraction. Hopefully this has taken some of the mystery out of how your new rate is calculated when you have an ARM.
Any questions or comments are always welcome!
Brought to you by Professional Mortgage Group, Inc. in Columbia, Missouri.
First, some terms that you should become familiar with:
Index: This is the base rate to which the new adjusted rate will be based upon.
Some common indexes to base rates on are the U.S. Treasury's and the LIBOR. These indexes change as the markets go up and down.
Margin: This is a fixed amount to be added to the index to calculate the new rate.
In your loan documents this is stated as a number (i.e. 3.00% or 2.50%)
to be added to a specific index. It will also state when the index will be examined for purposes of calculating your new rate, usually 30 to 45 days before the adjustment date.
Caps: These refer to the maximum amount a rate can adjust at any one adjustment and over the course of the loan.
Some common caps are 1/5 (change a maximum of 1% up or down from the current rate during any one change and a maximum of 5% from the original rate), and the 2/6 (change a maximum of 2% up or down from the current rate during any one change and a maximum of 6% up or down from the original rate).
Let me show you an example:
Original Terms of 3 Year ARM
Loan Rate = 7.00%
Margin = 3.00% over the current LIBOR 45 days prior to change date
Cap = 2/6
*Note: That means that at the time of the loan the LIBOR had to be 4.00%
(7.00%-3.00%=4.00%)
Now let's say three years are almost up. 45 days before the new rate will go into effect the LIBOR is at 5.50%
To calculate the new rate you must add the margin to the index
5.50%(LIBOR) + 3.00%(Margin) = 8.50%
But, what would happen if the index had gone up to 6.50% instead.
6.5%(LIBOR) + 3.00%(Margin) = 9.50%
But that is not the new rate.
The loan had a cap of 2/6 so the most the loan rate could increase would be to 9.00%
(7.00% + 2.00% = 9.00%)
What would the highest rate be that this loan can ever have?
7.00% (original rate) + 6.00% (maximum rate per cap) = 13.00%
The same applies when the index falls. What would the new rate be if the LIBOR fell to 1.50%?
1.50%(LIBOR) + 3.00%(Margin) = 4.50%
Again the caps apply. The most the rate can go down in any one adjustment is 2.00% from the previous rate. So the new rate could not be any less than 5.00%
(7.00%(Current rate) - 2.00%(Margin) = 5.00%).
As you can see the calculation is fairly easy addition or subtraction. Hopefully this has taken some of the mystery out of how your new rate is calculated when you have an ARM.
Any questions or comments are always welcome!
Brought to you by Professional Mortgage Group, Inc. in Columbia, Missouri.
Wednesday, October 17, 2007
Columbia Missouri Market Statistics Part II
Well, I have done some research and would like to elaborate on some analysis of the July 2007' housing numbers for Columbia Missouri. As per part I of this commentary this blog will be mostly comprised of statistics.
Existing Home Sales July 2007' vs. July 2006'
Existing Home Sales July 2007' vs. July 2006'
- Volume: Up $2,992,554 or (4.2%)
- Units Sold: Up 32 units or (7.6%)
- Average Price: Down $11,258 or (3.4%)
New Home Sales July 2007' vs. July 2006'
- Volume: Down $5,033,238 or (23.4%)
- Units Sold: Down 18 units or (17%)
- Average Price: Down $26,872 or (6.7%)
Total Homes Sales July 2007' vs. July 2006'
- Volume: Down $2,040,684 or (2.2%)
- Units Sold: Up 14 units or (2.6%)
- Average Price: Down $16,993 or (4.9%)
What does all of this mean?
Well, to summarize the numbers, it seems existing home sales in Columbia Missouri are holding strong. However, the price of the homes selling is down an average of over $11,000 or 3.4% from a year ago. New construction sales are really suffering. Volume, units sold, and average price are all down an average of 15.7% over last year. This is especially true for the sales price. Can you believe these homes are selling almost $27,000 less than July of 2006'? This shows the eagerness of builders wanting to unload their inventory.
Overall the market is down, but this is somewhat skewed as the majority of our issues lie in the "new construction" area which has simply been over built for the community. With the majority of the homes being over $200,000, there seems to be no "quick fix" to rid us of these problems. Time is the answer. Over time the Columbia market should rebound nicely!
I am sure I speak for most of us in the real estate community, the sooner the better!!
Brought to you by Professional Mortgage Group, Inc.
Your Columbia, Missouri Mortgage Broker
Tuesday, October 16, 2007
Helpful Links
The whole purpose for Professional Mortgage Group, Inc. to publish this blog on www.pmg-inc.net is to provide useful information to visitors. Each day we provide valuable information and insight into the current market in Columbia, MO and sometimes Nationwide. It has been quite awhile since we did a refresher on some of the valuable websites out there that can be of assistance to you. I will just give a quick rundown of several sites that may be useful to you.
www.pmg-inc.net - Our website of course!
www.google.com - You can find anything on this powerful search engine.
www.gocolumbiamo.com - The City of Columbia website.
www.missouri.edu - The University of Missouri
www.zillow.com - Real Estate Valuations
www.bankrate.com - Rate and Lending comparison site.
www.realtor.com - Search for home for sale.
www.fanniemae.com - They are the largest buyer of securitized mortgage paper.
www.freddiemac.com - Another large buyer of mortgage paper.
www.bloomberg.com/markets/rates - Check Mortgage and Bond rates.
www.countrywide.com - Large Nationwide Lender
www.wellsfargo.com - Large Nationwide Lender
www.bankofamerica.com - Large Nationwide Lender and Bank with local branches.
www.realestatebook.com - Another site for home listings.
www.boonebank.com - Boone County National Bank Website. Largest local bank.
www.fnb-columbia.com - First National Bank. Another large local bank.
www.pisinspections.com - Local Respected Home Inspector.
www.myfico.com - Information about credit scores.
www.annualcreditreport.com - Obtain a free credit report once a year.
Here are some links to Local Real Estate Companies
Re-max Boone Realty
House of Brokers
Plaza Real Estate Services
Central Missouri Real Estate LLC
Weichert Realtors (First Tier)
3D Realty
Reece and Nichols
Gaslight Properties
Century 21 Advantage
These are several links to browse for information.
PMG hopes this information can be useful to you.
If you have a link that you think should be on this list, please post a comment and we can add it.
Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
www.pmg-inc.net - Our website of course!
www.google.com - You can find anything on this powerful search engine.
www.gocolumbiamo.com - The City of Columbia website.
www.missouri.edu - The University of Missouri
www.zillow.com - Real Estate Valuations
www.bankrate.com - Rate and Lending comparison site.
www.realtor.com - Search for home for sale.
www.fanniemae.com - They are the largest buyer of securitized mortgage paper.
www.freddiemac.com - Another large buyer of mortgage paper.
www.bloomberg.com/markets/rates - Check Mortgage and Bond rates.
www.countrywide.com - Large Nationwide Lender
www.wellsfargo.com - Large Nationwide Lender
www.bankofamerica.com - Large Nationwide Lender and Bank with local branches.
www.realestatebook.com - Another site for home listings.
www.boonebank.com - Boone County National Bank Website. Largest local bank.
www.fnb-columbia.com - First National Bank. Another large local bank.
www.pisinspections.com - Local Respected Home Inspector.
www.myfico.com - Information about credit scores.
www.annualcreditreport.com - Obtain a free credit report once a year.
Here are some links to Local Real Estate Companies
Re-max Boone Realty
House of Brokers
Plaza Real Estate Services
Central Missouri Real Estate LLC
Weichert Realtors (First Tier)
3D Realty
Reece and Nichols
Gaslight Properties
Century 21 Advantage
These are several links to browse for information.
PMG hopes this information can be useful to you.
If you have a link that you think should be on this list, please post a comment and we can add it.
Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
Monday, October 15, 2007
Selling Your Home
In today's market where the inventory of homes is at an all time high and buyer's are not in abundance what can you "the seller" do to help make your home "stand-out" and thus have the best possible chance for a quick and painless transaction.
There are several components to this discussion but I will mention just a few of the major items you will want to address. First, your home must be in the best possible shape in order for you to maximize both your profits and your sale time. By this I mean making any necessary repairs that potential buyers will find issues with. For example; repairing any leaky faucets, the drywall crack by the window sill that has bugged you for years, the garage door opener that only works half the time, or the kitchen cabinet by the dishwasher that has cracked. These are just a few examples, but you get my point. Also, a clean house obviously looks better than a filthy one. All things considered equal, the home that has been kept clean, looks orderly, and smells fresh will sell faster than it's opposite. If you follow this simple rule, you will be on the right track.
Second, choosing the right realtor is crucial for a professional and optimal sale. Realtors are valuable tools and they have access to the MLS (Multiple Listing System). This advertises your home to other realtor's and buyers who may be looking for a home like your property. They understand what potential buyers are looking for and how to reach them whether that be print advertising, radio, word of mouth, or a combination of the three . Also, you need a realtor that will put the time and effort it takes to market your home in the best possible scenario for "you" whether that's something they have used in the past (i.e. The Real Estate Book) or some new more expensive medium. Finding the right realtor is no art but using references and referrals is key!
Third, you need the right lender involved from the beginning. More times than not your realtor will know who to use but the lender is a vital part of closing a successful escrow transaction. The last thing you want is to get a contract and at closing find out the lender has "miss-represented" the transaction and now you cannot close. How much time, money, energy, and other potential buyers have you missed out on? The right lender can help ease the stress of the transaction by helping your realtor market your home (i.e. Internet links, flyer's, yard signs, potential buyers, etc.) while at the same time "pre-screen" any potential buyers for your home so you do not have the former scenario happen to you.
I hope this helps and should you have any questions or comments as usual they are welcomed!
Brought to you by Professional Mortgage Group
Your Columbia, Missouri mortgage broker
There are several components to this discussion but I will mention just a few of the major items you will want to address. First, your home must be in the best possible shape in order for you to maximize both your profits and your sale time. By this I mean making any necessary repairs that potential buyers will find issues with. For example; repairing any leaky faucets, the drywall crack by the window sill that has bugged you for years, the garage door opener that only works half the time, or the kitchen cabinet by the dishwasher that has cracked. These are just a few examples, but you get my point. Also, a clean house obviously looks better than a filthy one. All things considered equal, the home that has been kept clean, looks orderly, and smells fresh will sell faster than it's opposite. If you follow this simple rule, you will be on the right track.
Second, choosing the right realtor is crucial for a professional and optimal sale. Realtors are valuable tools and they have access to the MLS (Multiple Listing System). This advertises your home to other realtor's and buyers who may be looking for a home like your property. They understand what potential buyers are looking for and how to reach them whether that be print advertising, radio, word of mouth, or a combination of the three . Also, you need a realtor that will put the time and effort it takes to market your home in the best possible scenario for "you" whether that's something they have used in the past (i.e. The Real Estate Book) or some new more expensive medium. Finding the right realtor is no art but using references and referrals is key!
Third, you need the right lender involved from the beginning. More times than not your realtor will know who to use but the lender is a vital part of closing a successful escrow transaction. The last thing you want is to get a contract and at closing find out the lender has "miss-represented" the transaction and now you cannot close. How much time, money, energy, and other potential buyers have you missed out on? The right lender can help ease the stress of the transaction by helping your realtor market your home (i.e. Internet links, flyer's, yard signs, potential buyers, etc.) while at the same time "pre-screen" any potential buyers for your home so you do not have the former scenario happen to you.
I hope this helps and should you have any questions or comments as usual they are welcomed!
Brought to you by Professional Mortgage Group
Your Columbia, Missouri mortgage broker
Friday, October 12, 2007
Featured Listing
4804 Cody Court, Columbia Missouri 65203
MLS# 301783
$425,000
This week's "Featured Listing" is from Carissa Neimeyer
Office: 573-489-8469
Cell 573-489-8469
Call Today for your private tour!!!
Property Details:
Custom built walkout ranch home on quiet cul de sac with wooded back yard, hardwood floors on main level, stained concrete flooring in basement with wet bar. Extras: Stone Fireplace, jetted tubs,screened in porch, extra storage with excavation under garage!!
Square Footage: Main level: 2,390 Sq.Ft.
Basement: 1,640 Sq.Ft.
Total: 4,030 Sq.Ft.
Garage: 3 Car Attached
Year Built: 2004
Builder: Kidwell
Subdivision: Thornbrook
Tuesday, October 9, 2007
Virtual Tour
For all our realtor referral partners and others who check our site from time to time, I wanted to mention a great new tool that is being introduced as you read this. Alex Aslanidis of G&D Steakhouse fame is someone you no doubt know in Columbia, MO. Their family restaurant is enormously popular! What you may not know is that Alex is very talented when it comes to video, pictures, and computers. He has recently begun using his talents to produce "Virtual Tours" for realtors and sellers who are in need of marketing ideas to help sell a particular piece of property! We all know the market is down and any new tool is welcomed.
Alex produced his first tour with Aaron Rose of Remax Boone Realty and I am extremely impressed. I was fortunate to see the full "HD" version and it was really well done. He is still in the process of improving a few minor details and these productions will no doubt improve even more in the days to come.
I'm sure everyone has seen a "Virtual Tour", but Alex has raised the bar to another level. These are done where you can see the agent and it is produced as if you are there and the agent is giving you a personal tour. Alex uses video, still images, music, and voice overs to make his tour. His editing skills are what sets him apart!
Not only does he give you the file to use on your website, but he can upload it to http://www.youtube.com/. This is a site that is heavily visited everyday and your property can be viewed all over the world. You get all of this for a very reasonable price!
Here is a quick example of what he can do
http://www.youtube.com/watch?v=tS0hFEOhVCo
I am by no means an authority on what he is doing, but I wanted to put it out there in case one of you realtors could find it useful. If you have any interest stop by G&D Steakhouse next to Best Buy or email me @ eric.hemmer@pmg-inc.net and I can get you in touch with Alex.
As this takes off, I will no doubt update our blog with more information.
Brought to you by:
Professional Mortgage Group, Inc.
"Your Missouri Mortgage Broker"
Alex produced his first tour with Aaron Rose of Remax Boone Realty and I am extremely impressed. I was fortunate to see the full "HD" version and it was really well done. He is still in the process of improving a few minor details and these productions will no doubt improve even more in the days to come.
I'm sure everyone has seen a "Virtual Tour", but Alex has raised the bar to another level. These are done where you can see the agent and it is produced as if you are there and the agent is giving you a personal tour. Alex uses video, still images, music, and voice overs to make his tour. His editing skills are what sets him apart!
Not only does he give you the file to use on your website, but he can upload it to http://www.youtube.com/. This is a site that is heavily visited everyday and your property can be viewed all over the world. You get all of this for a very reasonable price!
Here is a quick example of what he can do
http://www.youtube.com/watch?v=tS0hFEOhVCo
I am by no means an authority on what he is doing, but I wanted to put it out there in case one of you realtors could find it useful. If you have any interest stop by G&D Steakhouse next to Best Buy or email me @ eric.hemmer@pmg-inc.net and I can get you in touch with Alex.
As this takes off, I will no doubt update our blog with more information.
Brought to you by:
Professional Mortgage Group, Inc.
"Your Missouri Mortgage Broker"
Monday, October 8, 2007
Columbia Apartment Association
A couple of weeks ago I was asked to speak at the Columbia Apartment Association, with a resounding yes I accepted their invitation. It seems recently I have been asked to give several interviews/opinions on the current state of the housing and mortgage market both from a national and local perspective. Below is an outline of what will be addressed or commented on at this meeting.
Since late 2006' over 161 lenders are out of business including 5 out of the top ten. Below is a small list on some of the larger players no longer originating or funding loans.
1) Wells Fargo (Wholesale sub-prime division)
2) New Century Mortgage
3) First Magnus
4) Decision One (A division of HSBC)
5) American Home Mortgage
6) NovaStar Mortgage
7) Ameriquest Mortgage
8) H&R Block Mortgage
Foreclosures & Delinquency:
- .65% of 1-4 unit properties have entered into foreclosure according
to MBA that is a record high since it started keeping track 55 years ago.
- Foreclosures for August are up 115% from a year ago 244,947 v. 113,300
- WAMU reported an income reduction approaching 75%
- HELOC delinquency is at a 5 1/2 year high
- The delinquency rate is currently at 5.12% as of the second quarter 2007'
up 73 basis points from last year
Home Sales:
- Existing home sales are down 12.8% nationally from a year ago
- Inventory is up 14% over last year and 77% from August of 2004'
- Inventory of new homes is at 8.2 months or 180,000 down from
182,000 seen as a record in May of 2007'
- Sales of new homes are down 21.2% from a year ago.
- National Association of Realtors was expecting a 2.1% decrease and
received a decline of 6.5%
Home Prices:
- Just 2.6% appreciation nationally
- California, Nevada, New York, Florida, New England and the Mid-west
showed price declines
- Median price of new homes fell 7.4% to $225,700
Key Rates:
- Federal Funds Rate: 5.25% 1 Year ago, 5.25% 1 Mos ago, 4.75% this week
- Discount Rate: 6.25% 1 Year ago, 5.75% 1 Mos ago, 5.25% this week
- 10 Yr T-Bill: 4.638 (close of business Monday 10/8/2007)
- Prime Rate: 8.25% 1 Year ago, 8.25% 1 Mos ago, 7.75% this week
Miscellaneous:
- 2007' will see anywhere from 400-500 Billion ARM resets
- 2008' could potentially see over 1.5 Trillion Arm resets
- In 1994' $35B in sub-prime origination's took place vs. $640 Billion in
2006' a ridiculous 185% increase
- Sub-prime mortgages make up anywhere from 10-14% of mortgage
origination's
- Mortgage Brokers make up 50% of all mortgage ordinations and 70% of
all sub-prime loans
- The peak ARM resets will be seen between March and June
2008'
WHAT DOES ALL OF THIS MEAN FOR A LANDLORD / MANAGEMENT COMPANY?
- More people will rent and for a longer period of time!!!!!
Brought to you by Professional Mortgage Group
Your Columbia Missouri Mortgage Broker
Since late 2006' over 161 lenders are out of business including 5 out of the top ten. Below is a small list on some of the larger players no longer originating or funding loans.
1) Wells Fargo (Wholesale sub-prime division)
2) New Century Mortgage
3) First Magnus
4) Decision One (A division of HSBC)
5) American Home Mortgage
6) NovaStar Mortgage
7) Ameriquest Mortgage
8) H&R Block Mortgage
Foreclosures & Delinquency:
- .65% of 1-4 unit properties have entered into foreclosure according
to MBA that is a record high since it started keeping track 55 years ago.
- Foreclosures for August are up 115% from a year ago 244,947 v. 113,300
- WAMU reported an income reduction approaching 75%
- HELOC delinquency is at a 5 1/2 year high
- The delinquency rate is currently at 5.12% as of the second quarter 2007'
up 73 basis points from last year
Home Sales:
- Existing home sales are down 12.8% nationally from a year ago
- Inventory is up 14% over last year and 77% from August of 2004'
- Inventory of new homes is at 8.2 months or 180,000 down from
182,000 seen as a record in May of 2007'
- Sales of new homes are down 21.2% from a year ago.
- National Association of Realtors was expecting a 2.1% decrease and
received a decline of 6.5%
Home Prices:
- Just 2.6% appreciation nationally
- California, Nevada, New York, Florida, New England and the Mid-west
showed price declines
- Median price of new homes fell 7.4% to $225,700
Key Rates:
- Federal Funds Rate: 5.25% 1 Year ago, 5.25% 1 Mos ago, 4.75% this week
- Discount Rate: 6.25% 1 Year ago, 5.75% 1 Mos ago, 5.25% this week
- 10 Yr T-Bill: 4.638 (close of business Monday 10/8/2007)
- Prime Rate: 8.25% 1 Year ago, 8.25% 1 Mos ago, 7.75% this week
Miscellaneous:
- 2007' will see anywhere from 400-500 Billion ARM resets
- 2008' could potentially see over 1.5 Trillion Arm resets
- In 1994' $35B in sub-prime origination's took place vs. $640 Billion in
2006' a ridiculous 185% increase
- Sub-prime mortgages make up anywhere from 10-14% of mortgage
origination's
- Mortgage Brokers make up 50% of all mortgage ordinations and 70% of
all sub-prime loans
- The peak ARM resets will be seen between March and June
2008'
WHAT DOES ALL OF THIS MEAN FOR A LANDLORD / MANAGEMENT COMPANY?
- More people will rent and for a longer period of time!!!!!
Brought to you by Professional Mortgage Group
Your Columbia Missouri Mortgage Broker
Friday, October 5, 2007
New Featured Listing 502 Mustang Drive, Ashland MO
This week's featured listing comes from Kristi Collins with Plaza Real Estate. Call her for a showing today at (573) 268-8505.
502 Mustang Drive
Ashland, MO 65010
Currently listing for $210,000 MLS#304689
*BUYER TO VERIFY ALL DATA*
Beautiful Basement Home with lots of room to expand. Large lot with tons of natural light throughout. Check out the unique stone and stucco front!
Property Details
Style: Ranch
Bedrooms: 3 bed
Full Baths: 2 bath
Square footage: 1,750 sqft
Garage: 2 car(s)
Age: New-Never Occupied
Acreage: 0
Lot Size: 88X233
Individual Room Information:
Kitchen: Main 23.9 x 11.6
Dining Room: Main 10 x 12
Living Room: Main 17.3 x 18.9
Master Bedroom: Main 15 x 13
Bedroom 2: Main 11.3 x 11.5
Bedroom 3: Main 11.4 x 11
Property Features:
Exterior Finish: Stone Veneer, Synthetic Stucco, Vinyl
Exterior Features: Driveway-Paved, Windows-Vinyl
Roof: ArchitecturalShingle
Foundation: Walkout, Full Bsmt Unfinished
Heat: Natural Gas, Forced Air
Cooling: Central Electric
Flooring: Carpet, Ceramic
Deck: Back
Interior/Features:
Ceiling/PaddleFan(s), Garage Dr Opener(s), Laundry-Main Floor, Smoke Detector(s), Stand AloneShwr/MBR, Tub/Built In Jetted, Walk in Closet(s), Washer/DryerConnectn
Kitchen/Features:
Cabinets-Wood, Counter-Laminate, Dishwasher-Built In, Garbage Disposal, Microwave Oven, Range-Electric, Vent Fan
Fireplace:
Gas, In Living Room
Utilities:
Electric-City, Gas-Natural, Sewage-City, Trash-City, Water-City
Listed By: Kristi Collins - Plaza Real Estate Services
Disclaimer: All information deemed reliable but not guaranteed. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) or information provider(s) shall be responsible for any typographical errors, misinformation, and misprints and shall be held totally harmless. Listing(s) information is provided for consumers personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing.
Wednesday, October 3, 2007
The Industry Professionals
We all know that there are many of mortgage companies to choose from in Columbia. What does Professional Mortgage Group offer that the competition does not?One thing is true about our competition and that is they do not care about your business!! Ask yourself when the last time your mortgage broker helped you sell a home? That is why we are different.
1.
We are committed to helping you develop your business. 2. We help you establish that you are a professional who only works with other professionals.
3. Our marketing materials promote you and your listings and educate your clients on how a
real estate transaction works.
4. We help your clients set realistic expectations from day one so there are no surprises along
the way.
5. We meet your closing deadlines.
6. We provide you with 24/7 access to your client’s underwriting status on our secure website.
7. We link to your website on our Partners page to direct traffic to your listings.
If you want to work with the "Industry Professionals" call us today!!
Check out our website for other happy clients at http://www.pmg-inc.net/.
Brought to you by Professional Mortgage Group Columbia Missouri.
573-777-1198
Tuesday, October 2, 2007
Homeowner's Insurance. What Coverage's are Worth Buying?
I'm sure we all can remember the process we went through to buy our first home. It was an exciting time for me, but I bet we can all agree that securing an insurance policy on our new home was not a memorable occasion! Actually, nothing about insurance is exciting. In a perfect world you buy a good policy, pay over time, and never have to use it. To most people this is a big waste of money! Deep down we really know this isn't the case. Insurance is very critical to your family's financial well-being. We all take for granted that if we lost everything, "the insurance company will pay for it". Just imagine the family that doesn't have this luxury. They just lost a $150,000 home and all of their belongings! What a nightmare! All because they let their policy lapse! The reason that I feel strongly about this is because I was an insurance agent for 5 years. I saw how having or not having insurance affected many people. I have compiled a few tips and coverage explanations to look for when looking for your home insurance policy.
Dwelling with Expanded Replacement Cost- If every insurance agent and computer property evaluator was perfect, we wouldn't need this endorsement. However, we know this isn't the case. When writing an insurance policy some agents do better than others in estimating how much to insure your home. You do not want to be held to the amount they come up with. Many times people only look at price and not what their home is actually being covered for. Poor agents will also cut coverage to get the premium to look good and land a sale. This can really put a customer in a world of hurt. Just look at the fires in California. $700,000 homes were burnt to the ground and they were only insured for $500,000. That is a $200,000 burden left up to the customer. With expanded replacement cost, the policy will pay up to 120-125% of your homes value. This gives you an extra cushion in the event your home was under insured! (Keep in mind it only pays out if you need it).
Inflation Protection - Most good policies have this. This adjusts your policy each year for inflation. I am sure you have seen your $150,000 insurance policy jump to $154,500 in its second year. This increase is due to inflation protection. This is needed because it will cost more to re-build your home in the years to come than it will today.
Other Structures - This is coverage for any detached structures. If you don't have any, it will stay at 10% of your dwelling amount. If you have more detached structures to cover than the 10% allowed, you will want to make sure it is increased.
Personal Property Replacement Cost - We all know what this is, but believe it or not there are still policies out there that have limited replacement cost or actual cash value! Stay away from these. Full replacement cost is the only way to go! Also look at the amount you are covered for. Some companies cover 75% of your dwelling amount. Others offer less. Just get the most bang for your buck!
Loss of use - If you are unable to live in your home due to a loss, your policy will pay for the expenses you incur while living elsewhere until your home is repaired. Some policies cap the amount here. Make sure you feel the limit is sufficient. Good policies will state "Actual Loss"
Liability - The minimum amount is $100,000. This is too low. $300,000 is the minimum you should have. You can of course have more. If you have an umbrella policy you can keep your liability at $100,000, but if not make sure it is increased. There are too many sue happy people out there and you want to be protected!
Medical Payments - This is not like your car insurance med-pay. This is only for others on your property. Not many people go with more than $1000. Just make sure your liability is high and you should be fine. Make people file suit if they are on YOUR property and try to collect money off of your policy!
Deductible - Your deductible is up to you. Go with an amount that makes you feel comfortable. $1000 is most popular today and makes the most sense. This reduces your premium and will also help ward off small piddly claims that will raise your rates. What good is a $500 deductible if you claim something that is $700? You save $200 and your rate goes up $20 a month. Then if you would happen to have a 2nd loss, you would have 2 claims and are in danger of non-renewal or a huge rate hike!
Earthquake Endorsement - Some people have this and others don't. Make your own decision,but realize that if your home is damaged due to an earthquake or earth movement, you are out of luck! This isn't too expensive so weigh the pros and cons. Earthquake deductibles are typically 10% or so. This equates to $15,000 on a $150,000 home. This may also factor into your decision.
Water or Sewer Backup Endorsement - This is something many people think is included in a policy and it is not! Water damage is covered, but not sewer! Your can purchase specified amounts of protection. Be sure to look into this and ask your agent.
Identity Theft Endorsement - This is a newer item, but is gaining in popularity. If someone steals your identity and causes you harm, it can cost some time and money to clean things up. This will pay for it and provide a representative to help facilitate the process!
Scheduling Items - The most common item to schedule is jewelry. Your policy has low limits for specific items. You will want to schedule valuable or priceless items. This is a quick summary of the parts of a home insurance policy. Keep all of these points in mind when deciding who you are using and what coverages to include. Just remember you are buying piece of mind and financial security when you pick your coverages. Don't focus solely on price and find an agent that will work hard for you. I hope this helps.
Here are a few links to some of the larger insurance companies.
State Farm Insurance - http://www.statefarm.com/
Liberty Mutual Insurance - http://www.libertymutual.com/
Allstate - http://www.allstate.com/
Shelter Insurance - http://www.shelterinsurance.com/
American Family Insurance- http://www.amfam.com/
Farmers Insurance - http://www.farmersagent.com/emiller2/
Your comments are welcomed!
Brought to you by:
Professional Mortgage Group Inc.
"Your Columbia, MO Mortgage Broker"
Dwelling with Expanded Replacement Cost- If every insurance agent and computer property evaluator was perfect, we wouldn't need this endorsement. However, we know this isn't the case. When writing an insurance policy some agents do better than others in estimating how much to insure your home. You do not want to be held to the amount they come up with. Many times people only look at price and not what their home is actually being covered for. Poor agents will also cut coverage to get the premium to look good and land a sale. This can really put a customer in a world of hurt. Just look at the fires in California. $700,000 homes were burnt to the ground and they were only insured for $500,000. That is a $200,000 burden left up to the customer. With expanded replacement cost, the policy will pay up to 120-125% of your homes value. This gives you an extra cushion in the event your home was under insured! (Keep in mind it only pays out if you need it).
Inflation Protection - Most good policies have this. This adjusts your policy each year for inflation. I am sure you have seen your $150,000 insurance policy jump to $154,500 in its second year. This increase is due to inflation protection. This is needed because it will cost more to re-build your home in the years to come than it will today.
Other Structures - This is coverage for any detached structures. If you don't have any, it will stay at 10% of your dwelling amount. If you have more detached structures to cover than the 10% allowed, you will want to make sure it is increased.
Personal Property Replacement Cost - We all know what this is, but believe it or not there are still policies out there that have limited replacement cost or actual cash value! Stay away from these. Full replacement cost is the only way to go! Also look at the amount you are covered for. Some companies cover 75% of your dwelling amount. Others offer less. Just get the most bang for your buck!
Loss of use - If you are unable to live in your home due to a loss, your policy will pay for the expenses you incur while living elsewhere until your home is repaired. Some policies cap the amount here. Make sure you feel the limit is sufficient. Good policies will state "Actual Loss"
Liability - The minimum amount is $100,000. This is too low. $300,000 is the minimum you should have. You can of course have more. If you have an umbrella policy you can keep your liability at $100,000, but if not make sure it is increased. There are too many sue happy people out there and you want to be protected!
Medical Payments - This is not like your car insurance med-pay. This is only for others on your property. Not many people go with more than $1000. Just make sure your liability is high and you should be fine. Make people file suit if they are on YOUR property and try to collect money off of your policy!
Deductible - Your deductible is up to you. Go with an amount that makes you feel comfortable. $1000 is most popular today and makes the most sense. This reduces your premium and will also help ward off small piddly claims that will raise your rates. What good is a $500 deductible if you claim something that is $700? You save $200 and your rate goes up $20 a month. Then if you would happen to have a 2nd loss, you would have 2 claims and are in danger of non-renewal or a huge rate hike!
Earthquake Endorsement - Some people have this and others don't. Make your own decision,but realize that if your home is damaged due to an earthquake or earth movement, you are out of luck! This isn't too expensive so weigh the pros and cons. Earthquake deductibles are typically 10% or so. This equates to $15,000 on a $150,000 home. This may also factor into your decision.
Water or Sewer Backup Endorsement - This is something many people think is included in a policy and it is not! Water damage is covered, but not sewer! Your can purchase specified amounts of protection. Be sure to look into this and ask your agent.
Identity Theft Endorsement - This is a newer item, but is gaining in popularity. If someone steals your identity and causes you harm, it can cost some time and money to clean things up. This will pay for it and provide a representative to help facilitate the process!
Scheduling Items - The most common item to schedule is jewelry. Your policy has low limits for specific items. You will want to schedule valuable or priceless items. This is a quick summary of the parts of a home insurance policy. Keep all of these points in mind when deciding who you are using and what coverages to include. Just remember you are buying piece of mind and financial security when you pick your coverages. Don't focus solely on price and find an agent that will work hard for you. I hope this helps.
Here are a few links to some of the larger insurance companies.
State Farm Insurance - http://www.statefarm.com/
Liberty Mutual Insurance - http://www.libertymutual.com/
Allstate - http://www.allstate.com/
Shelter Insurance - http://www.shelterinsurance.com/
American Family Insurance- http://www.amfam.com/
Farmers Insurance - http://www.farmersagent.com/emiller2/
Your comments are welcomed!
Brought to you by:
Professional Mortgage Group Inc.
"Your Columbia, MO Mortgage Broker"
Monday, October 1, 2007
Cash-Out Refinance
During the tough economic times of today many more Americans are tapping their home's equity, what's left of it, to try and obtain some sort of cash relief. Whether that is paying off credit cards, personal loans, auto loans or even cash to put in some sort of savings account. Americans are feeling the pinch of both the slumping housing market and rising commodity items like fuel, utilities and groceries. I thought I would shed some light on things you need to know should you be one of the thousands facing this dilemma.
First, conforming loans (those backed by Fannie and Freddie) typically only allow for a loan-to-value of 95% cash out. This means should you have a home that appraised for $100,000 the maximum loan you can receive, if you are taking cash out, is $95,000 or 95% of the homes value. This typically can be structured as one loan or two (80% first/15% second) for those of you who do not want to pay PMI (Private Mortgage Insurance).
Second, as a precautionary matter you need to make sure that the appraised value is "realistic". The last thing you want is to go and try to sell your residence in a couple of years and find out you owe more on your home than what you can sell it for; otherwise known as over-leveraged or negative equity. I have seen this way too many times over the years, mostly because of "shady" lending practices in connection with an over-valued appraisal. Be sure you deal with a lender who looks out for your best interests!
Third, you may be able to work the timing of the transaction that will allow you the benefit of skipping two mortgage payments. Many clients really like this perk as it frees up "extra" cash flow that they would ordinarily be without. Imagine consolidating credit cards and other personal loans saving $900.00 a month and pocketing $2,000 cash while at the same time remaining in a financially stable position on your home. Believe or not it can and does happen everyday!
Fourth, and perhaps the most important, the entire process normally takes only approximately two weeks to complete. No long waiting period or constant questioning going back and forth. The entire refinance process has become very streamlined and efficient.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
First, conforming loans (those backed by Fannie and Freddie) typically only allow for a loan-to-value of 95% cash out. This means should you have a home that appraised for $100,000 the maximum loan you can receive, if you are taking cash out, is $95,000 or 95% of the homes value. This typically can be structured as one loan or two (80% first/15% second) for those of you who do not want to pay PMI (Private Mortgage Insurance).
Second, as a precautionary matter you need to make sure that the appraised value is "realistic". The last thing you want is to go and try to sell your residence in a couple of years and find out you owe more on your home than what you can sell it for; otherwise known as over-leveraged or negative equity. I have seen this way too many times over the years, mostly because of "shady" lending practices in connection with an over-valued appraisal. Be sure you deal with a lender who looks out for your best interests!
Third, you may be able to work the timing of the transaction that will allow you the benefit of skipping two mortgage payments. Many clients really like this perk as it frees up "extra" cash flow that they would ordinarily be without. Imagine consolidating credit cards and other personal loans saving $900.00 a month and pocketing $2,000 cash while at the same time remaining in a financially stable position on your home. Believe or not it can and does happen everyday!
Fourth, and perhaps the most important, the entire process normally takes only approximately two weeks to complete. No long waiting period or constant questioning going back and forth. The entire refinance process has become very streamlined and efficient.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
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