Happy New Year!

I wanted to take the time to wish everyone a Happy New Year! Hopefully 2007' proved to be a great year for your and your family. We at Professional Mortgage Group hope 2008' boasts promising things again for you! Be careful this evening, "watch out" should you be traveling, please do not drink and drive and be safe out there!

We will see you again in the new year!

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Your Columbia Missouri Mortgage Broker

Does your pre-approval sound too good to be true?

Recently I dealt with a couple customers that were shopping around for a pre-approval. These customers were dealing with a hand full of lenders, some of whom were not shooting them straight. It is my opinion this was just done out of laziness! The borrower came to them, gave them their information verbally, and then lender issued either a verbal or written pre-approval. After shopping around she found that this particular lender had a much lower rate and a much higher approved purchase price. I took a look at her situation and this pre-approval she was counting on as her best deal just didn't seem right. It seemed too good to be true! I told this customer that if this deal is what she says it is, then she needs to take it! I would love to have your business and would value it, however I cannot offer you a better deal. Sure enough, this lender wasn't thorough enough in the pre-approval process and they were off base on the approval. She came back to us and we got the deal done. It wasn't the deal she initially thought she could get, but it was the best loan out there for her! Always remember, most lenders have the same basic products. The difference comes in the manner these products are delivered to the borrower!

This scenario happens quite often. If you really read the pre-approvals, you can see where there is room to wiggle out of them if some piece of the puzzle doesn't come back as expected. Unfortunately when a lender is lazy and issues a pre-approval letter like this, it wastes peoples time. In their eyes I guess they feel they will be able to lock down first dibs on their business. Worst case scenario for them is that they can't do the loan. However, worst case scenario for the buyer is that they are out the time and money it cost them to find this out the hard way instead of finding it out initially.

You can take what you want from this short scenario. Just use a little common sense in comparing quotes from lenders. If one is drastically different, do a little extra homework on the lender. Hammer down all the details to make sure everyone is on the same page! If you do this, it could and probably will save you some unnecessary hassle!

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"Your Columbia, Missouri Mortgage Broker"

Mortgage Applications Drop!

Despite a significant drop in mortgage rates during the week ending December 21st; mortgage application volume actually fell 7.6%. The Mortgage Bankers Association reported an index rating of 603.8 from 653.8 in the previous week. What does this mean? MBA started tracking application volume on March 16, 1990 at an index value of 100; so a rating of 603.8 simply means that mortgage application volume is 6.038 times higher than it was when the MBA first started tracking this statistic.

This particular index was at its peak on May 30, 2003 with a rating of 1,856.7 when the housing boom was in full force. This survey simply provides a snapshot of mortgage lending activity among mortgage bankers, commercial banks and thrifts. Keep in mind this only covers about 50% of all residential mortgage lending activity. Of the mortgage activity surveyed 50% were refinance applications; this could mean an increase in credit usage as many homeowners are "tapping" their equity to rid themselves of dangerous credit card debt.

Why would this index be down when rates were relatively lower? That is the question that is puzzling wall street this morning. Many believe this is a sign that the housing problems are not on the decline as money may still be harder to come by. My personal explanation is simple. Most people have their minds on other items this time of year rather than worrying about their mortgage or purchasing a home. The holidays are a time for family, reflection, and relaxation; mortgages do not seem to slither there way in there during this time of year.

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Your Columbia Missouri Mortgage Broker

Professional Mortgage Group, Inc.

I hope everyone had a very merry Christmas! I wanted to highlight some tangible benefits that our clients and business partners receive on a daily basis. Professional Mortgage Group, Inc. is truly committed to being the most professional and ethical lender in Mid-Missouri and the below attributes simply back what we are trying to build!

Buyer’s Guides: A “tell all” book about the lending process, programs and what can be expected when purchasing a home.

Educational Daily Blog: A daily dialogue on market news, lending news, local news and personal perspective on key items affecting real estate.

Continuing Education: A member of the Freedman Report (#1 market source for knowing when to float or lock your clients loans to ensure that they get the best possible rate), member NAMB (National Association of Mortgage Brokers), member of Mortgage Originator Magazine and many other “on-line” classes.

Ethical Disclosures: We were the first to roll out additional disclosures above and beyond our competition and our lenders to help educate and inform your clients of key mortgage components. (i.e. Net Tangible Benefit, Customer Copy & Certification, Home buyer’s Certification Course, etc.)

On-line Loan Status: Helps eliminate phone calls regarding the status of a particular client or property; updated “real time”!

Testimonials: I challenge you to find another local lender with the credentials and testimonials we have! WE BACK WHAT WE SELL!

Yard Signs & Financing Flyer's: We want to help move your inventory and have developed and unique way to do so.

Featured Realtor Page: We want to help you get recognized and sell properties, this “unique” tool helps us accomplish that!

Service Guarantee’s: We take these VERY seriously and back them up!

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Your Columbia Missouri Mortgage Broker!

Merry Christmas!

PMG would like to wish everyone a Merry Christmas and Happy New Year! We thank all of our customers and referral partners for making 2007 a solid year! We wish everyone nothing but the best in 2008!

P.S. - We will resume our blog on December 27th.

Happy Holidays!

Professional Mortgage Group, Inc.

Underwriting Changes

Just when you think the mortgage mess is idling down and coming to some normalcy again yesterday comes along and hits you like a ton of bricks. I received an e-mail from a prominent lender in the Mid-West region yesterday around 3:41pm CST announcing a wholesale list of changes to ALL programs and we literally had an hour and fifteen minutes to "lock" our files or risk losing the ability to close the loan. Now this is nothing new to the mortgage broker, banking representative or any other lending institution, however it had been a period of time before anything like this had been seen. We are seeing even more strict guidelines on the Fannie Mae and Freddie Mac side, changes to Loan Prospector and Desktop Originator (decision engines for Fannie and Freddie), loan-to-value changes, debt-to-income changes, risk assessment changes and many many others.

So just when you think the mortgage market may settle down something like this hits and you must react in a timely, efficient and effective fashion for both your livelihood and your clients well being; although I must admit at times is extremely difficult! It is a very stressful time for me right now as I truly take my clients mortgage process very seriously and do not / will not jeopardize my reputation or ethical standards as a result of "last minute" guideline changes. What does this mean? Well simply put at times I must open my pocket book and lose money to fulfill my word and my clients expectations! Are others doing the same?

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Your Columbia Missouri Mortgage Broker

20% Down Payment

In today's volatile mortgage market, some are thinking that it is best to go with the old fashioned way of buying a home. This is by putting 20% down. This avoids mortgage insurance and lowers your payment. The lender bears much less risk on an 80% loan, therefore a lower interest rate is given. With the way things have been lately, I definitely understand the logic behind such a view. However, I do not agree it is a wise choice. If you are very liquid and have the cash, it is no big deal. The reality is that most people are not in this situation! I read a very good article on Yahoo Finance today and I wanted to post the link below. I think this brings up some great points while keeping it short and to the point. Please read and feel free to post any comments you have on the subject.

Here is the link to the article.

http://finance.yahoo.com/loans/article/104047/Skip-the-20-Down-Payment

If this link doesn't work, just copy and paste it into your internet browser.

I hope this helps!

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Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"

Stated Income Financing

The Federal Reserve has acknowledged it's idea of "limiting" stated income loans. According to published reports Ben Bernanke will make his plans public before enacting it. With this breaking news coming forward I at least wanted to give my two cents worth in regards to "stated income" financing.

First, stated income financing HAS it's place in the housing and mortgage market. With that being said there has to be certain guidelines that must be met in order to qualify. For instance, a minimum score of 680, at least 5% down, at least 3-6 months reserves, and a good and established credit history.

Stated program financing is extremely helpful for someone who does not claim all their income, however has "justification" for qualifying for a "stated" loan; (i.e. 680 score, reserves, low dti etc.) There is a needed niche for this type of financing in the market place as I see it everyday. Should there be the type of loose guidelines seen in the past? No. But to completely eliminate this program is a complete disregard to a substantial niche of clients that both qualify and have verified the "means" of repayment.

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Your Columbia Missouri Mortgage Broker

Mortgages and Commission Income

I've been faced with an unusually high amount of applications involving commissioned income clients lately; having been able to provide financing for some but not all I thought I would take a moment to discuss some features of being all or semi-commissioned as a means of deriving your income.

First, Fannie Mae and Freddie Mac state that if a portion of your income (typically 20% or more) is derived from commission then the most recent 2 year's taxes must be provided. Why? Because they will want to average your "commissioned" income over the last 24 months, this will give them a better indication for a "basis" in deriving an average monthly salary.

Second, if you have been in a field that has commission income for less than 2 years they (Fannie & Freddie) will not allow you to use your commission money. Fannie Mae and Freddie Mac will want to see a two year history. Now if you have worked for your current employer for 8 months but your previous employer (who also paid you commission) for 2 years then Fannie and Freddie will allow to average your 2 years commissioned income. Simply put they want to see a 2 year history of being paid commission.

Just like everything else in the lending world there are always "exceptions to the rule" or guideline changes depending on loan-to-value, credit score, assets etc. but this should give you the general idea behind underwriting commissioned income clients.

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Your Columbia Missouri Mortgage Broker

Cash Reserves

I want to take a moment to discuss a trend that I see too often. More and more I see mortgage applications from prospective buyer's that do not have enough cash reserves. In some cases people have none! While you can still be approved for a loan with little reserves, I feel it is a recipe for disaster. This is the same for someone that depletes their life savings for a down payment on a house. Not a wise decision! Don't get me wrong. There are always exceptions to the rule. Maybe you know you will be getting a promotion or large raise. Maybe you will receive a gift or inheritance. With these things, you can easily build or replenish your savings account. Unfortunately not everyone is so lucky! Home ownership is great, but it does come with added responsibility. Your landlord will no longer fix that leak or replace the furnace. These are on you now and can be very expensive! This is where cash reserves come into play. Mortgage lenders only want to verify 2 months worth of mortgage payments, but you should be focused on saving much more. Not only can something happen maintenance wise on your home, what if you lose your job? You definitely will need an emergency fund for that!

I think you get my point. Life is full of surprises and emergencies. Just don't let them get the best of you where you could run the risk of losing your new home!

By no means do I want to scare you away from purchasing a home. It is a great time to buy right now! Just before you jump into it, do a little bit of planning and make an effort to put some money away for a rainy day!

Trust me you will be happy you did!

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Professional Mortgage Group, Inc.

"Your Columbia, MO Mortgage Broker"

Real Estate News Part II

Well as stated in the previous post the Fed's will meet tomorrow to decide whether to cut key rates "discount rate" to help free up market liquidity. I have watched the market rather closely the last couple of days and noticed a couple of things.

First, "mortgage rates" once at 2.5 year lows are now rising and rising fast! The market is anticipating or "building-in" the Fed's predicted cut and the 10-year treasury is suffering from it. The 10-Year Treasury Bond is a key predictor in determining mortgage rates.

Second, the market is also reacting in a similar of positive fashion to the "Sub prime Aid Plan" the Bush administration has enacted. This administrative plan puts a rate "freeze" on some sub prime loans set to be reset in the coming months.

Third, today a "trade group" representing realtor's said it is predicting increased sales in 2008 and more stable home prices. Although many economist are not so optimistic, with many stating this is just a "ploy" to down play the negativity surrounding the housing debacle.

In summary the market is reacting positively to all of the above and in essence has impacted "mortgage rates" in a negative way. Hopefully, we will see the 10-Year Treasury Bond go down in the coming days.

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Your Columbia Missouri Mortgage Broker

Real Estate News

Well let's see how far the fox hole goes. Home foreclosures are at record levels according to the Mortgage Bankers Association and The Bush Administration as launched it's sub prime mortgage aid package, which among other things freezes all sub prime rates for the next 5 years.

Foreclosures from the July-September period hit .78 percent during this period surpassing the previous high of .65 percent set the previous quarter. My assumption is that during the 4th quarter 2007 a new record will be set. To help ease the pain of the "mortgage meltdown" The Bush Administration as launched it's "aid package". A new innovative and ground breaking financial package to help aid the over 500,000 borrowers who will face rate resets during the upcoming months. This was said to be a critical component in helping the slumping economy and in particular the housing slump; which was rumored to face a high risk of a recession and a significant drain on the broader global economy.

The market is really reacting and fairly fast considering the government and many other "high-end" businesses are involved. Hopefully the changes that the government, banks, servicing companies, the U.S. Treasury, and others have made will help better prepare us for 2008' and moving forward.

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Your Columbia Missouri Mortgage Broker

Fed Meeting

Some of you may or may not know that the Federal Reserve Board and in particular Ben Bernanke and his colleagues are meeting December 11th to decide whether or not they should reduce the discount rate and the federal funds rate. It was rumored that they could reduce the discount rate prior to this meeting should the lending guidelines remain tight. The discount rate or the rate at which banks lend money to each other is a key component in market liquidity. The federal funds rate or the rate at which banks can borrower money directly from the Federal Government is also a critical "safe guard" to keep liquidity in the economy. I have spoken about these indicators in previous blogs however thought I would remind everyone that on December 11, 2007 we could see additional cuts should economic data; such as home sales, unemployment filings, job growth, oil and inflation remain unchanged or stagnant.

Ben Bernanke has said numerous times that they are willing to do everything necessary to keep the economy from a recession, however warn that they will closely monitor inflation although that indicator has taken a close "back seat" to the broader problem of market liquidity, the "mortgage meltdown" and slumping housing sales. I must say that I feel more comfortable about the market place, housing data and the governments response than I did 90 days ago. Hopefully we will continue to see the necessary changes from the government, servicing companies and banks to help the economy crawl out of this hole.

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Your Columbia Missouri Mortgage Broker

Gimmick Pricing?

I receive calls everyday regarding mortgage interest rates. A common question is asked quite often. It usually goes like this. I saw online somewhere rates were 4.5-5.%, is this accurate?
Or, I heard on the radio that rates have dropped to 5%, can you lock me in at this rate?

Are these rates real or are they too good to be true! I cannot speak for every lender and every product out there, but the majority of the time the answer is "YES, it is too good to be true"!

Keep in mind advertisements always pitch the best case scenario. They feel that if they get you involved and you realize you can get 6% instead of 5.5%, you will still go with them. There are numerous "outs" to the company on the rates they advertise. How could they know your credit, income, equity position,and assets. They don't and this is why advertised rates are only good for 1 thing. That is a gauge of what the rate market.

I call rates like this "Gimmick Rates". This is because they look pretty, but you are paying for them one way or another. To get a rate of 4.5%, one of the following situations is probably taking place.

1. You are paying a high amount of points and fees in order to obtain this rate.
2. You are being offered an interest only product or an ARM. In other words, some kind of catch and not a fixed note.
3. The lender is paying out of their pocket to get you this rate.

Lets see a the number of hands of people that think the lender is paying the expense for you and losing money on your loan? Nobody? That's right. It isn't going to happen.

Great rates are out there, but the lender must make money or they will not do the loan.

This is simply a way of advertising a great deal and to make the phones ring. They will then take the person with 6.5% that is looking for 4.5% and give them 5.75%. Still a great deal for the customer, but not what was advertised.

I am sure you all see my point. Just don't get to wrapped up in the crazy rates you see posted. Do you homework, work with a good lender, and you will wind up with a great product and rate!

Brought to you by Professional Mortgage Group, Inc.

"Your Columbia, MO Mortgage Broker"

Mortgage Rates What Determines Mine?

Mortgage rates are falling and falling in a big way! Take for example today's 30 year fixed rate of 5.75%; pretty incredible right? You bet it is, however I thought I would educate this audience on what factors help determine your potential mortgage rate.

First, your overall credit score is critical in getting the best possible rate. Keep in mind that on a joint application Fannie Mae and Freddie Mac will use the lower of the two middle scores. For example; borrower A has scores of 708, 804, and 790 but the co-borrower has scores of 620, 608 and 595. Fannie Mae will use the 608 score for qualifying purposes. It is crucial to structure the loan the "right way" from the beginning to ensure you get the best possible product and rate.

Second, the loan-to value or (ltv) is also an important factor in determining your rate. For instance, a borrower putting 20% down will get a better rate than someone who is requesting a 100% loan or no money down. To add to this putting as little as 5% down will heighten your ability to get a better rate!

Third, your overall "financial portfolio" will help determine whether or not you get the best possible rate. What do I mean by this? Individuals who have savings accounts, investment accounts, 401K money and a low debt-to-income ratio or (dti) are putting themselves in a better position to qualify for a lower rate than someone who does not have the above.

What does all of this mean? Simple; the lenders risk will determine your rate. That is why someone putting 20% down, who has 800 credit and money in reserves will get a better rate than someone who is putting 0% down, has 610 credit and only $500.00 in reserves. The risk is greater on the later individual and therefore will get a higher rate than the first borrower. This does not mean that the later borrower will not get a great rate, it simply means that they will not get the best rate possible given their current financial situation and credit portfolio.

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Your Columbia Missouri Mortgage Broker