What should you be doing in order to prepare yourself for what lies ahead when applying for a mortgage loan? The following points will hopefully make the process easier to understand and help you index the items that you will need to consider.
1) Know your credit score and what's on your credit: This should be the first item you look into when considering to apply for a mortgage loan. For the most part I am sure the majority of you are on top of your credit and you know exactly where you stand. If you are nervous to find out what your credit is like, you probably have a reason. Plan ahead and make sure you are aware of your situation so you can tackle these issues prior to getting too involved in the home loan/purchase process.Are there any reporting errors or collection accounts that need to be resolved? Is there any derogatory information negatively impacting your score? You would be amazed how many reports have medical collections that individuals didn't even know were there! We can help advise you on minor issues or basic items. If your issues are more complex there are also reputable credit repair companies that for a fee will help you address and tackle the issue of repairing or erasing derogatory and/or erroneous information on your credit report. If you do have some items that need to be addressed these things can take time so you want to be on top of it.
2) Locate and organize your financial documents: You will need to have the following documentation readily available: Social Security Card, two year's W2's, 30 days of pay stubs, 2 months bank statements, and a quarterly statement for any investment/retirement accounts. You may be asked to provide a divorce decree, bankruptcy documents, Social Security Award Letters and Pension Statements as well. The bottom line here is stay organized and have this information where you can readily find it without difficulty. Should you be missing anything I would suggest you contact the necessary party (i.e. Accountant, Bank, Social Security Office, Employer, etc.) to get a copy of what you are missing.
3) Disclose Everything: I can't stress how important this one is. The loan process is very thorough and there are countless checks and balances. Always relate all pertinent information to your loan officer. You may think "Oh good he didn't ask me aboutmy large deposit in my checking account etc!" This doesn't mean it won't come up later. Very little ever slips by. Just be up front. Let your loan officer mention what may or may not be a problem. If you stay quiet it very easily could cause a bigger problem later and then you will be that much farther into the loan process. You could even find out the deal is dead and that is definitely something you would have wanted to know at the beginning. Most of the time what you may think is a problem, isn't. There are many loan programs and we usually have options for you. I just recently had a deal where a client came to me after working with another lender. A purchase contract was already in place, but I had to work with them on fixing a few credit glitches before we could get started. They failed to tell me they already had an inspection done on the property. Several weeks went by while we were working on their credit items before the inspection was mentioned. I took a look and knew right away that FHA would not accept the property. These buyers could have been looking for another home instead of just assuming everything was fine. Better communication and disclosure can save time and unnecessary headaches!
4) Get a Good Faith Estimate and work with a reputable lender: The most important thing to remember here is knowing what's involved in the mortgage process. Who are you dealing with and what are they charging you? This sounds simple, but it is very important. Be sure to look at the entire package your lender has to offer.(i.e. interest rate, APR, fees, ethical background, testimonials, and knowledge of the market). If you are only focused on interest rate you could miss something! The lowest rate lender in town may not always be the best option for you. Especially if they don't know what they are doing! Some choose to sugarcoat things or lowball their quotes to get prospective customers in the door. Just be on your toes and ask the right questions and make sure you are comfortable. Remember no question is a stupid question!These are four important items when it comes to applying for home financing. The process will be much easier and more pleasant if you are prepared.
Brought to you by:
Flat Branch Mortgage, Inc.
Thursday, April 30, 2009
Wednesday, April 15, 2009
New USDA Income Limits!
One of the best loan programs available just got a little better! USDA loans have become so popular because of the extremely competitive rate (Today 5.25% is the max rate), there is no down payment required, repairs can be financed in, and there is NO monthly Mortgage Insurance! USDA loans are available to all that qualify. You must have a 620 credit score, the property must be USDA eligible, and your family must be able to income qualify. While nothing has changed in the property eligibility areas, the income limits are being relaxed. As of April 20th the following changes will go into effect.
USDA currently allows the following incomes per household:
1 Person = $49,550
2 Person = $56,600
3 Person = $63,700
4 Person = $70,750
5 Person = $79,400
6 Person = $82,050
7 Person = $87,750
8 Person = $93,400
The new limits will be as follows (effective April 20th, 2009):
1-4 Person = $73,600
5-8 Person = $97,150
So from this you can see much more will fit in than before. Also keep in mind that it isn't as simple as taking your income now. Every loan scenario is different, but there are circumstances where 2 or 3 year averages of your income will be used. Daycare and non-reimbursed business expenses are also factored in and these items offset some of the income you make. Bottom line it is worth applying for to see if you qualify. Many people qualified in the past that didn't realize they would and these new income limits will only help.
Happy House Hunting!
Brought to you by:
Flat Branch Mortgage, Inc.
USDA currently allows the following incomes per household:
1 Person = $49,550
2 Person = $56,600
3 Person = $63,700
4 Person = $70,750
5 Person = $79,400
6 Person = $82,050
7 Person = $87,750
8 Person = $93,400
The new limits will be as follows (effective April 20th, 2009):
1-4 Person = $73,600
5-8 Person = $97,150
So from this you can see much more will fit in than before. Also keep in mind that it isn't as simple as taking your income now. Every loan scenario is different, but there are circumstances where 2 or 3 year averages of your income will be used. Daycare and non-reimbursed business expenses are also factored in and these items offset some of the income you make. Bottom line it is worth applying for to see if you qualify. Many people qualified in the past that didn't realize they would and these new income limits will only help.
Happy House Hunting!
Brought to you by:
Flat Branch Mortgage, Inc.
Wednesday, April 8, 2009
Homeowners Insurance Part II. Lower your premium!
In a post last week we discussed Homeowners Insurance. We focused on the parts of the home insurance policy and how it works. Today's post is part 2 of this segment. As we mentioned last time, you get what you pay for so don't focus solely on price. While this is true, there are ways to keep your premiums as low as possible. Everybody wants to keep their house payment low and if you escrow, your insurance premium plays a part in this. Some people bounce around from company to company searching for the lowest price at their renewal date. I am not a big fan of this. You don't develop any loyalty here and this could come back to haunt you if you have a large claim. Many times there is a reason why 1 company is drastically cheaper than all the others. State Farm, Allstate, etc. have been pricing their business for a very long time and have it figured out. You'll find a company come out with a super low price one year and then they run into financial trouble. You want your insurance company to be financially sound. After all, you are counting on them to be there for you. With this being said it is ok to shop occasionally, especially if you think your price is getting out of hand. This will keep them honest. Now just like last week, let me again mention an important disclaimer. I was an insurance agent for 5 years, but I am no longer licensed. All of this information is solely to help you wrap your mind around this subject and better educate you. Be sure to consult an insurance professional to find out any new details that pertain to their specific company and any industry wide changes that may affect any of the following information. With that being said, here are some tips on keeping your home premiums down:
1. Multi-Policy Discount - Insure your auto, home, and life insurance together. By doing this you will earn a multi-policy discount.
2. Raise your Deductible. - Go with a $1000 deductible. This keeps your premium down. Just make sure you are comfortable with the $1000. Also see what a $500 deductible costs .The larger the home the more difference it makes, therefore a higher deductible may not always make sense. Home claims are fairly rare and usually if something is claimed , it is a high dollar amount. Therefore, the $1000 is small relative to the damage. It also helps fight off your urge to claim something minor that could come back to haunt you down the road.
3. Home security system - By having an alarm you are eligible for a discount. It is best to have a full-reporting alarm to maximize the discount you receive. Keep in mind the cost of the alarm is more than what the discount will save you. If you already want an alarm, just realize this helps justify the price you pay for it.
4. Affinity Marketing Discounts - Ask your insurance company if they offer any Affinity Marketing discounts. Liberty Mutual is the leader in this field as they offer over 8500 different group discounts. In Columbia The University of MO Alumni Association and Missouri Credit Union are big ones. BMW and Onstar are a couple others that used to be in the fold. If your are a member or affiliated with these companies you can get a discount through Liberty Mutual. Met Life is another company that does this and there may be others, just ask. This can save you up to 15% on top of any other discounts you already receive!
5. Loyalty counts - I mentioned loyalty earlier. Some companies offer loyalty discounts or loss forgiveness programs for your years of continued coverage. Ask what programs they have in place. Keep all of these things in mind when looking to improve your premium. These perks can end up saving you more if you ever need to use them.
If you are looking to buy a new home, here are a couple things to be aware of that can potentially cost you money and give you a headache!
1. Location of the nearest fire hydrant and fire station. - If you are in the city limits this won't be an issue. If you are not, then pay attention. If you are over 1000 feet from a hydrant or over 5 miles from a station, you will pay significantly more for home insurance! Some companies won't even insure you!
2.Dogs - If you own a Pit Bull, Doberman, German Shepard, or other dangerous breed you may have some issues obtaining home insurance.
3. Prior claims on the residence - If the home has a history of water problems or claims,you will want to know. In some instances you may need special approval and this can affect your future rates. Insurance companies have different rating policies, so get all the information available to help avoid surprises in this area. Not to mention that if there is past water issues with them home you will want to make sure they are taken care of anyway! Nobody wants these items coming back! Your insurance companies claim search is another way to make sure the seller isn't hiding something.
Hope all of this information helps!
Brought to you by:
Flat Branch Mortgage, Inc.
Posted by: Eric Hemmer
1. Multi-Policy Discount - Insure your auto, home, and life insurance together. By doing this you will earn a multi-policy discount.
2. Raise your Deductible. - Go with a $1000 deductible. This keeps your premium down. Just make sure you are comfortable with the $1000. Also see what a $500 deductible costs .The larger the home the more difference it makes, therefore a higher deductible may not always make sense. Home claims are fairly rare and usually if something is claimed , it is a high dollar amount. Therefore, the $1000 is small relative to the damage. It also helps fight off your urge to claim something minor that could come back to haunt you down the road.
3. Home security system - By having an alarm you are eligible for a discount. It is best to have a full-reporting alarm to maximize the discount you receive. Keep in mind the cost of the alarm is more than what the discount will save you. If you already want an alarm, just realize this helps justify the price you pay for it.
4. Affinity Marketing Discounts - Ask your insurance company if they offer any Affinity Marketing discounts. Liberty Mutual is the leader in this field as they offer over 8500 different group discounts. In Columbia The University of MO Alumni Association and Missouri Credit Union are big ones. BMW and Onstar are a couple others that used to be in the fold. If your are a member or affiliated with these companies you can get a discount through Liberty Mutual. Met Life is another company that does this and there may be others, just ask. This can save you up to 15% on top of any other discounts you already receive!
5. Loyalty counts - I mentioned loyalty earlier. Some companies offer loyalty discounts or loss forgiveness programs for your years of continued coverage. Ask what programs they have in place. Keep all of these things in mind when looking to improve your premium. These perks can end up saving you more if you ever need to use them.
If you are looking to buy a new home, here are a couple things to be aware of that can potentially cost you money and give you a headache!
1. Location of the nearest fire hydrant and fire station. - If you are in the city limits this won't be an issue. If you are not, then pay attention. If you are over 1000 feet from a hydrant or over 5 miles from a station, you will pay significantly more for home insurance! Some companies won't even insure you!
2.Dogs - If you own a Pit Bull, Doberman, German Shepard, or other dangerous breed you may have some issues obtaining home insurance.
3. Prior claims on the residence - If the home has a history of water problems or claims,you will want to know. In some instances you may need special approval and this can affect your future rates. Insurance companies have different rating policies, so get all the information available to help avoid surprises in this area. Not to mention that if there is past water issues with them home you will want to make sure they are taken care of anyway! Nobody wants these items coming back! Your insurance companies claim search is another way to make sure the seller isn't hiding something.
Hope all of this information helps!
Brought to you by:
Flat Branch Mortgage, Inc.
Posted by: Eric Hemmer
Thursday, April 2, 2009
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. Please keep in mind that I am no longer a licensed insurance professional. I simply bring up the following items to help anyone looking for information on coverages. I hear from numerous clients that are clueless about their policy. All they know is the price and not what they are paying for! Please consult with your agent to confirm any questions that pertain to their specific policy. All companies offer relatively the same thing, but they do differ slightly.
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 in order to make 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 that occur from time to time. $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 in my opinion. 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! Either way this isn't an expensive part of the policy so if you have more it isn't the end of the world. I just wanted to point out some people's logic on why they don't carry much.
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/
Brought to you by:
Flat Branch Mortgage Inc.
Posted by: Eric Hemmer
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 in order to make 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 that occur from time to time. $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 in my opinion. 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! Either way this isn't an expensive part of the policy so if you have more it isn't the end of the world. I just wanted to point out some people's logic on why they don't carry much.
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/
Brought to you by:
Flat Branch Mortgage Inc.
Posted by: Eric Hemmer
Thursday, March 26, 2009
Government Loans!
As many of you already know the mortgage world has shifted greatly toward Government programs. Quite awhile ago Flat Branch Mortgage made a concerted effort to specialize in these very programs. These great products are FHA, VA, and USDA. All are top notch and carry great rates. I will briefly highlight a few items on each program.
FHA
FHA
- Low Rates - This program does not carry with it the hefty rate hits that conventional programs do. (5.5% as of today)
- 3.5% Down payment (Gifts allowed)
- Non-Occupant Co-Borrowers Allowed
- Upfront MIP fee is financed into the loan and a reduced monthly MI fee is charged.
- No Pre-Payment Penalty
- Fixed Rate
USDA
- Property Must be USDA Eligible (Click Here to Run an Address)
- Household Income Must be Eligible (Click Here to Run Income)
- NO Down Payment (102% Program)
- Cosmetic Repairs Can Be Built Into The Sales Price (As Long as Home Appraises)
- Low Rates - This program does not carry with it the hefty rate hits that conventional programs do. (5.25% as of today)
- 2% Upfront USDA Funding Fee Is Rolled Into the Loan, but NO monthly MI is charged!
- No Pre-Payment Penalty
- Fixed Rate
VA
- You Must Be An Eligible Veteran
- Low Rates - This program does not carry with it the hefty rate hits that conventional programs do. (5.50% as of today).
- Upfront MIP Fee is charged, but NO monthly MI is charged.
- No Pre-Payment Penalty
- Mortgage can be taken over (or “assumed”) by the buyer when a home is sold.
- Counseling and assistance available to veteran borrowers having financial difficulty or facing default on their loan.
Learn More About VA Loans Here: http://www.yourvahomeloan.com/Home
Flat Branch Mortgage can lend using these products as well as all standard conventional programs. Our Main office is located in Columbia, MO, but we have 2 VA Branches as well as a Branch in Moberly, MO.
Please visit www.flatbranchmortgage.com for more information or to Apply for a loan. You many also call our office (573-442-3850) to speak to one of our Mortgage Professionals!
Brought to you by:
Flat Branch Mortgage, Inc.
Thursday, March 19, 2009
Rate Locking and Floating Basics
In today’s interest rate environment the decision of when to lock and when to float is very important. It is also very difficult to monitor the market and make predictions on what will happen. The market is so volatile these days and playing the interest rate game is very risky! I wanted to talk briefly about interest rate locks and some of the different approaches one can take.
First the whole point of a lock is to secure a particular interest rate for a set time period. These range from 7 days and go up from there. The most common lock period is 30 or 45 days. You will receive a pricing hit that increases with the term of the lock. This is why you see some people continue to float to try and incur the smallest hit.
Floating is choosing not to lock in order to try and catch the market on a good day to lock. Most customers like this idea because it is music to their ears that they could possibly get a lower rate. What they don’t like is the possibility that they could get a higher rate if the market goes the other way!
Consumers want the best of both worlds. They want to take advantage of a drop in rates, but they want the security of a lock. This simply cannot be done.
As you begin your loan process there are two approaches you can take.
The first is to shop around and find a lender that you can trust that offers you a fair price. If you are happy with the rate and do not want to mess with it any further, just lock!
Second, after discussing your rate and the current rate environment you can decide to float. If you choose this option you better feel comfortable with who you are dealing with and make sure they know their stuff. Very few lenders have the knowledge or spend the time and money necessary to monitor the market in order to form their own market analysis. .Floating is never perfect and the market can change in the blink of an eye. Your loan officer can have the best intentions and still not get you locked. This is because unforeseen variables can be thrown at us from time to time. Case in point was Mid-December 2008. Rates hit all time lows on December 17th and all of the lenders websites began to crash while everyone tried to lock. The end result was that by the time the sites came back up, rates had already shot back up! Many people missed out! So you can see how difficult this is. Keep this in mind. Give your loan officer your target rate and they can tell you if it is realistic. It is also best to give them the green light to lock at a given rate you would be happy with if rates begin to shoot up. They may not have time to reach you via phone to discuss the situation. Remember the only sure thing is to lock, but this information should help you if you choose to float. A couple other important things to note are as follows.
If you lock with Investor A and rates drop considerably you are not out of options. Worst case scenario we can switch investors, but we are penalized for this. So the investors have put in a few policies to help. Each investor has their own renegotiation process. If the market has moved enough we can possibly renegotiate to that days going rate or close to it. Some lenders are offering more lenient rate extensions as well. Every situation is different, so be sure to ask. The whole point it to get you what you want as long as the current rate environment allows it. We are working for you. Just realize that there is no perfect science and if anyone tells you they are smarter than the market, they are wrong. There is always risk and you must be aware. Most people do not have a large enough loan balance that makes holding out for an extra .125% worth it. The monthly savings difference really isn't that much is most scenarios. However, rates shoot up much faster than they go down so the extra .50% you might end up paying if the market goes the wrong way fast will surely be noticed! Floating isn't always bad, just be aware of how the process works and the pros and cons so you can make your own decision.
Brought to you by:
Flat Branch Mortgage
First the whole point of a lock is to secure a particular interest rate for a set time period. These range from 7 days and go up from there. The most common lock period is 30 or 45 days. You will receive a pricing hit that increases with the term of the lock. This is why you see some people continue to float to try and incur the smallest hit.
Floating is choosing not to lock in order to try and catch the market on a good day to lock. Most customers like this idea because it is music to their ears that they could possibly get a lower rate. What they don’t like is the possibility that they could get a higher rate if the market goes the other way!
Consumers want the best of both worlds. They want to take advantage of a drop in rates, but they want the security of a lock. This simply cannot be done.
As you begin your loan process there are two approaches you can take.
The first is to shop around and find a lender that you can trust that offers you a fair price. If you are happy with the rate and do not want to mess with it any further, just lock!
Second, after discussing your rate and the current rate environment you can decide to float. If you choose this option you better feel comfortable with who you are dealing with and make sure they know their stuff. Very few lenders have the knowledge or spend the time and money necessary to monitor the market in order to form their own market analysis. .Floating is never perfect and the market can change in the blink of an eye. Your loan officer can have the best intentions and still not get you locked. This is because unforeseen variables can be thrown at us from time to time. Case in point was Mid-December 2008. Rates hit all time lows on December 17th and all of the lenders websites began to crash while everyone tried to lock. The end result was that by the time the sites came back up, rates had already shot back up! Many people missed out! So you can see how difficult this is. Keep this in mind. Give your loan officer your target rate and they can tell you if it is realistic. It is also best to give them the green light to lock at a given rate you would be happy with if rates begin to shoot up. They may not have time to reach you via phone to discuss the situation. Remember the only sure thing is to lock, but this information should help you if you choose to float. A couple other important things to note are as follows.
If you lock with Investor A and rates drop considerably you are not out of options. Worst case scenario we can switch investors, but we are penalized for this. So the investors have put in a few policies to help. Each investor has their own renegotiation process. If the market has moved enough we can possibly renegotiate to that days going rate or close to it. Some lenders are offering more lenient rate extensions as well. Every situation is different, so be sure to ask. The whole point it to get you what you want as long as the current rate environment allows it. We are working for you. Just realize that there is no perfect science and if anyone tells you they are smarter than the market, they are wrong. There is always risk and you must be aware. Most people do not have a large enough loan balance that makes holding out for an extra .125% worth it. The monthly savings difference really isn't that much is most scenarios. However, rates shoot up much faster than they go down so the extra .50% you might end up paying if the market goes the wrong way fast will surely be noticed! Floating isn't always bad, just be aware of how the process works and the pros and cons so you can make your own decision.
Brought to you by:
Flat Branch Mortgage
Thursday, March 12, 2009
Credit Repair and its Importance.
Credit Repair has always been out there. During the Mortgage Boom its importance was decreased because there were so many programs that allowed people with past credit problems to get into homes. Since all of these programs went bye bye, it is starting to creep back into the picture. On top of this the programs that remain are continuing to evolve. Recently a new wave of changes came down the pipe and 620 is the new standard minimum score. With this we are now taking apps every single day the fall just below this threshold. Just last month they could qualify, but no longer. With this being the case, all loan officers have to step up their game and their services. Let me state this first, we are NOT credit repair specialists. We just simply deal with credit on a daily basis to know how to help in certain instances. For those of you that fall just below the 620 minimum, there is hope. We can run a credit program that will evaluate your score and detail a plan to raise your score. We only do this if we feel there is a realistic chance of helping you get above the 620 mark. Many times we find there is nothing that can be done. However, there has been numerous times where it does work. We can sometimes find that a borrower needs to address a couple accounts, provide us proof of the action, and then we can submit this documentation to re-score your credit report. This process is fast and it works. This is just one more way we are here to help. For those situations that are more severe and messy I recommend you check around and find a good credit repair company to do the work for you. This can be expensive, but it is worth it since it is so tough to clean up messy credit reports. We do not have the time or resources to tackle such projects, but we can help on more minor issues and put you in a better position to purchase a home!
If you are one of the many people that need to rebuild your credit let me just mention a couple quick tips you can try. When your score is low it is very tough to walk into a bank and ask for a loan to help rebuild your credit. During these tough times they may just laugh at you. Don’t get discouraged. Take a proactive approach and propose something to them.
Tip #1:
Ask the bank if they will allow you to take $500 and purchase a CD at the bank and then take out a $500 loan against that CD using it as collateral. Set it up for 1 year at $50 a month or so. Take the $500 loan proceeds and put it in the bank and use this money to make the monthly payment. What this does is give you an active account on your credit and as you pay it establishes positive pay history for you Once you pay it off, do it again.
Tip #2:
Contact a credit card company and do something similar to #1. Ask them if you can open a secured credit card. Send them $500 and they will put it into a savings account and issue you a credit card with a $500 limit. If you default, they just keep the money like they would on the CD. Take this card and make a few minor purchases on it. Say $100 or so (i.e. gas or meals). When you get your first bill pay a portion of the balance and continue this method. Never borrow more than 50% of the credit limit and of course always pay on time. You can’t use it and pay it off in full each time you get the bill or it will not work. Remember you are looking to establish payment history and you have to carry a balance month to month to do this.
I know you probably have a negative view of credit cards or debt for that matter, but you have to do something to re-establish your score. If you have zero debt, it is great in real life but your credit score will just sit where it is until some sort of activity is on your report. If you have any further questions, please do not hesitate to contact us.
Brought to you by:
Flat Branch Mortgage
If you are one of the many people that need to rebuild your credit let me just mention a couple quick tips you can try. When your score is low it is very tough to walk into a bank and ask for a loan to help rebuild your credit. During these tough times they may just laugh at you. Don’t get discouraged. Take a proactive approach and propose something to them.
Tip #1:
Ask the bank if they will allow you to take $500 and purchase a CD at the bank and then take out a $500 loan against that CD using it as collateral. Set it up for 1 year at $50 a month or so. Take the $500 loan proceeds and put it in the bank and use this money to make the monthly payment. What this does is give you an active account on your credit and as you pay it establishes positive pay history for you Once you pay it off, do it again.
Tip #2:
Contact a credit card company and do something similar to #1. Ask them if you can open a secured credit card. Send them $500 and they will put it into a savings account and issue you a credit card with a $500 limit. If you default, they just keep the money like they would on the CD. Take this card and make a few minor purchases on it. Say $100 or so (i.e. gas or meals). When you get your first bill pay a portion of the balance and continue this method. Never borrow more than 50% of the credit limit and of course always pay on time. You can’t use it and pay it off in full each time you get the bill or it will not work. Remember you are looking to establish payment history and you have to carry a balance month to month to do this.
I know you probably have a negative view of credit cards or debt for that matter, but you have to do something to re-establish your score. If you have zero debt, it is great in real life but your credit score will just sit where it is until some sort of activity is on your report. If you have any further questions, please do not hesitate to contact us.
Brought to you by:
Flat Branch Mortgage
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