Prepare for the future

I wanted to take a moment to ask you how prepared you are for the future? I talk to many people in the course of my day who are interested in buying or refinancing. Many of them have had a life change sometimes good sometimes bad that can prevent this. The number one reason they can't do what they want is because they weren't prepared for the twists that life gives us sometimes. An illness, a lost job or even a death in the family can cause such havoc and grief and then it's compounded by hearing that the person doesn't qualify for a loan.

I have seen people lose their homes because a spouse passed away or because of an accident or illness. If you are a homeowner you need to have a will in case the worst happens. If you die without one it can be months until your home can be sold and any benefits may not go to the person that needs them and the person that you actually intended. I have seen this happen and it was crushing for the surviving spouse. You need to have life insurance for your spouse and your children.
And you should consider buying life insurance for your children again in case the worst happens.

You may wish to consider a short term disability plan for you in case of accident or illness. They are cheaper than you think and have many advantages to keep the income flowing in case something happens to you or your partner. Some plans even have a return of premium benefit in case you don't actually use the benefits. No one ever thinks that bad things happen until they actually do and then of course it's far too late.

Because of what I do I have seen the problems not being prepared can cause for you and your family. If you don't know anyone who does the sorts of things I am discussing I am happy to make a referral to a select group of trusted financial advisors. My family has used each of these people for years and I couldn't be happier with their expertise and level of customer service. If you do have someone that you use I think it's wise to shop and compare much as you would a mortgage. Different financial advisors have different programs and rates and until you research with a few people you will truly never know what the best solution will be for your family. If you require more information or would like to speak to a few people just let me know. I highly recommend Chris Staub and Jason Silverberg

Both are highly qualified in a variety of areas to guide you thru investments and all the pros and cons of different types of insurance for you and your family. To save you money on car and home insurance again I couldn't recommend any higher Steven Bender.
He is honest, has great service and has saved me thousands of dollars over the years in both car and home insurance. He has also educated me in what home insurance does and does not cover.

I hope this was helpful and please let me know how I can help you and your family with this or any mortgage related needs.

YSP Fact vs. fiction

There are many rumors floating around out there about YSP what it is and is it a good thing or bad thing for the homeowner. The truth is it can be both it depends on with whom you are dealing. Simply put YSP is the payment that a lender or broker collects as a fee from the bank when your loan is placed with them. The higher the rate the higher the YSP. What determines a "fair" rate? I believe that is between you and your loan officer. Many of these things are negotiated before and even during the loan transaction. YSP should also be determined by whether you are paying points or not. Most lenders will offer a discount if you buy down the rate which as I said reduces the YSP. Bottom line we get paid in three ways, from you, from the bank or from a little bit of both lender and customer. YSP is said by some to be evil and mortgage brokers to be just short of the devil. Take someone like Rob Blake he claims that YSP is some hidden cost that is passed along to you and only he shines the light of truth on this horrible practice. Here are the facts. YSP is fully disclosed multiple times in multiple ways. If it was some huge secret it wouldn't be splashed all over the Internet. Rob claims that most customers are charged by the broker and then paid by the bank is some hidden back room deal. Some people are but it's because they didn't shop around!! I urge you to talk to several different lenders so this doesn't happen to you. I claim that Rob has a system and a book to hawk and that is why he is so opposed to YSP. Something to sell and talk about. The only part where he is right is that direct lenders like Bank of America and Wells Fargo hide their YSP from the customer. They by law don't have to disclose it and as a mortgage broker I do every time. Why does the government protect large national banks against mortgage brokers both big and small?



If anyone wants to see the forms that go out to the customer from every bank disclosing YSP and how we are paid just ask and I will be very happy to show you and explain it so baseless bashers like Rob Blake can be quieted down. If you agree with me or want more information I would check out his website http://www.themortgageinsider.com/ but be warned. He took several of my posts and cut and pasted them to his advantage to show how "evil" mortgage brokers are.



Right now in Congress there is a bill H.R. 1728 that will ban YSP premiums from again brokers but not the big boy direct lenders. It was introduced by Rep Brad Miller and Chairman Barney Frank. Now I don't know about Miller perhaps he is just naive about what this bill would do but I do know that Barney Frank bears great responsibility of the current mortgage mess. There is plenty of blame by everyone and all sides but not according to Barney. He just blames all around him and won't admit that he made mistakes as well. There is no point in talking to someone this stubborn that refuses to accept any criticism of his role in what just happened. Take a look at this clip from You Tube Believe me there are dozens of them where Chairman Frank shows that Congress as a whole doesn't get how the housing industry really works.



If this bill becomes law I don't think loan officers will care per se but the person who wants to buy a home or refinance one surely will. If a bank can't pay us that only leaves one choice. That's right the poor homeowner. Points will be charged on EVERY loan originated in America. That means people will be digging out of their pockets to pay for loans or rolling the higher fees into their loans and financing the cost over 30 years. Which one makes more sense? Actually I don't know, it really depends on the overall scenario of the borrower. That's why I spend so much time sitting down with them and asking questions. Such as how long do you intend to stay in the home? And many many more. If YSP is eliminated it just removes another choice the borrower has to buy or refinance. There will definitely be fewer people buying, not because they can't afford the payments but because they don't have another 5-10k to pay in out of pocket fees.



Fewer people will refinance again to take advantage of the lower rates save thousands of dollars and maybe just maybe save their very home in the process. If someone is refinancing to get in a low rate 30 year fixed but has no equity how do you think they can afford to pay thousands of dollars in points out of their own pocket? Maybe they should drain a retirement fund that has already taken a massive hit. Please forward this to as many people you know. Ask them to get involved, call their member of Congress and try to get them to understand. If you don't think this will hurt you down the road you are WRONG. Get involved and do what you can to get the truth out there. Comments and feedback are very welcome and all respectful questions will be answered. Please let me know what I can do to help.

Mortgage/Debt Relief

Where to start? It's confusing when the rules change constantly and that sure is happening in the mortgage market. If you are trying to refinance under all the new programs it's almost impossible to know the right thing to do and how best to do it. The same goes for debt settlements and loan modification programs. On March 4th the Obama administration unveiled MHA or making home affordable program. The goal was 3 to 4 million people would be able to refinance under this and other similar programs. I haven't seen final numbers but I doubt seriously if the number has or ever will come close to the goal. I do know that recently only 200,000 people have successfully completed the program. Apparently the new goal is 500,000 borrowers. Nothing is easier than moving the goalposts closer calling it a touchdown and calling it a day. There are two parts to this program. This is HARP . If your loan is owned by Fannie or Freddie then you are at least eligible for the program. If your loan is not owned by the GSE'S then you must speak to your current lender and see what can be done. This program is for people who have paid on time and have lost equity or are even upside down on their mortgages. The program was supposed to be up to 105% if the value of the home but there were too many people beyond that point so it was raised to 125% That is just for the first mortgage in theory you can have a second up to a higher CLTV.
Second lenders can be reluctant to approve the new loan though. Your loan also must be under $729,750 and could be lower depending on where you live. It's set county by county. Check here to see if your loan is owned by Fannie or Freddie. http://loanlookup.fanniemae.com/loanlookup/
https://ww3.freddiemac.com/corporate/

There is also HAMP<> and you are only eligible for this if you are having trouble making payments and are at least 30 days behind on your mortgage.
Many of the rules are the same, you must be under $729,750, have verified income and that your payments are over 315 of your gross income. Debt to income may be higher under the MHA program. I just did two with DTI over 55%.

Broker versus Lender

Over the years I have had many people ask the difference between a mortgage broker and a mortgage lender. The answer can be complicated. Long story short if you are working with a quality loan officer the answer is not much. We here at Choice Finance have the best of both worlds. A mortgage lender can be quicker at times with preparing the final documents and underwriting. Not always though one of my clients came to me because Bank Of America told her that it would be 90 days until they can process an application on her purchase. I did it the same day. Large direct lenders will shuttle you between departments for each and every service they provide you. At Choice Finance, you have one contact and one only for every aspect of your loan from start to finish and that would be me and me alone. The level of service that you receive at a smaller company simply can't be matched in my opinion.

Another problem with direct lenders is most often they work for example Met Life which means they can only sell products that Met Life offers. If the loan is denied by Met Life that means you start over with someone new from the beginning. If the loan is denied by a mortgage broker like Choice Finance we can use another lender to close your loan. It's not preferred that this occurs but in today's mortgage market it happens more than it ever did. You don't start over with us just a new bank. We also know which banks prefer which types of loans, some lenders are aggressive on FHA ARMS for example and other want conforming jumbo that have been increased in high cost area's such as Montgomery County, MD and the surrounding counties in Virginia. It's not one size fits all these days for banks, very often a scenario is rejected by several banks before we find one that actually wants the loan. Remember banks appetite for loans these days is drastically reduced from just a few years ago.

That brings me to the greatest reason to use a broker versus one lender; RATE!!
I checked recently with BB&T and very recently with Prosperity Mortgage which is a division of Wells Fargo and Long and Foster here in the DC area. Using their assumptions today's Prosperity Mortgage was offering 6.25% with one point on a $440,000 loan.
Choice Finance is 5.625% with no points. So right off the top we are $4,400 less in fees.
The difference in monthly payment is $177 per month, $2,124 per year and if you live there for 30 years the difference is an amazing $63,720 out of your pocket over the life of the loan!! In fact we beat them across the board on every type of loan they had listed. I also noticed that rates didn't change on their site for a week even though we had at least 10 prices changes both good and bad. Makes ya wonder.

Fact is more often then not you can save money by shopping around a few different lenders but make sure you know where you are shopping; ie lender versus broker. Take a look at this site. http://www.choicefinance.net/mortgage-rate.htm

Again Choice Finance has both options available for you. We can underwrite and prepare the documents in house if that is the best option. Remember it is only an option we are using that for you because it makes the most sense and has the best rate not because we have no other choice.
It's the same story over and over, most people default to what is the easiest path, sometimes not what is in their best interest. Everyone claims the best rates and great service, no one ever says they will give you a high interest rate and have excessive fees. If only it were that easy right? My advice would be to use a personal referral but not everyone has that type of connection. Also even if someone does make that personal referral how do you know he wasn't taking advantage of the person that referred you? Talk to a few loan officers, get all the numbers from a few sources and then I would ask for referrals. Our are posted right on the web but I could always let you speak to a few if you really wanted to do so. You can find our at http://www.choicefinance.net/testimonials.htm

I hope this explained some of the differences between the various types of lenders. If you have any more questions just type them in or email me at brent@choicefinance.net

Thanks,
Brent

Economic Outlook 2009/2010http://www.choicefinance/blog/

Well everyone wants to know if we are the bottom, close to it or more bad news still to come. My answer is hard to know for sure but there will be some good news with bad bumps in the road for at least another year. Here's why.

Defaults on all types of loans for residential, commerical and credit cards continue to rise.
And for the first time ever prime fixed rate mortgages are outpacing subprime loans as the largest parts of new foreclosures. This is in large part to the continued rise in unemployment.
Unemployment is not supposed to peak until next year and nationally it will soon be over 10% In many states it already is. Michigan is already over 15% for example.
Property values have fallen nationally by over 35% and in some areas such as Florida, California, Nevada and Arizona it has far surpassed that. In South Florida some condo units have fallen from 250k in 2006 to little more than 50k now. Developers went bankrupt and homeowners went under right after them. Locally in MD we aren't as bad but there are large swings even in Montgomery County. Bethesda after all is a very different market from Germantown and the up county in general.
We are seeing higher commercial vacancy, declining rents for both commercial and residential units and credit card defaults are on the rise. Bank of America reported 13.8% for a default rate up from 12.5% over the previous month. Many other companies are close to or over 10% This means very bad things for the good customers including slashed credit lines, increased rate and switching you from fixed rates to variable ones. This will hurt even more as people depend on their credit cards for basics and to sometimes keep their business open because other traditional lines of credit are drying up for all but the very best customers.

It's hard to believe that prime fixed rate mortgages are now in more trouble than the so called sub prime mortgages but that is exactly what they numbers tell us. My theory is that there is much more help for people that got bad loans in the first place but many lenders will do nothing for you until you are late several months in a row. It seems to me that bank are placing more hurdles than ever to getting a loan no matter what the scenario. It's my opinion that banks are more concerned with their bottom line than making loans. They took billions in TARP money and then turn around and refuse to help many of the customers that gave them their funds to stay open in the first place.

Some signs are in place for a price stabilization in certain areas around DC but it may be a false glimmer. Most of this is at the low end of the market, higher end homes are still selling at a much smaller pace. The major reason is that some first time home buyers are buying lower priced units which is usually a good thing. But since the prices are down the people selling them can't reach up for the bigger home which is how the market works. That will depress sales for some time in the overall housing market. Until the foreclosures and short sales are gone prices will remain low.

Look for more of the same as we move into 2010. Feedback is welcomed and appreciated. Please check back more often for housing market updates and general economic news.

Thanks,
Brent

Energy Efficient Mortgages | MD,DC VA,FL

There is a loan available to many homeowners and almost no one seems to know about it. Even in today's' very strict mortgage market it's possible to lower your interest rate, obtain money for certain home improvement upgrades and not submit income or even have an appraisal. Sound too good to be true? Well there are a few catches but these are important loans and people need to know more about them. They are called energy efficient mortgages or EEM'S.

They are offered thru both FHA and VA and are for existing homes only.

Who benefits from an EEM? Well the better question is who doesn't?
You can obtain money for cost effective energy savings that can be financed into the mortgage.

This was an older home can be made more efficient and save you thousands over the life of the loan in lower energy bills.

There are more relaxed qualifying ratios for an EEM.
You can qualify for a larger loan amount using an EEM

Sellers can use these loans to sell the home more quickly and make the home more affordable to a larger pool of buyers.

Most importantly this helps the environment/ The EEM is estimated to reduce greenhouse gases by 2-4 tons PER YEAR.

If you already have an FHA or VA loan you can get up to a maximum of $8,000 for these energy efficient upgrades. Your payment can even go up as long as you are saving more in the energy savings on a monthly basis. You can do these loans with a credit score as low as 620 but your rate will improve if you have a score greater than 660. You qualify with standard FHA or VA guidelines and there is no increase in the rate with these types of loans,

Here are just a few of the upgrades/repairs that will qualify for the new mortgage.

Acceptable energy efficiency improvements include but are not limited to:
- Solar heating and cooling systems, including water heating
- Caulking and weather-stripping
- Furnace efficiency modifications
- Programmable thermostats
- Insulation
- Storm or thermal windows and/or doors
- Heat pumps
- Vapor barrier

You must have a HERS report to gauge exactly what savings you can expect. This is an independent report than can be included in the closing costs and therefore not of your pocket directly.

You must use all funds within 90 days and escrow can be used to hold the funds until the repairs are completed.

These loans are available in all 50 states and DC and remember the key features again if you already have a government loan:

Loan limits may be exceeded on the FHA limit per county
No re-qualifying if you have a government loan currently
No additional down payment

No new appraisal. Saving you both time and money.

You can use this loan on FHA, VA, Jumbo and conventional loans.
For conventional loans different rules apply but it can be done.
You will need an appraisal however.

Fannie Mae secondary market guidelines allow lenders to increase DTI ratios up to 2% with EEM. This could be crucial if the borrower is "maxed out" on qualifying ratios.

I know which banks have these loans, not all do and I also know which lenders allow higher or lower credit scores and debt loads.

Please contact me at 301-881-8900x123 or email me at brent@choicefinance.net for more information. I look forward to saving you money and the environment at the same time.

Please also refer to www.energystar.gov/index.cfm?...energy_efficient_mortgage
for further information of a more general nature of what benefits these loans can offer the enviroment.


Thanks,

HVCC Update

Well we have been stuck with HVCC since May 1st and it's still the total disaster I said it would be a year ago. Check http://www.choicefinance.net/blog/
for my post a year ago saying it would be a nightmare. It's about what I thought it would be and once again the homeowner that is supposedly helped by this is the biggest loser once again. I just had a home that appraised got 995k and the tax assessment is for 1,310 million. Now tax assessments typically run higher than the appraised value these days but not by that percentage. I went back and pulled comps closer and more recent than what the appraiser used. The banks response was a quick no to my appeal. It's ironic that the original intent was to separate lender and appraisers because EVERYONE was in collusion to increase home values. Well guess who owns the appraisal management companies? Yes that's right the banks own most of the AMC'S that are the central management for ordering appraisals!! There have been cases where the appraisers need directions to find the town where they need to go for the appraisal. Folks trust me if that is the case it's almost guaranteed that a poorly done appraisal will follow. When I could order my own appraisals, my local DC guys would not go to Baltimore for me. Why? Because they didn't know the area well enough to do the work. Now you have appraisers coming from anywhere to do them because they need the money. Did you know that while appraisal fees increased as a result of the AMC involvement the actual fees to the appraiser were reduced? Why? Because now you have another layer of bureaucracy involved in ordering it. So appraisers are working twice as hard to make the same amount of money. You get what you pay for, appraisers are turning in reports as fast as they can and why not, it doesn't really affect their ability to get another job. It's a rotating list so the accountability to do a good job is gone. The government claims that they wish to lessen the credit crunch and have the housing market perform to a higher level. Well the HVCC that they have placed on us all will do exactly the opposite, drive down the price of homes and continue the pain that we have all faced much longer than it needs to be. There is a bill in Congress to place and 18 month halt on the HVCC. PLEASE call you member of Congress and tell them to support HR 3044. If not the burdens this rule places on the housing industry will not stop. There has to be a better way than this. Don't think this affects you? You might be right unless you NEVER plan on buying or selling a home pretty much ever. If that is the case then why are you reading this? :)
Please let me know if you have any questions, I would love to hear appraiser feedback as well.

Thanks,

BIG changes last week

Something called the MDIA went into effect last week and it is likely to cause further heartburn for buyers and sellers. Basically the GFE can't change the APR more than .125% from start to finish. It sounds good, bad brokers can't get away with a bait and switch and more protection for the buyer. That is generally a good thing. I have seen many good faith estimates that "forget" to add certain fees and lowball others so at closing there are big changes and surprises for the buyer. Not the way it should be done. What I don't understand or like is some of the delays now put in place to getting things done. For example now we can't charge any funds other than the credit report for 4 days from the initial application and AU finding being run. I wish someone could explain how that will help the borrowers? Even more confusing is that EVERY bank is interpreting the rules differently. Different waiting periods for example. Some banks say we can email them and some say they must be mailed. One lender from when we are clear to close is saying that then we can't close until 8 days later. Why???? If everything stayed the same and we did our disclosures correctly why the extra waiting period? Only the government bureaucrats who put the rules in know for sure. This will hurt borrowers in a market where rates are rising which is sure to come soon. For the last two days rates have really jumped and who knows for sure what the future holds. Considering they are at historic lows or near that floor we have to assume they will rise in the future. If the government wants to make rules for all the banks to follow it would help if there is one uniform set of rules for all to follow.
Basically a borrower will be locked into the first bank selected and if rates improve elsewhere it will be very hard to switch them even if the loan is not locked. This was already hard to do with the HVCC appraisal mess and now even harder. Also locking for 15 or 30 days and closing quickly will be a thing of the past which will also hurt the borrower. Another well intentioned problem brought to you by an all powerful federal government. Please note as a buyer or a seller things will go even slower and just be prepared for more delays and problems when you buy or sell. We at Choice Finance know about these rules and are as prepared as possible to make sure your loan closes on time. The rules are for ALL loans, conventional, FHA and VA. Purchases and refinances are both under the new rules. If anyone has any questions please let me know how I can help.

Does anyone know the correct etiquette?

Curious to hear feedback on this subject. I was in a funeral procession a month ago and I was so angered and saddened by the cars that sped past us but really the people who cut in the line and then one guy who cut in and stayed in. I had enough so I sped up, pulled up and told him he was in a funeral procession. His answer was " I know but I want to turn right" I lost it then, no respect for anyone on that day. I dropped a few choice words and then cut him off and wouldn't let him pass until everyone else had. I have to say I was truly sickened by the lack of respect that many but especially this one guy did. I hope it's not a sign of our culture but I think maybe it is. I have a feeling that this may be more of a problem in our busy busy go go area also. I don't think you would see this behaviour in a small town or down South for example. The police did a great job until the very end when this one loser jumped in. Anyway curious to hear any thoughts you may have on the subject. Especially any regional differences. I'm telling you it was a sad sight, he wasn't the only person, just the biggest offender.

Common Courtsey

Is it just me or are people ruder than ever before? When did we as a people become totally unaware of the world around us? Does anyone know the protocol for riding an escalator? I say stand right walk left. Just like you are supposed to drive or even walk say in the airport.
It happened to me Sunday in Target and when I said excuse me she got a bit miffed. I said "why would you get mad when I said excuse me when YOU are the one standing next to someone talking away and slowing me down"? She really didn't like that comment. I tried to say it is nicely as I could but I am betting it didn't come out as nicely as it could have. So to avoid any potential scenes I suggest just paying attention to the world around you and moving over to let people get around you that may not want to have a stroll up the escalator listening to you yack on your cell phone. Which leads me to another gripe.....