Most of my blogs have been directed to new buyers, etc; today I am focusing on the current or soon to be homeowner. One of our biggest allies has turned into somewhat of a foe by advertising the so called “No Cost Refinance”. You have probably seen the ad from this company (withholding the name to spare the guilty) and thought to yourself this is too good to be true. And you are somewhat correct….
The no cost refi program truly has no closing costs; all the closing costs and third party fees are paid by the lender. Let’s discuss the true pros and cons of the no cost refinance program. Typically, a no cost refinance will come with a higher interest rate. Face it; there really is no free ride no matter how cleverly disguised!
One of the main factors in determining whether a no cost refi is the "right" way to go is to look into your financial situation and see what your future goals are. A no cost refi is a good idea if you are considering moving in a few years or you know that you will need to refinance in a few years. The reason being is that by obtaining a no cost refi you are going to pay a higher interest rate than you would have by just simply paying for the closing costs or rolling them into your loan. Most of the time the closing costs could have been paid for within a couple of years with a lower rate loan and therefore if you keep the no cost loan more than a couple of years you will be stuck with that higher interest rate for the life of the loan or long after you would have paid for those closing costs. This will cause you to pay much more in interest over the life of the loan. After discussing your goals and needs with your mortgage professional he or she should be able to provide you with their opinion on which type of refinance will be best for you, "no cost" or "with cost".
Whether a no-cost refi is the way to go depends on a couple of factors. ... If you're planning on moving fairly soon, the no-cost refi might very well make sense.
One way to find out which method is best for you is to find your breakeven point. The breakeven point is the number of months it would take to recoup your closing costs based on your savings in monthly payment. For example if you incur 5,000 in closing costs which result in a $250/month savings, it would take 20 months to break even of the closing costs.
Again the large corporate lender that advertises the "NO Cost Refi" puts it in a way that appears to save the borrower money. Again name withheld to spare the guilty! But I know you have seen or heard the commercial. The fact is that over the life of the mortgage the higher interest rate of a No Cost Refi will cost you substantially more money. You are better off paying closing costs out of pocket or rolling them into the loan in return for a lower mortgage interest rate.
When you hear the term "NO Cost Refi", ask yourself how are they going to make their money. (Remember there are no free rides!)The answer is in the form of a higher interest rate. You may save a few thousand dollars upfront but you will be paying tens of thousands of dollars in the long run. These loans are great for borrowers without the ability to pay the upfront fees but borrowers who can afford them should be very leery about using them.
While a no cost refi may sound like a dream come true, talk to a local and accountable mortgage professional about the detailed costs of originating a new loan or refinance. There is no such thing as a free ride, and sadly, there is no such thing as a free refinance either. How you choose to pay may dramatically impact how much you spend on your mortgage over the long run.
Tuesday, September 25, 2007
Tuesday, September 11, 2007
Overcoming Your Fear!
Fear stands for False Evidence Appearing Real! I don’t think we realize how much this can truly impact our personal and business life. I believe fear is the reason so may borrowers have called my office or met with me personally been pre-approved for excellent mortgage programs , viewed several properties with their Realtors but have yet to move forward on actually signing a contract. And basically giving up on their dreams of homeownership!
The external noise of the media and sometimes friends and family members can actually paralyze us from moving forward with our goals and dreams. In most cases, you will have to step out on faith. This simply means that you believe in yourself and that you will be able to make it work. Definitely you must not make foolish decisions but prepared and informed decisions that will help you deal with the unknown. This weekend I was listening to a song that had an appropriate hook “How will you make it if you never even try?”
Of course, I am basing this article on mortgages and purchasing a home, but the information is true for any endeavor we are looking to accomplish. In many cases, we often let ourselves or other people talk us out of doing something rather than into it. Distance yourself from the well-intentioned naysayers who think they are protecting you. But many times stealing away your dreams is exactly what they do.
It is okay to be afraid when doing or starting something new. As a matter of fact it is perfectly normal. As stated by a spiritual leader with the utmost integrity,” Do it with the fear!” How many people would have let golden opportunities pass them by, if they let their FEAR stop them from moving forward? I admit it can be frightening to think about all the different aspects of the transaction with realtor, lender, and title company, etc. Then there is the mound of paperwork that needs to be signed in advance such as the real contracts, inspections, and loan applications. As one buyer put it, you feel like you are signing your life away. Which is relatively true in a reverse way if you don’t sign you could be giving away certain aspects of your financial life such as the opportunity to build home equity that could fund your child’s college education, receive the large tax savings that you definitely deserve, or the opportunity to become debt-free through smart mortgage planning.
I encourage you to use fear as a tool to make sure you are informed and prepared versus paralyzed in your tracks. Meet with your local and accountable real estate professionals, ask plenty of questions, and use their expertise as your safety net. This will only be true when working with lenders and Realtors that you trust. Any Realtor or lender can place an advertisement in the paper or on the Internet. Only work with individuals that come highly recommended and will add value to your Real Estate transaction.
Since way back in the nineties, this is one of the most excellent times to purchase. The difference in this era is mortgage rates, although they have crept up in the last few years, still remain at overall thirty year lows. So if you have the opportunity to buy a home go ahead and seize it today before the window closes. Contact your local and accountable mortgage professional, to start the process or update your existing mortgage pre-approval. Get back out there on the market and purchase your new home today. False Evidence Appearing Real can never win unless you let it stop you instead of stepping out on faith!
The external noise of the media and sometimes friends and family members can actually paralyze us from moving forward with our goals and dreams. In most cases, you will have to step out on faith. This simply means that you believe in yourself and that you will be able to make it work. Definitely you must not make foolish decisions but prepared and informed decisions that will help you deal with the unknown. This weekend I was listening to a song that had an appropriate hook “How will you make it if you never even try?”
Of course, I am basing this article on mortgages and purchasing a home, but the information is true for any endeavor we are looking to accomplish. In many cases, we often let ourselves or other people talk us out of doing something rather than into it. Distance yourself from the well-intentioned naysayers who think they are protecting you. But many times stealing away your dreams is exactly what they do.
It is okay to be afraid when doing or starting something new. As a matter of fact it is perfectly normal. As stated by a spiritual leader with the utmost integrity,” Do it with the fear!” How many people would have let golden opportunities pass them by, if they let their FEAR stop them from moving forward? I admit it can be frightening to think about all the different aspects of the transaction with realtor, lender, and title company, etc. Then there is the mound of paperwork that needs to be signed in advance such as the real contracts, inspections, and loan applications. As one buyer put it, you feel like you are signing your life away. Which is relatively true in a reverse way if you don’t sign you could be giving away certain aspects of your financial life such as the opportunity to build home equity that could fund your child’s college education, receive the large tax savings that you definitely deserve, or the opportunity to become debt-free through smart mortgage planning.
I encourage you to use fear as a tool to make sure you are informed and prepared versus paralyzed in your tracks. Meet with your local and accountable real estate professionals, ask plenty of questions, and use their expertise as your safety net. This will only be true when working with lenders and Realtors that you trust. Any Realtor or lender can place an advertisement in the paper or on the Internet. Only work with individuals that come highly recommended and will add value to your Real Estate transaction.
Since way back in the nineties, this is one of the most excellent times to purchase. The difference in this era is mortgage rates, although they have crept up in the last few years, still remain at overall thirty year lows. So if you have the opportunity to buy a home go ahead and seize it today before the window closes. Contact your local and accountable mortgage professional, to start the process or update your existing mortgage pre-approval. Get back out there on the market and purchase your new home today. False Evidence Appearing Real can never win unless you let it stop you instead of stepping out on faith!
Tuesday, August 28, 2007
Bad Credit a Bigger Risk than Terrorism...
Bad credit a bigger risk than terrorism…
Yes according to an article written by Dan Seymour of the Associated Press on Monday, the biggest short term risk to our economy is bad credit. According to a survey of 258 members conducted by the National Association of Business Economics (NABE) credit has replaced terrorism as the gravest immediate threat to our economy.
It almost sounds surreal but I actually agree with the findings of the survey. As we continue to deal with the “credit crisis”, the issues have trickled down into our everyday lives at a record pace. The stock market being our first indicator, followed by the fact that 2 million people are expected to lose their homes this year to foreclosure. Even the big boys like Home Depot are taking the hit. Folks, real estate drives are economy far more than we would care to admit. Ask the car dealers, airlines, and other companies that depend on high discretionary income if real estate drives our economy. With less people able to tap cash/equity out of their mortgages through refinancing, Realtors not spending at a very high clip either, and the 100,000+ loan officers who have left the industry our entire economy is feeling the crunch. It is a serious trickle down effect. Builders are building less new homes being which means less work for the blue collar individuals ultimately leading to higher than normal unemployment rates.
Whoever though that a few missed payments here and there would supplant Osama Bin Laden and his terrorist goons as one of the greatest risk to the USA. I believe it goes back to my blog from last week about “Was the Mortgage a Mistake”. The consumerism mentality of our culture has left us in a very tough position for now. In a perfect world maybe we should have purchased smaller homes with stable fixed rates and chose not to drive our gas guzzling oversized SUV’s. But who know the bottom was going to fall out so quickly.
Listed below are 5 tips I encourage you to use, so we do not continue to add to the threats bad credit is placing on our society:
1) Stop using the credit cards unless you can afford to pay the balance in full for that month. This tip alone will give you a raise in income by having your money work harder for you because it won’t be spent paying high interest credit debt.
2) Pick up the book Smart Couples Finish Rich by David Bach. Married or single this book has some great tips on budgeting and other financial tools that will help you weather the storm and plan for the future
3) If you know you are going to be late contact your creditors in advance. Most creditors will be more forgiving of customers who are proactive about there obligations.
4) Don’t run from your history. It is important to review your credit at least one time per year but twice a year is ideal. You can receive a free report at www.annualcreditreport.com it really is true knowing is half the battle.
5) If you have derogatory or past due accounts that are now collections and charge-offs try to call and negotiate settlements with the creditors. My company has created a script to help our clients with the calls to creditors.
In closing, bad credit is not only a greatest short term risk to our economy; it can become the greatest risk to our personal quality of life as well. Today, credit is reviewed for everything from car insurance rates to homeowner’s insurance rates. Let alone applying for a mortgage with low money down and attractive interest rates. Even the ability to get a cell phone with an affordable, economical plan is nearly impossible when you have poor credit. Some employers even view credit, so it could have an affect on what job you get. Don’t let this happen to you!
If you have good credit by all means keep up the good work. If you have some credit challenges start working today to better your scores. Don’t let the four-letter word FICO be your downfall, because you will feel like your financial life is under terrorist attack!
Yes according to an article written by Dan Seymour of the Associated Press on Monday, the biggest short term risk to our economy is bad credit. According to a survey of 258 members conducted by the National Association of Business Economics (NABE) credit has replaced terrorism as the gravest immediate threat to our economy.
It almost sounds surreal but I actually agree with the findings of the survey. As we continue to deal with the “credit crisis”, the issues have trickled down into our everyday lives at a record pace. The stock market being our first indicator, followed by the fact that 2 million people are expected to lose their homes this year to foreclosure. Even the big boys like Home Depot are taking the hit. Folks, real estate drives are economy far more than we would care to admit. Ask the car dealers, airlines, and other companies that depend on high discretionary income if real estate drives our economy. With less people able to tap cash/equity out of their mortgages through refinancing, Realtors not spending at a very high clip either, and the 100,000+ loan officers who have left the industry our entire economy is feeling the crunch. It is a serious trickle down effect. Builders are building less new homes being which means less work for the blue collar individuals ultimately leading to higher than normal unemployment rates.
Whoever though that a few missed payments here and there would supplant Osama Bin Laden and his terrorist goons as one of the greatest risk to the USA. I believe it goes back to my blog from last week about “Was the Mortgage a Mistake”. The consumerism mentality of our culture has left us in a very tough position for now. In a perfect world maybe we should have purchased smaller homes with stable fixed rates and chose not to drive our gas guzzling oversized SUV’s. But who know the bottom was going to fall out so quickly.
Listed below are 5 tips I encourage you to use, so we do not continue to add to the threats bad credit is placing on our society:
1) Stop using the credit cards unless you can afford to pay the balance in full for that month. This tip alone will give you a raise in income by having your money work harder for you because it won’t be spent paying high interest credit debt.
2) Pick up the book Smart Couples Finish Rich by David Bach. Married or single this book has some great tips on budgeting and other financial tools that will help you weather the storm and plan for the future
3) If you know you are going to be late contact your creditors in advance. Most creditors will be more forgiving of customers who are proactive about there obligations.
4) Don’t run from your history. It is important to review your credit at least one time per year but twice a year is ideal. You can receive a free report at www.annualcreditreport.com it really is true knowing is half the battle.
5) If you have derogatory or past due accounts that are now collections and charge-offs try to call and negotiate settlements with the creditors. My company has created a script to help our clients with the calls to creditors.
In closing, bad credit is not only a greatest short term risk to our economy; it can become the greatest risk to our personal quality of life as well. Today, credit is reviewed for everything from car insurance rates to homeowner’s insurance rates. Let alone applying for a mortgage with low money down and attractive interest rates. Even the ability to get a cell phone with an affordable, economical plan is nearly impossible when you have poor credit. Some employers even view credit, so it could have an affect on what job you get. Don’t let this happen to you!
If you have good credit by all means keep up the good work. If you have some credit challenges start working today to better your scores. Don’t let the four-letter word FICO be your downfall, because you will feel like your financial life is under terrorist attack!
Thursday, August 23, 2007
Was the Mortgage a Mistake?
This is the actually the headline from an article on the front page of the Business section in this past Sunday’s Washington Post. In the wake of the “Credit Crisis”, a couple was discussing their regrets and fears about their adjustable rate mortgage. Their chief concern is will they be able to afford their home once their rate adjusts or will there be loans and programs available to refinance when the time comes. Honestly they share the same fears and worries of many borrowers who purchased homes in the last couple of years with adjustable rate mortgages. Are you starting to worry as well? If not maybe should.
First let’s examine the problem. According to the media, all the issues of the “imploding mortgage market” were caused by mortgage lenders and bankers such as me. Quite frankly we all played apart in this disastrous market; lenders, realtors, and borrowers alike. Realtors listed properties at astronomically high prices causing bidding wars for hot properties. In some cases, sellers had not owned the property even a year and were able to buy and then sell for high dollar profits. They were happy and Realtors too as they skipped to the bank with “fat” commission checks from the higher than “listed” sales prices. As mortgage lenders, we placed a great deal of our clients in Adjustable Rate Mortgages without any regard for the future market. Just as the Realtors many mortgage lenders and brokers benefited handsomely from these shorter period loans with no regard for the clients financial future. I believe myself to be one of the responsible lenders not out to overcharge clients with excessive points and fees but I too am guilty of placing at the least three out every five clients in an ARM. Let’s not forget the buyers who’s only question was,” What is the lowest payment I can get?” so I can afford this overpriced home. So even when trying to be a trusted advisor and present more than one option for mortgage financing inevitably most chose the lower payment adjustable rate programs versus the more stable, higher payment fixed rate options they were given.
Well none of us can cry over spilled milk. So instead of asking, “Was the Mortgage a Mistake?” it is time to review your current situation and figure out where we go from here. Which the couple mentioned in the Washington Post attempted to do by calling there financial planner. Noticed I mentioned attempted because the correct thing to do now is to call your local and accountable Mortgage Lender to schedule a review of your current financing situation. And maybe consider that fixed rate loan before it is too late. The initial discomfort of the possible payment increase will be much less painful than the discomfort of losing your home to foreclosure or premature sale because you cannot afford the new payment when your rate has adjusted too high, credit scores have dropped, or the homes value has significantly decreased. Don’t leave your family’s future to chance with some unscrupulous mortgage lender.
And buyers as well don’t get caught in the future asking “Was the Mortgage a Mistake?” If cost per month is the determining factor, which it typically is for 99% of home purchasers, make sure you are pre-approved before buying and don’t review properties outside of your price range which can lead to that question, “How can I get the lowest payment for this house?” Basically it will be like starting our cycle of creative financing i.e. interest-only adjustable rate mortgages all over again. Or maybe not(which I will discuss why at a later date) as the credit crisis continues and people are left asking “Was the Mortgage a Mistake” and the answer is probably yes but it doesn’t have to be…..
Contact, Markita Aldridge-Woods, local and accountable Woodbridge, Virginia area lender at (703) 497-3936, email at markita@weststarmortgage.com or visit her site at www.TheLendingAdvisors.com so you don’t have to ask the question "Was the Mortgage A Mistake!"
First let’s examine the problem. According to the media, all the issues of the “imploding mortgage market” were caused by mortgage lenders and bankers such as me. Quite frankly we all played apart in this disastrous market; lenders, realtors, and borrowers alike. Realtors listed properties at astronomically high prices causing bidding wars for hot properties. In some cases, sellers had not owned the property even a year and were able to buy and then sell for high dollar profits. They were happy and Realtors too as they skipped to the bank with “fat” commission checks from the higher than “listed” sales prices. As mortgage lenders, we placed a great deal of our clients in Adjustable Rate Mortgages without any regard for the future market. Just as the Realtors many mortgage lenders and brokers benefited handsomely from these shorter period loans with no regard for the clients financial future. I believe myself to be one of the responsible lenders not out to overcharge clients with excessive points and fees but I too am guilty of placing at the least three out every five clients in an ARM. Let’s not forget the buyers who’s only question was,” What is the lowest payment I can get?” so I can afford this overpriced home. So even when trying to be a trusted advisor and present more than one option for mortgage financing inevitably most chose the lower payment adjustable rate programs versus the more stable, higher payment fixed rate options they were given.
Well none of us can cry over spilled milk. So instead of asking, “Was the Mortgage a Mistake?” it is time to review your current situation and figure out where we go from here. Which the couple mentioned in the Washington Post attempted to do by calling there financial planner. Noticed I mentioned attempted because the correct thing to do now is to call your local and accountable Mortgage Lender to schedule a review of your current financing situation. And maybe consider that fixed rate loan before it is too late. The initial discomfort of the possible payment increase will be much less painful than the discomfort of losing your home to foreclosure or premature sale because you cannot afford the new payment when your rate has adjusted too high, credit scores have dropped, or the homes value has significantly decreased. Don’t leave your family’s future to chance with some unscrupulous mortgage lender.
And buyers as well don’t get caught in the future asking “Was the Mortgage a Mistake?” If cost per month is the determining factor, which it typically is for 99% of home purchasers, make sure you are pre-approved before buying and don’t review properties outside of your price range which can lead to that question, “How can I get the lowest payment for this house?” Basically it will be like starting our cycle of creative financing i.e. interest-only adjustable rate mortgages all over again. Or maybe not(which I will discuss why at a later date) as the credit crisis continues and people are left asking “Was the Mortgage a Mistake” and the answer is probably yes but it doesn’t have to be…..
Contact, Markita Aldridge-Woods, local and accountable Woodbridge, Virginia area lender at (703) 497-3936, email at markita@weststarmortgage.com or visit her site at www.TheLendingAdvisors.com so you don’t have to ask the question "Was the Mortgage A Mistake!"
Thursday, August 16, 2007
The Credit Crisis....What Does It Mean To YOU
It means plain and simple, if you are going to be in the market for financing in the next 18 months you need to consider this. As huge companies close their doors so goes the creative mortgage financing. If you are a potential buyer you can no longer afford to sit on the fence. Beware that the volatile credit market can change overnight which will leave fewer options for financing. This is even more true for those looking to refinance.
Sellers need to be more flexible and willing to accept reduced prices. As the mortgage products diminish, the pool of qualified buyers will decrease as well. It is no time to "holdout" for the best price possible.
As an educated mortgage professional, I will utilize experience and resources to help you or your loved ones to navigate through these turbelent times. Don't leave your future in the hands of some random mortgage provider. I'm local, accountable, and you can trust I will do the best thing for you....
Sellers need to be more flexible and willing to accept reduced prices. As the mortgage products diminish, the pool of qualified buyers will decrease as well. It is no time to "holdout" for the best price possible.
As an educated mortgage professional, I will utilize experience and resources to help you or your loved ones to navigate through these turbelent times. Don't leave your future in the hands of some random mortgage provider. I'm local, accountable, and you can trust I will do the best thing for you....
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