You Snooze You Lose

Ran into an old friend, David, at a party last night. After the usual pleasantries the conversation turned to mortgages and interest rates. I shared with David how we can do a Zero Cost Refinance which would allow someone with an existing 30 Year Fixed mortgage at 5.875% to refinance into a 20 Year and maintain the same payment. 

How significant is that? One of my clients will save almost $140,000 by refinancing. Where I come from we call that Money.

David commented that there is no rush after all the Fed has announced that they will keep rates down for the next two years. That sentiment is widely held - but not necessarily correct. The Fed is promising to keep overnight rates low.  However, there is no guarantee that Mortgage Rates will remain low.


How do you decide? Simple. Figure out what you would save if you refinanced today. Decide if your savings are compelling enough to act. If they are, don't wait. There is greater risk that rates will rise than there is opportunity for lower rates. And, with a Zero Cost Refinance, you could do it again if rates do drop significantly.

Summit Funding   Registered Mortgage Broker (NMLS #52081) New York State Department of Banking

Summit Funding   Licensed Correspondent Mortgage Lender (NMLS #301151)  New Jersey Department of Banking and Insurance

Summit Funding Inc, Your Mortgage Professionals  Licensed Mortgage Broker (NMLS #84943)  State of Connecticut Department of Banking

How Serious Are Your?

I read a twitter post the other day by Debra Hoffman Brill: "Serious Buyers go out in this heat - and I'm there with them..."

That set me to thinking... If serious buyers go out in the heat, what do serious professionals do?

My first answer is that serious professionals stand by their work.  What do I mean? I mean that professionals should be prepared to guarantee the quality of their work. I back my preapprovals with a $5000 Guarantee.

What do you do to show how serious you are?

Please check out my new site ...

Financial experts estimate that only 40% of the people who should refinance have done so. For some, it is because they do not want to pay up front. Many do not realize that they can refinance at no cost. My new site, zerocostrefinance.com is intended to help people figure out of it would be possible for them to do so.  Please take a look Here and let me know what you think.

81 Days and Counting

Today you can get a 'High Balance' Conforming mortgage and borrow up to $729,750 in high cost markets. 

Since Conforming loans generally have better rates than non-conforming loans, the 'High Balance' program has been helpful for many of my customers in New York,New Jersey and Connecticut.

These limits will ratchet down to $625k on September 30. Importantly, for anyone who plans to borrow more than $625,000, you must close on or before September 30. Do not expect an extension.   

Want to read more? Here is a link to a WSJ article WSJ

On this Fourth of July ....

Today, as we celebrate Independence Day, I feel a huge debt of gratitude to the servicemen who go in harms way to defend us and our liberties. 

May God protect them and this wonderful country.

Markets Gone Wild

Why is it that the Markets are reacting with ever greater volatility?

What do I mean? I follow the Mortgage Bond Market closely. The FNMA 4.0% Bond stood at  101.15 when the market opened on Monday (June 27).  As of 1:45 on Friday the Bond is down to 99.72 - a drop of about 140 points. That's crazy!

Yes, I know that the Greek crisis has (sort of) resolved itself. And, I know that the stock market is having its best week in a year. And I know that QE2 (the Fed program to support the Bond market) came to a close yesterday. And I know that Chicago Purchasing Manager Index came in slightly hot. And I know that trading has thinned before the holiday weekend. And I know that some investors are being conservative before the long weekend...

I know all that. But, I do not believe that those news items explain the market volatility. I have my own theory. I believe that two factors are driving increased volatility across markets. I believe that 'Wall Street' is less successful at making 'honest' money by providing traditional investment banking functions and instead has focused on legal gambling. What will it take for regulators to take action to prevent 'Too Large to Fail' entities from betting our money on outrageous bets?

I also believe that there has been a huge increase in speculative investment - often by small investors. Just think of all those people who have invested in gold. These investors react emotionally to thin (and often late - see Wall Street, above) news.

For what it is worth, I am betting that we'll see Bond prices climb again - soon.
.

Why are (some) Homeowners having Payment Problems

The top 3 reasons for housing payment distress:

• Reduced Income
• Too Much Debt
• Unemployment

Behind these reasons there is one more: Lack of reserves. 

Life is always throwing curve balls. However, 40% of Americans could not come up with $3,000 to cover an emergency. So, the number one defense is a plan.

Do you have a plan?

Do you have an adequate emergency fund?

Are the Largest Mortgage Lenders Throtling Housing Recovery?

The WSJ reports that WSJ on Tighter Lending the top mortgage lenders are rejecting more home buyers than ever. Last year the top ten lenders rejected 26.8% of all applications up from 23.5% in 2009. This, in turn, is negatively impacting the already fragile housing market.

The article reports that some of the blame accrues to FNMA and Freddie, the two government-backed entities that ultimately set the standard for 90% of mortgage loans. These entities are placing ever tightening restrictions on lenders. (BTW, the article ignores the negative impact of 'Price Adjustors' imposed by FNMA and Freddie which can add two and a half points to the origination cost of a mortgage for a borrower with a 679 credit score putting down a twenty percent down payment.)

As I have previously stated, I personally find the 26.8% rejection rate appalling. My average approval rate is above 98%. 

You be the judge: where should you send a client or friend that is looking for a mortgage for their home purchase or refinance?  

The TwentyFirst CEntury Beckons: Wish me Luck

June is turning into my technology month. 

I am migrating my phones to a Voice Over Internet system (thank you Steve, Duncan and Brian.) Migration will take weeks as we must port our existing phone numbers over to the new company. I did get a chance to play today and was wowed by the system capabilities.


Next week sees the replacement of our existing firewall with the installation of an advanced firewall and security device. We'll ultimately be able to set up a rollover capability, so, when our cable goes down we'll switch to wireless internet.


Then the following week we are swapping email providers. Our new system will provide managed Exchange access (which will interface with my new phone system as well as allow secure mobile access.)


What are the odds I'll live through this without a nervous breakdown?

Dave

Is the housing market going down? Is the housing market going up?

At a time when pundits are racing about predicting the future of the universe and other such, there is no dearth of published opinion about when, if ever, the real estate market will recover. My opinion: given all the pundits at least one will be right (at least for a short while.)

While they speculate, it may be helpful to remember that "All Real Estate is Local". So, if you want to know what your home is worth or where your market is trending, talk to the expert: your local realtor. BTW, it helps if you pick an excellent realtor. Find out who the best person is in your neighborhood. (Hint: it is probably not a part-time real estate sales person. Hint #2: it may well not be the realtor who spends the most on self-promotion)

Need help finding a great person to talk to? I have a huge network of great realtors and would be delighted to introduce you to people who I think are great.

Who is Afraid of September 30?

In about 100 days, the legislation that forced FNMA and Freddie Mac to lend up to $729,750 (in certain markets) will expire to be replaced (as applicable) by High Balance limits.

Let me explain. Traditionally, lenders were able to offer mortgages at favorable terms on loan amounts up to the Conforming loan limits set by FNMA and Freddie Mac. Because FNMA and Freddie Mac stood behind these loans, the rates for the loans were better than other loans available in the marketplace. As a general rule, before the mortgage market imploded in 2008, rates for Jumbo loans were about 1/4% higher than otherwise comparable conforming loans. 

After the market implosion, it became very difficult to obtain financing for these larger loans. So, Congress mandated that FNMA and Freddie Mac offer larger loans in higher cost markets. They created two limits: Temporary which  expire September 30 and High Balance which will continue in effect.

                   Property       Conforming  High Balance  Temporary

 1 Unit             $417,000        $625,500         $729,750      
2 Units            $533,850        $800,775        $934,200      
 3 Units            $645,300        $967,950        $1,129,250     

4 Units           $801,950       $1,202,925      $1,403,400     

Importantly, loans with Temporary Loan Limits must close by September 30. Lenders will not be able to grant extensions for these loans beyond that date!

Your Mortgage Guy: How High Will Rates Go?

Your Mortgage Guy: How High Will Rates Go?: "There is much fear these days about rates spiking once the economy recovers. You even hear 'Genius' economists are predicting rampant inflat..."

How High Will Rates Go?

There is much fear these days about rates spiking once the economy recovers. You even hear 'Genius' economists are predicting rampant inflation and double-digit inflation. I believe they are wrong!

There used to be a saying that the Military is always preparing for the 'last war'. Well that is what these pundits are doing. The chart below demonstrates that inflation has been under control for the past twenty years. Odds are that even if inflation spikes, that spike will be short lived.

What does that mean for you? It means that mortgage interest rates are less likely to rise uncontrollably in the future. [We may, however, see periods of higher rates due to other factors, including liquidity.]

So you think you'll get approved for a mortgage ...

According to a recent report,   Half of All Mortgages Rejected , banks are rejecting about half of all mortgage applications.

Let me put that in perspective for you. I can tell you that I am batting virtually 100% on getting my clients loans approved. My peers in the mortgage professional world are doing about the same. So if half of all loans are getting rejected, it really means that 70 - 80% of all mortgages for borrowers who are not represented by mortgage professionals are being denied.

My advice: If you are purchasing a home or looking to refinance, work with a mortgage professional.  Why? Because we do not get paid unless you get your mortgage, so, we'll tell you the truth. And, the statistics show that we do a better job than the banks.

all of my loans are

Will the Fed make it more difficult for women to get credit cards?

Forbes reports that under new Fed regulations, banks will be prohibited from issuing credit cards to individuals who do not have income. Historically, credit card issuers were able to factor in household income when issuing credit cards. The new regulations require that banks consider only individual income in determining qualification for new credit. Why? Because the Fed wants to prevent students from piling up credit card debt that they cannot repay.

But, the 'law of unintended consequences' is unmerciful. The Regulations will also prevent many credit worthy people from obtaining credit cards. For example, it will become more difficult for some retirees to obtain credit - even if they have significant assets. More significantly, stay-at-home moms will find it almost impossible to get their own credit cards.

Forbes Article

How hard is it to cancel PMI

No one likes to pay PMI. It is bad enough having to pay your mortgage every month. PMI - insurance required by lenders when a homeowner borrows more than 80% of the value of a home - which is of no (direct) benefit to the borrower, adds insult to injury. So, the quicker you can get rid of it the quicker you save.

Can you get rid of PMI?  The good news is that under the Homeowners Protection Act of 1998, banks are obligated to terminate PMI when the mortgage balance falls below 78% of the original value of the home at the time the mortgage was obtained.

Is that all? No. Borrowers can also petition the mortgage holder to drop PMI when the value of the home rises. Admittedly, in our declining market this is happening less frequently. However, clients who buy a 'fixer-upper' may see real appreciation when the work is complete. We have assisted a number of our clients is getting the PMI waived - generally at least a year or two after they took out the mortgage.And, as the real estate market recovers (and it will recover) there will be opportunities to drop PMI in the near future.

Show me the papers!

The Wall Street Journal reports that homeowners are successfully fighting foreclosure by demanding that banks produce evidence that they 'own' the loan. Link to WSJ Article

.Who is using Social Media?

Are High Net Worth individuals using Social Media?

According to the American Affluence Center, only half of affluent individuals (average net income $333,000) are active on Social Media. Not surprisingly, participation declines with age. Surprisingly, it also declines with income.

Owners of smart phones and tablets are more likely to participate. Womern or more likely to be engaged than are men.

Where do you reach the affluent? LinkedIn is their social media destination of choice.