Rising Rates & Affordability: “How Much Can You Finance with $960/Month?”

March 15, 2017

As rates rise, affordability dwindles.  If you want more home for the same monthly payment, acting before rate rise further may be a direct path to success.

Each example here shows the principal and interest payment for a 30-year, fixed-rate loan.

1) Loan of $200,000 – Interest rate: 4.00% / 4.25% APR – Payment = $955

2) Loan of $180,000 – Interest rate: 5.00% / 5.27% APR – Payment = $966

3) Loan of $160,000 – Interest rate of 6.00% / 6.29% APR – Payment = $959

It’s pretty amazing that a rate increase of just 2% can impact affordability by as much as $40,000.  Rates have been artificially low for some time now due to Fed intervention.  As this stimulus is removed, the usual result is the rates to rise.  Rates have already started rising just in expectation of a change in Feb policy.

Act NOW to buy the house you desire without the risk of losing your opportunity to lock-in these amazing low rates.  I can help you or those you know get a low interest rate loan before further increases go into effect.

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Choosing Your Mortgage Professional

June 20, 2009
By Brian Short, CMC, CRMS, GMA
 
“Shopping for a Mortgage Professional is much like shopping for a medical doctor or an attorney. Choosing your medical or legal care based on “who is the cheapest” may not really be the best strategy. You want you choose a professional who is trained, certified, experienced and has a good reputation.” 
 
Often times, this is my response to those asking for me to give them a detailed list of all their closing costs if they select me and my company to provide the financing for their upcoming home purchase or refinance of their current home.
 
I have heard of real estate industry partners telling their customers that choosing a mortgage professional is as simple as getting a “Good Faith Estimate” and comparing the costs contained on those documents.  This sets up the borrower to work with the “best liar”, too early in the 30-60 day process of finding a home, rather than getting the most professional financing help to get the deal closed correctly.
 
How can this be?  Aren’t all “Good Faith Estimates” accurate?  Aren’t all mortgage professionals the same?  Aren’t all mortgage companies the same? 
The truth is: the numbers on the “Good Faith Estimate” given too early in the process are RARELY CORRECT!  You see, the numbers on that document are affected by one or more of the following 13 variables below:

-> Sales pricegood-faith-estimate

-> Appraised value

-> Loan amount

-> Borrower’s employment status and history

-> Credit scores and payment history

-> Amount and source of down-payment

-> Date of closing

-> Immigration or citizenship status of the borrower

-> The housing type and location (Single family dwelling, Duplex, Condo, Townhouse, PUD, suburban, rural, urban, etc.)

-> The county where the home is located

-> Mortgage Interest Rate

-> The Term (length) of the Loan

-> The Title Company being used to close the loan

I have worked for several mortgage companies during my mortgage career and even owned my own company for 5 years. I know that some “loan guys” will “low-ball” the initial estimate, only to pull out the “surprise” at the closing table when your options for making any changes are very limited.  Of the 21 separate line-item fees on the “Good Faith Estimate” I give to my borrowers when they sign their loan application forms and disclosures, only one of those fees is the same for every loan and is not dependent on any of the variables listed above.

Mortgage interest rates change daily (sometime, even more often!). I could simply print off a “Good Faith Estimate” with made up numbers as some customers request (as other “loan guys” may do) but it will not be accurate because of all of these variables I have mentioned.  That process of collecting “Good Faith Estimates” prior to having all of the above variables identified will very time-consuming and wasted effort by the borrower and “loan guys” passing out worthless forms with inaccurate numbers.

My goal is to take the worry and uncertainty out of the process of originating, processing, underwriting and closing the loan.  I help guide my borrowers through their negotiations with their seller by providing honest numbers as they become available rather than simply making up numbers to get “my hook set”.

I have been in the business for over 11 years and nearly 100% of my business comes from referral and repeat business. A businessman can not build that kind of business by being a con-man, cheating others or participating in the bait-and-switch tactics that have riddled this industry for years.

This helps my my borrowers understand how I have built my business and how I provide a level of confidence and professionalism which will make my borrower’s Real Estate purchase a very smooth and cost effective transaction over the next.

So, you ask, how should I select the Mortgage Professional to close my loan for me?  I’m glad you asked.  Allow me to give you a few guidelines for starters:

1. Choose a Mortgage Professional who is EXPERIENCED.  Was he selling shoes or washing cars last week and then some buddy of his talked him into “trying out the mortgage business”?  Does he really know what he’s doing?  Has he been originating mortgage for 5-10 years?  Does he do this full-time or this just a hobby or part-time gig? 

NAMBCertified2. Choose a Mortgage Professional who is CERTIFIED.  Has proven to anyone that he knows the laws, the process, the programs and theory and mechanics behind the mortgage industry.  Has he taken courses and exams to measure his competency?  Is his certification a national designation? Is his certification from a professional association who can objectively measure and monitor his expertise or from some mail-order outfit looking to make few bucks?

3. Choose a Mortgage Professional with a GOOD REPUTATION.  Is your selection a true professional who is respected and well-known in his industry.  Who knows him and what kind of work he does?  Who has ever closed a loan with him?  Who can speak for his level of trustworthiness, honesty and attention to detail?  What do you know of his character and personality?

4. Choose a Mortgage Professional who is a PROFESSIONAL.  Does your choice know the market, the industry, the community, the history, the trends and your desires?  Is he a member of his professional association?  Has he been awarded and recognized by his peers and fellow business associates for his contribution to the industry and community?

During the month that your loan is supposed to close it is the most important transaction in your Mortgage Professional’s office.  “Getting it cheap” doesn’t mean much when your “loan guy” drops the ball and makes a mess of the whole deal simply because  he has “never seen anything like this before.”  That stack of bogus “Good Faith Estimates” collected 30-60 days prior to your closing will mean very little when you find out that returning phone calls, diligently following up on underwriting conditions, and working long hours to insure that all of the bases are covered on your deal are not his priority or part of his work ethic.

Paper is cheap, and ink toner to print fictitious loan estimates is even cheaper.  Experience, Certification, a Good Reputation and Professionalism are priceless life-long attributes and qualities you want in your Mortgage Professional.  Leave the spreading of such worthless papers to those lying, low-balling, bait-n-switching, short-termers who do not deserve to work with someone like you who, understandably, expect it to get done right the first time.


Get Your House in Order – Before you Lose it!

January 30, 2009

By Brian Short, CMC, CRMS, GMA

The job losses reported last week were the topic of an article entitled, “A Litany Of Job Losses: When Will It End?” written by Linton Weeks  for NPR Online, “Read aloud the litany of lost jobs and it sounds like a funeral knell.

On Monday, Caterpillar construction equipment. 20,000 jobs. Gong … Pfizer pharmaceutical. 8,000. Gong … Sprint Nextel telecommunications. 8,000. Gong … Home Depot home improvement. 7,000. Gong … Texas Instruments computers. 3,400. Gong … General Motors automakers. 2,000 Gong …homedepot

On Tuesday: Corning glass. 3,500 jobs. Gong …

On Wednesday: Starbucks coffee. 6,700 jobs. Gong … AOL online. 700 jobs. Gong …

On Thursday: Ford Motor Co. 1,200 jobs. Gong … Eastman Kodak cameras. 3,500 plus. Gong … Also on Thursday the Labor Department reported that nearly 4.8 million people are on the unemployment benefit rolls, a historic high. Anyone who has glanced at the news in the past few days is not surprised.

You know the causes: mortgage shenanigans, housing values falling, construction paralyzed, credit market frozen. ”

This negative economic news causes even the most positive person to swallow hard and take a careful inventory of what might happen if the bottom would fall out their own life.  Some nay-sayers have even pulled out their notes from “dusty old” Y2K Prep Courses urging us to stock-pile dehydrated foods, water, gold and ammo – again. 

All of those ideas might be worthwhile to consider if things fall apart and the government can’t keep control of our typically orderly society.  However, what about your house and your finances in case “life as we know it” does not fall into complete shambles but continues to struggle month-by-month for next year or so as some have suggested.

Even our new President and his advisers have admitted that this economic recovery may take an additional 12-24months.  One good way to prepare for additional lay-offs and a continued down-turn in our economy is to get YOUR house in order. 

pink-slip1What if you lost YOUR job? 

What if YOUR needed cash for medical bills without your employer-paid insurance?

What if YOUR fuel went back up to the all-time high July 2008 prices and stayed because of an international crises in the Middle-East or if another “super-power wanna-be” decided to test this new President like that last guy was tested only 8 months into his first term?

Mortgage interest rates are at a nearly 30 year low and many of your neighbors, friends, co-workers and family members are still holding on to mortgage interest rates at 6%, 7%, 8% and higher because they’ve been convinced by the press (their brother-in-law!) that those of us in the mortgage industry have folded up our shops and have gone away.  This can not be further from the truth!

We are in the midst of a very strong refinance market because many who had adjustable mortgage interest rates are now refinancing to “fix” their rates. Others bought homes in the past couple of years and have been paying a higher interest rate but are now able to lower their monthly payments, consolidate their high interest credit card debt and lock in the peace of mind that a long term fixed rate mortgage in the low 5%’s would bring to their monthly budgets. 

Who do you know who needs to get their house in order before THEY get a “pink slip” and then have lost THEIR opportunity to qualify for an historically low interest rate on their most prized and stable asset – their house?

I can help nearly any homeowner with their refinance needs by putting a new low interest loan in place or giving them a plan for systematically preparing for the day for when they would qualify for that new loan or for their next home purchase. 

NOW is the time to prepare for what could be another of year of lay-offs and down-sizing.  And one way to prepare might be to re-work the mortgage in order to lower the term, the monthly payment or the total out-flow of cash from the monthly budget.  Help is now available even before any new “stimulus packages” are snookered through Congress!