March 28, 2007
This list was made by Ted Janusz, a former Mortgage Salesman interested in helping borrowers get a fair deal:
1. Not knowing which mortgage fees the borrower can and cannot negotiate.
2. Choosing and trusting the first loan officer the borrower interviews. Shop around.
3. Using an interest-only or “payment option” adjustable-rate loan primarily to qualify for a more expensive house.
4. Thinking the interest rate is always the main thing.
5. Not comparing the final fees listed on the closing documents to the up-front estimates and good faith estimate to avoid the lender “packing” the loan with added-on fees without the borrower’s knowledge.
6. Not knowing if the mortgage has a pre-payment penalty until it’s too late, like, when the borrower decides to refinance or otherwise pay the mortgage off early.
7. Thinking that renting is always “just throwing money away.” In the short run it can cost thousands less to rent.
8. The borrower does not know if he or she is paying a back-end yield spread or service release premium, fees paid to brokers and loan officers for making loans with higher interest rates.
9. Paying for mortgage life insurance, credit insurance or other expensive but unnecessary lender add-ons.
10. Paying hundreds of dollars to have a company set up a biweekly mortgage payment plan, something the borrower can generally do for herself or himself — at no cost.
March 28, 2007
Hofman Dujardin
Bloomframe is a window frame that can be transformed into a balcony. The balcony is automatic, with one control. Of course, it is guaranteed collapse safe.
The only issue, and it’s a big one, I can’t figure out where to buy it. The architect’s website above is difficult to navigate, and when you do find the window it’s just a description. If I was really into buying this I wouldn’t waste time searching for a vendor, I would just call the architects directly. Their contact information is easily found on the website.
March 26, 2007
The appliance of the year – for me anyway. I mean, I have kept garbage under the sink and recycling by the back door in a paper bag for so long, always thinking I need a better system, but never taking the time. This is a good idea.
59 bucks
Simple Human
March 26, 2007
Absolutely No Major Purchases
Debt-To-Income Ratio
When qualifying you for a mortgage, your lender looks at your Debt-To-Income Ratio. A debt-to-income ratio is the percentage of your gross monthly income (before taxes) that you spend on debt. This will include your monthly housing costs, credit cards, student loans, installment debt, an so on.
For example, if you earn $5000 a month and you have a car payment of $400, using an interest rate of 8.0%, you would qualify for approximately $55,000 less than if you did not have the car payment.
Don’t Move Money Around
Most likely, you will be asked to provide statements for the last two or three months on any of your liquid assets.
If you have been moving money between accounts during that time, there may be large deposits and withdrawals in some of them. Then the mortgage underwriter will probably require you to produce cancelled checks, deposit receipts, and other seemingly inconsequential data, which could get quite tedious
So leave your money where it is until you talk to a loan officer.
Real Estate ABC’S
March 21, 2007
Subprime lending (also: B-Paper, B-tier, non-prime, near-prime, special finance, second chance lending) describes a specific lending market sector. Typically, subprime customers are those who do not qualify for prime market rates because of a blemished or limited credit history. Subprime customers are therefore charged a higher interest rate, to compensate for the increased future probability of default.
The general lending philosophy can be described as “priced to risk,” where the interest rate the borrower pays increases as their risk level to the lender increases. In the United States, subprime borrowers are generally defined as individuals with limited income or a FICO credit score below 620 (on a scale between 300 and 850).
Subprime lending evolved the same way as other businesses, with a realization of the demand in the marketplace and then providing a supply to meet it. With divorce being common in society, bankruptcies and consumer proposals being widely accessible, a constantly fluctuating economic environment, and consumer debt load on the rise, traditional lenders are more cautious and have been turning away a record amount of potential customers.
Statistically, approximately 25% of the population has a credit score lower than 650.
Source: Wikipedia
March 19, 2007
When you’re ready to buy a home, take the time to create a solid game plan - beginning to end. Your plan will change along the way, but you will have more control if you know what you want.
Learn as much as you can about the home-buying process. Because there are many variables that you cannot control, understanding what you can control is a big advantage.
Choose a great support team. which is, at minimum:
1. Mortgage Broker
2. Real Estate Agent
Get recommendations from people around you who recently bought property in the area. If you don’t know anyone, interview several brokers and agents, ask them for recommendations and compare fees.
Figure out what you can afford and check your credit status and financial qualifications.
It is a benefit to get loan approval before you’re in contract to buy a house because it gives you negotiation strength with the seller. Plus, if the property you want has multiple offers, you’ll have a hard time competing unless you’re pre-approved.
Now, create a comprehensive list of the features you want, keeping in mind that the list is provisional. For example, you want to live in the area of old Victorian homes, but most of them have only a one car garage and you want two. You either modify your list or go to a different neighborhood.
Do lots of research to develop your ‘pricing instinct’. You should know what the property you are buying is really worth.
Time to negotiate. Negotiations can go quickly or they may be carried out over days or weeks, depending on the situation.
THE CLOSING
March 18, 2007
A loan becomes a ‘Liar Loan’ when the lender makes no effort to verify the income reported by the person receiving the loan. This type of loan allows people to borrow more money than they can hope to pay back.
So, if there is a wave of foreclosures over the next few months, lax lending standards like this will be to blame. Instability in the sub-prime lending market has shaken American markets to the distress of the financial and real estate businesses.
March 17, 2007
Income verification is almost never required, but using it will help you get better terms on a loan. W2 employees will usually be asked for a few recent pay stubs, and occasionally the W2 form for the previous year. Self-employed borrowers will need two years of federal tax returns.
Asset verification is not always required either, but could to improve your borrowing terms. Asset verification means the lender sees documentation of liquid assets (savings, investments, retirement funds) that having been in the borrower’s name for at least two months. Even if you’re not putting money down, showing the lender that you have strong liquid assets will strengthen your application.
Chris Pastor
Guidance Mortgage
cpastor@guidancemortgage.com
617-501-7100.
March 15, 2007
The secret to understanding Interest Rates is to understand Treasury Yields.
Treasury Yields are yields that are paid on Federal bonds, and the interest rate follow those yields. If the yield goes down, mortgage rates go down.
Points is a method of pre-paying your interest to the bank. One point equals one percent of the loan amount. For example, for a first mortgage of $240,000, a point would $2,400. The borrower can pay points to “buy down” their interest rate, a point normally being .25%.
If you pay two points to “buy down” your interest rate on a 30 year fixed at 6.25%, your interest rate becomes 5.75%.
Remember to always calculate the long term benefits versus the short term cost.
And that’s all I have to say about that.
Chris Pastor
Guidance Mortgage
cpastor@guidancemortgage.com
617-501-7100.
