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Where Home Buying Begins....

Home buying doesn’t begin with home searching; it begins with a mortgage pre-approval.  Often, first-time home buyers fear getting pre-approved because they’re afraid the lender may tell them they do not qualify for a mortgage or they qualify for a loan smaller than expected.  However, by getting preapproved, buyers will make a financial decision rather than an emotion one.  Contact Mountain West Financial first before you shop and you will save money and have a much smoother transaction.

The pre-approval process will:

• Prepare you the first time buyer for the steps necessary to purchase your home.
• Give you the first time buyer the confidence you need to make the purchase.
• Assist your Realtor in structuring the deal to your maximum advantage.
• Help you narrow your home search.
• Enable you to act quickly to get the very best deal.
• Discover any challenges that need to be worked on early in the process.

Not calling a qualified mortgage professional who is and expert in the area you are shopping for a home first is a step in the wrong direction.  Do yourself a favor and make the call, you will be glad you did.  I recommend two of the best in the business.  Tom Crate can be reached at 909.744.0455 and Marty Sievers can be reached at 909.709.7318.

 

 

 

Mortgage Debt Forgiveness Act to Expire at End of 2012

One of the most helpful laws on the books for underwater home owners is set to expire at the end of this year. At this point, The National Association of Realtors expects to make a strong push to get it extended because the law will likely be needed in the years ahead as lenders undertake more loan modifications for hard-hit home owners

The law is mortgage cancellation relief and it was first passed in 2007 with the National Association of Realtors taking a prominent role as industry supporter. It relieves home owners who get part of their mortgage loan forgiven from having to pay tax on the forgiven portion of the loan for single family primary residences.

Ordinarily, the IRS would count that forgiven loan amount as income. But in light of how hard home owners were hit in the market downturn, it was unrealistic to expect households to pay tax on tens of thousands of dollars on forgiven debt when they lack money to pay their mortgage without a modification.

Now, with the ink barely dry on the $25 billion foreclosure settlement between the U.S., states, and the country’s biggest banks, the likelihood of mortgage modifications picking up is strong.

It’s safe to say many members of Congress want to extend the relief. It has already been extended once, in 2009. And given its strong bipartisan support in both houses, many members can be expected to support extending it further, especially with its need poised to grow.

But in talking with NAR Director of Tax Policy Linda Goold about the issue, the challenge could be in finding a legislative vehicle that can make it through Congress. Goold says trillions of dollars in tax provisions are expiring at the end of this year. Bills for extending expiring tax provisions in the past have tended to be the last pieces of legislation Congress considers before the end of its session, leaving little room for alternative approaches.

What’s more, all of these expiring provisions tend to get considered as a big package. That means mortgage cancellation relief, as popular as it is, could get snagged if this larger tax package gets held up.

Stop Renting Now! Calling all first time buyers....

Bad news in the real estate markets brings forth some of the most compelling reasons for buyers.... first time buyers in particular to get off the fence and become a home owner.  In most markets the cost of buying and owning a home has dipped below what it would cost to rent. 

Renting isn't such a great deal.  Its all about economics 101: demand for rentals the past few years has increased dramatically.  Primarily due to foreclosures and distressed sales, number of renters is outpacing the number of available rental properties.  I spent several weeks searching high and low for a rental property for a friend.... it is extremely challenging to find rentals in this market.  This increased demand is pushing up rental prices.  It is expected with the continued demand that rental prices will continue to increase over the next few years. 

The worst of the price declines is likely over....
The future will bring higher prices on homes.  Buyers thinking about buying need to take advantage now before the prices start to increase.

Mortgage Rates are at historic lows.
Never before could someone buy so much house for so little payment... First time buyers in particular are often shocked at how affordable their dream home is at the current low interest rates.

There are multiple programs designed to help new homeowners.
FHA and downpayment assistance programs make purchasing a home in this market possible for many who previously had no idea that they could qualify to buy.  The first step to homeownership is making contact with a loan professional who specializes in first time buyer programs.  Mountain West Financial has made its reputation as a home loan provider who assists first time buyers.  Contact Marty or Tom at 909.336.1793 and they will start you down the path to owning your own home.  Even if you think you won't qualify, make the call.... more often than not, someone will qualify when they thought they wouldn't.

Mortgage Q&A

 
Steven Keefe, Broker/Owner 
Coldwell Banker Sky Ridge Realty 

www.mountainmoves.com
steve@mountainupdate.com
909.744.7690

1. Will I save money if I make my regular monthly payment early?

No.  Paying early does not do anthing but allow the mortgage servicer to earn additional interest on your money until the payment due date.  Making extra payments or paying more than your regularly scheduled payment will however save you money.

2. If I make a large extra payment, or pay down the mortgage, will my future payments be lower?

Yes and No.  If it is a variable rate mortgage the payment is calculated on the anniversary date or change date by utilizing the current rate, the outstanding balance and the remaining term.  So reducing the principal will lower your payment after the adjustment date.  If it is a fixed rate mortgage, all additional payments will do  is pay the loan off earlier.  This will save money in the long run, but does not reduce the monthly payments.

3. Is it better to invest excessive funds, or pay more on my mortgage?

It depends upon what return you can expect in other investments.  You can calculate the return on investment in the mortgage by using the interest rate.  This is considered a no risk investment.  If you have an extremely low rate, you may be able to invest in vehicles that can give you a better return.  Talk with an investment advisor to insure you are making smart money decisions.

4. Is it better to make extra payments early in the mortgage cycle when most of the payment is going to interest?

No, the return on investment is not affected by where the mortgage in its life cycle.  While the allocation os scheduled payments between principal and interest changes over the life of the mortgage, extra payments go entirely to principal, no matter what stage of its life cycle the mortgage is in. 

5. Is there a way to escape a pre-payment penalty clause?

No.  the clause was put in the loan to protect the lender, or the investor if the loan is sold.  Pre-payment penaltys do not get waived.

6. Should seniors approaching retirement payoff their mortgage?

If they have significant assets, this can be a great idea.  Once again, it is important to consult an investment professional before making any decisions regarding your money.

7. I have more than one mortgage which one to I pay off first? 

The one that has the highest rate of interest is the one you want to focus on paying down first.  Sometimes it is a good idea to look at paying off a variable rate mortgage before a fixed rate even though the rate might be lower on the adjustable, because future adjustments could be a greater risk.

8. Should I consider refinancing my mortgage?

There are many factors to consider to determine whether or not a refinance will ultimately save you money.  Consider contacting a mortgage professional.  They can take a look at your current mortgage, and determine based upon your future plans whether or not it will save you money. 

If you have other mortgage related questions, please don't hesitate to contact me directly at the office 909.336.7995 or contact Tom Crate or Marty Sievers at Mountain West Financial.  They can be reached at 909.336.1793.

 

 

Testimonial for Marty Sievers at Mountain West Financial

Frequently when buyers choose a lender there can be challenges....... some lenders make a lot of promises and sound really good up front, and then put the screws to the client, or in some instances don't perform at all.  During a recent transaction a buyer chose a lender who did exactly that.  The didn't deliver.... what follows is an email that was sent from the buyer stating his exact feelings.

"Thank God. If only we would have started the process with Mt. West to begin with....it could have saved me a couple pints of blood. Thank you Marty for getting this done in record time!"

 Thanks!!

 -Paul

Marty picked up the ball and ran with it and funded the deal in less than 3 weeks.  One of the many reasons she and Mountain West Financial is the go to home loan source for the mountain communities.  Thank you Marty for being the pro you are.

 

Fixed Rates are too Attractive to Ignore

Steven Keefe, Broker/Owner 
Coldwell Banker Sky Ridge Realty 

www.mountainmoves.com
steve@mountainupdate.com
909.336.2131

 

Fixed Mortgage Rates Are Too Attractive to Ignore

Mortgage rates have hit their lowest point in almost 50 years. The truth is, some people have owned their homes for so long, they can't tell you what interest rate they are paying on their loans without looking it up.

Those who bought a home a few years ago likely locked in a rate much higher than what is available today. There are still people paying hundreds more each month than they need to because they have not bothered to refinance. And, of course there are still folks who have adjustable rate loans.

In California, a drop in rates can lower a homeowners monthly mortgage payment by a few hundred dollars, depending on the size of the loan.

Unfortunately, gone are the days where prospective homeowners could show up without a single document verifying their income. Without question, the loan qualifying process has tightened up, but some loan professionals have the ability to assist consumers streamline the process. Tom Crate and Marty Sievers with Mountain West Financial have the expertise, tools and relationships that can assist you in getting the very best rate with the least amount of hassle.  Call them you won't be disappointed.

Contact the experts at Mountain West Financial to see how you can take advantage of these low rates.

(909) 336-1793 ask for Tom or Marty

Fannie Loosens Multiple Property Restrictions

Steven Keefe, Broker/Owner 
Coldwell Banker Sky Ridge Realty 
Arrowhead Home Loans, Inc.
www.mountainmoves.com
steve@mountainupdate.com
909.336.7995

Last Friday, Fannie Mae rolled-back one of its least popular mortgage guidelines updates of the last 12 months - officially eliminating its 4-financed property limit.  Effective March 1, 2009, real estate investors can once again own and finance up to 10 individual properties.

Why is this important for Mountain home buyers? Given that over 70% of the homes purchased in our market are for second home use or an investment property, there is a good probability that the buyer owns multiple properties.  Maybe they also own a commercial building, or other investment rental properties, or other “second” homes in various locations.

I had a real life example of this in January.  The home buyer already had a primary home + multiple investment properties (over 4) and had to pay nearly 2% higher in interest to get the loan for his Lake Arrowhead home purchase.  Soon, he may be to refinance it to a better rate.

This gives future Mountain home buyers the ability to get favorable financing and not be penalized for owning more than 4 properties.

The restriction reversal does come with new minimum requirements, however.

Homeowners buying a 5th, 6th, 7th, 8th, 9th or 10th home must meet the following standards, as set forth by Fannie Mae:

1.                              720 credit score

2.                              25% downpayment for a 1-unit (30% for a 2-4 unit)

3.                              No mortgage delinquencies in the last 12 months

4.                              6 months of reserves for each investment property

In other words, Fannie Mae is re-opening the lending spigot for real estate investors with good credit, a sizeable down payment and ample reserves.

According to Fannie Mae, the change rationale is that experienced investors can “play a key role in the housing recovery”. Until now, foreclosure auctions have gone at less than full speed because investors unable to pay cash have been halted by the existing 4-property Fannie Mae limit.

Going forward, expect a more expedient foreclosure liquidation nationwide which should, in turn, provide further support for the housing market.

And lastly, not to be forgotten, homeowners with more than 4 properties can finally participate in the ongoing conforming mortgage Refi Boom. Until now, they’ve been stymied by the 4-property restriction, too.

Things to Keep in Mind Before Buying A Home

Steven Keefe, Broker/Owner 
Coldwell Banker Sky Ridge Realty 
Arrowhead Home Loans, Inc.
www.mountainmoves.com
steve@mountainupdate.com
909.336.7995

Many new homebuyers make the mistake of rushing out to buy things to fill their home with as soon as the seller accepts their purchase offer and the lender pre-approves their loan. But there are still a few major hurdles to overcome before the keys are handed out. Here are some things to avoid during the home buying process to assure your transaction goes as smoothly as possible:

• Don't make an expensive purchase. It may be tempting to order that new sofa for your soon-to-be living room, but its best to avoid making major purchases like furniture, cars, appliances, electronic equipment, jewelry, or vacations until after the closing. Financing that furniture with a store credit card or even one of your own credit cards could jeopardize your credit worthiness during the time it means the most. Using cash to purchase big items can also create a problem because many banks take into consideration your cash reserve when approving your mortgage.
• Don't get a new job. Lenders like to see a consistent job history. Generally, changing jobs will not affect your ability to qualify for a mortgage loan - especially if you are going to be making more money. But for some people, getting a new job during the loan approval process could raise some concern and affect your application.

Don't switch banks or move money around. As your lender reviews your loan package, you will likely be asked to provide bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid assets. To eliminate potential fraud, most loans require a thorough paper trail to document the source of all funds. Changing banks or transferring money to another account - even if its just to consolidate funds - could make it difficult for the lender to document your funds.

• Don't give a good faith deposit directly to the seller in a FSBO purchase. As a rule, your good faith deposit belongs to you, not to the seller, until the deal closes. Your FSBO seller may not know that your good faith funds should be applied to your expenses at closing. Get an attorney or other neutral party who can hold the deposit or put it in a trust account until you close on the home. Your purchase contract should dictate to whom the funds go should the transaction fall through.
• Don't disregard your lenders requirements. You may have been pre-approved for the loan but your work with the lender is far from over. In order to process your loan, you need to meet certain requirements. Your lender will need copies of your bank statements, W2s and other paperwork. It is up to you to get it to him or her as soon as possible. Failure to submit certain qualifying documents could cause you to lose your loan and the financing you need to buy your home.
• Make sure you are working with a reputable lender.  As with any industry, there are good lenders and bad lenders.  The best source for a recommendation is your Realtor.  They know who does a good job and who doesn’t.  Picking a lender because of an advertisement or a specific rate quote is a big mistake.  9 times out of 10 if you pick a lender because of rate, you are going to be disappointed at the settlement table.

 

If you want the best financing in California, my mortgage company Arrowhead Home Loans, Inc. stands ready to deliver for you.  Contact me directly at 909.336.7995 or via email at steve@stevenkeefe.com for a free no obligation pre-approval.

Advice for Borrowers Looking for Home Loans

Steven Keefe, Broker/Owner 
Coldwell Banker Sky Ridge Realty 
Arrowhead Home Loans, Inc.
www.mountainmoves.com
steve@mountainupdate.com
909.336.2131

With interest rates at record lows, all lenders in the US have recently seen a sharp increase in loan applications - right at the time that many lenders have cut headcount to save money in a challenging economy. This means that timeframes needed for underwriting, approvals and closing have become longer than normal. Some companies have chosen to actually raise rates just to slow down the volume to a manageable level.

Sound crazy? No crazier than when you go to buy that hot new vehicle...only to find that there is no price negotiation. In fact, you wind up lucky to just pay the sticker price, as the demand usually allows the Dealer to add a markup to the price. And you don't get the car right away; you have to wait on a list for your turn to come up.

Right now, home loans are like that hot new car - but with the timer ticking on interest rates locks, there are a few things you can do to protect yourself.

First, longer lock in time frames than might normally have been considered are a necessity, to ensure that the file has time to be processed, underwritten, approved and closed in time to protect the rate lock in this extremely volatile climate. And that longer, safer lock-in period may be a bit more costly - but it's money well spent. Overall, the mind set here should not be one of greed. Don't try to squeeze every last drop out of rates. If you are within a quarter percent of the lowest rates offered in the history of this country, you did very well. And rates always shoot up higher at a much faster pace than when then dip lower. So if the savings or opportunity make sense - grab it.

Next, responding quickly to requests for information or documentation is important - the faster the file is submitted and approved, the better off we are to keep that great interest rate protected.

Finally, be aware that it may be a smart idea to pay points to gain the best interest rate - and sometimes is even necessary in today's market. Giant mortgage buyers Fannie Mae and Freddie Mac have recently imposed more "risk-based pricing adjustments", meaning that even credit scores and loan to values which in the past would have been considered very low risk, may now be subject to mandated fees by Fannie and Freddie. And based on the way lenders have changed their rate sheets over time, there is now very little "premium pricing", which used to allow options for fees like these, points or other closing costs to be covered in return for a slightly higher interest rate.

Right now is still an excellent time to act, before the great low rates of today get away from us. But let's be smart - call us for information on how we can get started right away.

Contact us at Arrowhead Home Loans, 909.336.1793 or send me an email at steve@cbskyridge.com

Think you have a "Personal Banking Relationship???"

Steven Keefe, Broker/Owner
Coldwell Banker Sky Ridge Realty
Arrowhead Home Loans, Inc.
www.mountainmoves.com
steve@mountainupdate.com
909.336.2131

The media is projecting that due to market conditions and changes in the mortgage industry, buyers can’t get loans.  This is not an accurate assessment of what is happening.
 

It is true that credit guidelines have tightened, but good borrowers… people who should get loans are getting loans with very favorable terms.  Because the guidelines have tightened it becomes important for those applying for credit to have an advocate to Sheppard the loan through processing and underwriting to insure a smooth transaction and successful close.

Over the last 30 days, I have been involved in several transactions where the borrower was very strong.  In fact in one case I was told by the borrower that they had a “personal banking relationship” with Bank of America.  This borrower had been strung out and paperwork requested to death only to find out the day before the scheduled closing that “Due to Market Conditions” Bank of America was unable to make the loan.  I immediately requested that the borrower complete a package with Arrowhead Home Loans, our affiliated mortgage brokerage and I personally walked the deal through the process to close the loan and transaction only two weeks late.  Yesterday I had a repeat only it was Wells Fargo.  I offered to provide the same service and walk the deal through, but the borrower was so fed up with what he had been through that he just blew the deal out.

Bottom line… in today’s climate, banks aren’t getting it done.  When someone applies for a loan with a bank, basically they are getting either an 800 number with someone who really doesn’t know what they are doing, or a clerk again who has very little experience.  What is needed is a professional… an advocate who will take the necessary steps and package the loan accordingly to insure a successful end result.  It is almost as banks haven’t told their employees yet that they aren’t going to make loans, because the employees are making promises and not delivering on them.  No matter what kind of relationship someone has with a bank or perceive they have with their bank it is never going to be as close as the banks relationship with their REGULATORS.

Arrowhead Home Loans, Inc. a mortgage brokerage firm operates as an advocate for its clients.  If and when challenges arise in the transaction, our talented loan consultants are there to provide expertise to resolve those challenges.  Arrowhead Home Loans, Inc; also provides some of the most competitive rates found in the marketplace.  Our past clients come back time and time again and send individuals from their sphere because they realize the value of dealing with professionals who do what they say they are going to do.

If you are applying for a loan, think twice before you go to your current “banking relationship”.  In this market, they are probably not going to deliver, regardless of how strong you are. 

If you are in the middle of a transaction, and it isn’t going the way it should, call us, we can get involved and secure the financing for you with the least amount of hassle.

The days where just any loan guy will do are gone….Borrowers need someone who knows what they are doing.