Real Estate Info & FAQ

FSBO Scam

2007-05-28T07:28:00.001-05:00

Here is something to watch out for....
http://activerain.com/blogsview/109282/FSBO-Scam

John

Advice for sellers

2007-05-16T05:11:00.000-05:00

I found some great advice for home sellers. Click here to go to the site.

The point of the article is that we live in a very "lawsuit happy" world. And there is no reason to expose yourself to more risk than is absolutely needed.

This article has some very practical tips.

John

Getting the best interest rate

2007-05-13T06:09:00.000-05:00

Here is a link to an article that I wrote on Helium.com

"Dirty Little Secret"

This article covers some very practical advice for anyone that is currently shopping for a mortgage.

It also touches on a hot spot within the mortgage industry.

Take a read (it is a little long--1500 words). It does give some very practical, actionable advice at the end.

Thansk!

John

Real Estate Agents

2007-05-13T05:56:00.000-05:00

I found this article on Real Estate-News on Blogger. They talk about the value of traditional listing agents versus Flat Fee Agents.

This is a hot issue. Traditional agents despise the flat fee agents and in some states, have actually been able to get laws passed that put them out of business. The National Association of Realtors has a very powerful lobby.

Read this article. It spells out some of the good and bad about traditional versus flat fee agents. The writer stands with the flat fee, but it is still good information.

What it really comes down to is what am I willing to do myself and what do I want to pay someone else to do.

http://realestate-news.blogspot.com/2007/05/flat-fee-mls-vs-real-estate-listing.html

Thansk!

John

Save my Home!

2007-05-06T07:25:00.000-05:00

If you are one of the unlucky people who find themselves caught up in an increasing payment and therefor are in foreclosure trouble, you find this article helpful.

Go to:
http://realestate-news.blogspot.com/2007/05/stop-foreclosure-quick-and-enjoy-life.html

Best Wishes,
John

Another reason not to pre-pay the mortgage

2007-04-23T05:18:00.000-05:00

I have read (change that to skimmed) the article that is referenced here. It really does not get into the tactical (what to do) part of the solution. However, it does bring home the point that paying off the home as fast as possible is not really the best long term option for most people.

Take a look at this link. Mr. Stenbeck does a good job of summarizing the salient points of the article. Of course, there is a link to the article if you feel the need to read it yourself.

http://www.behindthemortgage.com/behind_the_mortgage/2007/04/home_equity_as_.html

Thanks!

John

Tough times for applicants...

2007-04-11T06:26:00.000-05:00

There is a great post on Mortgages Undressed.

Here is what Larry Cragun has to say:

I realized today just how much the implosion of the subprime world has affected our business. Everyone is running and hiding. Few are willing to take any chances. Things that used to be easy decisions are difficult. No one at the lender level is willing to take any chances. The days of getup and go have got up and went. It reminds me of a poem: How do I know my youth is all spent? My get up and go has got up and went.

This state of affairs has important implications for you the borrower. Expect no favors and no exceptions. Additionally you should go overboard to prove how worthy you are to borrow. Give no crap to anyone asking for anything, just to(sic) it and to(sic) it right.

If you are requested to give bank statements give copies of all pages front and back.
Do it fast. Do it thoroughly, Do it all. Otherwise your loan will drag out and no one will have any sympathy for your state.

No one is moving fast so you move fast to help compensate.

That is great advice. There is an impact on EVERYONE regarding the subprime fallout and I have noticed it in my loans that I am trying to process. I had a loan turned down yesterday because they felt that the property values were declining in the area. I want to call them up and say "No kidding? They are declining or are flat everywhere", but this is all the reason they need to deny the loan. So, make sure your application is TOP NOTCH and is an easy approval.

On a personal note...

2007-04-07T07:39:00.000-05:00

Posting here has been a little sporadic. The reason for that is that I have been finishing my MBA course work. I completed my last test on April 3rd! Praise the Lord!

I think I am going to advise the Professional MBA department to offer counseling to people that are completing their PMBA's on "re-entering" their family's' lives, since my family has seen me only scarcely for the last 2.5 years.

On another personal note, I have accepted a new job with a different firm. Actually it is a total career change. I will be working as a Project Manager for Colite International. They manufacturer signs (but not yard signs...they make the big ones that go on top of buildings and places like that). I start on April 16th. This position, based on the description that they gave me, matches well with the loan process. It also is in line with my education and will allow me to use my MBA in an effective way

I still intend to keep posting on this blog. While this is a career change, real estate and mortgages (and the personal finance and planning that surrounds them) are really a passion for me. On the up side, the past 6 years has been a real joyous occasion for me and I have loved the people and getting to help them. On the down side, the income has been a struggle. The inconsistency and the lack of enough money to provide for my family has prompted me to take a different path.

However, I still intend to do home loans for people on the side. Of course, they would have to understand that I have a full time job, and I will help them after work or on the weekends. But from my point of view, if I do not NEED the money to make the ends meet, it will fun and enjoyable again, and that should translate for the customer into a great experience. David Rucker, the owner of Sturkie Mortgage, has agreed to let me still run some loans through the company. So, if you, or anyone that you know, is in need of a home loan, I can still help, albeit in a somewhat reduced capacity. Of course, since my availability will be reduced, I will lower the cost of doing the loan for the client.

That's it. As I said before, I still intend to post on this blog about real estate and I intend to keep up with everything. I just need to make a move that will provide better for my family.

Trigger Lists...Bummer

2007-03-26T12:25:00.000-05:00

This is from REALTOR (R) Magazine online.

Daily Real Estate News March 26, 2007

FTC Says It Can't Regulate 'Trigger Lists'

The Federal Trade Commission announced earlier this month that it lacks the legal authority to crack down on unwanted “trigger list” phone solicitations to consumers who have applied for mortgages within the preceding 12 to 24 hours.

Companies sell lead generation lists to lenders. The names on the list come with significant financial information, including credit scores, loan balances, credit card debts, and estimated home values. The information emanates from the big three credit bureaus — Equifax, Experian, and TransUnion — following their receipt of an inquiry by a mortgage broker or loan officer.

Rebecca E. Kuehn, the FTC's assistant director for privacy and identity protection, says even though the FTC lacks statutory authority to ban prescreened telemarketing mortgage offers, it does have enforcement authority against bait-and-switch scams and misuse of consumers' credit information. Consumers who experience such problems can file complaints with the FTC online at FTC.gov.

Source: Washington Post Writers Group, Kenneth Harney (03/25/07)

Personal Financial Analysis

2007-03-23T14:59:00.000-05:00

I have been wondering about something lately. In management, there is a term called a SWOT (actually pronounced Swat) Analysis. This tool is particularly valuable when analyzing a company in realtion to its competitive landscape. But, could you use the terms to analyze your own personal financial picture?

What does the acronym stand for? It stands for Strengths, Weaknesses, Opportunities, Threats. I can see this breaking down like this - and this is a ROUGH breakdown...I am still going over this in my head.

> Strengths - What strengths does my personal financial life have? Do I have good income, low debt, good credit, or good habits?

> Weaknesses - Opposite of the above. Do I have poor habits?

> Opportunities - What opportunties are in front of me? These could be a raise, an investment, a business decision, etc.

> Threats - This could be anything and could be boiled down to "Life". But I think that if you have young children, like I do, paying for college could go here.

I do not think that the answers you get are as valuable as the process you would go through in working this out in your mind.

I am open to all comments on this!

Have a great weekend.

Cost of a mortgage

2007-03-20T08:26:00.000-05:00

What is the true cost of getting a mortgage? I talk to many people and when the cost of getting the loan done comes up, usually one of the questions is about comparing two different offers. The trouble is that getting two offers structued the same so that you are comparing "apples to apples" is quite hard. There are so many variables that it is hard to set them both equal to each other. In addition, so many of the numbers that go into the deal are not "known" and are only estimates.

I found a great post on Outer Banks Real Estate. In this post, Mr Roach does a GREAT job of line by line comparing one of his loan offers to another offer. The other offer is not fully disclosing the FULL cost of the loan. This is the "apples to apples" problems that I mentioned before.

Thanks Mr. Roach.

Spring time

2007-03-19T06:35:00.000-05:00

I am not going to say this is really something I am going to do myself (smile), but I know that it is something I need to do.

Spring cleaning appears to me to not only be a ritual (where did it start anyway), but it does make sense. Over the winter, things can tend to be put off, so the spring and fall seem to be good times to catch up on that sort of stuff.

Also, it makes sense if you may consider selling. A good deep cleaning is step one if you are thinking of selling your home. So, while you are going around cleaning, try to put yourself into the eyes of a potential buyer. What would they like to see?

Another good investment is a black light. No, not for some wild party once you get your home really clean. If you have pets, like we do, they have accidents on the carpet. You rush to clean it up and do the best job you can. But did you really get it all up? The black light will reveal the truth. We recently got one and I was SHOCKED at what I say. Not just the pet spots, but just general dust showing up in areas that I never thought to look.

Here is a good article on this to help kick start your brain on what needs to get done.

http://blueroof.wordpress.com/2007/03/11/spring-cleaning-checklist/

John

Your credit identity is at risk!

2007-03-16T07:29:00.000-05:00

ALERT: WHAT’S YOUR NAME WORTH?

Your name is worth everything to you…it’s your identity, it’s YOU. Here’s breaking news you need to know…and you need to let all your family and friends know right away as well.
Few people realize that each time their credit is checked, the information provided to the credit bureaus (Equifax, TransUnion, Innovis or Experian) immediately becomes a commodity that is sold not only to other lenders but also to companies that sell and resell the same names and personal information.

That’s right - The credit bureaus have found a way to increase their revenues at your expense….and without your permission. These ‘inquiry leads’ include name, address, phone numbers (including unlisted), credit score, current debt and debt history, property information, age, gender and estimated income. They are marketing your personal, confidential information to competing creditors and making millions. Your privacy is being sold, not just once, but over and over again.

The lenders that have purchased these leads at a premium will then do everything they can to recoup their investment and turn a hefty profit. Often, bait and switch tactics are being used to lure clients away from their reputable lender.

The good news is that you can make it stop! The consumer credit reporting industry has provided a way for you to “opt out” or remove your name from these lists. You can contact them by phone at 1-888-567-8688 or online at https://www.optoutprescreen.com/?rf=t. You must opt out at least 48 hours prior to having your credit checked to make sure it is processed in time. You can choose a five year or lifetime option. The lifetime option does require a signed form.

At this time the practice of generating and selling these lists is allowed by the law. If you would like to complain about this or have been targeted after opting out, you can contact the FTC or your state Attorney General's Office. These agencies will investigate reported violations. In most cases, an agency's primary source of information is complaints from the public.
As a consumer, it is your right to shop for the best service and price for a product, but this should be when and how you want to shop. These unsolicited marketing tactics are a nuisance and intrusive. Take your privacy back and refuse to be a part of this system.

Sub Prime mortgage fallout

2007-03-14T22:49:00.000-05:00

If you pay any attention to the news, I am certain that you have heard numerous reports of Sub-Prime lenders going under. This is rocking the financial markets. There are many reasons for this, including the glut of money that was dumped into the markets over the last 5 or so years. Another culprit is the innovative loan products that were sold to people that had no business getting them. Couple this with VERY loose underwriting standards and...VIOLA! You have companies dropping like flies now that their portfolios of loans are defaulting and they are cash strapped.

But what does this have to do with you? Even though you may have good credit, solid job and easy to prove income, this does effect you. It effects you in rates. Obviously, as this shakes out in the markets, mortgage rates are bouncing around like a yo-yo as Mortgage Backed Securities investors try to figure out how to price their deals.

One other effect of this is in underwriting times. I have a loan in underwriting right now that is taking 2 to 3 times as long as it did 6 to 12 months ago. I am certain that this is due to the fact that, due to the lack of work, underwriters are getting layed off. So, a loan that would breeze through in the past in about 2 to 3 days, now takes over a week to get done and that time is getting even worse.

Another way this effects you is in underwriting standards. I ran a loan today that, 6 to 9 months ago would have flown through the underwriting engine. But not today. It took some real time and the final deal that I could put together for the client was not as attractive. This is all due to the pressure put on the markets to tighten up the belt. So, it effects you in what you may qualify for, since the pot is smaller and pressure is on the banks to deliver better QUALITY loans, as opposed to QUANTITY. So, if you have credit that is good, but not great, or if you have some other extenuating circumstances, get involved early. Do not let someone tell you that "we can get that done in 10 days", because that is unlikely. Stay on top of it and understand that, if you are working with a professional mortgage planner, you are in good hands. They will figure something out for you.

The one thing you can count on in the mortgage business is CHANGE!

Personal Finance and Strategic Equity

2007-03-07T12:14:00.000-05:00

(cell 1) 3-6 Months emergency income
then
(cell 2) Get out of non-preferred debt
then
(cell 3) One year salary (liquid)
then
(cell 4) Payoff the mortgage

I must give proper credit to this model. It was developed by Jim McQuaig of Nations Home Funding of Reston, VA.

Basically, the model is a very conservative approach to personal finance, and I doubt that there would be anyone that would argue it would not work.

The real strategy comes into play in cells 3 and 4. It is Mr. McQuaig’s belief (and my own) that whether the mortgage is actually paid off or strategically paid off is the personal decision for everyone.

By actual payoff, I mean that the loan is satisfied and a payment is no longer made to the mortgage company. You own the home free and clear.

A strategic payoff is if cell 3 (One year salary in a liquid account) actually continued to grow to the point that there is enough in this account to payoff the mortgage at anytime. You personal balance sheet has an asset (the side account) greater than the liability (your mortgage). You are in a POSITIVE position.

There is much more to this model and this thought process. I will try to share more in the coming weeks. If you would like to discuss this further, or apply a particular situation to this model, call or email me.

Subprime loans are a problem

2007-02-28T09:36:00.000-05:00

First, subprime loans are loans that are NOT run through Fannie Mae and Freddie Mac. They are typically given to customers that have poor credit or other issues like income they cannot document.

The other problem with these loans, and I know this from working with these lenders in the past, is that they usually push Adjustable Rate Mortgages (ARM). The favorite is the 2/28, which means that for 2 years, the rate is fixed. After that, it can adjust. The real problem with this is when there is a 3-year pre-payment penalty on the back side. That means that for one year (month 25 to 36), you MUST pay the higher payment, but you cannot refinance without paying a huge penalty.

These loans serve a purpose. I have done them and then worked with the clients during the two years to fix their credit and get them into a conventional loan before the interest rises.

That is the main problem with them. You have lenders and brokers with a product and un-informed consumers. To many (not all) of the lenders and brokers, these are transactions, with the borrower left to fend for themselves.

Here is an article that points out these problems from a national economic level.

http://brokerwatchdog.com/2007/02/26/signs-of-a-subprime-mortgage-market-earthquake/

SweetScooterBicks: It's Pretty Soon To When I Get Here

2007-02-18T22:39:00.000-05:00

I am very sorry that the posts have been few and far between. As you may (or may not) know I am in school getting an MBA, and sometimes we adults have to play the little game of "intentional neglect."

One of my favorite people in the whole world and one of the most talented writers I know personally (and I know soooooo many!), has finally decided to start a blog. This post and this link are completely unrelated to real estate (except the lady the wrote on the other blog actually worked for a real estate agent in a past life), we all need a good laugh sometimes.

The following link is a must read if you simply want a pick me up and to have a good chuckle.

SweetScooterBicks: It's Pretty Soon To When I Get Here

Check out her blog.

John

First Time Home Buyers

2007-02-06T15:54:00.000-05:00

I found the following list on Realtor.org today. This is a good, quick-hit list of stuff for first time home buyers to consider. It is not comprehensive, but it is a good place to start.

Of particular importance (of course, I would think so) is that they should get pre-qualified. This process can catch all sorts of issues, from credit problems to problems sourcing the down-payment money.

Here is the listing:

Daily Real Estate News February 6, 20076
Ways First-Time Buyers Can Prepare

A cooling housing market gives buyers, especially first-time buyers, more opportunities to snatch up a good deal. But just because there are good deals, doesn't always mean buyers are ready to make the leap.These six tips will help prospective buyers find out if they are ready for homeownership.

1. Take a first-time home buyer class. It will make repairing a credit score and shopping for a loan less stressful.

2. Be conservative. Borrowing too much can mean stretching and even sacrificing — to the point that it’s hard to even keep a six-pack of beer in the fridge.

3. Organize documents. First-time buyers should keep a pay stub, W-2, and bank and
retirement account statements on hand to expedite the loan application process.

4. Get pre-approved. Before starting the homebuying process, consumers should get pre-approved by at least one lender. Being pre-approved won't lock buyers in to a loan but it may save them the heartache of falling in love with a home they really can't afford.

5. Play house. Every month, prospective buyers should bank the amount that they'd have to pay if they owned a home. It's good practice so they'll be ready for the real thing.

6. Consider all the costs. It's not just a mortgage payment they have to worry about. Repairs, assessments, and other costs of homeownership can add up quickly.

Source: Star-Tribune, Kara McGuire (02/02/07)

Inman.com has a Wiki

2007-02-01T13:22:00.000-05:00

If you are unsure what a "wiki" is, take a look at Wikipedia. It is user controlled content. The users of the service write the content.

Inman.com, a nationally known real estate information service, has a new wiki. It is located at Inmanwiki.com.

I just added the following information on Adjustable Rate Mortgages this morning.

== ARM (Adjustable Rate Mortgage)==
An adjustable-rate mortgage, aka ARM, usually has a fixed interest rate period, followed by a period of fluctuating interest. The fixed period can range from as short as one month to as long as 10 years. ARM's are always linked to an index. These indices are usually published numbers such as the LIBOR rate, treasury bill or bond rates, or the Cost-of-Funds Index. The lender then adds their margin on top of this index. A good place to look at historical index numbers is [http://www.forecasts.org Forecasts.Org].

These loans act just like fixed rate loans during the initial fixed rate period. However, as soon as the loan begins to adjust, things can change and quickly. Lenders differ on margins that are added to the index rate and they differ on how fast the rate can adjust. Recent trends though show that the rates can go to their max rate on the first adjustment, which can almost double your interest rate when you move from the fixed period to the adjustable period.

The strategy behind using these loans are to either maximize monthly cash flow or to get the best rate if you know that your time in the home will be limited. These loans are less popular in times with an inverted yield curve (see [http://money.cnn.com/markets/bondcenter/index.html BondCenter on Money.cnn.com]), because they offer rates that are close to longer term fixed rates, so the risk is not worth the reward. With an inverted yield curve, the short term rates, carry the same or higher risk as the long term rates. Normally, the yield curve shows that rates are lower with shorter terms, which makes sense. If I was to lend you money today for 6 months, I will not loose much buying power on that money over six months, so the interest rate I will charge will be less. However, if I loan you money for 30-years, the money will have significantly less buying power 30-years from now, therefore, I need to charge a higher interest rate. This is inflation risk priced into interest rates.

American's no longer saving for a rainy day!

2007-02-01T13:14:00.000-05:00

I heard a story on the radio this morning and found an article on VOA NEWS. Last year, the national average personal savings rate was at a 70-year low of NEGATIVE 1%. That is absolutely astounding that on average, a person earning $80,000 would have spent $80,800. They are going in the whole. I am not sure if this factors in retirement accounts like 401K's, but I know of many people that have taken loans against those retirement accounts.

This underscores a post I made in the past regarding saving some money in a liquid side account and calling it you "Mortgage Reduction Account". I would recommend this instead of sending extra money to the lender. This side account is liquid and can be a safe account (like a simple savings account, money market or CD) or something more aggressive. But it is yours! And, it increases your savings rate.

Life happens and this average American that this article talks about is going to be in trouble when it does, because they will have no choice but to go even deeper into debt.

What is your home worth?

2007-01-25T16:23:00.000-05:00

While there is no online valuation tool that will give you a 100% accurate reading, there are two online tools that are good at giving a starting number.

Cyberhomes is fairly recent and many other bloggers feel that it is superior. The other is Zillow. I like to use both to give me an idea of a starting number when coming up with a value.

Of course, the details of the property and recent local sales will impact the value of any property. So, please engage a real estate professional when you are needing a value for your home for a transaction.

Raise your Credit Score!

2007-01-15T13:07:00.001-05:00

There is often a good deal of confusion over exactly what factors play a role in your credit score. It is generally understood that a history of on-time payments factors in heavily. However, most do not know that other factors play a very important role.

The following list is from USAA Magazine (Winter 2006, p 31).

RAISE YOUR SCORE

Pay your bills on time – Payment history affects about 35 percent of your score. So do whatever it takes to be timely: Set up automatic payments online, keep stamps on hand, maintain your budget.

Keep credit card balances at 30% of your credit limit, or lower – Around 30% of you score is based on how much credit you have access to and how much you are using. If you’re cutting it close to the credit limit on your cards, that will reflect poorly on your score.

Don’t cancel credit cards to up your score – About 15% of your score is based on how long you’ve held your credit cards. A card that you’ve had for a few years is better for your score than one you’ve just obtained. Having no credit history at all can readily throw off the score, so do carry a credit card – just pay it off in full.

Don’t apply for too many cards - About 10 percent of your score is determined by the number of times lenders request your credit report. Lots of requests might indicate that you are desperate for credit and might be headed into trouble, or are already there.

Watch the kinds of credit you use – About 10 percent of your score is based on the types of credit you are using – secured loans such as car loans and mortgages, or unsecured loans such as student loans, credit cards, and so forth. Unsecured loans are considered riskier on you report.

I would take issue with only on point in this list. In number 3, it states that you should use a card, but “just pay it off in full.” It has been my own experience, both personal and professional, that carrying some balance, even $100, is better than nothing because it shows you know how to make a scheduled payment. But, if you are in a situation where this becomes a very big deal, there are larger credit issues that you are facing.

Bottom line – use your credit wisely and pay the bills on time. With that, all other things should work out.

Happy Birthday!

2007-01-14T11:32:00.000-05:00

I want to make a post to wish my brother-in-law, Cam Moss, a happy birthday. Although his brithday is not until tomorrow, I figured I would take the time now, while I had a moment.

Some other good news for Cam is that he just accepted a job with Chris Tomlin. If you are unfamilar with Chirs Tomlin, he is a very well know christian muscian and worship leader. Cam's position will be on the technical side, but I am certain that he will excel at this. This really is one of his passions, so he is one of the fortunate ones in that he is going to get paid to do what he loves.

So, Happy Birthday Cam!

Tax tips for 2007

2007-01-12T07:33:00.000-05:00

Thanks to Lenderama for these tips. Link to this article for great tax tips for the upcoming year. The most relevant one to real estate has to do with the deductability of the Private Mortgage Insurance. If you are dealing with a reputable loan officer or mortgage company, they will notice this is a BIG change in evaluating the proper program to meet your needs.

Tis the season for escrow adjustments

2007-01-04T07:36:00.001-05:00

I am not sure what it is like in your part of country, since property taxes are different everywhere, but here in SC, this is the month that lenders do their annual escrow analysis. It is inevitable that I will receive phone calls this month from my past clients regarding their tax bills.

Here is what happens. The lenders analyze each loan for which they collect escrow payments (taxes and insurance). They look to see if they are collecting enough to pay the bills due or if they are colelcting too much. By the end of the month, clients will start to get letters stating that their total payment is going to either rise or fall, based on this analysis. In addition, if the tax or insurance payment went up, and there were insuffcient funds to cover the debt, the lender went ahead and paid it, but will expect to be paid back. This payback be either one lump sum or stretched out over the nest 12 months.

So, if you get a letter from your in January or February stating that your payment is going to increase by $10 or $20 dollars, this is the cause.

Of course, if the payment absoltuly skyrockets, to the tune of $100 per month or more, I would recommend some investigation on your part. There is typically an assignable cause for this sort of variation. Maybe your insurance shot up due to a claim, or your property taxes got re-assesed, something like that.

Of course you can email me and I will help as much as I can with any questions. Email john@bigbearmortgage.com

Have a great day.