December’s YOU Magazine Now Available

December 13, 2007 by Leave a Comment

This month’s issue of YOU Magazine features the following articles that I highly recommend you check out:

Like Mortgage Market Guide, this is a service that I subscribe to for the benefit of clients.   (I did notice the person who stole my post also copies Mortgage Market Guide and post it as his own…this is a huge no-no and could be a costly one.  If I notice my MMG and YOU Magazine being plagiarized, I may have no other choice than to provide the articles I pay for to those who subscribe only and to remove the links from Mortgage Porter). 

Anyhow…there are other articles available with this month’s YOU Magazine including those for recipes and health tips.   You can read them all by clicking here.

Filed Under: Financial Planning, Mortgage, Recipes

Picking your next mortgage by rate shopping? You might as well be playing Liar’s Poker.

October 23, 2007 by 8 Comments

Poker_2

Rate shopping to select who will be assisting you with your next mortgage is similar to playing “liars poker”.  The Loan Originator who is the most successful at bluffing wins.  The fact is, unless you’re locking in the rate at the moment you’re shopping, you don’t have that rate.  It’s a rate quote–that’s all. Mortgage rates change throughout the day.  They are based on mortgage backed securities: bonds.   Some lenders I work with offer “live pricing” and others issue rate sheets; sometimes we can have several rate sheets offered by a lender during one day.

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Filed Under: Financial Planning, First Time Home Buyer, Interest Rates, Mortgage, Predatory Lending, Refinance, Residential Purchase

Please Don’t Neglect Your Unhealthy Mortgage

October 22, 2007 by Leave a Comment

ErToday I received a phone call from a CPA who was trying to help her clients who have a "toxic mortgage".   She was hoping I would be able to save them…there was a time that I probably could perform a "rescue".   In fact it was just a few months ago before the current mortgage melt down.   Believe it or not, when applied correctly, subprime mortgages could mean the difference of someone being able to save their home assuming they were able to be disciplined enough to keep (or get) their finances healthy.  This family will not qualify for FHA or FHASecure (they don’t have an ARM that’s adjusted).   What they need is a subprime (now known as "non-prime") mortgage to buy them a little time.   Now their time is running out.

Part of their problem began with working with an unsavory loan originator who is now out of the business.   The LO brokered their loan to a subprime company I would not work with.  (Even though we’re approved with around 80 lenders, give or take depending on the day, I tend to select 5 preferred prime lenders and 3-5 subprime/alt-a…this lender was not on my list of preferred). 

Shortly after closing, their lender informed them that they did not have home owners insurance…they did.  They provided documentation showing their insurance to the lender.    The lender did not respond and instead, ordered insurance for them at a hefty price…jacking up their payment beyond what they can afford.   Now they’re sliding down a very slippery slope and the lender is not cooperating.   They are behind on their mortgage a couple months.  They called out for help too late.   

NOTE:  Other lenders may be more willing to cooperate with homeowners…you need to act quickly and contact your lender if you’re having difficulty with your payment. 

Homeowners:  the very moment you think you may be having trouble with your mortgage or debts, please contact your Mortgage Professional right away.   If you don’t have one, you can always contact your CPA or other trusted financial advisor for a referral.   Please don’t wait until you have a "mortgage emergency"…get help, even if you just have the sniffles.

Trusted Advisors (Real Estate Agents, CPAs, CFPs, etc): Please keep an ear out for your clients who may have adjustable rate mortgages or are may be having difficulites with their mortgage payment.   Even if an ARM isn’t scheduled to adjust for 12 months or more, the sooner someone meets to with a Mortgage Professional to make sure their credit and everything else is in line to restructure the mortgage (if needed), the better for all.

All home owners should meet with their Mortgage Professional at least annually to have a "mortgage check up" or Annual Review.   This is a service that I provide to my clients.  I’ll provide more information about the Annual Mortgage Review in a separate post.   

My point is, the more time you allow yourself to fix a "sick" mortgage situation, the better your odds are of finding a cure.

Filed Under: Debt Restructuring, FHA, Financial Planning, Mortgage, Predatory Lending, Subprime Lending

October is National Breast Cancer Awareness Month

October 14, 2007 by Leave a Comment

This is the time of the year when open enrollment for benefits takes place with many employers.   Considering this, I asked Jean Christensen from AFLAC to share a story with you regarding one of the benefits of AFLAC.   Jean shares a story of Michele, one of her co-workers who was diagnosed with breast cancer a few months ago.

I am a 40 year old mother of two, wife of one and friend of many.  As of July 9, 2007 my life was changed radically as I was diagnosed with breast cancer and bone metastasis.  One year earlier, I’d had a clear mammogram.  At that point I had to stop working as an Associate of AFLAC, have others cook and clean for my family and drive me everywhere. I went from being totally in charge of my life to being totally dependent on others for everything.

Now a one income family, in a hugely stressful situation, with the same monthly bills like mortgage, food, heat, cable, etc., who did we have to turn to?

Thankfully in 2003, I enrolled I the AFLAC Cancer Plan for $36.00/month.  Our first check from AFLAC was $7,000 upon my diagnosis and I know that the checks will keep on coming as I’ve seen over and over for others.  AFLAC’s average cancer payout of $40-$60,00 is life changing.

I tell you this story not to scare you, but to share with you my story.  I continue to fight the fight. 

The financial help that AFLAC brings is enormously comforting.  If you choose to participate in one plan, please, look at the statistics, hear this story and consider the cancer plan.

-Michele H., Woodinville– willingly shared with Jean Christensen and you.

AFLAC has been a great benefit to the employees at Mortgage Master.   My first processor is battling Stage 4 breast cancer and I know that AFLAC has been a significant help to her and her family.

I have enrolled in AFLAC and Mortgage Master is able to offer a Flex Spending program because of their participation.   

When you’re reviewing your options during benefits enrollment with your employer, please make sure you understand your options.   Hopefully you never need insurance or AFLAC…but you’re certainly glad that you have coverage when the unexpected happens.

If you’re employer does not offer AFLAC, or if you would like to learn more, please contact Jean Christensen at 206-819-8704.

Filed Under: Financial Planning

I’m happy to adopt your ARM…no refi required!

September 24, 2007 by Leave a Comment

One of the Realtors I work with sent a Seller to me since they were having second thoughts about the lender they were working with for the property they were buying in Arizona.  I reviewed their estimate and discovered their proposed loan had a prepayment penalty that they were not aware of.   Long story short, they decided not to buy (not just because of the lender…I believe their house did not sell in time and they were "bumped").    I’ve told their story in a previous post.

They recently contacted me wanting to know if they should refinance.   They have 5 years left on their 7 year ARM which is currently at 5.5%.     Since their mortgage is not set to adjust until the summer of 2012 and they still hope to move from their current residence, I recommended that they do not refinance at this time.   Even though I’m not her original loan originator, she asked me if I would mind watching her rate and keeping tabs on her ARM.    Managing mortgages is part of my standard business practice for my clients.   I added her information to my database and told her I will gladly add her to the mortgages that I care for…even though I did not originate her current mortgage.

It got me thinking… if you or someone you know have an adjustable rate (or actually mortgage) and you don’t have a Mortgage Professional who is helping you manage that debt (watching current mortgage interest rates and trends, keeping tabs on when your mortgage payment may adjust), and you’re in the beautiful Washington state, I’m glad to include include your existing mortgage to my database.   No refinance required.    If you’re satisfied with your Loan Originator, then ask them to manage your mortgage for you.   I’m sure they’ll be happy to do so (again, no refinance is required).

Now if I could only figure out a way to be paid for all the times I’ve talked people OUT of refinancing!   Seriously, if you have an adjustable rate mortgage, please contact a Mortgage Professional to review the terms. 

Filed Under: Adjustable Rate Mortgage (ARM), Financial Planning, Mortgage, Refinance

Get your free issue of YOU Magazine

September 8, 2007 by Leave a Comment

September’s issue of YOU Magazine is now available and features the following articles:

And so much more!   

I’m still working on my latest issue of e-Mortgage Porter, an emailed monthly newsletter.   If you would like to receive an issue in your email in-box, just let me know.

Filed Under: Financial Planning, Just for Fun, Recipes

Question from a reader: Are the 30 year fixed interest only fixed for the full 30 years?

September 5, 2007 by Leave a Comment

The answer is yes, the rate is fixed…BUT… The rate is fixed for 30 years however depending on if you select the 10 year or 15 year interest only period, once the interest only period is over, the mortgage will be amortized at the same rate for the remainder of the term.

For example, let’s assume your mortgage balance is $350,000 and the rate for the 30 year fixed with interest only payment is 6.50%.

The interest only payment is: $1895.83

If you have the 10 year interest only product (usually a slightly better rate), the payment will adjust to a fully amortized mortgage based on the remaining 20 year term.   The new payment would be:  $2609.51

If you opt for the 15 year interest only product, the fully amortized mortgage based on the remaining 15 year term  be:  $3048.88

Both of the above scenario’s are assuming that there are no additional payments made towards the principal during the interest only period.   NOTE:  borrowers may need to qualify at the fully amortized payment (not the interest only payment).

Here is the email from the reader:

"Currently, we have a subprime loan with a 2-year penalty which expires  March 2008. We were told that it is a 40 year fixed at 8.83% and if we refinanced prior to the 2-year penalty expiration date, there will be a 6-months of interest penalty. However, we recently reviewed our loan documents and with a better understanding called the lender. The lender confirmed that we have a subprime loan and the rate will be adjustable after the two years.

We are considering the 30-year fixed, 10 year interest only, but want to be sure that the rate is definitely fixed for the full 30 years. We are in our mid-40s and have no intentions of selling our home, and consider this home to be our retirement home. From your financial expertise, do you think this is a good option for us?"

It’s difficult to provide advice for someone when you don’t have their entire financial picture.   This couple does not live in Washington State (where I’m licensed to practice).   

Here are factors that I would consider if I were their Mortgage Professional:

  • How much funds do they have currently reserved for their retirement?  (With their current loan being subprime, I’m assuming they are underfunded.   Most Americans are).
  • What do they anticipate their retirement income to be in 20 years?
  • How is the appreciation/depreciation in their current region and with their home?
  • In 20 years, when they retire and their income is different, can they afford the 20 or 15 year amortized payment? 
  • Are they needing the interest only payment to make current ends meet?
  • What are their financial goals for retirement?  To have no mortgage?  To be debt free?   To hang onto their house with the mortgage as a tax favored debt? 

I would caution against doing "band aid" loans that will need refinancing when you’re at retirement or close to then.   Depending on what you anticipate your income to be, should you need to refinance out of a 15 or 20 year term mortgage because your income is less, you may not be able to qualify.   You may want to consider a traditional 30 year fixed or a Fannie Mae or Freddie Mac 40 year fixed rate (without the balloon or adjustment that you have with your current mortgage).

Here are the rates I quoted last Friday (just to give you an idea of how these rates may vary from product to product):

30 Year Fixed: 6.125% (APR 6.281%).  Payment per $1000 = $6.08.

30 Year Fixed with 10 Year Interest Only:  6.500% (APR 6.653%).  Payment per $1000 = $5.42.

40 Year Fixed:  6.500% (APR 6.646%).  Payment per $1000 = $5.85.

I give them huge kudo’s for reviewing their loan documents and contacting their lender and for getting second opinions.   Their Mortgage Professional should review all possible mortgage options with this couple and make sure they understand the terms and any consequences. 

Filed Under: Financial Planning, Mortgage, Refinance

How Well Do You Know Your Mortgage?

August 26, 2007 by 2 Comments

Here is another Rain City Guide re-run that I feel is worth visit that I wrote on April 7, 2007.  I’m always surprised at how many people do not know the terms of their mortgages.   It’s more important than ever…especially if you have an ARM or Balloon mortgage.   BTW, the link to the massage therapist always cracks me up!

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Filed Under: Financial Planning, Mortgage
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