Announcing “The Mortgage Porter” Quarterly

September 2, 2007 by Leave a Comment

My quarterly newsletter, Homes and Land, has undergone some minor changes.  It is now "The Mortgage Porter".   The latest issue is just back from the press and is being prepared to be mailed to my clients.   If you would like to be on the distribution list, please let me know.

With every issue, I remind readers to use one of the bureaus at www.annualcreditreport.com to pull your free report (you’re allowed one free report from each bureau annually).   With this issue, I recommend that you select Transunion.

Filed Under: Mortgage

Washington homes still show appreciation, BUT…

September 1, 2007 by Leave a Comment

We are lucky that Washington state is one of the few in the nation to still be reporting that our homes are appreciating.  BUT…please don’t let that allow you to have a false sense of security with the value and equity in your home.   These reports are based on information that lag month(s) behind what’s actually going on. 

Other reports show that we are at a 16 year high for unsold homes (listings).   With this much inventory and few buyers due to a reduction in available mortgage programs (subprime, alt-a are reduced if not nil and jumbos have higher rates than before August), we may very well see a change in the appreciation stats we have been benefiting from.     The Seattle/Bellevue area has a high rate of "jumbo" priced homes (jumbo mortgages are loan amounts higher than $417,000).

If you currently have an ARM or bought your home with 100% financing a few years ago, you need to check with your Mortgage Professional to see how your credit is and what actions you should take (if any) right now (even if your ARM is not adjusting for two years).

Consider how you would be impacted if:

  • Your home value does not appreciate and instead, the value stays the same (stagnant) or depreciates?
  • Your adjustable rate or balloon mortgage adjust and you cannot afford the new payment?
  • Your interest only feature on your mortgage is over and you now have to make a fully amortized payment?
  • Your home does not appraise high enough to have the loan to value required for a refinance (loan to value guidelines are more strict now.   FHA has one of the best programs allowing a 95% LTV.  However, loan limits apply).

I don’t want to sound like a "Chicken Little" or cause panic.  I do want to make sure that you’re prepared for worse case scenario and hopefully it doesn’t happen.  Maybe Seattle will get away with just getting bumped by the national housing bubble.    Who knows?

Appraised values are based on what other homes like yours in your neighborhood recently have sold and closed for — not trends and not what other homes in your area are listed for.   If homes are selling for less because there are fewer buyers, this will directly impact your loan to value should you need to refinance out of a non-fixed rate mortgage.

Many home owners with prime and subprime ARMs that will be adjusting over the next few years will see their payments increasing from 20-50%.   It is your responsibility as a home owner to know your mortgage and to be fiscal and credit wise.     Please do contact your Mortgage Professional today (I know I’m repeating myself…but it is that important) to develop your personal "Mortgage Exit Strategy".  The more time you have to prepare, the better off you should be.

Filed Under: Jumbo/Non-Conforming, Mortgage, Real Estate, Seattle

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

Be careful relying on posts about mortgages prior to August 2007

August 16, 2007 by Leave a Comment

It’s occurred to me that consumers who are using the internet to research mortgage information, products and guidelines, etc. need to be aware that anything posted before July 31, 2007 may very well have changed or is no longer valid.   

Do not rely on information on mortgage blogs or websites.  Especially if the information was created before August of 2007.   

Guidelines are changing and programs are being removed daily in this ever changing market. If you are currently preapproved for a mortgage, verify that your program still exists.  As always, I do not recommend floating your interest rate.

Contact your Mortgage Professional for your most current options.

Filed Under: Mortgage

Concerned questions from a home owner regarding the “credit crisis”

August 12, 2007 by Leave a Comment

mortgageporter-thinkingThe other day, one of my past clients asked me:

“I was wondering if there are issues that could arise if this credit crisis continues in a downward spiral? The market hasn’t been doing well in the past week with concerns about the “credit crisis”.

Is there any reason for concern that we could have our home loan called in early if our mortgage company gets into trouble? Are there other issues that we should be thinking about if this causes a ripple affect to other areas of the economy?”

 

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Filed Under: Adjustable Rate Mortgage (ARM), Mortgage, Refinance, Residential Purchase

What’s going on in the mortgage industry? A must see graph spells it out.

August 11, 2007 by Leave a Comment

This graph from the New York Times paints a picture that I can’t call pretty.   

"So what’s gone wrong in the last few months?  An unfortunate combination:  more loans in default (many borrowers were never in a position to pay them off), risky bets worth billions made by some investors (deals now gone sour), and the reversal of the housing boom."

A big hat tip to Behind The Mortgage.

Filed Under: Adjustable Rate Mortgage (ARM), Mortgage, Subprime Lending

Question of the Day: Can my mortgage be called due if the company gets in trouble?

August 9, 2007 by Leave a Comment

Five gold stars to Sandy, one of my clients who I helped with financing a few years ago when they bought their dream home in Eastern Washington, for asking me this regarding the current market:

“I was wondering if there are issues that could arise if this credit crisis continues in a downward spiral? The market hasn’t been doing well in the past week with concerns about the “credit crisis”.

Is there any reason for concern that we could have our home loan called in early if our mortgage company gets into trouble? (We are with CitiMortgage right now). Are there other issues that we should be thinking about if this causes a ripple affect to other areas of the economy?”

I’m going to address the “bold issue” first.   Your loan will not be called due if the company you’re making mortgage payments to gets into trouble.   The mortgage company you’re making payments to does not hold your mortgage.   They are actually just receiving and processing the payments.   They receive a small percentage of your payment for “servicing” the loan.  Your mortgage has been bundled with other mortgages and has been sold to investors as mortgage backed securities (bonds).  If something were to happen to the mortgage company you make payments to, you would just be sending your mortgage payment to someone else.

Continue to make your mortgage payments (including your property taxes and insurance) on time and your mortgage will not be called due early.

I’ll address Sandy’s other excellent questions in a follow up post.

Filed Under: Mortgage

Now is the time to work with a Correspondent Lender

August 9, 2007 by 4 Comments

A correspondent lender is a blend between a bank and a mortgage broker.   What sets correspondent lenders apart from others is that they have significant credit lines that allow us to fund loans which are then sold to the lender after closing.   A correspondent lender processes, underwrites and prepares the loan documents which allows them more flexibility than the traditional broker.  Correspondent Lenders have access to many different lenders unlike most banks.   Even if bank mortgage companies can broker, loan originators often will not as they’re typically paid a lower commission if they do not use their bank’s products.

So why is now such an important time to select a correspondent lenders?   With banks pulling back (or suspending) products or repricing and lenders shutting down, it’s important to work with a Mortgage Professional who can make adjustments if needed in a rapidly changing market.   Many were caught at closing when they sent loans to American Home Mortgage, one of the nations largest lenders.   If you were getting ready to close with a mortgage broker, the loan would need to be re-processed, re-underwritten, and new loan docs prepared and delivered to escrow.  With a correspondent lender, as long as the rate had not changed, you could possibly keep the same docs and your escrow appointment.

Because it is more difficult to become a Correspondent Lender vs. a Mortgage Broker there are fewer of us and therefore, we’re a bit more challenging to find.  How do you  know if your Mortgage Professional is employed with a Correspondent Lender?   Ask.  A “mortgage broker” or “mortgage banker” is not the same as a correspondent lender. 

A Correspondent Lender just may make the difference in your transactions closing on time in this uncertain market.

Filed Under: Mortgage Tagged With: , ,
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