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!
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 need to be aware that anything posted before July 31, 2007 may very well have changed or is no longer valid.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.
Concerned questions from a home owner regarding the “credit crisis”
August 12, 2007 by Leave a Comment
The 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?”
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.
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.
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.
Your mortgage payment may be going up
July 31, 2007 by Leave a Comment
Last week we received a postcard from our friendly tax assessor informing us that our assessed value increased 14% over last year. When I owned my first home, this news would probably excite me. What it really means is that our mortgage payment is going to increase.
Your note rate determines the principle and interest portion of your mortgage. However, property taxes and home owners insurance can and do change…count on it. Your mortgage company received the same notice about your property taxes, too (this is one reason why you pay the "Tax Service Fee" when you obtain a mortgage).
Our new assessment is effective for our 2008 real estate taxes. Once this rolls into place in the beginning of the new year, our mortgage company will contact us and may offer the following options, after reviewing our escrow account:
- Increasing our mortgage payment to cover the difference in the account.
- Allow us to pay the difference in a lump sum.
We will most likely opt to have our payment increased.
Please do be aware when you’re buying a home, that even if you have a fixed rate mortgage, the taxes and insurance are not "fixed". If you currently own a home in the Pacific Northwest where our values are still strong, be prepared to have your mortgage payment increase in 2008.
And for those of you who are squeaking by making your mortgage payment, this is even more reason to put away your credit cards and to have your credit reviewed by a Mortgage Professional in the event you need to restructure your current financial position (do this at least 6 months before you need to refinance so you have a chance to make any corrections or improvements to your credit). Don’t wait.
Refinancing with FHA…now that’s Paris Hilton HOT!
July 23, 2007 by 2 Comments
What? You’ve never thought of FHA mortgages as “hot”? Read about this scenario of a client I recently helped and you just might be cooing “that’s hot”, too! [Read more…]
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