Rest in Peace, Patrick Sand
I’ve moved!
After 23 years of helping people with their mortgage needs at Mortgage Master Service Corporation, I have made a move to New American Funding. You can still reach me at my same phone number and email. And you can still click the “Get Approved” link above to start a loan application with me. I am still here to help you (and anyone you care about) with your home loans. [Read more…]
Should You Follow Dave Ramsey’s Advice on Mortgages?
Dave Ramsey is someone a lot of people follow for financial advise. Lately he’s been showing up A LOT in my Facebook stream pushing his thoughts on mortgages, home ownership and credit. Some of his ideas, I don’t totally disagree with. In fact, I shared a post that came from his group encouraging people to continue to pay rent and make their mortgage payments during the pandemic if at all possible (ie nothing is for free). However, I don’t support what he instructs his followers who are considering buying a home and I also have an issue with anyone who pushes their “team of vetted real estate agents”…I would be really surprised if there is not some sort of financial relationship associated with this referral arrangement.
Let’s take a look at what he encourages his followers to do with regards to buying a home or getting a mortgage. [Read more…]
Honoring our Hometown Heroes
Mortgage Master Service Corporation recently started a program to honor our local heroes. We are now offering a $625 credit towards closing cost for a home purchase or refinance when we provide the mortgage.
Mortgage Master Service Corporation’s Hometown Heroes program is available for:
- Police Officers
- Firefighters and EMTs
- Doctors and Nurses
- Teachers
- Military
We thank our heroes for taking care of our community and hope we can take care of you with your mortgage needs. Please feel free to share this! I’m am honored to help you with any home purchase or refi on homes located in Washington state.
Note: This program cannot be combined with any WSHFC program. Program and pricing subject to change.
Mortgage Master Service Corporation on the radio
You may have noticed hearing “Mortgage Master Service Corporation” mentioned on the radio lately. This is because Mortgage Master Service Corporation has recently welcomed Laura Kiel (MLO54744) and family to join our company. Not only do they advertise on the radio, her team also host weekly radio shows. I’m still surprised when I listen to the radio and hear an ad that mentions our company name. [Read more…]
Mortgage loans and the first Presidential Debate
Did you watch the Presidential debate last Wednesday? At one point, President Obama and Mitt Romney discussed regulations that are impacting getting a mortgage – namely: Dodd Frank. When you hear media discussing that some borrowers are having a difficult time qualifying for a mortgage or that the process is cumbersome, odds are it’s regulations like those you’ll find in Dodd Frank that are the cause.
Here’s a bit from the debate:
President Obama:
…the reason we have been in such a enormous economic crisis was prompted by reckless behavior across the board. Now, it wasn’t just on Wall Street. You had…loan officers…giving loans and mortgages that really shouldn’t have been given, because they’re — the folks didn’t qualify. You had people who were borrowing money to buy a house that they couldn’t afford. You had credit agencies that were stamping these as A-1 (plus) great investments when they weren’t. But you also had banks making money hand-over-fist, churning out products that the bankers themselves didn’t even understand in order to make big profits, but knowing that it made the entire system vulnerable.
So what did we do? We stepped in and had the toughest reforms on Wall Street since the 1930s. We said you’ve got — banks, you’ve got to raise your capital requirements. You can’t engage in some of this risky behavior that is putting Main Street at risk. We’re going to make sure that you’ve got to have a living will, so — so we can know how you’re going to wind things down if you make a bad bet so we don’t have other taxpayer bailouts.
Mitt Romney:
Let me mention another regulation of Dodd-Frank. You say we were giving mortgages to people who weren’t qualified. That’s exactly right. It’s one of the reasons for the great financial calamity we had. And so Dodd-Frank correctly says we need to… have qualified mortgages, and if you give a mortgage that’s not qualified, there are big penalties. Except they didn’t ever go on to define what a qualified mortgage was…
It’s been two years. We don’t know what a qualified mortgage is yet. So banks are reluctant to make loans, mortgages. Try and get a mortgage these days. It’s hurt the housing market…because Dodd-Frank didn’t anticipate putting in place the kinds of regulations you have to have. It’s not that Dodd- Frank always was wrong with too much regulation. Sometimes they didn’t come out with a clear regulation.
Read the full transcript of the Presidential Debate courtesy of NPR.
I was actually surprised to hear “qualified mortgages” (also referred to as QRM or qualified residential mortgage) brought up in the debate. Banks have been waiting for the definition of what constitutes a QRM for some time. One of the biggest concerns is if the government uses loan to value (how much down payment or home equity) to qualify as a QRM
It’s quite possible that in order for a mortgage to be classified as a QRM, a home buyer may have to come up with 10 or even 20% down payment when they’re buying a home. I would imagine that mortgages that fall outside of the QRM criteria will have much higher rates to compensate for the risk that bank will be taking. First time home buyers or those without larger down payments (assuming loan to value is one of the factors) will be penalized. Obviously this would not help the housing market’s recovery nor help our economy.
The Center for Responsible Lending reports:
QRM mortgages requiring a 10% down payment would lock 40% of all creditworthy borrowers out of the market. A 20% down payment would exclude 60% of creditworthy borrowers.
In my opinion, it’s time to move forward with common sense underwriting. We don’t need the government creating underwriting guidelines for those who are wanting to buy or refinance their home (the flaws with “net tangible benefit” requirements illustrates this).
Stay tuned…
Clark Howard Suggests 5/1 ARMs for Refinancing
Yesterday morning on CNN, "Money Expert" Clark Howard recommended that home owners who are considering selling their home in the next five years investigate refinancing into a 5/1 adjustable rate mortgage. Why would he suggest such a "risky" product? Interest rates for adjustable rate mortgages are extremely low right now and if you're not going to have the home for more than 5 years, you could save a significant amount of money.
I will be using worse case adjustments for this post, assuming that the index (12 months LIBOR) has climbed incredible to where the the rates have hit the lifetime caps (ceiling) of 5% at the first adjustment and have remained their at each adjustment. The 12 months LIBOR is incredibly low right now and those who have ARMs setting at their first adjustment are probably in a good position.
These rates as of June 15, 2011 at 10:30 am based on 740 or higher credit scores and a loan to value of 80% or lower. NOTE: We do have several programs available if for Seattle area home owners who have diminished home equity. This scenario is based on a rate-term owner-occupied refinance and a loan amount of $327,500.
3.00% for a 5/1 ARM (fixed at 3.00% for 60 months) with a principal and interest (p&i) payment of $1,381. APR 3.285. The "caps" that limit how much this rate can adjust are 5/2/5 so the highest this rate can ever be is 8.00% (worse case scenario) and the lowest is the margin (2.25%).
- At 61 months, assuming worse case scenario, the rate would adjust to 8.000% with a p&i of $2248 and an approx. principal balance of $291,600.
- At 85 months, assuming worse case scenario, the rate would still be 8.000% with a p&i of $2248 and an approx. principal balance of $283,228.
3.375% for a 7/1 ARM (fixed at 3.375% for 84 months) with a p&i payment of $1,448. APR 3.417. The highest this rate could ever be with 5/2/5 caps is 8.375% at the 85th payment and the lowest is the margin of 2.25%.
- At 61 months, the rate is still 3.375% with the same payment of $1448 and the balance is approx. $293,122.
- At 85 months, assuming worse case scenario, the rate would adjust to 8.375% with a p&i of $2270 and an estimated balance of $277,650.
4.500% for a 30 year fixed rate with a principal and interest payment of $1,659 for the entire term of the mortgage.
- At 61 months, the balance is approx. $298,500.
- At 85 months, the balance is approx. $285,000.
NOTE: the above rates are from June 2011 – if you would like a mortgage rate quote based on current pricing for your Washington home, click here.
What is crucial when selecting your mortgage is considering what your financial goals are. If you're not certain that you'll be selling your home in 5 years and you do not want to risk the adjustment that will take place in 61 months, you might want to consider the 7/1 ARM, which will "buy" you two more years of a fixed period for a slightly higher rate. If having an adjustable rate mortgage is going to keep you up worrying at nights, than a fixed product, like the 30 year or 15 year is probably a better option for you. If an adjustable rate mortgage is suitable for your financial scenario, the savings can really add up.
Personally, if you're considering an adjustable rate mortgage, I would recommend seriously considering the next longest term just to "buy" some wiggle room. I was honestly a little surprised that Clark Howard was pushing a 5/1 ARM when the 7/1 is currently just a little higher. Whatever choice is made, it belongs to the home owner and it is their responsibility to understand the risk, rewards and terms of what ever mortgage product they select.
If you have questions about mortgages for homes located anywhere in Washington, please contact me. By the way, if your mortgage originator is no longer in the business (many have found new careers with the higher standards now required), I'm happy to adopt your mortgage – no refinance or transaction is required - your mortgage does need to be on a home located in Washington.
RIP Mark Haines
Many of my mornings have been spent watching CNBC's Mark Haines with Erin Burnett and I'm saddened to learn that Mark passed away at the young age of 65. I loved his wit, humor and ability to cut through political bolony.
Here's one of my favorite Mark Haines moments.
My heart goes out to his family and friends.
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