The Mortgage Porter

A Room with a View: The Inn at El Gaucho

April 9, 2007 by Rhonda Porter Leave a Comment

My husband and I received a wedding gift to stay at the Inn at El Gaucho in the Bell Town district of Seattle. Saturday night, we had tickets to see Greg Brown and Bo Ramsey at the Moore Theatre, so we decided to use our present.

Since we were staying there, we also made reservations for dinner prior to our show. I have to tell you, I was so impressed with the service. The food was outstanding too. We had the New York for Two–prepared perfectly. It’s not cheap–but hey, we don’t go out much and the room was paid for!

We caught a cab to the show at the Moore. The Moore Theatre was built in 1907 and is the oldest remaining theater in Seattle. It is certainly not as flashy as The Paramount and is in need of some TLC. Regardless, the Moore is an amazing venue.

We had the fortune to see Greg Brown and Bo Ramsey at the Tractor Tavern a few years ago. That was an incredible concert. Greg made you feel like he was long time old friend and was very interactive with the crowd. His performance then was passionate and lively. I probably went into this concert with too high of expectations because this show seemed to be lacking that. It was a bit disconnected and, although he is very talented and has a one of a kind voice, it appeared to me that he just wanted to get the gig down and call it a night.

We walked back to El Gaucho and finished our evening with a flaming Spanish Coffee. The photo above I snapped with my Treo from our suite, is of The Cyclops bar (it’s a blinking neon eye). While relaxing in our room, I had a chance to read Seattle Metropolitan Magazine’s list of the Top 10 Neighborhoods…click here to read more.

We should go out more often!

Filed Under: Just for Fun, Real Estate, Seattle

Are You Getting An Income Tax Refund?

April 9, 2007 by Rhonda Porter Leave a Comment

Lucky you! If you are, may I offer you a few suggestions?

Look at adjusting how much income you are withholding from your pay. A refund always feels like a bonus, but in reality, you’ve given the government an interest free loan. Why not adjust how much is withheld from your paycheck each month by increasing your exemptions? Give yourself a monthly spiff instead.
Do you have credit cards with a balance over 50% or 30% of your credit limit? Pay them down to below 50 or below 30% and give your credit score a boost.
Imagine how satisfied you would feel paying off a credit card with a high interest rate and cutting up the card?
Invest your refund into a traditional or Roth IRA or other retirement plan.
Start a 529 account for your child. It’s never too early to start saving for college.
Save your refund towards a down payment or closing costs on your next home. "Zero and low down" loans are much tougher to qualify for. Especially if you have credit issues (which in that case, you should probably refer back to items 2 and 3).

Please do not get a income tax refund loan. These loans are loaded with high interest with all intentions of you not paying them back once your refund shows up. E-file and try to be patient.

As always, consult with your professional Mortgage Planner, CPA and/or CFP. Everyone’s personal situation is unique and may call for a specific strategy and complete review of your financial information.

Filed Under: Credit Scores and Reporting, Debt Restructuring, Financial Planning, Residential Purchase

ARMS Defined

April 8, 2007 by Rhonda Porter 2 Comments

Adjustable Rate Mortgages, also referred to as ARMs, come in many shapes and sizes. This post will be focusing on fixed period ARMs, such as the 3/1, 5/1, 7/1, 10/1…etc. that feature a fixed rate period before adjusting.

[Read more…]

Filed Under: Mortgage Programs Tagged With: adjustable rate mortgage, arms

Friday Funny…

April 6, 2007 by Rhonda Porter 3 Comments

The March of the Librarians takes place in Seattle’s new library. This documentary reveals what happens when 10,000 librarians gather for an American Library Association convention. I just had to share!

Filed Under: Just for Fun

How Do You Find an Ethical Lender?

April 4, 2007 by Rhonda Porter 4 Comments

On Rain City Guide, there are often debates that will arise about measuring one’s ethics (usually referring to real estate agents or loan originators). So how do you determine whether or not someone is indeed ethical? You can have a Code of Ethics plastered all over your web site and at your office…but it really doesn’t mean squat unless you do what you say.

As a Certified Mortgage Planning Specialist, I am to adhere to their Code of Ethics or I will lose my CMPS designation. This includes 11 Statements of Commitment and 8 Duties to the Client Codes of Conduct. There are 10 other Codes of Conduct that apply toward fellow CMPS members and the CMPS Institute. It’s pretty elaborate.

The Washington Association of Mortgage Brokers (WAMB), which I am a member of, also has a Code of Ethics. WAMBs Code of Ethics are more "short and sweet" than those of CMPS.

The company I am employed by, Mortgage Master Service Corporation, has their philosophy and goals on our website. And I was a Campfire Girl while in elementary school. (Our troop was the Blue Bird Blue Stars).

Jillayne Schlicke recently did a post on Vacation Mortgage about a local mortgage company who has "ethics in their name" and touts ethics on their web page. However, if you contact them about their "vacation mortgage" which is heavily advertised on the radio, instead of providing information about the mortgage and answering general program questions (I emailed on several occasions inquiring about their vacation mortgage), they want to run your credit and obtain all of your information information to make sure you’re considering the proper mortgage. Hmmm…dangling a vacation from your mortgage payment, then refusing to explain the program so they can offer you a different program…sounds like bait and switch to me. Hardly ethical in spite of all their efforts to promote being an ethical company.

This is why I will always return to relying on referrals from three different sources of individuals whom you respect to select your Mortgage Professional. Such as a friend, co-worker, neighbor, Certified Financial Planner, CPA or Real Estate Agent. Preferably, one who has recently gone through a purchase or refinance transaction themselves. Your referrals have all ready been tested by those you trust.

Unfortunately, you’re not able to submit a Loan Originator to a polygraph test to determine if they’re straight shooters with your best intentions at heart. And, you cannot follow them around 24-7 (legally) to see what types of decisions they make throughout the course of a day. And although the new legislation to have loan originators who work for mortgage brokers licensed (banks such as Washington Mutual, Countrywide and Wells Fargo; and credit unions are excluded from this law) is a start, it’s still no guarantee of the the person’s moral fortitude. At least unsavory LOs who work for brokers will have a license to lose (or, at least they will not be originating loans at a mortgage brokerage).

One of my favorite examples of a "Code of Ethics" is from Les Schwab Tire Company. They promote that they treat clients just like they would their own mother. I browsed through their web site and could not find a posted Code of Ethics…but I guess this is, perhaps my point. They do what they say, it’s not all talk or print. Simple. Funny, I think some of the best things are!

Filed Under: Financial Planning, Legislation, Mortgage, Predatory Lending

Go M’s!

April 2, 2007 by Rhonda Porter Leave a Comment

What a game! I love baseball. Speaking of the Mariners. Last week, I was pleasantly surprised by a gift. Someone shipped a very nice Mariner’s blanket to me. I’m assuming for my birthday…. However, there was no card and no one has claimed this kind act.

A mystery present! It makes watching the M’s whomp the A’s all the sweeter! 😉

Filed Under: Just for Fun

Getting on Track to Buy Your First Home

April 2, 2007 by Rhonda Porter 2 Comments

Last fall, a Mom made an appointment with me to meet with her children about buying a home. It was so cool. First off, she was very proud of her 18 and 20 year olds. Both were hard working individuals…being responsible young adults. Mom thought they should look at buying a house together instead of renting. It was a very interesting consultatation. I was happy to meet with this family to help make sure her young adults are on the right track of becoming home owners and mortgage payers.

Why I Don’t Like Stated Income Loans

March 31, 2007 by Rhonda Porter 11 Comments

Let me start by saying, I prefer a “No Income” over a “Stated Income” loan. If you have to “state” an income, you’re potentially setting yourself up for committing fraud. A “no income” verified loan (where your income is blank on the loan application) does come with a slightly higher rate than a stated income loan, however, there are no questions about what is questionable…your income!

Recently, a home buyer contacted me for a second opinion on their good faith estimate. They had just made an offer that was accepted on a home. After reviewing his information, he revealed that the loan was stated income. I did not have all of their documentation needed for self employed borrowers (2 years complete tax returns, for starters) since I was just looking at closing costs and the rate. So I asked why they were going stated income. Here is his actual response:

“Let’s just say it’s income we’re hoping to achieve, but higher than what is on our tax return.”

Does that sound a wee bit concerning to you? For one, they are stating income they don’t make in order to qualify for a mortgage. When you’re self employed your income can vary quite easily. What happens if they don’t make the income they “hope to achieve” and they cannot swing their new mortgage payment?

I asked if his Loan Originator was going to have him sign a 4506 or 4506T. These forms are sent to the IRS so the lender (and what ever company your loan is sold to) can verify the income you are stating on the loan application by accessing your tax transcripts directly from the IRS.

“I did ask [our LO] about that, and she said it’s basically a formality – that they don’t actually pull the tax return…it’s just put [the 4506 form] in the file.”

Often times, the 4506 may stay “in the file”. However, if the borrower defaults on the loan, you can bet the first thing the lender will do is to grab the 4506 to compare what was stated on the loan application to the actual income reported to the IRS.

“Since I certainly don’t plan on defaulting, I’m going trust [the LO] and the bank on this one. She’s got an interest in this as well!”

The LO certainly does have an interest in the loan. She’s going to get paid and keep her real estate agent happy. Stated income and no-income verifiers are very easy loans to do as compared to doing a full document loan for a self employed borrower where you have to review and average incomes for the past two years. Yikes…the LO might actually have to pull out their calculator and do some hard math and go through someone’s tax returns. Oh dear!

Let’s assume worse case scenario for this borrower who is all ready admittedly overstating income at what he hopes to achieve…what he suffers a loss with his business and and is not able to keep up with his mortgage? As a self employed person, your income and costs are not secure or stable. This could quite easily happen to the best of people. Now you’re in a mortgage that you could not afford to begin with because you had to ~~over state~~ lie about your income. Should your mortgage go into default, will the LO who put you into this loan stand by you? I doubt it. Plus, she’ll probably state something like “I had no idea they didn’t make that income.” She won’t go down holding the borrower’s hand in this case, far from it.

If you are considering a mortgage where you “state” your income on the loan application, you should know:

Stated income loans are not created to exaggerate your income so you can qualify for a mortgage.
Your stated income should compare to what you have reported on your gross income tax returns.
Consider a “No Income Verified” loan vs. a “Stated Income”. The difference to rate, with good credit, is often not that significant. With no income stated, there are no figures to lie about. You’re qualifying on credit and down payment alone.
Don’t lose sight on whether or not you can actually afford the mortgage payment. Qualifying for a mortgage does not mean that you should have the mortgage if you cannot make the payments.

Lying about your income, or anything on the loan application, is mortgage fraud. There are many other types of documentation available so that borrowers do not need to go this route (unless it makes sense–ie they actually have the income).

Still thinking about stated income? Watch this video from CBS.

Filed Under: Financial Planning, Mortgage, Predatory Lending, Refinance, Residential Purchase, Subprime Lending Tagged With: stated income, subprime