Archive for August, 2009
Is paying off your mortgage early a good idea?
Posted by: | CommentsThis message came to me today from;
Da
Home Buyer
Allen, TX
I am in the process of paying off my mortgage and had a quick question on the below math.
I have around $75000 left on my 15 year mortgage with 3.75% APY after Tax Deduction. And, five years ago I had invested in a Certificate Deposit of $75000 for 5% APY. The CD is getting matured next month and looking at CD rates, the best out there is around 2.00% for 1 Year.
So, if I keep paying mortgage (3.57% after Tax) and invest the $75000 in a CD for 2 % (1.6% after Tax), then I am losing around 2.15% interest. Am I doing the math correctly? Is this as simple as it sounds.
So, to me it makes sense to repay the mortgage. Also, in this market, I don’t have any interest in investing in stocks, mutual funds, bonds, etc. ”
Here is my response;
Good Morning Da:
Congratulations of having the ability of choices. The choice of paying off your mortgage sounds appealing on the surface. However, with out a few more questions being able to help make the best choice advice is difficult.
1, Is the payment on your current mortgage causing you any financial stress?
2, What is your age and when do you plan on retiring?
3, are you financially set up to retire when that time comes?
4, What tax bracket are you in today?
5, What would you do with the money you are using to make the mortgage payments with today after you pay off the mortgage?
6, Have you looked into other investments that do not have market risks that stocks, bonds or mutual funds have?
We really need to better understand your situation to offer advice.
Case in point.
I have a mortgage client that inherited more than enough money to become debt free mortgage included. He could have paid off his mortgage early.
We refinanced home out of the second lien and into a lower payment, paid off the non-tax deductible debts he had and the rest we put into a small term life insurance policy just enough to pay off the mortgage and the rest into an annuity that will never lose principle plus share in the market up-turns. He was in CD’s and as you he did not see the returns being above inflation.
Today he can rest assured that if he dies his wife and child are taken care of with a paid off mortgage and his money is making a return higher than CD’s with no market risks.
If you would like to discuss these or other options send me an e-mail I am a licensed Insurance agent as well and a Mortgage Banker.
Underwriting changes for a Mortgage loan
Posted by: | CommentsWith all the changes in the mortgage industry new guideline changes are coming almost weekly. These changes effect all mortgage loans from conventional, Jumbo and even FHA Loans.
Recently all lenders are requiring the IRS form 4506T be issued from the IRS. this form is the tax transcripts of the borrowers last two years tax returns. The lenders are using this to verify income, deductions for interest paid on houses and other things they do not tell us.
Recently I have seen loans come in from other loan officers with signed tax returns that have not been filed by the borrowers. Also, if past the deadline for filing your taxes and you do not owe taxes some people do not file their taxes. However, to an underwriter today and with all the lenders scared of making a mistake they are requiring the last two years be files to the IRS.
This has caused problems for people buying FHA home mortgages that have not filed. Either the underwriter denies the file or they have to send in their taxes and wait for the IRS to accept the return and allow access to the transcripts via this 4506T form. Have you ever know the IRS to be fast, except if you owe them money. This process can take 2-6 weeks and many home buyers have 30 day contracts.
If you are looking to buy a home with FHA or conventional financing and have not filed your tax return here is what to do.
1, Tax your tax returns to the local IRS office and have them give you a stamped receipt of your returns.
2, Ask how long before the returns are registered and a 4506t can be pulled. (they may not know.)
3, to find out use this to verify and get a copy for your records.
Call the IRS office at 800-829-1040. You press 2, then press 2 again. It will ask you for the social security number. Enter the social security number and then press 1 to confirm. A menu of 7 options will come up, do not press anything. Once it goes through the menu it will get the representative. Once the representative answers, you request the tax transcripts for the required years (need the following years 2007 & 2008 as of this post) and then ask the representative to fax them to you or my office. You will be asked private information to confirm it is really you. Ask them be faxed to you at your fax number or if we are working together they can send to me directly.
I hope this helps you and speeds up the process of buying a home with a FHA loan or conventional loan.
If your have any questions or need help send me a note at jerry@DallasFHAloans.com
The Dems and how the mortgage crisis started.
Posted by: | CommentsWe need to get these people out of Government like Barney Frank. They have caused the mortgage melt down. This is causing all the new crazy regulations on Home loans.
Watch these videos;
The last administration tried to stop Fannie Mae and Freddie Mac from lowering the standards but the Democrats Frank, Dodd, Cuomo, Boxer, Clinton, Pelosi and the rest stopped them from tightening guidelines and made this all happen.
Single family home sales are up
Posted by: | CommentsSingle family home sale are up – but why? Federal Reserve loses lawsuit and must show the country where all the money has gone. Swiss cooperates with IRS – No more tax free Swiss bank accounts and it’s time to pay! How Does this effect purchasing a FHA Home in Dallas? to learn more about the Dallas FHA Loan and housing market send me a note and I’ll send you my insiders guide to the Dallas home market white paper. (e-mail link at bottom of page)
Watch the video for more detail
http://www.thinkbigworksmall.com/mypage/player/tbws/15029/975408
So if you want more information on buying a home in Dallas give me a call or e-mail Jerry@DallasFHAloans.com
http://www.thinkbigworksmall.com/mypage/player/tbws/14856/975408
Great information on what FHA said about HVCC appraisals. So if you are looking for a FHA loan in Dallas you may want to watch this.
Getting the Best interest rates on Dallas FHA Loans
Posted by: | CommentsMost people think there is “one rate” out there for Dallas FHA loans and everyone gets the same interest rate. I wish this was true, it sure would make my job easier.
First interest rates are set for each type of loan available, conventional, FHA, VA, USDA, refinance, cash out. Then by how long you want to finance, 30, 15, 10 year fixed and then ARMS Adjustable Rate Mortgages.
Once you know the type on loan then we need to know the loan amount, loan to value (LTV) if escrowing taxes & insurance.
Finally, we need to know your credit (FICO) score and debt to income (DTI)
Each of these items layer risk to the mortgage company and add to the interest rate.
Example: a 30 yr fixed term FHA loan of at 96.5% LTV for someone with a 720 FICO might get 5.25% rate but someone with 620 FICO on same loan due to being a higher risk might get 6.00% . Yet tomorrow all interest rates worsen and the 720 person is now 5.5% and our 620 person is 6.625%. Then again rates could improve and now the 720 person can get 5.00% and the 620 person get 5.375% Also, keep in mind all FHA loans have upfront Mortgage insurance premiums of 1.75% and monthly Mortgage Insurance of 0.55%
There is one more thing to remember, you can buy down your interest rate with points. A point is 1% of the loan amount and in the above case the 620 person could buy his rate down to exactly what the 720 person got with maybe 1-2% points. Then again, each could take a higher rate so that all the fees are paid for by the mortgage company. The average fees on a loan are about $3000.00 give or take. so a higher interest rate could cover these cost.
So, when you co-worker says they got 6.25% or 5.25% on their loan last month unless you know all the details for that day and all about them, you just don’t know what you could get. When looking for a Dallas FHA Loan please give me a call or e-mail me at jerry@DallasFHAloans.com
Letter to your Senator on Appraisal and Truth in Lending
Posted by: | CommentsHello:
This is a great letter to send your Senator and let them know you are tired of them costing you more time and Money in obtaining financing on a home. Cut and paste this letter and mail it to them or go to their website and e-mail them. Find your Senator here
These laws are costing you money to the tune of $2.4 BILLION DOLLARS and they are okay with this on the Hill.
If you are tired of Government with their hand in your pocket, help make some noise and do something about it.
August 23, 2009
John Cornyn, United States Senator 517 Hart Senate Office Bldg. Washington, DC 20510
Dear Senator Cornyn:
We have just completed a loan application for a new home and have learned about the new Home Valuation Code of Conduct and the Mortgage Disclosure Improvement Act.
Our evaluation of these two reforms has indicated clearly that as consumers these new regulations are costing us both time and money in acquiring a mortgage loan with little or no benefit for those costs.
We have been informed that our mortgage representative will have less time and thus fewer options for us and that it will be necessary commit to a specific plan sooner if we are to meet the specifics of our real estate contract. In the past we have had the opportunity to move our mortgage loan option literally up until the last minute and now that option is no longer available.
We are also instructed that we can no longer leave a check in advance for our appraisal and must return to our mortgage company to drop off a check or make other arrangements after our signature has been obtained on a new Truth-In-Lending Agreement. This now means taking more time off from work and burning more gasoline in order for my mortgage company to be in compliance with these new rules. We cannot see how that benefits us.
In addition we do not select our mortgage loan lender or product based on APR (Annual Percentage Rate). We evaluate our mortgage based on note rate, the payment and how much we have to come to closing with. Although the purpose of APR is to summarize this into one figure we have always been more comfortable assessing any consumer loans by evaluating cost and payment separately.
We ask that you immediately rescind these new regulations and return mortgage lending to the way that works best for me the consumer. Although we agree some reforms could be helpful the unintended consequences have yet again cost the consumer more than any benefit gained could possibly be worth.
Sincerely,
(Your Name)
(Your Address)
top 10 reasons to use a local Loan Officer
Posted by: | CommentsIf you found this blog, chances are that you are a consumer who is looking for more information about a mortgage. Maybe even more specifically, you are searching for specific information about how to get the best deal on your mortgage.
So I thought I would take the time to list out the Top 10 Reasons Someone Should Use a local Mortgage Loan Officer to Shop for a Mortgage.
Number Ten
You much prefer filling out a form on the Internet somewhere that looks like this…
because you wonder what will happen if you do.
Number Nine
When you fill out a form that looks like number ten, you also want to give your personal information – just in case someone needs it.
Number Eight
You sometimes get lonely. You like to get phone calls. From lots of different people. Forget it if they want to talk about your mortgage – you want to tell them all about how your garden is doing. You know that by filling out a form, you will soon have lots of different people to talk to from all over the country. And they sound like such nice people when they call.
Number Seven
Your Realtor’s brother seems like he is so smart about mortgages. You feel lucky that you found the World’s Best Realtor who has a brother who is the World’s Best Loan Officer on the back of the shopping cart at Tom Thumb.
Number Six
You really don’t have all that much time to fill out any forms on the internet. Can’t you just sign a form or two and be done with it?
Number Five
Your sister said that she found her loan officer on MySpace and he was so cute – he even gave her a ride in his BMW to the title company.
Number Four
You can’t find any loan officers in Dallas who are offering you any cash-back-at-closing when you buy your house and you really need to find someone who can offer “creative financing”.
Number Three
Your mom used a loan officer that she liked before – and he said that he could “help you out” even though he has a side job now stocking shelves at Seven Eleven.
Number Two
You like the fact that you can go to the Realtor’s office and stop by the Loan Officer’s office right there in the Real Estate Office. Having them together makes it so easy.
And finally, the Number One Reason Someone Shouldn’t Use a local Mortgage Loan Officer to Shop for a Mortgage?
You feel sorry for your brother. Who also happens to be a mortgage broker.
Come stop by my office and find out what a Mortgage Professional can do for you.
Insider info on Interest rates
Posted by: | CommentsMost people think there is “one rate” out there and everyone gets the same interest rate. I wish this was true, it sure would make my job easier.
First interest rates are set for each type of loan available, conventional, FHA, VA, USDA, refinance, cash out. Then by how long you want to finance, 30, 15, 10 year fixed and then ARMS Adjustable Rate Mortgages.
Once you know the type on loan then we need to know the loan amount, loan to value (LTV) if escrowing taxes & insurance.
Finally, we need to know your credit (FICO) score and debt to income (DTI)
Each of these items layer risk to the mortgage company and add to the interest rate.
Example: a 30 yr fixed termConventional loan of at 80% LTV for someone with a 720 FICO escrowing might get 5.25% rate but someone with 620 FICO on same loan due to being a higher risk might get 6.00% . Yet tomorrow all interest rates worsen and the 720 person is now 5.5% andour 620 person is 6.625%. Then again rates could improve and now the 720 person can get 5.00% and the 620 person get 5.375%
There is one more thing to remember, you can buy down your interest rate with points. A point is 1% of the loan amount and in the above case the 620 person could buy his rate down to exactly what the 720 person got with maybe 1-2% points. Then again, each could take a higher rate so that all the fees are paid for by the mortgage company. The average fees on a loan are about $3000.00 give or take. so a higher interest rate could cover these cost.
So, when you co-worker says they got 6.25% or 5.25% on their loan last month unless you know all the details for that day and all about them, you just don’t know what you could get.
Half Of US Homeowners Will Be Underwater By 2011
Posted by: | CommentsI was reading Yahoo real estate news tonight and came across an article on “Half Of US Homeowners Will Be Underwater By 2011″
WOW
Then I read past the jaw dropping headline and as I suspected they use statistics to shock people. Since over 30% of homes are mortgage free, those don’t count and another 22% rent, need I go on. Statics are like people, if you torture them enough… they will tell you what ever you want them to.
I did find an interesting chart that showed Dallas Texas has the lowest drop in value since 2001 at -7.4% compared to some are over -54%
-7.4% drop since 2001 best in country!
So, why is Dallas TX so low you may ask. Great question. #1 is JOBS! We didn’t lose jobs as much as other parts of the country. #2 we didn’t go crazy inflating the value like parts of the country. So, aren’t you glad to be in Dallas? I sure am.
Now is still a great time to buy a home in Dallas TX. Interest rates are low, We still have a few months left on the $8000.00 tax credit for First time home buyers and our FHA purchase limit is well above the average home price in Dallas, Collin or Denton Counties.
So, don’t believe all the headlines you read and send me a comment about what you think of our great Dallas Market.
Thank you,
Your
TX Mortgage Pro
Jerry Holcomb