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Saturday, April 30, 2011

When a 4.625% fixed might be better than a 4.00% fixed rate

When a 4.625% fixed might be better than a 4.00% fixed rate


I was working with first time home buyers who said they wanted a 4.00% fixed rate CHFA loan. They are putting down 10% on a 250,000 purchase with a final loan amount of 225,000. This couple are in their early twenties, have no children – their long term plans are to have children and move to a larger house in 5 – 10 years. They want a fixed rate mortgage. They have excellent credit scores and about 40,000 saved for this purchase.

With CHFA there is mortgage insurance, which is an additional $207.00 per month. And the point to pay for the CHFA rate is 1% or $2,250.00. The monthly mortgage payment would be 1074.18 + 207.00 = 1218.18 per month.

A conventional 30 year fixed rate is 4.625% with 0 points for the rate. The one time mortgage insurance premium will be about 2% or 4,500. The monthly mortgage payment is 1156.82

In 5 years – which is the minimum time required to keep CHFA mortgage insurance on the loan, the Mortgage insurance payment = 12,420, The point for the rate is 2,250 and the total 5 year loan payments = 64,458.80- or a total paid in 5 years = 79,120.

With the conventional fixed rate loan, 4500 for the mortgage insurance and total 5 year loan payments = 69,409.20 + 4500 = 73,909.00.

Assume the CHFA mortgage insurance is eliminated at the end of year 5 – and the loan must be paid down, it cannot be eliminated with property value appreciation.

322,254 is the 25 year amount to pay off the CHFA loan.
347,046 is the 25 year amount to pay off the conventional loan.

The life of the CHAF loan cost = 401,374.
The life of the conventional loan cost = 420,955

Or a difference of $55.00 per month less for the CHFA loan for 30 years.

They now know the real numbers of the cost of a 4.00% fixed rate loan – and can make an informed decision when they chose their loan program. They may still opt for the CHFA. They may also take the cost of the CHFA loan and buy down the conventional mortgage to 4.250% - and save some real money on this purchase loan.

Having the lowest rate in the wrong program for a borrowers needs is just bad business, and my business is making sure the borrower has the right program for their long and short term borrowing needs.

Tuesday, April 26, 2011

Why did the bank accept a lower offer than ours on a foreclosure?

If you want to buy a foreclosure home, you could be competing with other buyers for that foreclosure.
© Big Stock Photo Question: Why Did the Foreclosure Home We Tried to Buy Sell for Less?
A reader writes: My wife and I tried to buy a foreclosure home a few months ago. The agent told us we had to offer more than list price to buy this particular foreclosure home. We didn't think it was worth more money, so we kept our bid at the list price. Come to find out last week this home sold for less than we had offered. Can we sue our agent? Why did he tell us to pay more for that foreclosure? Why did the foreclosure home we tried to buy sell for less? None of this makes sense to us."
Answer: The process of overbidding to buy a home, whether it's a foreclosure or a regular home, is often very confusing to buyers. Part of the reason buyers are confused is because they might think the price of a home is the value of the home. The truth is the asking price, the eventual sales price and the market value can all be 3 different numbers and often are.
When a bank-owned home comes on the market as a foreclosure home, it can attract many buyers for that home if it's priced attractively. Say, for example, the bank wants to sell the foreclosure for $250,000. The bank might price that home at $240,000, hoping that buyers will easily see the home is priced far less than it is worth and be drawn like moths to a flame. Underpricing is one way a bank can get multiple offers for a foreclosure home.

The problem that can arise is sometimes agents don't do a very good job explaining to potential buyers why underpricing occurs and how to make underpricing work for the buyer's benefit. After all, the buyer probably just wants to buy a foreclosure home. But it's more complicated than that.


To Buy a Foreclosure Home Can Mean Making an Offer Over the Asking Price
If the home is priced too low, many buyers will probably make offers over the asking price. The asking price is simply the starting place for negotiations. The following is a sampling of how a series of offers might possibly rank, depending on the order in which they are received:


•First offer to buy a foreclosure: slightly under the asking price. That's because the buyer is first and there are no other offers on the table.

•Second offer to buy a foreclosure: at the asking price or $1,000 or so above. That's because the buyer figures the first buyer offered full price, even when the buyer did not.

•Third offer to buy a foreclosure: quite a bit above the asking price. That's because the buyer wants to beat out the first and second buyer.

•Fourth offer to buy a foreclosure: above the asking price but it could tie with #3. That's because the buyer is hoping the third buyer might back out.

•Fifth offer to buy a foreclosure: above list price with a hefty earnest money deposit and a shortened inspection time. This is often the buyer who really wants the home.

•Sixth offer to buy a foreclosure: a little bit below list price but all cash. This buyer thinks her offer is golden. Maybe she's right; maybe she's wrong. There are advantages to paying cash to buy a home.
By the time the bank receives 7 or more offers, these offers can be all over the board. Some low, some high and some are incomplete. It might seem as though everybody and their uncle are throwing offers at the bank.

Reasons a Foreclosure Home Can Sell For Less Than the Price You Offered
A lot can happen during an inspection period and offer negotiations. The terms a bank agrees to in advance can change. A tree can fall on the house or market conditions could suddenly worsen. Not to mention, interest rates could go up, putting downward pressure on prices. Here are a few reasons why a home can sell for less when you offered to buy the foreclosure for more:


•The listing agent represented the buyer and purposely, although it is generally against the law in most states, pushed her own buyer's offer to the top of the pile while downplaying the other offers. Not every real estate agent is an ethical agent.

•The home required extensive work, which was revealed during a home inspection. Sometimes buyers can ask the bank to lower the price to reflect a newly discovered condition.

•The buyer might have offered a price that was too high to be substantiated by an appraisal. In that event, generally a bank will lower the price to match the amount from the buyer's appraisal. A low appraisal is the most common reason.
this article was written by
About Home Buying / Selling: Why That Foreclosure Sold for Less Than Your Offer

Elizabeth Weintraub - About.com Home Buying/Selling Guide
to:
jbuchanan
04/26/2011 03:33 AM

Monday, April 25, 2011

VA Tax Service and attorney fees

Tax Service Fee is an UNALLOWABLE Fee for VA Loans.

The borrower cannot pay the lender's attorney fees.

Also, please be aware that if the borrower chooses personal representation by an attorney at the closing, it cannot be the same attorney that is representing the lender. It must be a separate attorney to allow the borrower to pay an attorney fee.

Friday, April 22, 2011

2,000,000 30 year fixed locked @ 5.250%

Purchase price 4,000,000
2,000,000 loan amount
30 year fixed = 5.275% with .125% (2,500) for rate, .125% discount to rate for opening a CD = 5.25% with .125% (2,500) cost to borrower for the rate.
If you need a JUMBO loan with a great rate, I have the produce.

Thursday, April 21, 2011

What is a Credit Report

What is a credit report?
FACT: The Federal Reserve Board (FRB) shares that Your Identity, Your Existing Credit, Your Public Records and Inquiries are all parts of a consumer credit report.
What they fail to mention is – there are some things that are NOT reported that many people think ARE reported or affect their scores.

- Your Household Income or Personal Income is NOT reported or used for scoring.
- If you are married your credit files are NOT merged together. (Only joint accounts
will show on each others’ credit reports.)
- Even though your birthday is reported your age cannot affect your score or chances of
approval. (One exception is the reverse mortgage which has an age requirement.)

Where Can I get a Copy of My Credit Report?
FACT: You can get a one free copy of your credit report from each bureau every 12 months at www.annualcreditreport.com .
Now here’s a secret that may save you some money. Instead of using a credit monitoring service, just log on to the free site and pull one different bureau report every 4 months!

Does the Credit Bureau Decide Whether To Grant Me Credit?

FACT: Another great “truism” is that the credit bureaus DON’T make any credit decisions.

The creditor uses the bureaus information along with other information (like your income) to determine whether or not to extend credit to you. If a score is low studies have shown that up to 79% of credit reports have errors! So even though the credit bureaus generate a score, it doesn’t mean it’s accurate.

How Can I Stop the Unsolicited Credit Card Offers?
FACT: You can OPT-OUT from creditors marketing lists by going to www.optoutprescreen.com and completing the information. You can choose to opt out for 5 years or permanently. To opt-out permanently you will need to mail in the documents requested off the website. This will cut down on your unsolicited mail.
(Don’t worry, if you change your mind you can turn it back on again!)

OPT-OUT - the credit bureaus are in the business of selling your information and making money off of the sale, it's legal and it's done every day.

What is a credit score? How is my credit score calculated?
FACT: The FRB states that your score is “a number based on your information”. True, but there is more.

The FICO algorithms (FICO 70% of the credit scoring market) actually calculate the odds of you having a 90 day late in a 24 month period on a loan obligation. I know its odd isn’t it? That’s why a 90 day late or more has such a negative impact on your scores!

Your credit score is like a “snapshot in time”. The score is calculated at that precise moment in time. So if you can change an inaccurate or un-validated item (i.e. repair, delete or remove) then your score will change immediately!

No mention was made of Vantage Score which has new algorithms and claims to have higher consumer scores. (They currently only have 6-7% of the markets, but are used more in consumer loans - store credit cards for example.)

Credit Reporting Errors….

FACT: This is the last section the FRB speaks about in their consumer report. This has advice for consumers to dispute credit reporting errors on their own. And of course you can do this all yourself. (And you can operate on yourself if you need surgery too…and build your own home… and change your own oil…..)

Seriously you can repair your own credit. In fact the FTC (Federal Trade Commission) requires that credit repair organizations have to tell the clients this in their contracts.

But they make no mention of using an outside attorney or legitimate credit restoration organization to assist you if you need it. You have legal rights under the Fair Credit Reporting Act that your information be 100% accurate and 100% validated that it’s yours. If not they have to permanently delete it. It’s easy to say but usually difficult to get the credit bureaus and creditors to perform due diligence.

It’s legal and ethical for you to get professional assistance for credit restoration. Especially if you have had a divorce, bankruptcy, foreclosure, short sale or medical emergency that’s caused negative or erroneous information to appear on your report.

Another reason we know its legal: If credit repair wasn’t legal a law would not have passed governing Credit Repair Organizations! It’s called Credit Repair Organization’s Act (CROA) and it was passed to govern and protect the consumer.

Spanish Version – When you use the link to the website in the links section, there is a Spanish version on the lower, right hand side of the web page.

Links
The Consumer's Guide to Credit Reports and Credit Scores".
http://www.federalreserve.gov/creditreports/ "


Jennifer Buchanan
Certified Mortgage Planning Specialist
MetLife Home Loans
jbuchanan@metlife.com

Title Source: Title Source in the Community

Title Source: Title Source in the Community: "Making a difference in the lives of our clients, team members and community is part of our culture.  Title Source team members have volunte..."

Wednesday, April 6, 2011

5 Myths for Home Biuyers

5 Myths For Home Buyers

1. The listing information is always correct - not always. When it comes to listings, don't always take the information on the house as being on-target. Some times listing agents don't bother to check out facts they receive from the sellers and the wrong data is posted. Always verify!

2. We will find the PERFECT house - Not always. Buyers may try to focus on something that's wrong with a house rather than all of it's good points. Don't expect to get everything on your wish list and zero in on the items that are the most important to you.

3. If we have several agents looking for homes on our behalf, we'll find a house quicker. Wrong again. By working exclusively with one agent you will improve the momentum and the end results. Working with your Buyers Agent thrives on communication, loyalty and trust!

4. When a house remains on the market longer, the more you can negotiate a better deal. Buyers always ask, "How long has this home been on the market?" They may think the longer its been on the market the more they can negotiate the price down. Not always. It often means the seller is determined to hold on to their price.

5. If the offer is accepted right away, it was too much to offer." No, it's just called buyers remorse. There's no point in second-guessing what the bottom line is, go with your goal and everyone will be a winner.