Also known as mortgage brokers...
I found an interesting article online discussing mortgage brokers on cnnmoney.com today. Here is an overview.
"A good one (mortgage broker) can save you time & thousands of dollars over the life of a loan."
"It's up to you to understand the loans you're being offered and the fees involved."
Key Questions:
Do I need a broker?
-Do you understand mortgage products? 30 fixed, 2/28, 3/27, IO
-Do you know where rates are right now? 30 fixed, short term
Brokers can help. They have access to wholesale rate sheets from many banks & have the time to shop rates. Afterall, its their job.
Who can I trust?
Find out the following:
-How much does the broker stand to make on your loan?
-How will the broker make money (Fees &/or yield spread premium)
-If you don't feel comfortable, talk to another broker!
Am I getting a fair deal?
-$0 application fees. ONLY appraisal ($350) & credit ($13 - $25) should be charged in advance. That being said, these fees should not be required to complete an application.
-What are the pros & cons of at least 3 different types of loans
-Understand terms of loan (rate, fixed or adjustable, prepay, margin, rate cap, etc)
-The broker should be able to guarantee fees once the loan is locked.
-Request paperwork (a copy of the HUD-1) before closing & compare them with the good faith estimate
http://money.cnn.com/2007/07/24/real_estate/salesman_factor.moneymag/index.htm
Showing posts with label Refinance. Show all posts
Showing posts with label Refinance. Show all posts
Feb 11, 2008
Jan 7, 2008
5.875% + 6 months no payment!
This morning, I heard an ad on the radio selling an amazing loan program!
5.875% 30 year fixed rate + No Payment for 6 months!
Wow! It sounds too good to be true.
It is. I haven't called in to shop this loan program, but before getting excited let's take some time to guess where 6 months of payment freedom comes from. It's going to be one of two places:
1 - EQUITY!
2 - Closing Costs (Since we'd be talking about 6 months of payments rolled into your closing costs, I think its fair to say that this 'payment freedom' will in fact be 'equity payments.')
There is no such thing as a free lunch. This program simply offers you the opportunity to eat up your equity. However, it may be a good fit for a select few people.
Let's say you have great credit but have just experienced major unforeseen expenses and need some help to get back on your feet. Perfect!
On the other hand, if you are incapable of living within your means and need payment freedom to pay down $15,000 in credit card debt, this isn't a solution. It's a band aid. The real problems? Financial management, self-control and budgeting.
Shady marketing is just that.... shady! The company has one goal, and that is phone calls. Once you've called, I hope you are ready to be told that you don't qualify because of ________ (select one or more: credit, employment, assets), but you do qualify for this higher interest rate loan that will allow you to skip two months payments!
I hope they mention that every refinance allows you to enjoy no mortgage payment for two months.
I also hope that they disclose where the money for this payment freedom is coming from.
A - Equity
B - Closing Costs
I encourage you all to trust your home to financial professionals who are not transaction driven, but people driven. You deserve a consultation where your needs and goals are discussed. Let's all get past minimum payments and start talking about how you can work towards financial freedom! It can be a reality, but it's not going to fall into your lap!
Wishing you all a wealth of real estate knowledge in 2008.
5.875% 30 year fixed rate + No Payment for 6 months!
Wow! It sounds too good to be true.
It is. I haven't called in to shop this loan program, but before getting excited let's take some time to guess where 6 months of payment freedom comes from. It's going to be one of two places:
1 - EQUITY!
2 - Closing Costs (Since we'd be talking about 6 months of payments rolled into your closing costs, I think its fair to say that this 'payment freedom' will in fact be 'equity payments.')
There is no such thing as a free lunch. This program simply offers you the opportunity to eat up your equity. However, it may be a good fit for a select few people.
Let's say you have great credit but have just experienced major unforeseen expenses and need some help to get back on your feet. Perfect!
On the other hand, if you are incapable of living within your means and need payment freedom to pay down $15,000 in credit card debt, this isn't a solution. It's a band aid. The real problems? Financial management, self-control and budgeting.
Shady marketing is just that.... shady! The company has one goal, and that is phone calls. Once you've called, I hope you are ready to be told that you don't qualify because of ________ (select one or more: credit, employment, assets), but you do qualify for this higher interest rate loan that will allow you to skip two months payments!
I hope they mention that every refinance allows you to enjoy no mortgage payment for two months.
I also hope that they disclose where the money for this payment freedom is coming from.
A - Equity
B - Closing Costs
I encourage you all to trust your home to financial professionals who are not transaction driven, but people driven. You deserve a consultation where your needs and goals are discussed. Let's all get past minimum payments and start talking about how you can work towards financial freedom! It can be a reality, but it's not going to fall into your lap!
Wishing you all a wealth of real estate knowledge in 2008.
Oct 11, 2007
No Cost Loans!!
Yesterday morning, a tv ad caught my attention. 'America's Home Lender' was advertising 'No Cost' loans!
No administrative fee.
No processing fee.
No credit fee.
No title insurance fee.
No recording fee.
No appraisal fee.
This is incredible! This sounds too good to be true!
'No Cost' loans are a great product, but they aren't no cost. (If something sounds too good to be true, it is.)
Below, I'm going to explain how a 'No Cost' loan works.
Appraisal, processing, credit, title insurance, recording and other fees are paid out of a couple of potential sources.
1 - Equity. If the pay off for your current loan is $200,000 but your new loan amount is $207,000, can you guess where the cost of the loan is? You guessed it... EQUITY!
....That being said, if you don't have/want to bring in $7,000 in order to close your loan, this is a good deal, BUT it is not a true no cost loan!
2 - Interest Rate Premium. The higher the interest rate, the more the bank pays mortgage professionals. By raising the interest rate a point or two, there can be more than enough $$ to cover the costs of fees which make it possible to bring no money into closing! Once again, this is not a true no cost loan, BUT it could be the right move for someone who doesn't plan on staying in their home long term, doesn't have $$ to bring to closing or is willing to refinance again in a few years.
Folks, mortgages are expensive. Addictions to refinancing regularly quickly eat up all of your equity (and sanity). Get into a fixed rate mortgage, make an extra payment occasionally (after you put some reserves into your savings account) and give the market an opportunity to provide you with some equity!
Wishing you all a wealth of real estate finance knowledge!
No administrative fee.
No processing fee.
No credit fee.
No title insurance fee.
No recording fee.
No appraisal fee.
This is incredible! This sounds too good to be true!
'No Cost' loans are a great product, but they aren't no cost. (If something sounds too good to be true, it is.)
Below, I'm going to explain how a 'No Cost' loan works.
Appraisal, processing, credit, title insurance, recording and other fees are paid out of a couple of potential sources.
1 - Equity. If the pay off for your current loan is $200,000 but your new loan amount is $207,000, can you guess where the cost of the loan is? You guessed it... EQUITY!
....That being said, if you don't have/want to bring in $7,000 in order to close your loan, this is a good deal, BUT it is not a true no cost loan!
2 - Interest Rate Premium. The higher the interest rate, the more the bank pays mortgage professionals. By raising the interest rate a point or two, there can be more than enough $$ to cover the costs of fees which make it possible to bring no money into closing! Once again, this is not a true no cost loan, BUT it could be the right move for someone who doesn't plan on staying in their home long term, doesn't have $$ to bring to closing or is willing to refinance again in a few years.
Folks, mortgages are expensive. Addictions to refinancing regularly quickly eat up all of your equity (and sanity). Get into a fixed rate mortgage, make an extra payment occasionally (after you put some reserves into your savings account) and give the market an opportunity to provide you with some equity!
Wishing you all a wealth of real estate finance knowledge!
Jun 13, 2007
Ouch....
I'm not referring to my back after 8 hours of laying tile yesterday... I wish I was.
"Colorado came in second with one foreclosure filing for every 290 households, which was 2.3 times the national average. Colorado's foreclosure activity, at 6,231 foreclosure filings in May, rose 9 percent from the previous month and was an increase of more than 50 percent from May 2006" (Source: CNBC http://www.cnbc.com/id/19193611)
OUCH!
What does this mean for homebuyers, homewners and investors?
"Colorado came in second with one foreclosure filing for every 290 households, which was 2.3 times the national average. Colorado's foreclosure activity, at 6,231 foreclosure filings in May, rose 9 percent from the previous month and was an increase of more than 50 percent from May 2006" (Source: CNBC http://www.cnbc.com/id/19193611)
OUCH!
What does this mean for homebuyers, homewners and investors?
- Homeowners - Foreclosures drive market prices down, making it more difficult to sell & move up or to refinance.
- Homebuyers - Lenders have cut back first time buyer programs, but if you can qualify there are a ton of good deals out there.
- Investors - Get off of this foreclosure mindset. Will your investments probably be foreclosures? Yes. 1 of every 290 houses is in foreclosure! Does this automatically mean you're getting a great deal? No way! Look for great deals. Who cares if the property is owned by a bank or private seller?
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