Florida Mortgage

Federal Reserve's Rate Hikes Grind to a Halt

2006-09-27T17:24:00.000-04:00

Some Reservations at The Federal Reserve

Almost all major financial analysts are predicting that the Federal Reserve, under Ben Bernanke's direction, will leave the Fed rate of 5.25% untouched at their meeting today. Now, with the recent reports indicating a downturn in sales of durable goods, plus the continuing drop in new housing starts and home values, some think the freeze on rate hikes will last through the end of the year.

There are some signs that the cooling economy is still stable. The sale of homes actually crept up slightly from July to August, by about 14%, and consumer attitude is still very positive. Still, the backlog of homes for sale on the market, decreases in fuel prices, and a drop in consumer spending all indicate the the Fed's policy of raising rates at every meeting for three years has succeeded in driving down inflation. But have they gone too far? Unfortunately no one, including Ben Bernanke and the directors of the Federal Reserve Bank, knows for sure. As I've mentioned before, there are problems with balancing the economy by controlling interest rates, not the least of which is that the full effects of rate changes aren't apparent until 12-24 months after the change takes effect. Because of this lag in cause and effect, the Fed may already have increased rates above what was necessary to slow inflation to a standstill, and a recessionary trend may be developing. What this means to homeowners and prospective home buyers is that currently rates for home mortgages are fairly stable, and have actually moved slightly lower in the last few months. And interest rates on fixed rate mortgages are still very low.

Let's look at what these conditions mean for homeowners thinking about re-financing, new home buyers, and sellers.

Homeowners

Many homeowners have been misled by all of the news and talk about the Federal Reserve's rate increases. They assume that because the Fed Rate has increased by 4.25% in the last 3 years, that mortgage rates have gone up by that amount, as well. This simply isn't true, and many homeowners with current fixed rate mortgages at 7% or above, or who are hanging on to older adjustable rate mortgages (ARM's) with wide spreads, could do much better by re-financing. The fact is that back in June of 2003, when the Fed Rate was at 1%, the best available rates on mortgages were averaging 4.75-5.125%, a spread of about 4%, with fixed rate mortgages significantly higher than ARM's. Right now, with the Fed Rate at 5.25%, the best average rate on a mortgage is running about 6.125-6.5%, a spread of only about 1%! No matter what your credit rating or debt situation, the average rate you could get today, versus what you would have gotten when rates were at their lowest, is only about 1% higher. Plus, due to other economic factors such as changes in the bond market, fixed rate mortgages are actually averaging rates that are almost the same as ARM's, making them an excellent deal for consumers. So if all of the talk about high rates has scared you off re-financing your current mortgage, take a hard look at what your current rate really is, and contact a Licensed Mortgage Broker to find out if you can do better.

Home Buyers

As I stated in a previous article, it's a buyers market, and that still applies. There are real bargains to be found in housing, as more sellers tire of waiting for a sale, while watching their home's value slowly decrease. Plus, rates on mortgages for new purchases are usually lower than those offered for a re-finance. Waiting for the Federal Reserve to perhaps lower rates slightly sometime next year, may mean that you miss out on buying a home at a bargain price, and the small amount you "might" save in interest, won't even be close to the amount you could save by buying at a lower price. For example, if you can buy now at a 5% below market value price on a $250,000 home, financed at 100%, you would save $12,500 off the price, and finance $237,500 at 6.5%, for a payment of $1501.16 on a 30 year fixed rate mortgage. If the Federal Reserve drops rates by .25% early next year, but the housing market gradually improves, and you have to pay full appraised value for the same home, you'd be financing $250,000 at about 6.25%, for a payment of $1539.40! Plus you will have paid $12,500 more for the same house, and have less equity in that home for the entire time you own it.

Home prices have fallen slightly in the last few months, but there are signs that trend is coming to an end, and no one predicts it to continue in the long term. You only have to decide if you want to already own a home when the recovery is in full swing, or wait until then and pay more for the same house.

Sellers

Although the short term prospects for people trying to sell their home appears bleak, there are some things you can do, depending on your situation, to improve your odds of making a deal you can live with. You basically have two options, and the first one is pretty simple. If you have no pressing need to sell your home quickly, either pull it off the market until conditions improve, or just sit back and wait out the current situation in the housing market. If you do decide to leave it up for sale, consider using some of the suggestions under option two. Or, if your need to sell isn't based on location, but instead on the size of your current home or it's amenities, consider re-modeling or an addition to solve those problems. You need to be careful not to improve your home to the point where you "out price" it's value for the neighborhood its in, but in general home improvements give you a very good return on your investment. This is especially true in the current market, when contractors need work, you can often negotiate better deals, and it is an even better deal if you can do some of the work yourself.

On the other hand, if you really do need to sell your home as soon as possible, there are several things you can do to improve your chances of selling it quickly. First, make sure your home is "ready to sell". Inexpensive repairs or upgrades can make a big difference in how buyers view your home. Walk through and around your home with "buyers eyes", or have a neighbor do it with you, and look for things that are negatives, that can be easily and cheaply turned into positives.

Some suggestions, if needed:

Re-paint the exterior and interior with neutral colors. Many realtors and others suggest yellow for the exterior and very light cream for the interior, but buyers get tired of seeing so many yellow houses with stark white interiors. Still, keep it muted, nothing too bright or out of the ordinary. Consider using a three color scheme for the exterior. For example, a very light gray or tan body color, with a medium gray or brown trim color on soffits and shutters, and a dark gray or brown accent color on window ledges and the front door. You can also do the same scheme with other colors like green or blue (but make sure they are muted, think sage green and gray-blue shades), and also consider substituing white for your trim color in any of these. For the interior, stay very light to make your home appear larger, but consider using a darker cream color in certain rooms to make it appear warmer or cozier. The main thing is to follow a consistent color theme from room to room. Bathrooms and the kitchen are two areas you can consider going a little wild with paint color, just don't over do it.

Speaking of kitchens and bathrooms, depending on your budget, and how much of the work you can do yourself, consider adding new faucets, sinks, or complete vanities. (Don't forget to clean throughly around all additions! A new faucet with a hard water ring around it doesn't impress anyone.) Launder or replace shower curtains, bath mats and area rugs. Make sure bathroom accessories are minimal, look new and clean, and match. Buy a few new, good quality towels, and put them out on towel racks for "show".

Edit, edit, edit! If necessary, rent a storage locker for a few months. You want your home to appear lived in, not cluttered. Clear tables, cabinets, bookcases of all knickknacks and personal pictures, etc., then replace just a few, grouped together by similarity. A good guide for most people is to leave half or less of what was there, and group the items in odd numbers, three or five for example. Take away every canister, appliance, or anything on your kitchen counter that you can, and clean out all of your pantry, kitchen cabinets and drawers. Sell, store or give away anything you haven't used in the last 6 months. Remove furniture that is seldom used to create a more spacious look. For example, if your dining room set has 8 chairs and a leaf in the table, and 2 chairs sit on either side of your china cabinet, put the extra chairs and the leaf in storage. If the room still seems crowded or cramped, consider putting the buffet in storage, and replace it with a narrow hall table from the cramped foyer. Store personal items such as toothbrushes and razors out of sight in drawers or cabinets. Speaking of drawers and cabinets, clean them and your closets out now. It will make moving easier, and make storage appear more spacious. Clothes and shoes that you don't wear regularly, Christmas decorations, photo albums and scrapbooks, even about half or two-thirds of the books on your bookshelves can all be placed in storage. Don't forget the basement and garage. Remove and store anything that keeps you from easily parking your car in the garage. Paint and household chemicals, bicycles or exercise equipment (unless it is in a dedicated "workout room"), all need to go. Consider having a yard sale to get rid of anything you don't want to move with you, and donate the rest to charity immediately after the sale. Then go through and see if you still have any cramped feeling areas or rooms, and edit some more. Then have your friend or neighbor come back through and point out any problems, and edit some more.

Clean, clean, clean! I've mentioned these last two things 3 times each, not because they are very important, although they are, but because you should do each of them 3 times! Clean your entire house from top to bottom, inside and out, with special attention to the bathrooms and kitchen. This should include "cleaning up" your landscaping, as well. Trim hedges and overgrown plants, trim trees (or hire someone), remove dead or sickly plants, add plants to create a theme to your landscaping, if you don't already have one. Mow your lawn high (it looks better), trim around it, and add fresh mulch to flower beds, around trees, etc. Sweep or hose off side walks and the driveway, use a special cleaner to get rid of any oil stains. Rent a pressure washer and buy cleaning solution to go with it, if you have a lot of stains to remove, and consider using concrete stain in a color that complements your homes base color, on any really rough looking driveway or walk way, after its been pressure washed. Then go back to the inside, and clean again. Look for areas you may have missed, cobwebs up high on a cathedral ceiling, for instance. Shampoo your carpets, scrub grout lines, reseal or wax tile and linoleum floors, clean windows inside and out, polish mirrors, wax or oil wood furniture, vaccuum and use odor neutralizer on all fabric furniture, launder or dry clean drapes, clean blinds, etc. Really get into every corner, knook and cranny, and make it spotless. Clean trash cans and ashtrays, clean picture frames and polish glass, clean and degrease kitchen and bath cabinets, clean out and wipe out the refrigerator (don't forget behind it!) and use Pledge or lemon oil, or the appropiate sealer or wax, on your counters and cabinets to make them sparkle. Wait a day or two and rest up, then walk through and clean any ares you might have missed. Now comes the hard part, maintain this level of cleanliness until you sell your home. Pick up after yourself daily, vaccuum and dust often, and mop floors and polish counters, furniture and glass weekly.

Market your home every way, every where, all of the time.

If you are using a realtor, make sure your contract specifies that any buyer you find on your own is excluded from your broker aggreement. Tell all of your friends, acquaintances, co-workers and anyone you meet that you are selling your home. They may not be interested, but they may have other aquaintances that are. If you are selling it yourself, invest in a professionally printed sign, put an ad in the newspaper, list it on free on-line services. Consider putting an ad in the paper advertising an open house one Saturday or Sunday. Contact a Mortgage Broker to assist your prospective buyers with their financing. Many of the better mortgage brokers will provide you with pre-printed handouts for your open house, signs for your yard, free pre-approvals for your prospects, and some will even give you free listings on-line on their web-sites. Some will do a walk through with you, pointing out areas you may have missed when you were repairing, editing and cleaning. They will also do an Electronic Valuation Appraisal of your home, and give you a "real" estimate of the price you should be asking. All at no cost to you. Once you a Mortgage Broker lined up to assist your prospects, put "Financing and Free Pre-approvals Available" in your advertisements. Research and use every available resource you can find to get your home in front of as many people as possible, and make your home the best looking one they have seen.

If all else fails, and you have substantial equity in your home, consider dropping your price slightly, and advertise it as selling for below appraied value. If a prospect wants to know why you are selling below market value, explain that you have owned the home for quite a while, have substantial equity, and can afford to sell it slightly below appraisal and still make a reasonable profit. If you are selling it yourself, you could also explain that you are discounting the price slightly because you will have broker fees to pay. Do not tell them that you are "desperate to sell" or "need to move for your job" or the "market in this neighborhood is terrible right now", or anything else that will cause them to make an offer that is ridculously low. Besides, these aren't the "real reasons", they're just conditions that have caused you to reconsider the amount of profit you can live with.

So this is the bottom line. If you are considering buying a house, or re-financing your current home, conditions are probably a lot better than you thought. If you are selling your home, you will face some competiton, and demand is low, but there are still many buyers out there, and almost 110,000 homes were sold nationwide last month alone. You just may have to work a little harder to make sure that yours is one of the ones that sell this month.

FMI

The Federal Reserve Pauses in Their Rate Hikes

2006-08-22T02:55:00.000-04:00

The Federal Reserve Pauses in Their Rate Hikes

Well, the two big news stories in the last few weeks were the Federal Reserve Bank's decision to not raise rates for the first time in 3 years, and the terroist plot by Islamic extremists that was foiled in Great Britain. How these two things are related helps explain why the rates on a 30 year fixed rate mortgage actually went up in the days following the Fed's announcement. Of course, the reports after the announcement that showed that inflation wasn't slowing helped spark the bond market, which naturally drove up long term rates. But what this phenomenon actually helped highlight is that although the Fed can influence rates, they can't totally control them.

One of the major problems with the Federal reserve's policy of raising rates to influence inflation is, by their own admission, that the results of rate increases aren't fully seen in the economy until 12-18 months after the increase takes effect. This means that the "best" rate to keep inflationary pressures at bay might be the Fed rate of a year and a half ago, and cuts in the current rate may be necessary to forestall a recession. Although the current rates available to consumers for a new purchase or refinance are actually quite reasonable, at only 6.5-8% (remember the 80's, when rates on mortgages ran as high as 18%!) many people have adopted a wait and see attitude when it comes to buying a new home or refinancing their current one. Thus, the huge drop in new home sales and starts, and the equally large increase in homes on the market versus buyers wanting to buy them.

The feeling among consumers seems to be that rate cuts are on the horizon, and the instability caused by the attempted terroist attacks also contributes to the instability that makes consumers balk at taking any type of risk. The fact that the pressure of increased oil costs is about the only thing fueling inflation at the moment, also doesn't help. This may lead to the Fed maintaining a higher rate than is really necessary, leading to a real estate market collapse that is both unprecedented and unwarranted. The good news is, buyers who aren't afraid of the current rates can really get some good deals on the home they want. Most buyers are afraid of "paying too much in interest" at the moment, so houses are sitting on the market for months at a time. There are bargains to be found at 10-20% below appraised value or more, and a smart buyer can take advantage of this situation. Plus, in a year or two, if rates do gradually creep down (which is my best bet on what will happen) they can then refinance at a lower rate, and still have ten of thousands of dollars in equity. Plus, as an added bonus, those borrowers in an Adjustale Rate Mortgage (ARM) at the moment, should see their rates decreasing.

Another factor that influences inflation, and then effects interest rates, is the manipulation of U.S. currency by foreign governments. Without going into too much detail, China is one of the countries currently driving up inflation in the U.S. Every time a U.S. citizen buys a product made in China, dollars are shifted to the Chinese economy, and the trade deficit with China increases. The Chinese investors then use those dollars to buy up U.S. Treasury bonds, which fuels inflation.

So, we have a variety of factors at work that cause changes in the interest rate you pay, and also cause inflation or recession to occur in the United states. Changing one of those factors, as the Fed does, can influence the others, but can never stop those factors from changing in response. Now the question is, "What can an individual do to influence how the factors that influence their day to day existence?". One thing each of us can do is something that was a catch phrase from 20-30 years ago, and that is to "Buy American". Although that is difficult to do that today, with components for the various things you might purchase being manufactured in a variety of different countries, and U.S. companies being bought out and owned by foreign conglomerates, it is a goal still worth pursuing. It would only take a small shift in consumer buying patterns to influence both the trade deficit, and the economy in the U.S. And when you cosider that the quality of American made products is still, by and large, excellent, the overall cost to consumers is actually negligable.

The other major factor in this equation that each of can control is oil. Wars with, treaties and agreements entered into, sanctions imposed against, and aid and concessions given to oil producing countries are a major source of drain on the U.S. economy. The solution to this problem is both simple and attainable. As a country, we need to stop depending on foreign oil for our energy supplies. Simply cut off all interaction with, commerce with, aid given to, immigration or political asylum allowed from, any country that supports or allows terrorist activity. The benefit to the U.S. economy would be billions of dollars in scope, and those countries could no longer complain that we were intruding on their culture or way of life. But, how could we survivie without the influx of oil from these countries? The fact is that the technology does exist, and it is available today, not at some point in the future, but it simply isn't being utilized by a governmet that has too many ties to maintaining the "status quo", when it comes to the oil industry. This technology would probably be commonplace today, except the federal government of the U.S. and the Europeon nations can't control and tax the prodution of water, so it will cost them literally billions of dollars in revenue, when it becomes the norm. This is the same reason that none of the auto manufacturers or power companies have embraced this technology.

So, what can you do? Basically, there are three things each of us can do:

1. Take advantage of the bargains now available in the housing market. Buying is always cheaper than renting, in the long run.

2. Buy American whenever you can. The few dollars more you spend will be more than made up for, in most cases, by getting a higher quality product that lasts longer.

3. Explore and promote alternatives to an oil based society, For more information on a technology that has been around for decades, and that would allow you to run your car, lawn mower, portable generator, etc. on water, not gas, check out the posting on another blog, http://www.upaas.com/blog. It can be done, and it is both cheaper and safer, and virtually non-polluting.

The conclusion I'm getting to is simple. Rates are coming down, bargains can be had, and water fueled technology is becoming available, so the future does look bright. However, you can't wait or hope that big corporations or the government will help you to take advantage of these opportunities, you have to take action yourself to succeed. Check out the posting on the blog I've listed above, and the links to the YouTube video that actually shows this technology working in a real vehicle. Consider helping yourself, the country, and the world by spending a few dollars to convert your current car over to a water based fuel system, rather than buying a new fossil fueled vehicle. The bonus is that you get to save the approximate cost of the retrofit each year for every year you own the car. Check it out.

Is the Federal Reserve’s Rate Raising Fight Against Inflation Going Too Far?

2006-05-07T02:27:00.000-04:00

When Will Ben Bernanke Blink? Is the Federal Reserve’s Rate Raising Fight Against Inflation Going Too Far?

There is a lot of speculation and debate among economists about whether the Federal Reserve will raise the Fed’s short term interest rate to 5% in their meeting on Wednesday. If they do, it will make 16 straight jumps of .25%, since it reached it’s low point of 1%. Most people seem to feel that statements by Fed Chairman Ben Bernanke have sent mixed signals about whether or not this meeting will be the time for a pause. Or, will they keep consistently raising rates through the rest of the year? No one at the Fed seems willing to commit to an answer. This is no surprise, considering the economy seems to be sending mixed signals as well, and although the risk seems small, some economists fear a pause in rate increases would trigger a rapid increase in inflation.

One problem with judging how far to go with a rate based battle against inflation is the fact that many economic indicators take months to show their full impact. Recent decreases in retail jobs, coupled with increases in manufacturing, apparently caused a sharp jump in the average hourly wage last month. This doesn’t appear to be an indication of true inflation, just a shift in the job market. The increase in oil prices only fueled a small inflationary spark, but as the fuel costs filter down through all manufacturing and transportation in the next 60 days, it could cause widespread price increases. Mr. Bernanke and the Fed have to judge whether its time to put on the brakes, but they can’t know for sure how fast they’re going.

Some economists blame the volatile changes in the Fed’s policy under Alan Greenspan from 1987 to 2006 for the inflation and recession that occurred, as well as the crash of the tech stocks, which caused huge losses in the stock market. During that time, the Fed’s policy changed 7 times in 19 years, going back and forth between raising and lowering rates. Several of these changes were quick and radical, and the effects, of course, were dramatic. From the crash in 1987, until 1990, the Fed raised rates as inflation picked up. Then from 1990 to 1991, they sharply cut rates during the recession. In 1994, Greenspan overreacted to a fear of inflation by raising rates, but the inflation fear was overblown, and never materialized. It did serve to create a very bear market on Wall Street, however. As a result, when rates gradually decreased, and more money was injected into the economy, a massive bubble developed in high tech, and the stock market in general, as an almost irrational exuberance caused both the Dow and the Nasdaq to soar to new levels.

When Greenspan reversed his position and decided to quickly increase rates and curtail liquidity in 2000, the stock market collapsed and entered a three-year bear market – the Dow losing almost 50% of its value, the Nasdaq over 70%. Later in 2000, Greenspan embarked on a road of reducing rates all the way down to 1%, what many consider an artificially low rate of interest, based on his fears of deflation leading to a recession. Since 2003, the Fed’s current policy of raising rates has continued unchecked.

One thing that is not receiving much attention in all of this is how these steady increases are effecting the bond market. During the time that artificially low interest rates ruled, Wall Street investors bid up mortgage REITs, and other interest-sensitive investments, to astronomically high levels. Now, under Alan Greenspan, and Benanke, the Fed has embarked on a campaign of raising rates every six weeks. As a result, the mortgage REITs, muni bonds, and other interest-sensitive investments have come down.

An inversion in that market has caused a change in mortgage interest rates that hasn’t been seen in over 20 years. Right now, fixed rate mortgages, which are traditionally much higher than adjustable rate mortgages (ARMs), are basically at the same interest rate, or lower. While this makes fixed rate home loans more attractive to both buyers and homeowners, in the long term it may prove to be a more expensive choice, if the rates on ARMs decrease. But the problem for many homeowners is that their current ARM, which was a great deal originally, is now costing them more every month. Even ARMs that are based on a traditionally stable index, such as the COSI (Cost of Savings Index, an average of what banks pay as savings account interest), have seen large increases in the last year.

“It’s a difficult situation to judge”, said Karen Pooley, President of Star Mortgage, Inc., in Tampa, Florida, “but right now, I’m telling my clients with ARMs that their best bet is to ride out the current increases. In the past, ARMs have always outperformed fixed rate mortgages in the long run, but you have to be willing to live with the changes as they happen.”

“One option I've used with a few people who were having real problems making the payment, and who had sufficient equity, is to refinance with a fixed rate mortgage at about the same rate, plus get them some cash out.” Ms. Pooley continued, “This allows them to skip a few payments, and gets them some extra cash on hand to help cover their new, slightly higher payment.”

Even Alan Greenspan, in a speech early in 2004, had recommended ARMs as a better deal for homeowners, and said many could have saved thousands of dollars a year over the last decade, if they had one. But this was before the Fed’s constant increases had caused such a significant increase in the average rate on all mortgages, and especially on ARMs. One thing Ben Bernanke and the Federal Reserve should consider in their meeting this week, is how the constant increase in rates is affecting homeowners who took Alan Greenspan’s advice, and now have payments much higher than they expected. According to industry reports, foreclosures are on the rise, and that’s an economic indicator that may be telling Mr. Bernanke and the Fed that the time to pause in their rate hikes is actually past due.

FMI

Ameriquest Settlement; "Don't Judge Too Quickly"

2006-03-05T15:47:00.000-05:00

Ameriquest says, "Don't Judge Too Quickly". I say, "Don't Forget So Easily"

I may seem to be going on a bit with another article about the Ameriquest scandal and judgment, but I simply couldn't ignore their new series of television ads. I should mention that the settlement was actually for ACC Capital Holdings, the holding company for three retail subsidiaries, Ameriquest Mortgage Co., Town and Country Credit Corp. and AMC Mortgage Services Inc. Less than a month after making an out of court settlement for $295 million dollars plus $30 million in attorneys fees, Ameriquest's marketing machine was back in force, with a series of commercials that seemed to be aimed at damage control. One showed a woman on an airliner stumbling due to turbulence, and accidentally winding up straddling a stranger, with her blouse also "accidentally" unbuttoned. There are no spoken words, just gasps and looks of discomfort from her fellow passengers as the lights suddenly come up. Another shows a doctor zapping a fly, and holding the paddles over the unconscious patient as his family walks in. He says "That killed him". The tag line on both is "Don't Judge too Quickly ... We Won't", followed by the Ameriquest logo. The more recent ones are simply a short, 15 second spot of the tag line "Don't Judge Too Quickly", followed by the logo.

In a recent article in the Washington Post by Kenneth R. Harney, titled "Don't Believe It Unless It's in Writing", he asks a series of questions;

"Did your loan officer sit you down and walk you through all the key operational details of your most recent mortgage before you signed?
Did you see a copy of the appraisal and have a chance to review it carefully?
Did you understand when, if ever, a prepayment penalty might take effect to discourage you from refinancing? Or was that whole subject left a little fuzzy?
Did you receive a copy of your loan and settlement cost good-faith estimates within three business days of application?
These may sound like the most basic of questions and you may well answer: Duh! Of course I understood everything I needed to, and yes, my loan officer was an absolute font of useful information.
But the recent $325 million multi-state legal settlement involving Ameriquest Mortgage Co. suggests that not all is well on the home loan front, and that even experienced buyers and refinancers need to question more, review more, probe more before committing to what is often the biggest debt burden of their lives."

And Mr. Harney is right. Not only are these the most basic of questions, but are all matters that are covered by law. Laws that set standards that all brokers and lenders are supposed to adhere to. Standards which the president of Ameriquest, billionaire Roland E. Arnall, has admitted publicly that they did not always manage to comply with.

The task force formed to investigate Ameriquest has never specified the allegations made against Ameriquest in 49 states and the District of Columbia, but Arnall disclosed the information in writing to the Senate committee as it considered his nomination by president Bush to the position of ambassador to the Netherlands. According to Arnall's written testimony, the attorneys general alleged that the company had pressured appraisers to inflate property values so borrowers could get bigger loans, charged upfront fees without reducing interest rates as promised, and told borrowers to ignore written information about interest rates because they would give them lower rates later. The company then is alleged to have given them the higher interest rates instead. Ameriquest is also alleged to have assured borrowers their loans would have no prepayment penalties, then inserted such payments into the final loan documents; delayed the time period between the loan closing and the funding; and misrepresented fees and costs. At the November Senate hearing, months before the settlement agreement, Arnall stated that Ameriquest had not handled its dealings with customers "perfectly" and that some employees had been fired.

But according to Connecticut Attorney General Richard Blumenthal, who said he could not discuss any specifics about the negotiations before the settlement had been reached, (and was bound by the agreement afterward), many consumers had been badly taken advantage of in their dealings with Ameriquest.
"What we've seen in human terms is catastrophic damage for some individuals who were misled or deceived or who received loans greater than they could possibly afford because of inflated income levels or appraisals resulting from employee misconduct," Blumenthal stated "We're taking action that will be designed to stop these abuses and effectively scrutinize and monitor these systems going forward. The abuses are systemic in number and nature."

Others sanctions imposed on Ameriquest are specifically designed to hamper them and their other lending groups from violating legal and ethical practices in the future. Still, nothing can be said about ACC Capital Holdings having really done anything wrong, by me or by anyone else. That also was part of the agreement. ACC Capital Holdings and Ameriquest admitted no wrongdoing, and their licenses to do business were not restricted in any way as part of the settlement. Now a total settlement of 325 million dollars might seem like a lot of money, and no one outside of the company appears to know exactly how much they profited from these suspect transactions. But, some estimates put the profit figures between 6 and 12 billion dollars ($6-12,000,000,000) off of those loans, which would make the settlement amount less than the sales tax rate in most states. Of course, Arnall has been President Bush's single largest campaign contributor since 2002, and he is Bush's candidate for ambasador to the Netherlands. He has also made large contributions to many Democrats, including U.S. Representative Tom Lantos (D-Calif.), who endorsed Arnall's nomination to become ambassador at the Senate hearing. So, there are those expenditures to consider, but in Mr. Arnall's case, it seems it was money well spent.

My problem with Ameriquest's new ad campaign is threefold. First and foremost, is the implication that any legal or ethical problems with their lending practices were strictly "accidental", and that firing a few low level employees have solved the problem. Both statements from past and current employees, as well as a somewhat guarded statement from the Connecticut Attorney General, seem to more than suggest otherwise. Although, of course, the terms of the settlement don't allow any definitive accusations.

Second, their campaign seems to imply that all brokers and lenders are using the same illegal and unethical practices they were accused of, so those practices are no reason to "judge" Ameriquest. After all, there was no legal statement of guilt on their part, or judgment of guilt by the court system, so they must be innocent. This implication hurts all of the small, independent brokers that adhere to not only legal, but also ethical practices, with every client they have the privilege to help. I've mentioned this before, and I can't help saying it again, sometimes bigger isn't better, or even cheaper. If you want real assistance with one of the biggest financial decisions of your life, try contacting a small, local Licensed Mortgage Broker.

Finally, I feel their failure to admit any guilt, pay all penalties and make restitution in full, and only resume business after carefully overhauling all of their procedures and practices is insulting. Not only to myself and all of the other conscientious brokers and lenders out there, but also to consumers that might be considering using them for a mortgage.

Yes, Ameriquest did pay back a small percentage of their profits in a settlement to some consumers, and they are under the gun from a committee that's supposed to insure that they don't promote any unethical practices in the near future. Still, their apparent lack of remorse and failure to fully compensate all consumers who were damaged by their practices, plus their "wink, wink ... nod, nod" attitude, makes them seem just a bit insincere. Ameriquest representatives say their commercials are referring to the fact that they don't judge consumers who have credit issues, but even their explanation refers to the idea that "anyone" can make a mistake. I'm not the only one who has a problem with their ads, including some of their past customers, and other editorials have pointed this out.

Luckily, it seems that, contrary to Ameriquest's hopes, maybe people don't forget that fast. Perhaps their ad campaign is a direct response to the fear that potential clients have been flocking away from them, and other large on-line lenders, in droves. Since ACC Capitol Holdiongs has 360 days to fund the settlement agreement, many consumers may have decided not to help them fund it with their money. When Ameriquest says "Don't Judge Too Quickly", it serves to point out Ameriquest's concerned that many people may think they were never properly judged at all, but simply "skated by" on political influence and financial clout.

The decision, of course, is yours. You can get a mortgage through a large corporation, be assigned a number (and perhaps get treated like one), and then fight to get what ever service you can, from a company that is being forced to comply with ethical practices. Or, you can contact a local Mortgage Broker who will treat you right, just because it's the right thing to do. They have access to all of the same loan programs, and really appreciate your business. They'll listen to your concerns, find the best program available for your needs, and you can start to develop a relationship that will last a lifetime. Especially in light of recent events, the choice seems pretty clear.

FMI

What the Credit Reporting Agencies Don’t Want You to Know

2006-02-25T23:51:00.000-05:00

A Few Things Credit Reporting Agencies Don’t Want You to Know

Everyone needs to take advantage of the new Federal Free Annual Credit report program, and everyone means you! Why? Because the odds are about 4 to 1 against your credit report being accurate at all 3 bureaus. That’s one of the things the big three credit reporting agencies don’t want you to know. A recent study did random pulls of credit reports from Equifax, Experian and Transunion, with the consumers involved prior permission. They then contacted each consumer and verified all information on those reports. In 79% of the cases, there were one or more errors on the reports from at least one agency! This indicates that there is about a 4 out of 5 chance that there may be an error on your credit report.

Now, some of these errors were pretty harmless, such as incorrect past addresses or employers, but a lot them were not. And many of these errors had a negative impact on the consumers credit scores. This means you could be turned down for a loan or credit card, or charged a higher interest rate for your loan, all through no fault of your own. In our own experience in consulting on Florida mortgage loans, we’ve seen many instances of errors somehow appearing on clients reports. One client had several derogatory items listed, simply because he had once lived in the same apartment complex as a man who had the same first and last name, and who also had some problems with his credit. Even though their age and middle initials, and in fact their addresses, were different, the bad credit data had shown up on his report as well.
And of course, they obviously had different social security numbers...

In another case we had a customer who had a collection listed on their account for an unreturned cable box. After disputing it with the cable company for several weeks on the phone, and reporting the discrepancy to the bureaus, they finally dug through old paperwork from 3 years before and found the receipt for the unit's return. Only after carrying the receipt down to the cable company for their inspection was the collection removed from their account, and then it was simply posted as a collection that had been “satisfied”! It took another series of phone calls, letters to all three bureaus, and almost 2 months to get the incorrect item removed completely.

In other instances, we’ve seen derogatory credit posting on a son’s account from his mother’s credit history, or on a daughter’s from her father, and vice versa. The bureaus “assumed” that since their addresses were the same, that there was a legally binding link between their credit. But this would normally only apply if they were husband and wife, or if they had applied jointly for the credit. In these cases, they had not applied jointly, and one would think that the 25-30 year age difference would give the credit bureaus a clue as to their real relationship, or would at least cause them to seek verification of a marriage through public records.

In my own case, one of my credit card accounts has now shown up on my wife’s credit bureau reports, simply because I mentioned her name on the phone to a credit card company representative, while I was declining their offer to add her to the account. In this instance, it does neither of us any harm, since we both have excellent credit, and as husband and wife are responsible for each other’s debts anyway, but it was an “intentional error”, none the less. I would be willing to bet that the credit card company offers a bonus to their reps for getting co-signers added to an account, and the rep I was speaking to simply cross referenced my address to find my wife’s account.

When confronted with the errors discovered in the study referred to above, all of the credit bureaus had basically the same response. Human beings help compile the data in these reports, and being human, may make mistakes. All of the bureaus have procedures in place for consumers to dispute erroneous items, and say they are happy to remove any that are shown to be incorrect. But if any of you that are reading this have ever tried to have an erroneous listing removed from your credit report, you know what a frustrating and time consuming job it can be. Plus, in my experience in dealing with client’s credit reports, I have rarely seen good credit listings from another consumer magically appear on someone’s report, but I see derogatory ones that don’t belong there, show up all of the time. Somehow the credit bureaus manage to spot differences in consumers account details and social security numbers when posting good credit lines, but ignore them on a regular basis when posting bad ones. Some consumers would just as soon pay off a small delinquency, even if it isn’t theirs, rather than holding up buying a home or a car for 30-90 days while they dispute the item and get it removed. This of course benefits the company listing the delinquency, since they really don’t care who pays, as long as someone does.

All of these problems are why the credit bureaus are now required by law to give you access to your credit reports for free on an annual basis. Even if you’ve never had a issue with your credit rating before, you need to take advantage of this free service. Do it before you need a new mortgage or other loan, so there are no surprises when you do apply. And do it every year, to insure that no new errors appear on your report. It only takes a few minutes of your time to order the reports, and it is time well spent. Consider this, at current fixed rates for an average $200,000 Florida mortgage, a half of one per cent increase in you interest rate, caused by an error on your credit report lowering your score, could cost you over $23,400 in interest over the life of the loan. If it takes you 1 hour a year to request and look over your credit reports to correct that error and save that money, (and it shouldn’t even take that long), you’ll have been paid about $780 an hour for that time.

Now, maybe the credit bureaus are correct, and are being honest, when they claim that all of the mistakes in their credit reports are simply human error, but that doesn’t mean you have to be a victim of those errors. Find out NOW if your reports are accurate, and make sure to get any errors corrected before you need your next loan. Don’t be put in the position of having to pay for someone else’s mistake in order to buy your dream home. Or having to pay too much, year after year, for that home.

I’ve said before that dealing with a local, fully licensed Mortgage Broker, is the best way to get your home mortgage, and this is just another reason why. With most banks and large, on-line lenders, all you’ll get is a standard turn down letter if you have problems with your credit. But a truly dedicated Broker will discuss your credit report with you (although they are restricted from actually giving you a copy of your reports), help find any mistakes, and help you get them corrected. Now I may well be prejudiced, considering I’m associated with the one of the best, if not the best, Florida Mortgage Brokers, but considering that about 4 out of 5 clients can use that help, and banks and on-line lenders usually don’t offer it, I think my opinion is actually fair and unbiased. Solving one problem with your credit report could save you 5-10 times a Mortgage Broker’s average fee. And that’s not counting the lower interest rate you’re likely to get to begin with.

To get a copy of your credit reports for free go to this website;

http://www.annualcreditreport.com or call 1-877-322-8228

To contact any of the big three credit bureaus, use the numbers below;

Equifax 1-800-685-1111

Experian 1-888-397-3742

Transunion 1-800-916-8800

And finally, if you live in Florida and want getting your Florida Mortgage or your Florida Refinance Mortgage to be as easy and relaxing as a day at the beach, with no hassles and no pressure, call;

Star Mortgage, Inc. 813-882-8878

Or visit their website at;

http://www.starmortgagebroker.com email - starmtg@tampabay.rr.com

So, check your credit reports now, and correct any mistakes before they become an issue. One thing your free reports won’t give you is your actual score, but if your report is clean, and you’re still paying more than 7% on your first or second mortgage, give Star Mortgage a call. They’ll pull your credit just one time, run it through a matrix of hundreds of programs from dozens of wholesale lenders, and find the best mortgage to solve your problems and save you money. The consultation and mortgage analysis is free, and you’re under no obligation. If there is a solution that will work for you, they’ll be happy to help you find it.

FMI

Federal Reserve's Balancing Act Creates Unique Situation

2006-02-21T01:53:00.000-05:00

Unique Opportunity for Consumers

The Federal Reserve's consistent increasing of rates since June 2004, and recent statements by new Federal Reserve Chairman Ben Bernanke, have created a unique opportunity for consumers. During a Senate Banking Committee hearing on Thursday, Bernanke refused to say how high interest rates would need to climb in order to balance the economy, but economists predicted at least one more increase at the end of March, when he has his first meeting as Fed chief.
"There are two possible mistakes. One is to go on too long and one is not to go on long enough," Bernanke said during the hearing. "And, it's a very difficult balancing act."
On the future course of interest rates, Bernanke made a statement Wednesday before the House Financial Services Committee saying that he agreed with an assessment made by his Federal Reserve colleagues in January, and that interest rates would probably need to move higher. Because of this gradual increase in the Fed rate, the available rates on fixed and adjustable rate mortgages have converged, and in some cases, inverted.
"For the first time in 5 years, many lenders have rates on fixed rate mortgages that are almost the same as an adjustable rate mortgage (ARM)," said Karen C. Pooley, President of Star Mortgage, Inc. "This means that many people who shied away from refinancing because the best rates were only available on ARMs, can now get a fixed rate that is much better than what they have now. And even people who have seen the rate on their ARM shoot up in the last year can usually refinance at a lower fixed rate."
In a speech to the Credit Union National Association early in 2004, Federal Reserve Chairman Alan Greenspan had stated that American’s preference for fixed rate mortgages means many are paying more than necessary for their homes, and suggested consumers might benefit from considering ARMs as an alternative. In fact, a Federal Reserve study at the time concluded homeowners could have saved tens of thousands of dollars in the last decade if they had ARMs. But the Federal Reserve’s policy of raising rates 14 times since June 2004 has challenged the validity of that position today. Normally, the difference between rates for fixed and adjustable rate mortgages can be more than 1%, with the ARMs having the lower rate, but now, for most consumers, the rate is almost the same on both.
There are still millions of homeowners with fixed rate mortgages that have interest rates of 8% or more, and they could save thousands of dollars a year by refinancing before the Federal Reserve’s next meeting on March 27-28. Many homeowners may think they have already waited too long, and that rates are now too high, but that isn't the case. There are still many programs available from Licensed Mortgage Brokers, who deal with wholesale lenders, that have fixed rates that are in the 6%-7% range, and actually less than the Prime Rate. A drop of just 1% in the rate on a $200,000.00 loan can lower your payment over $1500.00 a year, and many homeowners could actually lower their rates by 2% or more.
"They can normally save back the total cost of the new loan in 2-3 years or less," said Ms. Pooley, who is a Licensed Florida Mortgage Broker, "and pay little or nothing out of pocket to do it."
Economists are predicting the Fed will boost rates by another quarter percentage point to 4.75 percent at their next meeting, and that the average rate on home loans will increase by another one-half of a percent or more by the end of the year. Although economists, and Fed officials, disagree on how many more rate increases may be coming, most agree that the Fed's rate-raising campaign may be coming to an end soon.
According to Ms. Pooley, "The current situation is something that probably won’t last very long, and anyone who wants to get these below Prime fixed rates on a mortgage needs to act now, before the opportunity is gone."
Star Mortgage, Inc., is a licensed mortgage broker based in Tampa, Florida, and offers prospective clients a free mortgage analysis and consultation. They specialize in mortgages for the Florida market. Further information and a short on-line application are available on their web site at www.starmortgagebroker.com.

FMI

Lack of Ethics Comes From the Top

2006-02-06T00:53:00.000-05:00

This is a little off topic for this newsfeed, but I do click through and read other listings while I'm here. This seemed pertinent to the recent Ameriquest scandal, and how less than ethical behavior is rationalized by those engaging in it. This is a post I saw on another blog;

How to rise to the top of Memeorandum 101
Alex and I discussed, at length, strategy on getting our posts to rise to the top of Memeorandum. You see, it's a well-known fact that appearing on the pages of Memeorandum means you have 'arrived'. Getting to the top makes you a total rockstar.

However, it is actually trivially simple. I've put together a wee step-by-step (There may or may not be a screencast in the future) 'how to':

Get quoted saying something quite controversial

Squawk about the quote

Get a whole bunch of attention for squawking about that quote

Watch your Memeorandum star rise

Wish you had just shut up in the first place 'cause nobody but youwould have probably even noticed it
See? Simple. ;)

[alternatively, you can take the fasttrack and just 1. say something incredibly controversial, 2. have others squawk about it, 3. watch your star rise...but it's gotta be good...like an article on blogging lynch mobs or something]

File under: suprcilious
posted by http://www.horsepigcow.com/2005/11/how-to-rise-to-top-of-memeorandum-101.html
at 8:22:00 PM

If you go to the link for Alex, he actually does have a podcast on how to do this. Alex then states that "It's better that we find out how this works and do it before the spammers do (the same thing)". In other words, he doesn't feel it's wrong for his friends and him to hack Memorandum's code, just anyone else who has a different reason to do it. Now this may have some merit, (killing someone who is threatening your life is much more justified than killing someone in order to rob them, for instance), but then proceeding to make a podcast instructing anyone who sees it on how to do it seems a bit like the pot calling the kettle black. It seems to me the whole reason Alex and the rest of his group did it was for attention (or publicity), much the same reason as the worst of the so called "spammers" out there.
My point here is simple. I don't have a problem with Alex or his friends hacking into Memorandum, or teaching others how to do it. Really, it's a small thing in a very big world. But the lack of ethical consideration is a big thing in a big world, in a lot of other cases. The recent Ameriquest indictment that I commented on before is one example. Although Ameriquest agreed to a huge settlement of 295 million dollars, they "refused to admit any wrong-doing". Home Finance Corp had an even higher settlement back in 2002, with the same failure to admit any guilt. Now I know this is simply a legal, corporate ploy to avoid further losses through lawsuits, and no one believes that either company was blameless, but should they be protected by their lack of admission?
There are plenty of small, ethical, well intentioned Mortgage Brokerages out there that were penalized by Ameriquest's lack of ethics (by losing business to them because these small companies wouldn't lie to prospective clients to "rope them in"). Then they are further penalized by the bad rap the whole industry suffers from the large corporations unethical behavior. I've mentioned before that they are usually your best bet for getting a great deal on your mortgage, because they won't con you or scam you to get your business.
I guess what I'm saying here is that ethics is a "slippery slope indeed", and one false step can lead to a big slide. Hopefully Alex and his friends simply pointed out a problem that will soon be fixed, and their reasons for doing it were well intentioned. I don't think I can say the same for most other ethical slips.

FMI

Ameriquest Scandal Results in Second Largest Settlement Ever

2006-01-23T11:49:00.000-05:00

Why a small, locally owned and operated Mortgage Loan Brokerage is your best bet for your mortgage.

If you've seen the news in the past week, I'm sure you've heard something about the Ameriquest scandal and the huge settlement. Ameriquest, one of the larger on-line lenders, settled out of court for $295 million dollars (that's $295,000,000.00!) on charges of multiple acts of lending fraud in 49 states. Abuses included forging documents, appraisals and employment records from borrowers, as well as upping interest rates substantially from quotes, and charging undisclosed fees at the time of closing.

The worst of it is that they aren't the worst of it! Household Finance Corp. had a settlement for $484 million in 2002 for similar charges of lending fraud. Make sure you know who you're dealing with when you go to find a mortgage. Many times the hype and unbelievable low rates and fees you see advertised on web sites are unbelievable because they never happen. An on-line site may quote you closing costs that seem very low, but don't include escrow costs, their broker fee, or their processing fee. At closing, if you read every piece of paperwork, (and who could!), you may find your actual costs are double or triple their estimate! That's because what some companies call "closing costs" only include title fees and doc stamps, the fees they (and the actual lender) charge aren't included. Service at some of these large corporations consists of dragging you in with promises that never happen, getting you to closing with no other options, and forgetting you exist as soon as you sign.

We've told you before that your best option when looking for a home mortgage is a Professional Licensed Mortrgage Broker, and now the news is again saying the same thing. If you live in Florida, try Star Mortgage , they'll treat you right. You'll know before hand what your actual closing costs are, including their fee and Crow Processing's charges. There are no surprises, and you'll get their Prompt, Professional, Personal Service at no extra charge. Yes, they will charge you a fee of 1-2% on your loan, but compared to Ameriquest's hidden charges of 8- 10 % on some of their loans, it's a real bargain. Plus you'll get the best rate and terms available from a nationwide network of lenders, not whatever program some unlicensed "Loan Consultant" in a boiler room is told to push that month.

No matter what your credit or situation is, if you want the best rate on the best Florida mortgage for your particular circumstances, contact Star Mortgage by clicking here. No hype, no hassles, no unbelievable rates that no one can qualify for, just a mortgage program designed for what you want and need, and personal service for every client. There's an old adage that says "You get what you pay for", but at Star Mortgage, you'll get much more.

FMI

What Information will a Florida Mortgage Broker Need From You?

2005-10-06T09:42:00.000-04:00

I found some interesting questions and answers on an affiliate's web page, and I'll reprint some of them here with my own explanations added. The first one is;
What Information Will a Florida Mortgage Broker Need From Me? OR
What questions will a Florida Mortgage Broker ask somebody who’s looking for a Mortgage?

There are three main things you will be required to provide:

i. Verification of Income

ii. How much and where the Down Payment is coming from

iii. Personal information for Credit Checks (Birthday, Social Security Number, Address, Job Letters, Pay Stubs, 3 years worth of Tax Returns, 3 months worth of Bank Statements, any current Retirement Savings Funds…)

Your Banker or Broker will want to confirm your ability to qualify by doing a GDS Ratio (Gross Debt Ratio) and a TDS Ratio (Total Debt Ratio).

A Gross Debt Ratio is determined by taking the Mortgage Payment, the Property Taxes, and a Heat Component (really hot areas will be exempt from this, I’m guessing!), which is usually around $50.00. These numbers are added together. That number is multiplied by 12, then divided by your Gross Income Amount. This number can’t exceed 32% of your Gross Income. Some banks &/or brokers may have different criteria, but this is a commonly used method to see if a client can qualify for a mortgage.

The Total Debt Ratio takes the above information (the GDS Ratio) along with all other debts and payments (whatever else you have to pay per month – credit cards, support payments, etc.) to make sure that the Grand Total of all of your payments, including the new mortgage and taxes, won’t exceed 40% of your Gross Income.

N.B. Don’t get too hung up on the math – that’s the job of the banker or broker. This is just info to give you a good understanding of how they get their numbers.

Well, that's pretty simple, and for a lot of lenders those are the requirements. But don't get bent out of shape if you see one or two things on this list that you can't get or meet. For instance, 3 years of tax returns are usually only required for top credit loans and self employed borrowers (and some lenders will take 2 years for self-employed!)
An experienced, competent broker will have many sources, Star Mortgage has access to over 700, each with their own programs and qualifications! Some of these are called "stated income programs", and you basically tell the lender what you make...and they don't verify it! Now obviously it has to be within reason, someone working 30 hours a week at a convenience store can't claim $100,000 a year salary, but someone with a nurse's license working part time on-call probably could.
Give Star Mortgage a call at 813-882-8878, or visit their website by clicking on the name. They have a mini-application you can fill out on line, and they'll get back to you to discuss what you need, then they'll help you get it!

FMI

Top 10 Reasons to use Star Mortgage, Inc. For Your Florida Mortgage Loan

2005-07-18T17:37:00.000-04:00

Here's another Top 10 List for you. Now that you may be actively looking for a mortgage to buy a new home, or to refinance your current home, you need to use someone you can trust to help you find your loan. If you live in the state of Florida, you're in luck, because the people at Star Mortgage, Inc. are dedicated to helping you find the home mortgage loan you need, as quickly and easily as possible. They'll go the extra mile to make sure you're happy. Their level of customer service is so high that over half of their business comes from either referrals or repeat customers. Check out the website at http://www.starmortgagebroker.com , or give them a call at 813-882-8878 today.

Top 10 Reasons to Use Star Mortgage to Finance Your Florida Mortgage Loan

10. Star Mortgage, Inc. has access to a large, nationwide network of lenders. They have excellent relationships with a large number of lenders, all of whom have a variety of programs available. Your Bank or Credit Union, and in fact many brokers who are associated with only a few lenders, simply can't offer that range of possibilities.

9. Because they have access to so many different lenders, they offer a huge variety of mortgage loan programs. They have programs for bad credit loans, finance loan re-finance options, reverse mortgages (if absolutely necessary), interest only mortgage loans, and many more options, to deal with almost any situation. No matter what your past credit, income or equity problems have been, they probably have a plan that will help you get the mortgage you need.

8. Your mortgage is handled by a single, dedicated, fully licensed Mortgage Broker. Your loan isn't passed around to different people in some "department". You have a real person (YOUR Broker) and their partner (YOUR Processor), both with real names, who are dedicated to helping you obtain your mortgage loan as quickly and easily as possible.

7. Because of this, you're not just a "number", and you get quick responses to your questions, plus personal service. You'll never be left hanging with Star Mortgage. You get honest to goodness, real one-on-one personal contact through all stages of the process. From taking the application, to closing the loan, they'll be with you every step of the way. They'll keep you informed about the progress of your loan, and help you through any problems.

6. No need to go to them during "regular business hours", they'll come to you at whatever place and time is most convenient for YOU! Their brokers are happy to come to your home or work, at any time that's convenient for you. They normally take the initial application in person (or you can fill out a mini-application at their web site), and most of the details can be handled on the phone or by FAX. Your never have to take time out of your busy schedule or go out of your way to come to their office during "banker's hours".

5. They're dedicated to finding the best mortgage loan for YOU. They'll get you the best rate and terms possible for your situation. After collecting your information, it's run through a matrix of available programs. From the best possibilities, your broker (an actual live person) will narrow it down to the best one or two programs, then call to discuss them with you. They really do want to find you the best possible mortgage loan.

4. If a new loan isn't the answer to your situation, THEY'LL TELL YOU! Brokers at Star Mortgage don't have quotas or minimum numbers to meet. They will not try to get you a new mortgage if it won't help improve your situation! They turn down anyone who would simply be worse off and further in debt by re-financing or taking out a new mortgage. AND, they'll take the time to explain to you why a new mortgage won't help, and tell you what you can do to make it a viable option in the future.

3. Star Mortgage's fees are low, only 1%-2% of the loan amount, not the 3%-4% (or more, like the 8-12% Ameriquest is accused of charging!) charged by some brokers and large corporations. This helps you by keeping your total closing costs down, which shortens the time it takes to save back the money you spend on buying a home or re-financing. Make sure you check the good faith estimate at any broker or finance company. Even many of the larger ones charge fees that are double what Star Mortgage & Crow Processing charge.

2. Save money, save time, and get the best possible mortgage at the best rates and term for your personal situation. If you're looking for a loan custom designed just for you, and prompt professional service, then look no further. This is one company that will do their best, to deliver their best, every time.

1. The President of Star Mortgage, Inc., Karen C. Pooley, personally brokers many of their loans, and is committed to making sure your mortgage is completed quickly and professionally. As their motto says, at Star Mortgage, YOU'RE the Star!

If you've read this far, you're probably at least thinking about buying a home or re-financing your mortgage, so check out Star Mortgage's web site and give them a call. They'll help find the perfect mortgage for YOU!

Star Mortgage Home page

I hope you've taken the information in these articles to heart, and are ready by now to start taking some action. Whether your are still renting and need to buy your first home, are still carrying a high interest rate first or second mortgage, or need to pay off some or all of your other high interest debt, the next step is up to you. I'll be continuing to give you more information about home equity loans, lines of credit and other topics in the future, as well as listing any special deals or strategies I come across. In the meantime, if you still want to know more about mortgages and buying a home, there is a site with plenty of books on the subject. You can access the site by clicking here--> Books on Mortgages and Buying a Home

FMI

>

Info on Bad Credit and How it Effects you

2005-06-11T16:21:00.000-04:00

Here's some information about bad credit, and how it effects your chances of getting a home mortgage loan, as well as how this might apply to getting an interest only mortgage loan. Even if you have some credit problems, you can still find a reasonable deal on a mortgage, you just have to know where to look.

Mortgage Rates on Bad Credit Loans and Interest Only Mortgage Loans
Do ALL Lenders charge higher Mortgage Rates for Bad Credit Loans and Interest Only Mortgage Loans?
The answer to that would have to be that they usually do, BUT some lenders have special programs for Bad Credit Loans, and others have special deals on Interest Only Mortgage Loans. You just have to find the right Mortgage broker, who will then find the right plan for YOU!

The fact is, all lenders don't have the same Mortgage Rates for similar mortgage loans. Those few borrowers with perfect credit, high income and a low debt ratio usually qualify for the best mortgage rates. BUT, if they go to the wrong bank, credit union or broker, they may wind up paying higher Mortgage Rates than people looking for Bad Credit Loans or Interest Only Mortgage Loans ! The fact is, many sub-prime lenders (for the average borrower) have Special Deals that they run , and these let the average borrower obtain Reverse Mortgages, and also get very low mortgage rates on Bad Credit Loans, Interest Only Mortgage Loans , and even finance Loan Refinance Mortgage Loans.

Let's look at these options one at a time. Reverse Mortgages are a rather difficult proposition, both to understand them, and to actually find a company who will issue them. Basically, you invest your money in your property, and someone pays it back to you, with interest (usually a bit lower than average Mortgage Rates ) over time, in monthly payments. We usually find reverse mortgages to be unnecessary, and we feel there are easier and better ways to invest your money. Buying a second property that you then rent, and eventually sell, usually will get you a much better return on your money, with better tax breaks, than doing a reverse mortgage on your principal residence. Check with a qualified CPA, and we think you'll agree that reverse mortgages usually cause more problems than they solve. But for special circumstances, especially for older individuals with low income and no current mortgage, they can be useful, especially if they live in an area where property values are appreciating rapidly.

Interest Only Mortgage Loans can also be quite useful. With interest only mortgage loans, you have the option of lowering your payments initially, and only paying the interest that accrues each month. Many times you only have to qualify for the lower payment the Interest Only Mortgage Loans offer, and can get a higher mortgage than you could otherwise qualify for, especially if debt ratio is a problem. Some Mortgages, including some finance loan refinance options offer payments Lower Than Interest Only Mortgage Loans! And the Mortgage Rates on some of these plans is excellent! This may mean you can get the house you want at a payment you can afford, or get a home equity loan to pay off your higher interest rate debts! Plus, even though you're not paying off any of your principle, you still gain equity in your home as its value increases, usually at least 3-7% a year! Use a Loan Calculator or Mortgage Calculator to compute what even a 1% drop in your interest can do to your payments.

Finance Loan Refinance options let you pull out cash from the equity in your home as a home equity loan, or to get rid of a high interest rate finance company second mortgage. Actually, you can basically use this money for any purpose, including paying off higher mortgage rates on your existing first or second mortgages. Some special plans will let you borrow up to 95% of appraised value, while keeping the mortgage rates on 80% of it very, very low. Try using our Loan Calculator/Mortgage Calculator to see what a 2% or even 3% drop in your second mortgage rates can do to lower your payment!

Bad credit loans are not that hard to find, but decent rates often are. Some lenders, however, will only consider your mortgage payment history when looking at your credit, which can help if your credit problems are in other areas. Also, some lenders specialize in "sub-Prime" lending, so what your bank or credit union might consider a bad credit loan, they look at as just fine, and offer Interest Only Mortgage Loans and great Mortgage Rates on those programs.

With all of these variables, it's no wonder that at Star Mortgage/Crow processing they don't post Mortgage Rates on their web site. With access to a nationwide network of lenders, they may look at dozens of options before finding the best mortgage rates and loan terms for each customer. If you'd like more information, and you live in Florida, visit the website for Star Mortgage, Inc. You can send them an email or fill out a short application on the website , or give them a call anytime at 813.882.8878 .

Well, hopefully you can see that it is possible for virtually anyone to buy their own home, or find a good deal on re-financing their existing mortgage. Subscribe to this news feed, or come back later, for more articles and info.

FMI

Loan Calculators Mortgage Calculator Can Be Misleading

2005-05-12T15:44:00.000-04:00

Loan Calculators Mortgage Calculator Can Give Misleading Results

Here's a short piece which explains loan calculators and mortgage calculators. I've seen web sites that have over a hundred different ones listed for calculating every possible scenario dealing with loans, home equity, prepayment, etc.. But the fact is, unless you already know what your various loan options are, they're all pretty much useless. Anyone can easily see that a loan with a lower interest rate is better than one with a higher rate, all other things being equal. But suppose the lower rate loan has a 3 year prepayment penalty, and requires mortgage insurance, and has a 5 year balloon payment. Then which one is a better deal? A licensed Mortgage Broker can look at all your options and help you figure it out. If you're definitely planning on moving in about 4 years for example, then the lower interest rate might be a better deal, but if might have to move in less than 3 years (relocating for work, for example) then the higher rate is probably much better.

If you still want to look at some options using a mortgage calculator, this article has some links to a basic one. Plus there are some links to other parts of the Star Mortgage web site. If your really serious about getting your best deal on a mortgage, visit the site, or give them a call at 813-882-8878.

Why a Mortgage Calculator or a Loan Calculator can be Misleading
Star Mortgage does offer you a free Loan Calculators Mortgage Calculator page to allow you to compute your own Mortgage Payments. But the problem with any automated Mortgage Payment Calculator or Loan Calculator is that it can only compute your P & I (principal & interest) payment. There may be other components to your total mortgage payment, such as taxes and insurance, that no Mortgage Calculator can calculate. Of course, anyone can give you a "guesstimate" of what these will equal. Just take the value of your house (say $200,000) and multiply it by .0015 and .0030 (this gives you $300.00 and $600.00). That's approximately what your taxes and insurance payment will equal each month, somewhere between $300 and $600. Some calculators that claim to compute taxes and insurance will use $450 (split the difference) and tell you that is what it will be. But it is just as likely to be a lot more, or a lot less. Depending on the area the house is located in, taxes on a home of similar cost could be double the estimate or more, and the necessity of having flood insurance in some areas can cause the insurance estimate to more than double!

Also, you need to be familiar with Mortgage Rates in order to use the Mortgage Calculator effectively. Some companies advertise really low mortgage rates, even for bad credit loans and finance loan refinance options, but when you call them only a small percentage of borrowers actually qualify for those rates. Using their advertised Mortgage Rates can cause the Loan Calculators Mortgage Calculator to give you a payment well below what your actual mortgage payment will be. The best Mortgage Rates available to YOU, with your particular situation, may be higher or lower than any rate you could quote as a general rule.

Mortgage Rates are also very much prone to change on a weekly, or sometimes daily, basis. Since brokers deal with a large, nationwide network of lenders, to list all of their current mortgage rates for all of their different programs and keep them all updated on a daily basis is extremely difficult. Plus, you still might not know which Mortgage Rate to use in the loan calculator to come up with a reasonable result. Most borrowers have very little idea of the wide variety of options available to them. Even bad credit loans and finance loans refinance programs can have very reasonable Mortgage Rates for someone with less than perfect credit.

So, please use Loan Calculators or Mortgage Calculators at your own risk. Or better yet, give Star Mortgage/Crow Processing a call at 813-882-8878, and they'll help you figure out the plan with the best rate and terms for your particular situation. Then you can use this Mortgage Calculator to compare the payments for the different options they've found for you. With this information in your hands, you can use the Mortgage Payment Calculator to confirm which plan will save YOU the most money.

Subscribe to this feed, or stop back later for a look at some of the options available to people with less than perfect credit. Even if you have some problems, you can still buy a home and find a mortgage that will fit your needs.

FMI

Greenspan Says ARMs Might Be Better Deal.

2005-04-15T16:31:00.000-04:00

Greenspan says ARMs might be better deal.

That was the title of an article in USA Today earlier this year. Greenspan refers to Federal Reserve Chairman Alan Greenspan. I promised you a synopsis of that article, and here it is. Sorry it took a few days, but I wanted to make sure and hit all of the relevant points. If you want to read the entire article, you can go to USA Today online (if you're a paying member) and look under "Advanced Search" for Alan Greenspan for the date 2004-02-23 and it will pull it up for you. .

Basically, Mr. Greenspan was saying that people could save thousands of dollars by choosing adjustable rate mortgages (ARMs) and that banks and credit unions don't usually give them many options to do so. "Federal Reserve Chairman Alan Greenspan said Monday that Americans' preference for long-term, fixed rate mortgages means many are paying more than necessary for their homes and suggested consumers would benefit if lenders offered more alternatives."

Greenspan was making a standing room only speech to the Credit Union National Association meeting in Washington when he made these comments. "Overall, the household sector seems to be in good shape," Greenspan said. "While borrowers can refinance fixed rate mortgages (which made up more than 70% of the mortgages drawn in January), Greenspan said homeowners were paying as much as 0.5 to 1.2 percentage points for that right and the protection against a potential rise...". He suggested "A Fed study suggested many homeowners could have saved tens of thousands of dollars in the last decade if they had ARMs."

Now there are lots of innovative programs out there, but Greenspan was talking to Credit Union officers about banks and credit unions, which usually don't have or promote these kinds of home mortgage loans. Too find a program that is an ARM and is designed for someone with low income or with bad (or no) credit, you have to consider using a Licensed Mortgage Broker. They have access to a wide variety of programs through many different lenders, not all of whom are as strict as banks and credit unions about credit scores and income restrictions.

Further illustrating Greenspan's point, the Mortgage Bankers Association said the average rate at the time for a 30 year fixed mortgage was over 2 percent higher than for a 1 year ARM. And the fact is, the difference between what your bank or credit union might charge you for a 30 year fixed mortgage , might differ by 2-3% or more from the rate you could get on a 3 year ARM from a mortgage broker! Speaking about banks and credit unions, Greenspan said "American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage."

Luckily, some lenders do provide alternatives to the traditional products that your bank or credit union might offer. Contact a reputable Licensed Mortgage Broker and they'll be able to find a program that suits your needs. But who do you trust to find you the perfect mortgage to fit your needs? Call Star Mortgage, or visit the Star Mortgage web site. They specialize in the State of Florida, where they're located. So no matter what your situation is, if you need a Florida Mortgage or Florida Refinance Mortgage, give them a call or contact them by e-mail before you buy a home or re-finance your current mortgage. They'll help you get into your new home, or help you start saving money by re-financing your old mortgage.

My next post will be an article on why loan calculators/mortgage calculator might give you an accurate, but misleading results, and how to get the best estimate of what your actual mortgage cost might be. The best way to do that if you live in Florida, is to contact Star Mortgage/Crow Processing. You can call them direct at 813-882-8878. They'll look at all the options and give you a free professional estimate of your actual total costs. In a few weeks I'll post another Top 10 List that explains the top 10 reasons to pick Star Mortgage, Inc. as your broker.

FMI

Why You Should Consider an Adjustable Rate Mortgage (ARM)

2005-03-21T17:24:00.000-05:00

This next Top 10 List gives some pretty good reasons why an adjustable rate mortgage (ARM)is almost always a better deal than a fixed rate mortgage. I know I've had an ARM on the first property I ever purchased for the last 18 years, and except for two years, the rate and payment I have was less than it would have been had I taken the fixed rate mortgage I was also offered. Plus the two years the rate was higher, it was less than 1/2 of a percent above the initial fixed rate. From my personal experience what this list says makes a lot of sense.

Top Ten Reasons to Choose an Adjustable Rate Mortgage (ARM) Over a Fixed Rate Mortgage.
10. Federal Reserve Chairman Alan Greenspan thinks they're a better deal, and can save you thousands. Check out the Greenspan Article to see what he says about ARMs, and how banks and credit unions usually don't have them, or if they do, they don't recommend them. As a result, Mr. Greenspan said "...a Fed study suggested many homeowners could have saved tens of thousands of dollars in the last decade if they had ARMs." Now, if rates shoot up, fixed rates are better long term, but with rates at a long time low and apparently stable, and the average person moving and re-financing every 7 years, the risks seem pretty slim.

9. A variety of options are available, with rates fixed for 3,5 or even 7 years before the rate adjusts. This means that you can lock in a rate much lower than the "fixed" rate mortgages offer for up to 5-7 years. By that time, you may be ready to move, due to having children, getting a promotion, children grown and leaving, transfer at work, you want a pool, etc. At this point you'll have to sell and get a new mortgage anyway, so WHY NOT SAVE THOUSANDS OF DOLLARS BEFORE THEN?

8. The rate on your ARM is tied to an "indicator", such as the Prime Rate, or Cost Of Living Index (COLI). This means you can see what this indicator has done in the past, and keep an eye on what it is doing (usually listed in Financial section of most newspapers). Your rate is always some amount (margin) above that indicator or index rate. So if that index stays stable, the lender can't raise your rate! And you can try and pick an index that you've researched and are comfortable with, by choosing a mortgage that uses that index.

7. There are even programs tied to the COSI (Cost Of Savings Index), which is based on what banks pay on savings accounts, and tends to be very stable. Basically, banks don't tend to increase what they pay on savings accounts very often or very much, so your rate probably won't change very often or very much either. Plus, if your mortgage payment is increasing, the amount you're making on your savings account funds will be going up too.

6. Most ARMs have a cap on the amount your interest can increase each year, and a cap on the amount it can ever increase! This means no matter what the index rate does, your interest (and thus your payment) can only increase a small amount each year, and there is also a limit on the amount it can increase while you have the mortgage.

5. Usually, there is NO CAP on the amount your mortgage interest or payment can go down! So, if the indicator drops substantially from one year to the next, your payment will drop a corresponding amount. But if it goes up the next year, it can only rise as high as the yearly cap!

4. There are flexible mortgage programs that allow you to pay either the 15 year or 30 year payment each month. This means you can start out paying the larger 15 year payment, but if rates do go up substantially over several years, you can switch to the lower 30 year payment with no penalty.

3. Even more flexible plans allow you to make interest only payments (or even less!) for a portion of the loan period. Some even give you this option on a monthly basis! You normally only have to qualify for the lowest payment option offered, and there is never a penalty or bad mark posted against your credit report for choosing to pay the lowest payment. Although you're not paying off any principal with an interest only mortgage, you still gain equity as your property's value increases through appreciation. (See other Top 10 Lists for more info on this)

2. Interest Only Mortgages make it easier to qualify for a larger loan, which can mean you're able to buy a larger, nicer house in a better neighborhood. This helps you 2 ways. Not only do you get the advantage of living in a nicer home in a better neighborhood while you're there, but larger homes in better neighborhoods usually appreciate faster than smaller homes in less desirable areas, sometimes by double the amount or MORE! This means you can accumulate equity over twice as fast, even though you aren't paying off any principal! The difference between a $180,000 home appreciating at 5% with a conventional mortgage, and a $200,000 house appreciating at 10% with an interest only mortgage would be an extra $13,600 in equity that you could accumulate each year! At the same interest rate of 6% for both loans, you'd also pay about $80 LESS each month in P&I with the interest only loan on the $200,000 home, versus a standard 30 year mortgage on the $180,000 home!

1. The rate on a Adjustable Rate Mortgage can be 2% less than a similar fixed rate mortgage of the same term (say 30 years)! The average for loans from the same lender is about 0.5% to 1.2%, but even the smallest difference, plus another 0.5% you can save by not going to a bank for your mortgage, means you can save over 1% on your total interest rate! A 1% difference can save you over $1500.00 a year, and almost $50,000 on a 30 year mortgage! And if the ARM rate does start to shoot up quickly and consistently, you can always cut your losses and refinance to a fixed rate mortgage! In the meantime, why not save as much as you can, and keep your payment as low as possible

Next, I'll post some excerpts from an article with comments by Alan Greenspan that is referred to in the Top 10 List above. Unfortunately, it's not available to view on USA Today's site unless you're a paying member. Check it out if you get a chance, or sign up to get this feed and I'll send my excerpts to you shortly.

FMI

Why Should You Quit Renting and Buy a Home?

2005-02-18T16:56:00.000-05:00

If you've come back to this feed to find out more information about mortgages, maybe its because your thinking about buying your first home. Maybe you're not sure if its the right move, or if you can get financing with your income and credit. Well, its definitely time to act on those thoughts. Every month you pay rent is another month you could have been saving that money! This Top 10 List explains why renting is always cheaper than buying, and why you need to get started today on finding your first home. If you already own your own home, but are thinking about moving, subscribe to this feed to catch our article on how to own your "dream home" for what you're paying now!

Top 10 Reasons to Buy Your Own Home and Quit Renting

10. You're paying off your landlord's property. Every time you make a rent payment, your landlord uses some part of that to pay off the mortgage on the home you're renting...AND KEEPS THE REST!

9. For most people, their biggest retirement savings is the value in their home. Today, most people fail to save much actual cash each year in a retirement account, and who knows what your pension (if you're lucky enough to have one) or Social Security will pay when you retire. When most people retire, the equity they pull out by selling their home and moving to a smaller, easier to care for home is their major source of funds. Plus, currently,up to $500,000.00 of it is tax free for married couples!

8. You get zero (0) tax credit for renting a home, while almost all of the money you spend on a mortgage is tax deductible for the first 10 to 15 years on a 30 year mortgage. Because of how mortgages are structured, in first 1/3 to 1/2 of the term you're paying off very little principal. Currently, all of the interest you're paying, plus in most cases the property taxes and hazard/flood insurance premiums, can be tax deductible. Ask your accountant for more info.

7. Buying a home is almost always less exspensive than renting the same house. Why is this? Because your landlord needs to make a profit on their investment. So your rent payment is what they calculate they pay for their mortgage, including taxes and insurance, plus money for repairs and maintainence, PLUS their profit each month. This profit can be 20-30% of your rent payment or more! In addition, they also "earn" equity every year, as the value of their property increases, plus the amount of rent the local market allows them to charge (to you!)usually increases as well.

6. You gain value through equity (appreciation) when buying your home, as the value of the house and property increases. Of course, if you are renting, your landlord gets this extra money when they eventually sell the property you helped them buy.

5. With the 80/20 and 95% financing plans some lenders offer, you can buy a home with very low or no down payment, just closing costs. Your bank or credit union may not offer 95-100% financing plans, but many lenders you can access through mortgage brokers do. If you qualify (which isn't as hard as you probably think) you can buy your home by paying only your closing costs. And if the home you find is worth $5000-$10,000 more than the asking price, you may be able to work with the seller to get them to pay all closing costs, while selling the house to you at its appraised value. You could own your home without any out of pocket expense!

4. Interest Only Mortgages can save you even more, and you still gain equity through appreciation! Interest only mortgages allow you to pay only the interest that accrues on your loan on a monthly basis. This reduces your out of pocket payment, and it also lets you finance a larger amount, since you usually only have to qualify for the smaller payment. These pograms also usually have a cut off several years into the mortgage when you have to start paying on the principal. The idea is that you will either have moved by then (the average homeowner moves every 7 years) or else your income will have increased due to raises and/or a promotion. Of course, you always have the option of refinancing at that time as well. PLUS, you still gain equity during this time as your house gains in value through appreciation. In fact, the amount that appreciation adds to your equity is usually a much larger factor than the amount of principal you pay off in the first 10 years of a 30 year mortgage. For example, on a $180,000.00 mortgage, the first year you pay off about $1000.00 of principal with a 30 year mortgage, but with appreciation of just 3% (very conservative, most areas average 5% or more!), you gain $5400.00 in equity!

3. Adjustable Payment Plans can mean YOU choose what you pay each month. Some mortgage plans available through mortgage brokers let you pick from several payment options each month. Can you imagine your landlord allowing you to do that? One of the best programs offers 3 options;

-Paying a payment equal to a 15 year mortgage payment

-Paying a payment equal to a 30 year mortgage payment

-Paying a payment equal to an interest only mortgage payment

Some plans even offer a fourth option that is less than the interest only payment, and you only have to qualify for the lowest option! Then YOU pick which payment you want to make each month. This plan is especially good if you are a commissioned sales person or someone whose income varies quite a bit month to month.

2. You control what you do with your own home. You can do improvements to the existing house, add on a room or several, remodel or add a swimming pool, and YOU, not your landlord, benefit from these improvements! Any of these can increase your home's value, and you reap the benefits of a nicer home while you're there, and the extra profit when you sell. Plus, the ultimate control is that you have no lease to worry about. If you want to move, you put your house up for sale, sell it, and move. You don't have to stay the remanider of a year lease or pay any kind of fee. You decide where you want to live and for how long, and make a "moving bonus" when you do sell.

1. The number one reason to buy instead of rent is to SAVE the money you spend on housing, not THROW IT AWAY! Rent payments are just an expense, you pay "X" amount to have the right to live in a space for a certain amount of time. When you buy, a large portion of your payment is being "saved" in the value of your home. In fact, with interest rates still so low, and appreciation in most areas in the 5-10% range or higher, you may even be "saving" more than you spend every month! For example, for a $180,000 mortgage your total payment, including taxes and interest, could be around $1300.00 a month ($15,600 a year), and you'd pay off about $1000.00 in principal the first year. If that same property (valued at $200,000, we're assuming 10% down for this example) appreciates at only 8%, it would increase in value $16,000 the first year + the $1000 you paid off in principal, means you've put $17,000 in your "savings" account, and it only cost you $15,600 to do it! Plus, you have about $14,500 in tax deductions for your mortgage interest, taxes and insurance!

Stop wasting your money on Rent every month, start SAVING it in your own home TODAY.
Check out our other Top 10 Lists - They'll expalin why an ARM (adjustable rate mortgage) is usually a better deal, and how you can own the home of your dreams without paying a "dream home" payment.

FMI

Why Should You Use a Mortgage Broker to For Your Mortgage?

2005-01-15T16:33:00.000-05:00

The answer to this question is...to save time AND money! Unless, of course you have perfect credit, low debt and high income, and a close personal relationship with the branch President at your bank. Then (maybe) they'll be able to get you better rates and terms than a Licensed Mortgage Broker. But you're still limited to the loan products offered by that bank (or credit union). Here's a list of The Top 10 Reasons to Use a Mortgage Broker that explains why a Licensed Mortgage Broker can get you a much better deal on your home mortgage, whether its for a purchase or a re-finance.

Top 10 Reasons to Use a Mortgage Broker to Find Your Mortgage.

10. Banks, Credit Unions, and Savings and Loans have strict guidelines to follow, and offer only a limited group of loan options. The Financial Institution where you have your checking or saving account has very little flexibility in what they can offer you for a mortgage loan. You either qualify or you don't, and if you do, they can only offer you the limited programs that they offer (See the Greenspan article, which we'll publish later).

9. Each Bank or Credit Union is a totally different company, so you have to apply to each one separately. Some on-line services do offer quotes from several different ones with one application, but even then, you're limited to the financial institutions signed up with that service. Many Mortgage brokers use a nationwide network of lenders, that you can't access on your own. So they have a huge variety of options to choose from, and they'll do the work of finding you the best deal.

8. Fully Licensed Mortgage Brokers have extensive training and have passed a difficult certification exam. They also have to complete Continuing Education courses to keep abreast of changes in the law and loan programs. Plus, holders of a Mortgage Broker Business License have even more experience and training. In contrast, the loan officer at your bank does not have to be licensed or take any training courses. Someone at that bank is licensed, but it may not be at that branch, and it may not be them!

7. Mortgage Brokers can help you get the best mortgage quickly and easily. Many Mortgage Brokers will even come to you, at work or at home, to take your application. Some will even come at whatever time is most convenient for you, day or night. You don't have to take time off work to come and apply at their office, at their convenience, during regular "banker's hours".

6. Mortgage Brokers can usually get you rates that are as good or better than banks or credit unions. Why is this? It's because the bank has to pay salaries. They pay loan officers, branch presidents, vice presidents, etc. Plus, they have high overhead for buildings, branches, advertising and so on, and a lot of their services ("free" checking and savings accounts) generate very little revenue. The difference in what they charge for interest, compared to what a Broker can find for you, goes to pay all of those things.

5. Closing costs are normally the same, except for the broker's fee (more about that later), and can usually be rolled into the loan on refinance loans and some new purchases. Closing a loan with a bank or with a broker, you basically have the same fees (title, state endorsements, wire fees etc.) and escrows (money collected in advance of when it's needed) for insurance and taxes. The only difference is the fact that brokers normally charge an up-front fee. Most charge this as a percentage of the loan amount, 2%-4% being a reasonable range, although some charge more. Which brings us advantage number 4.

4. Brokers normally charge an up front fee. Why is this a good thing, you ask? Because, unlike institutions that don't charge a fee, the broker is concerned with finding you the best mortgage at the best rate available. They also don't have to charge a higher rate to collect their money over time. This is to your advantage, because the lower rate you get makes it well worth it! For example, if a broker saves you only 1/2 of 1% on your rate, but charges you a 2% fee to do so, within about 5 years & 3 months you have saved every penny that it cost you to pay the broker. With the bank loan at a .5% higher rate, you'd keep paying more for the next 24 years! Plus on a $200,000 loan you save about $753.00 a year in payments, or $22,586.00 over the course of a 30 year loan! All for a cost of only $4000.00 up front. So the question is, would you rather pay a $4000 fee you know about, or a hidden $22,586 "fee".

3. The Mortgage Broker has a personal interest in finding you the best mortgage and closing as quickly and easily as possible. A Mortgage broker gets paid their fee when you close your loan. On the other hand, the loan officer at a bank gets his salary whether or not you get your loan, and the bank gets its profit from charging you the highest interest it can. Which is why many either don't offer, or don't advertise ARM's, or Adjustable Rate Mortgages, which normally have rates well below comparable fixed rate mortgages (0.5% to 1.2% or more).

2. Many Mortgage brokers offer Interest Only Mortgages and other payment options not available at banks, credit unions or savings and loans. Not only are these programs normally easier to qualify for, but they reduce your payment, while you still gain equity through appreciation. Some even offer programs with payments lower than interest only, or that give you several options as to how much YOU want to pay each month! (We'll talk about this in future Top 10 Lists!)

1. A Mortgage Broker works for you, not one particular bank or lender, so they work to get the best rate and terms for your situation, as quickly and easily as possible, and you save money every month, on a mortgage designed specifically for you! Especially if you've been turned down by your financial institution, or quoted a ridiculously high rate because of your credit (or lack of it), or even if you're just getting started looking for financing, give a Licensed Mortgage Broker a call. They can help guide you to the best program, one that fits your needs and will save you the most money.

Subscribe to this feed, or stop back later, and we'll give you some excerpts from an article on the benefits of adjustable rate mortgages, and some more Top 10 Lists with information on buying your first (or next) home.

FMI

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How to Shop Around for the Best Rate Without Hurting Your Credit Score.

2004-12-10T17:17:00.000-05:00

If you don't know you're Credit Score, or have borderline credit, read this before you go looking for a loan.

The credit score most lenders use to determine whether or not to give you a mortgage, and what rate and terms they'll offer you if ou do qualify, is a composite of three scores from three different credit reporting agencies. Many things contribute to how each agency scores your credit in their system. Almost everyone knows that "bad" credit, like collections on overdue accounts, or repossessions and foreclosures, will lower your score. And, of course, paying your accounts on time and having paid off accounts help raise it. Some other things are less obvious, and can effect your score in different ways. For instance, the number of open accounts, and your current balance compared to your allowed high balance on credit cards can be good or bad, depending on how each system views them. What most people don't know, and what we'll talk about here, is how having several banks or credit unions pull your credit, (and maybe turn you down for a loan) can really lower your credit score!

Each time a lender pulls your credit, whether they offer you a loan or not, it can lower your credit score at all three agencies by several points. What this means to you, if you don't know your credit scores, is that you could "shop" yourself into a worse rate or even a turndown, especially if you started out just a few points above a lenders cut off for approval. If you shop around to 6 or 8 or 10 different lenders over a 10 day period, and then decide to take the first or second program you were offered, you may find that you no longer qualify for it!
Or, if you do still qualify, the rate they offer you has gone up, as your score has gone down.

If you've applied for a loan, and been turned down, one thing you definitely should not do is immediately go to another lender (or 4) and apply there too! Stop, and read your actual turn down letter. There should be information in it telling you why you were turned down, and where to call or write to get a free copy of your credit report. Before you apply anywhere else, get a copy of that report. All banks and credit unions have only slightly different criteria for issuing loans. If the first bank turned you down, probably any other will, especially since your credit score has likely dropped several points when the first bank pulled your credit.

Credit repair is beyond the scope (and not the focus of) this post, but briefly you should take your credit report and do the following;

Check for mistakes. Accounts that aren't yours, or collections that you have paid off still showing due. Notify all three credit burueas and the company listing the error in writing, and ask that it be fixed.
Find out what your score is. Usually its between 450 and 800. If its below the 620-640 range, most banks or credit unions won't approve you for a mortgage.
Take care of any valid collection accounts listed on your report, (especially small ones that you can pay off easily) and asked to be informed in writing when they have upgraded your account to "paid off" with the credit burueas. Check back with them every 30 days until they do.
If you have credit card accounts with balances that are close to your limit (for example a $9400 balance on a card with a $10,000 limit) and other cards that are paid off, use balance transfers to move some of that debt to another card. Try to get your ratio below 65%. BUT, only do this if you can get a rate the same or lower than where you have the balance now, and only if they waive the balance transfer fee (or its low), and it won't take your balance on the new card above 60-65% of your limit. It "feels good" to pay off a credit card, but having 4 cards with balances at 50-60% of their limit is much better for your score than having 2 cards at 95% of their limit.

All of these steps should improve your scores in the future, but you need a loan now. You could start shopping finance companies for your mortgage, but their rates are normally quite high, AND each one will pull your credit,, which will again keep lowering your score. So how do you shop for the best rates and terms for your situation, without having your credit pulled a dozen times for a dozen different lenders?

Find a fully licensed Mortgage Broker that deals with a nationwide network of lenders, and let them work to find you the best program for your credit and situation, all with just ONE credit report.

You save time and effort, and your credit stays stable, so the offer they make you will still be valid when its time to close. Yes, a Mortgage Broker will charge you a fee, but thats actually to your advantage, as we'll explain in the next post. Subscribe to this blog now, or check back later, to find out the top ten reasons to use a Mortgage Broker to find your mortgage.

FMI

Where Do You Start to Find the Best Deal on a Home Mortgage Loan?

2004-11-18T15:12:00.000-05:00

So...where do you start? Probably not where you would think to start. A lot of people just walk into the bank or credit union where they have their checking or savings account and ask for a home mortgage loan or a home equity loan. Then they walk out with either no loan (a turn down) or what ever loan that particular bank has to offer. The rate may sound OK or even good, but unless you have perfect credit, its probably not the best you could get. So, where do you start? Start here. We have a lot of experience in getting home loans for various properties and reasons, and we've collected some articles, and written some of what we've found out in short one page form. We'll be posting this information as fast as we can collect it and edit it, so keep returning over the next few months and you'll get to see it all. Or, subscribe to this blog and get the new feeds automatically. Hopefully this will help you make a more informed decision about finding a home to buy, what exactly you need to look for in a mortgage loan, and also help you find the right people to get it for you.

FMI