Tag Archive: Kentucky

Nov 25

Rate Calculator

Rate Calculator vs Payment Calculator

I recently searched for an online rate calculator for mortgage interest rates. All of the top results pointed to payment calculators instead of a rate calculator. This seems strange because I use a rate calculator every day.

In order to accurately compute a mortgage payment we need an accurate interest rate. This is particularly important when trying to estimate a payment on a conventional loan because the interest rates are tiered.  The tiers are so complicated one needs a calculator.  Here is a link will shed light on mortgage interest rate tiers.

For the most part the public believes mortgage lenders have only one interest rate, and I base this statement on my last thousand rate calls. Every single person asked for my best interest rate not for the rate they would receive.  There is no way to tell if every one of them thought they should receive the best rate or just assumed there was only one rate. 

My interest rate calculator is proprietary software that I use daily.  It is the only method I know to quickly calculate an exact interest rate. 

There is a sequence that should be followed to reach an accurate estimate. It begins with the individual’s credit score from a tri-merged credit report.  When I receive an initial call from a home buyer one of my standard questions is if they know their credit score.  Nine times out of ten their true credit score is 20 to 40 points below their answer. The free credit scores available online are not from a tri-merged credit report.

Using an online mortgage payment calculator without access to an interest rate calculator is dangerous.  The results could easily be off 30% to 40%. The only safe way is to have an experienced loan officer guide you through the process.

Nov 19

Revised the Legal Credit Repair Guide

Very tricky undertaking tonight, worked all weekend trying to figure out how to shrink the size of the Legal Credit Repair Guide and get the hyperlinks to work in a pdf file format.  For some reason the PowerPoint software made the file grow instead of shrinking it like it was supposed to do and all of the links were dead.

Had a brainstorm while in the gym this morning, looks like it worked! 

Deleted all of the links and printed all of the slides in a PNG format, then pasted all of them back into a blank PowerPoint.  Next, added the URL versions of the links, and then saved the file as a pdf.  It worked, the size cut down to nothing, the quality is high, well high enough. And all of the links worked on my computer at least.  Shot off a copy to my technical guru to see if he approves. 

 

Nov 19

Mortgage Rate Watch November 19, 2012

A little late posting this tonight, very busy day!

After the post last Friday the market improved towards the end of the day.  This morning it opened off a little then bounced back in the afternoon.  Not enough change in either direction to impact interest rates.  One reason they are not moving is because the yield spread between the 1/8 increments rates are quoted in is so large it will take a pretty big movement to bounce either direction.

It will be a short week for trading in the mortgage backed securities market as well as the stock market.  Both are closed all day Thursday and half a day Friday.

Nov 17

Conventional Mortgage Credit Standards Page Added

Conventional Mortgage Underwriting

Explaining in plain English how the mortgage industry works continues to be an endless project.  The larger the resource becomes the more there is to explain. 

The newest page, Credit Standards for a Conventional Mortgage, made me realize just how big the project has become.  But it is a good exercise, the more I try to explain the easy way for a home buyer to arrange financing the more I see opportunities to streamline the process. 

A little bit of preliminary team work between the home buyer and the loan officer can really speed up the process.

Nov 16

Lease Option Failures

Three different Realtors called me this week chatting about deals gone south.  Each agent had a story where in a large amount of money was forfeited by the “Buyer.”  The three incidents had combined losses of $60,000!  All of the deals were lease options.

Each of the tenant/buyers entered into the lease option because they did not qualify for traditional mortgage financing.  They had large chunks of cash for non-refundable deposits but did not meet the credit guidelines for a regular mortgage.

They did what I call a work-around, trying to work around the rules that actually protect them.  I believe most buyers that have an issue ask a mortgage professional how long it will take before they are eligible for a mortgage.  The loan officer gives them the only answer they can which is a minimum timeline.

For example if the borrower recently filed bankruptcy then the minimum timeline might be 2 or three years from the date of discharge depending on the type of loan they get.  That is the best case scenario!

But that is not how the loan is going to be underwritten once the minimum waiting period is over.  The question is asked, “How long after a bankruptcy must I wait until I can get a mortgage?”

But the 2 or 3 year answer only addresses the minimum timeline; nothing in the field of mortgage financing is that simple.  For instance, if the BK included an FHA mortgage and FHA ended up taking the property back from the lender the timeline isn’t based on the BK discharge.  It is based on when FHA paid off the lender and that may not be until years after the BK was discharged.

The borrower thinks they can get another FHA loan 2 years after the BK was discharged because that is the minimum timeline for getting an FHA loan.  But they cannot get approved for another FHA loan until they are eligible for a new CAVIRS number.

This additional $60,000 lost by buyers this week puts the total I have heard about this year in the neighborhood of half a million dollars.  That’s a pile of money!

If you insist on trying to work-around the rules, establish the timeline you think is required then double it.  Double the amount is probably more realistic.

Nov 15

Working on Page For Step 5

Just added a page that is going to outline the processing stage of getting a mortgage application approved.  Will be an ongoing project as the mortgage industry changes.  May not be able to work on it tonight, Deb’s birthday so going someplace special. 

Here is the link to Step 5

 

Nov 14

Rate Watch November 14, 2012

 

Bonds Down a Little Rates Up Slightly

 

Not a big movement, but Mortgage Backed Securities are trading a little lower this morning, down about another 5/32’s. Interest rates are up very slightly, not enough to change the rate.  Lenders look at yield and borrowers look at rate, the yield is only slightly less than yesterday so not enough change to bump the rate an 1/8 of a point. 

 

In fact, considering how small the change is in yield supports something I have thought for the last couple of weeks, interest rates are not as low as they should be.  Yes, I know they are at an all-time low!  But considering how much the price of bonds have increased recently I would have expected the rates would have improved more than they have.

 

So this little movement today and yesterday didn’t change anything, there was already a little fat imbedded in the rate or so it appears to me.   

 

Nov 13

Legal Credit Repair

Credit Repair or Mortgage Fraud?

New page added to the Resource Center that outlines the difference between building a strong credit report and committing mortgage fraud.

Here is the link to the page Credit Repair or Mortgage Fraud?

A link to the Legal Credit Repair Guide

Nov 08

Update to Buyer Resource Center

Updating the Buyer’s Mortgage Application Resources

There have been many changes in the last couple of years in the area of processing a mortgage loan.  It seems the mortgage industry is in a constant state of change. I thought it would be a good idea to start from the beginning and track a few applications comparing them to the information on this site.

Seems like some of the stuff I wrote not long ago is already out of date.  Going to be updating everything over the next few months, bear with me, it will be worth it.

The biggest problems recently all seem to be focused around credit reports and support documents. Home buyers that need a mortgage to complete the purchase are having a difficult time gathering the right support documents, or their docs contain information that is a problem.  I am going to break down every document and whenever a problem pops up will explain it here.

The Start Page for the Buyer is Located here. –>

The Steps are under construction but the beginning is here. –>  

Oct 27

Mortgage Helpful Hint #8

 

You and Your Money are Both Needed at the Closing.

 

If everyone that is signing the note and mortgage live in the town where the closing is taking place then they need to attend the closing.  One of the most common questions asked by both buyers and sellers is how do I get a Power of Attorney for the closing? You don’t. 

We do not want a signatures by Power of Attorney (POA) on the note and mortgage, original signatures only!!!  The only exceptions are out-of-town work assignments.  If you are in the military stationed overseas that would be a valid issue.  If you just don’t want to attend the closing that isn’t good enough.

All of us have worked very hard to get to this point so the closing isn’t a surprise.  You must attend the closing in person even if it requires taking off from work.  If you have small children get a baby sitter.  We love kids too but you are signing some very important documents, pay attention.  The $20 of missed work or paying a baby sitter pales in comparison to messing up the closing on a mortgage.  It deserves your undivided attention for about 30 minutes to an hour.  Redrawing all of the mortgage documents can take days, do not let this happen to you.

If your money is in out-of-town bank account it can take a few days for the money to arrive once you start the process.  A large deposit from an out-of-town institution to your local bank account might cause your local bank to freeze your account until the funds have cleared.  This will stop everything, don’t wait until the very last-minute to assemble the cash needed at closing.

But remember, don’t move money around without my help, all funds must be sourced.  There are right ways and wrong ways to move money, let’s keep your stress level low by doing it correctly the first time.  

 You and your money are both needed at the closing!!!

Please send a link to this page to any of your friends and family that are planning to buy or refinance a home.  They’ll be glad you did.

 

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