Aren't there a lot of ads these days promoting "a great loan program that no one else has, so call immediately"? One of the most consistently promoted programs these days is the No Cost Home Loan.
It’s everywhere – radio, TV, the web, even in the shopping malls these days. “Refinance now with us and have no closing costs”. And you might think, “gee, with money being tight right now, that sounds good to me.” A free loan, save lots of money!
Didn’t Mom once say, “nothing in life is free”? And isn’t Mom usually right! Now, you actually can get a loan with little or no closing costs. But, what you’re not told is that you actually end up paying a higher interest rate than you really qualify for! This in turn means that you might save $3,000-4,000 in closing costs upfront, but the monthly payment could be $100-300 higher than it would have been if you had paid the closing costs.
Let’s walk through the process with the following example. Loan amount is $200,000. You will pay the closing costs on this loan, you qualify for a 6% rate. (not so perfect credit) Monthly payment (P&I) is $1,199. Banker ABC says “no closing costs, and 7%.” He may tell you, “the rate may seem just a little bit high, but you’ll save $3,000.” You think that sounds great!
What is not explained is the difference in the 6% rate you qualify for, and the 7% rate you choose to take for the “free” loan. Borrowing $200,000 at 7%, the payment is $1,330. So, that’s $131.00 more a month than the loan at 6%.
Now, if you choose the loan where you pay the closing costs and save $131 monthly, it will take you about 22 months to get your $3,000 back for the closing costs. And, if you stay in the house another five years beyond the “payback” time (22 months), you’ll save about $7,900 at the 6% rate. BUT, if you decide on the “no cost loan”, you’ll see about
$8,000 blow out the patio door into the wind.
Always ask what the difference in the rates is, and exactly what the closing costs will be. Figure the difference between the two programs – the loan with closing costs and the one without. Rule of thumb says that if in two years or less you’ll have paid back the closing costs, and you’ll be in the house for at least 5 years, then take the loan with the lower rate and pay the closing costs.
It’s our mission at InSight Mortgage Group to find the best loan program to meet your needs and to counsel you throughout the entire process. We specialize in making you, our client, our first priority. Please call us at 913-642-3334 or email me at michele@wantinsight.com with questions regarding refinance or purchase loans.
Thursday, April 30, 2009
Friday, April 24, 2009
STRENGTH IN FIRST-TIME BUYER SALES
Although March saw a slowing in existing home sales, low mortgage rates and tax credits are drawing first time buyers into the market according the National Association of Realtors.
NAR chief economist, Lawrence Yun, indicated that with the modest ups and downs recently seen in the market, it appears to be stabilizing. “The share of lower priced home sales has trended up, indicating a return of many first-time home buyers, which we also see in a parallel member survey”, he said. “Sales in the upper price ranges have stalled because of higher interest rates on jumbo loans.”
March ’09 saw a rise in home prices, with the national median existing-home price for all types of properties at $175,000, although it is down 12.4% from March 2008. But, the increase in March was 4.2%, which is more than double the 1.8% seasonal increase usually seen at this time. Over half the March transactions were distressed properties which typically sell for 20% less than traditional homes.
The March survey conducted by NAR of its practioners indicated 53% of transactions were first-time buyers. Yun said “buyer traffic has been rising, and real estate offices are getting phone inquires about the tax credit.” “By early summer we should be seeing a positive impact on home sales from record low mortgage rates in addition to the stimulus provisions.”
The Midwest region has fared better than the other regions in the country. March’s median price was $141,300, a drop of 6.1% from a year ago, compared to an 18.4% drop in the Northeast, 12.2% in the South, and 11.1% in the West.
At InSight Mortgage Group we can provide you with clear, concise information on the $8,000 first-time buyer tax credit, in addition to finding you the right loan program to fit your specific needs. Call us at 913-642-3334 or email me at michele@wantinsight.com. We look forward to working with you. Blessings.
NAR chief economist, Lawrence Yun, indicated that with the modest ups and downs recently seen in the market, it appears to be stabilizing. “The share of lower priced home sales has trended up, indicating a return of many first-time home buyers, which we also see in a parallel member survey”, he said. “Sales in the upper price ranges have stalled because of higher interest rates on jumbo loans.”
March ’09 saw a rise in home prices, with the national median existing-home price for all types of properties at $175,000, although it is down 12.4% from March 2008. But, the increase in March was 4.2%, which is more than double the 1.8% seasonal increase usually seen at this time. Over half the March transactions were distressed properties which typically sell for 20% less than traditional homes.
The March survey conducted by NAR of its practioners indicated 53% of transactions were first-time buyers. Yun said “buyer traffic has been rising, and real estate offices are getting phone inquires about the tax credit.” “By early summer we should be seeing a positive impact on home sales from record low mortgage rates in addition to the stimulus provisions.”
The Midwest region has fared better than the other regions in the country. March’s median price was $141,300, a drop of 6.1% from a year ago, compared to an 18.4% drop in the Northeast, 12.2% in the South, and 11.1% in the West.
At InSight Mortgage Group we can provide you with clear, concise information on the $8,000 first-time buyer tax credit, in addition to finding you the right loan program to fit your specific needs. Call us at 913-642-3334 or email me at michele@wantinsight.com. We look forward to working with you. Blessings.
Monday, April 20, 2009
REFINANCING HELPFUL HINTS
Even with low, low interest rates and new government recovery programs, it can be a tough road to walk to get to the closing table on refinancing your home loan. At InSight Mortgage Group, we work to smooth out the few bumps you may encounter along the way – it’s our specialty.
Strangely, the tough part isn’t the “approval” process for borrowers, it’s keeping the approval!
I’ve recently blogged about the mortgage industry in general, starting in 2005, being understaffed. With these wonderful low rates, lenders are getting slammed with requests and are having a difficult time handling the volume. An underwriting logjam has been created.
These days taking a mortgage application from start to finish with some lenders can be as long as 2 months! That’s double the time it took about 6 months ago, when the average was 20 days to closing.
You know, a lot can happen in 60 days. More so than in 20 days. And while there are things outside your control which may affect the loan process, there are a number of things you can control.
Mortgage approvals are delicate things and nothing’s complete until it’s complete! Please keep in mind the following “rules” for the period of time when your loan is in underwriting and before it closes.
A. DON’T buy a new car, trade up to a bigger lease, etc. (incur more debt)
B. DON’T start a new company or quit your job
C. DON’T move to a commissioned job from a salaried job
D. DON’T transfer large sums of money between bank accounts
E. DON’T be late on paying your bills
F. DON’T open any new credit accounts -- even if it’s 0% interest for the next year
G. DON’T take a cash gift unless you have all the proper “gift” paperwork filled out
H. DON”T make random, undocumented deposits into your bank account
The above are red flags to an underwriter and only one is enough to slow or even derail the process. Situations arise, and it doesn’t mean that you can’t get a cash gift or buy a new car, it means talk to your loan officer first. We’re here to guide you each step of the way, so call us at 913-642-3334 or email me at michele@wantinsight.com to get started on your refinance.
Strangely, the tough part isn’t the “approval” process for borrowers, it’s keeping the approval!
I’ve recently blogged about the mortgage industry in general, starting in 2005, being understaffed. With these wonderful low rates, lenders are getting slammed with requests and are having a difficult time handling the volume. An underwriting logjam has been created.
These days taking a mortgage application from start to finish with some lenders can be as long as 2 months! That’s double the time it took about 6 months ago, when the average was 20 days to closing.
You know, a lot can happen in 60 days. More so than in 20 days. And while there are things outside your control which may affect the loan process, there are a number of things you can control.
Mortgage approvals are delicate things and nothing’s complete until it’s complete! Please keep in mind the following “rules” for the period of time when your loan is in underwriting and before it closes.
A. DON’T buy a new car, trade up to a bigger lease, etc. (incur more debt)
B. DON’T start a new company or quit your job
C. DON’T move to a commissioned job from a salaried job
D. DON’T transfer large sums of money between bank accounts
E. DON’T be late on paying your bills
F. DON’T open any new credit accounts -- even if it’s 0% interest for the next year
G. DON’T take a cash gift unless you have all the proper “gift” paperwork filled out
H. DON”T make random, undocumented deposits into your bank account
The above are red flags to an underwriter and only one is enough to slow or even derail the process. Situations arise, and it doesn’t mean that you can’t get a cash gift or buy a new car, it means talk to your loan officer first. We’re here to guide you each step of the way, so call us at 913-642-3334 or email me at michele@wantinsight.com to get started on your refinance.
Wednesday, April 15, 2009
RATES ARE LOW, BUT ....
Mortgage rates are low but there are costs associated with acquiring a loan. Those borrowers with less than perfect credit have incurred increased fees recently implemented by Freddie Mac and Fannie Mae. Many of us in the mortgage industry think that with the uncertainty in the mortgage market, other costs will increase as lenders look to reduce their costs and anticipate rates.
Lending standards are really tight which means that borrowers who qualify for the really low rates must meet a strict and narrow set of guidelines.
In general, to get the headline making rates, borrowers are often paying more points, or prepaid interest, that brings the mortgage rate down.
Over the past year and a half there has been many changes in mortgage pricing, and from the borrower’s standpoint, it’s mainly negative. Fees are added based on a borrower’s credit scores according to Fannie Mae and Freddie Mac’s new risk-based pricing. Now, borrower’s must have a FICO score of 740 or higher to avoid the extra fees, according to Dan Green, author of TheMortgageReports.com and loan officer with Mobium Mortgage in Cincinnati. Lenders incorporated the new rules into the rate sheets in the middle of January even though the official effective date is April.
These new fees, Loan Level Price Adjustments, are an unpleasant surprise for some borrowers wanting to take advantage of low rates. These fees create different pricing scenarios from one person to the next. What works for one borrower may cost the next person 1% more.
For those wanting to pull equity from their home through a cash-out refinance, fees have increased as well. And the lenders have added costs to condo financing.
A point is 1% of the mortgage amount, and is charged as prepaid interest. The more in points a borrower pays, the lower the rate. If points rise a bit, it’s a sign that lenders are looking for up front money as opposed to over time, thus covering a portion of their risk.
With government intervention in the mortgage market these days, rates are unpredictable, which generally causes lenders to price conservatively.
Why pay points? A borrower needs to decide whether paying a point (or more) makes more sense for them , or if a mortgage with a higher rate with no points would be better. Factors to consider would be how long does the borrower plan to stay in the home , and how long it will take for buying points to pay off. The more time a borrower plans to remain in the home, the more paying points makes financial sense. In the past one point in fees would buy a drop of 0.25% to 0.375%. These days the percentage is greater, dropping a rate 0.625% to 0.875%.
An example: A 30 yr fixed rate of 5.625% on a $417,000 loan with no points. By buying a point ($4,170), the rate dropped to 4.875%, which saves the borrower $261 monthly in interest cost. With that savings, it takes only 16 months to pay back the buy down. From this point on, everything is a benefit. Given traditional guidelines, the breakeven point would be double that 16 months.
Borrowers are also seeing some fee increases in underwriting and processing. It takes more expertise and work to process a fully documented file than the popular no-document loans of several years ago, thus the higher charges.
Mortgage rate lock fees are also more common. The largest increases in the title & settlement category are in the real estate transfer taxes charged by counties and cities. You may be able to save money when refinancing by using the same title insurance company who closed your first loan. Many title companies have gone out of business, or one company buys out another, so surviving companies are raising prices for title and settlement fees too.
A rule of thumb is that mortgage fees generally run 3% or so of the loan amount.
As a mortgage broker, InSight Mortgage Group has an advantage over the standard lender. We work with many different banks and lenders allowing us to shop around for you to find you the right product and best rate for your home financing. With so many banks and lenders discontinuing loan programs, constantly changing the guidelines or going out of business overnight, it’s good to have other options at our fingertips if the need arises. This keeps you from completely starting over.
Call us at 913-642-3344 for professional, integrity minded help in finding the right loan program for your specific needs. Or, email me at michele@wantinsight.com with your question or concern. My staff and I are ready to work for you. Have a blessed day.
Lending standards are really tight which means that borrowers who qualify for the really low rates must meet a strict and narrow set of guidelines.
In general, to get the headline making rates, borrowers are often paying more points, or prepaid interest, that brings the mortgage rate down.
Over the past year and a half there has been many changes in mortgage pricing, and from the borrower’s standpoint, it’s mainly negative. Fees are added based on a borrower’s credit scores according to Fannie Mae and Freddie Mac’s new risk-based pricing. Now, borrower’s must have a FICO score of 740 or higher to avoid the extra fees, according to Dan Green, author of TheMortgageReports.com and loan officer with Mobium Mortgage in Cincinnati. Lenders incorporated the new rules into the rate sheets in the middle of January even though the official effective date is April.
These new fees, Loan Level Price Adjustments, are an unpleasant surprise for some borrowers wanting to take advantage of low rates. These fees create different pricing scenarios from one person to the next. What works for one borrower may cost the next person 1% more.
For those wanting to pull equity from their home through a cash-out refinance, fees have increased as well. And the lenders have added costs to condo financing.
A point is 1% of the mortgage amount, and is charged as prepaid interest. The more in points a borrower pays, the lower the rate. If points rise a bit, it’s a sign that lenders are looking for up front money as opposed to over time, thus covering a portion of their risk.
With government intervention in the mortgage market these days, rates are unpredictable, which generally causes lenders to price conservatively.
Why pay points? A borrower needs to decide whether paying a point (or more) makes more sense for them , or if a mortgage with a higher rate with no points would be better. Factors to consider would be how long does the borrower plan to stay in the home , and how long it will take for buying points to pay off. The more time a borrower plans to remain in the home, the more paying points makes financial sense. In the past one point in fees would buy a drop of 0.25% to 0.375%. These days the percentage is greater, dropping a rate 0.625% to 0.875%.
An example: A 30 yr fixed rate of 5.625% on a $417,000 loan with no points. By buying a point ($4,170), the rate dropped to 4.875%, which saves the borrower $261 monthly in interest cost. With that savings, it takes only 16 months to pay back the buy down. From this point on, everything is a benefit. Given traditional guidelines, the breakeven point would be double that 16 months.
Borrowers are also seeing some fee increases in underwriting and processing. It takes more expertise and work to process a fully documented file than the popular no-document loans of several years ago, thus the higher charges.
Mortgage rate lock fees are also more common. The largest increases in the title & settlement category are in the real estate transfer taxes charged by counties and cities. You may be able to save money when refinancing by using the same title insurance company who closed your first loan. Many title companies have gone out of business, or one company buys out another, so surviving companies are raising prices for title and settlement fees too.
A rule of thumb is that mortgage fees generally run 3% or so of the loan amount.
As a mortgage broker, InSight Mortgage Group has an advantage over the standard lender. We work with many different banks and lenders allowing us to shop around for you to find you the right product and best rate for your home financing. With so many banks and lenders discontinuing loan programs, constantly changing the guidelines or going out of business overnight, it’s good to have other options at our fingertips if the need arises. This keeps you from completely starting over.
Call us at 913-642-3344 for professional, integrity minded help in finding the right loan program for your specific needs. Or, email me at michele@wantinsight.com with your question or concern. My staff and I are ready to work for you. Have a blessed day.
Thursday, April 9, 2009
A GLIMMER of SUNSHINE
Demand for purchase loans rose the first week in April even though interest rates rose slightly from record lows, even outreaching the demand for refinancing. This gives hope to the hard-hit housing market as Spring approaches, generally the high season for purchases.
The Mortgage Bankers Association and various lenders have reported an increase in applications these past few weeks. We,at InSight Mortgage Group, have been blessed with many new applications. Many economists believe that our economy will begin to emerge from its slump when the housing market stabilizes. And the growing demand of refi’s due to the low rates available, can provide some relief to burdened consumers by providing them with lower monthly payments.
A ray of hope is actually found in Calilfornia, the hardest hit state in the housing bust. The median single family home price recently was down 41% from a year earlier and new home construction starts had almost disappeared. But, is the worst now over? Inventory is shrinking, investors are coming back, and sales volume is increasing.
More than 600,000 homes were purchased in February this year. The numbers show that the majority of the sales were bank owned foreclosures. And some areas, according to the California Association of Realtors spokesperson, are seeing slight increases in price per square foot, which is a hopeful indicator. The market is seeing an increase of investor purchased properties too.
The best indicator of positive change is in the inventory supply. A year ago it was 15 months, now it’s at 6.5 months! Generally a six-seven month supply of homes is considered a “normal” market. Nationally, the market has an overall 9.7 month supply.
And, according to the NAHB (National Association of Home Builders), model homes are seeing a lot more foot traffic due to combination of the first-time homebuyer credit, low interest rates, and affordable prices. Joe Robson, NAHB chairman, reports "consumer interest is increasing”. He also reported that approximately 1.5 M visitors have logged on to their website to learn more about the $8,000 tax credit for first time homebuyers.
And for us, locally the numbers are good too. According to the National Association of Realtors home sales in the Midwest jumped 14.5%. We should have the local Kansas City regional numbers for March soon.
If the hardest hit area begins to show signs of slight improvement, what does that mean for the rest us?
Call us at InSight Mortgage Group, 913-642-3334, for the good news on purchase and refinance rates. Please email me at michele@wantinsight.com with your good news stories to share. Have a blessed day.
The Mortgage Bankers Association and various lenders have reported an increase in applications these past few weeks. We,at InSight Mortgage Group, have been blessed with many new applications. Many economists believe that our economy will begin to emerge from its slump when the housing market stabilizes. And the growing demand of refi’s due to the low rates available, can provide some relief to burdened consumers by providing them with lower monthly payments.
A ray of hope is actually found in Calilfornia, the hardest hit state in the housing bust. The median single family home price recently was down 41% from a year earlier and new home construction starts had almost disappeared. But, is the worst now over? Inventory is shrinking, investors are coming back, and sales volume is increasing.
More than 600,000 homes were purchased in February this year. The numbers show that the majority of the sales were bank owned foreclosures. And some areas, according to the California Association of Realtors spokesperson, are seeing slight increases in price per square foot, which is a hopeful indicator. The market is seeing an increase of investor purchased properties too.
The best indicator of positive change is in the inventory supply. A year ago it was 15 months, now it’s at 6.5 months! Generally a six-seven month supply of homes is considered a “normal” market. Nationally, the market has an overall 9.7 month supply.
And, according to the NAHB (National Association of Home Builders), model homes are seeing a lot more foot traffic due to combination of the first-time homebuyer credit, low interest rates, and affordable prices. Joe Robson, NAHB chairman, reports "consumer interest is increasing”. He also reported that approximately 1.5 M visitors have logged on to their website to learn more about the $8,000 tax credit for first time homebuyers.
And for us, locally the numbers are good too. According to the National Association of Realtors home sales in the Midwest jumped 14.5%. We should have the local Kansas City regional numbers for March soon.
If the hardest hit area begins to show signs of slight improvement, what does that mean for the rest us?
Call us at InSight Mortgage Group, 913-642-3334, for the good news on purchase and refinance rates. Please email me at michele@wantinsight.com with your good news stories to share. Have a blessed day.
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