Although the President's "housing and Affordability Plan was announced on February 17th, it wasn't until yesterday that we got the details of what it actually means to homeowners.  We are finally seeing some changes in guidelines, starting today with a major announcement by Fannie Mae.  It was announced that over the next two months, significant changes are being implemented that will loosen credit guidelines and start lending to responsible people again.  The pendulum that swung too wide and then back again, is now a little closer to the middle, where we knew it would end up but we just weren't ...<< MORE >>

That's a question I'm asked daily.  It seems everyone these days is holding out for lower rates as a result of the government stimulus plan.  Talk of government subsidized rates has many folks waiting for rates in the 4% range.  While we've dipped below 5% a few times in the last couple of months, rates have been range-bound in the low 5% range.  It's anyone's guess as to if and when we'll see rates that low, especially for refis.  I think it's much more likely to happen on rates for a purchase than a refi, and we might start ...<< MORE >>

You probably see ads all the time for "No-Cost Refinancing", but what exactly is it and how do some lenders offer it and some don't?  The truth is, all lenders can offer it and probably do, it's just that some use it as a marketing gimmick. 

A true no-cost refinance is one in which the lender literally picks up all of the fees, with exception to your escrows (assuming you escrow taxes and insurance) and pro-rated interest.  So you don't pay any fees; no appraisal, no credit report, no title search, nothing.

So how does the lender do it?  ...<< MORE >>

It used to be that a 720 was considered an excellent credit score, however that's no longer the case.  The new benchmark for excellent credit when it comes to mortgage rates is now a 740 or better.  When we obtain a credit report, we go off the middle score (not average) when there's only one borrower, or the lower of the two middle scores when there's a borrower and co-borrower.

We then look at the equity position.  Depending on the type of loan (rate/term refi, cash-out refi, or purchase), the rate can be higher or lower depending on the credit score ...<< MORE >>

I am frequently asked about bi-weekly mortgage programs and whether or not they are a good choice.  As my readers know, I always like to give the short and sweet answer first which is NO, they are not.  But for those looking for an explanation I offer an in depth look at why they aren't a good deal.  Yes, they pay off a loan quicker and accelerate equity build up.  But they often come with a price that is unnecessary as you can accomplish the same thing on your own using simple math.

A bi-weekly mortgage is set up so that ...<< MORE >>

Ever wonder why you can get a better deal going through a mortgage broker than you can if you go directly to a lender?  After all, the mortgage broker just turns around and sells it to a major national lender anyway?  So logic dictates that cutting out the "middle man" should yield you a better deal, right?  Not in the case of mortgages.

Believe it or not, 65% of all mortgages in America are originated by mortgage brokers.  Because many of those brokerages are small businesses, they can keep their overhead low and effectively lower their margins.  This means lower rates and ...<< MORE >>

Many times during a mortgage transaction, a lender will refer to their "underwriter" but just who is the underwriter and what do they do?  As a broker, we don't make the final decision on a loan.  We originate and process the file, meaning we take the application, collect, and verify all documentation submitted.   We then submit the file electronically to a lender via an automated underwriting system that evaluates the loan applicant based on their credit report and the information we input into our system.  An automated response tells us whether that applicant qualifies and also informs us of additional documentation that may be needed ...<< MORE >>

When shopping for a mortgage, you will find that there are two types of mortgage companies: mortgage bankers and mortgage brokers.  While they both typically go to a third-party "investor" to purchase and service a loan, it's the way they get there that makes them different.

Mortgage bankers are mortgage companies that "fund" their own loans.  This means that they use a line of credit, usually called a "warehouse line", to obtain the funds necessary at closing.  Usually within 30 days, they will sell the loan to an investor or lender who will then service the loan.  This means that you will ...<< MORE >>

Ever wonder why there is such a disparity from lender to lender when it comes to rates and fees?  It really comes down to two things, marketing and their compensation.  You see, most lenders are compensated by the companies they sell the loans to and therefore the higher the rate, the more compensation they receive.  That is why it is in the lender's best interest (no pun intended) to get you into a higher rate loan.  What may only amount to a $20-30 higher monthly payment for you can mean hundreds or even thousands more in compensation to the lender.

This ...<< MORE >>

One of the worst ways to compare loans, in my opinion, is to shop the "APR" or Annual Percentage Rate.  The APR is an expression of the effective interest rate that will be paid on a loan, taking into account certain one-time fees and standardizing the way the rate is expressed.  While the formula can be complicated, the underlying foundation is made up of the interest rate and any service-related fees being charged on a loan.  Examples of service-related fees would be processing, underwriting, and closing fees.  Items such as appraisal reports, credit reports, and title insurance are tangible reports and therefore are ...<< MORE >>

Although most folks choose to escrow their real estate taxes and homeowner's insurance monthly, I am often asked whether or not this is wise.  As long as you have a minimum of 20% equity in your property, you actually have the choice of "waiving escrows" or paying the taxes and insurance on your own when the bills become due each year.   The only caveat being that most lenders charge an "escrow waiver fee", which is commonly .25% or a quarter of one percent of the loan amount.  This is a one-time fee due at closing, not something added to the rate.

Upon ...<< MORE >>

If you have been shopping for a mortgage, chances are you have found the process to be overwhelming and confusing.  Besides the hundreds of loan programs available, it can still be confusing even if you are only looking for a 30 year fixed due to the way each mortgage company quotes their rates and fees.  Unfortunately, there is no "standard" way of quoting rates and fees when discussing them over the phone.  Some mortgage companies include items such as the appraisal and credit report fees in their closing costs and some don't.  Are they being deceitful in doing so?  While some ...<< MORE >>