David Krushinsky

"So what's my Phoenix home loan rate"? This is the question asked to loan originators everyday from our clients and prospects. There is no simple answer and it seems to be getting more complex as the mortgage industry moves toward more risk-based pricing. Risk-based pricing allows adjustments to par pricing for risk factors such as; FICO scores, loan-to-value percentages, property type (SFR, Condo, 2-4 Units), occupancy (Primary, Vacation or Investment) and mortgage type (Interest Only, Adjustable Rate etc).

Let's start off with the basic mechanics of fixed mortgage interest rates. Interest rates are primarily based upon the pricing of Mortgage Backed Securities ("MBS" or "Bonds") issued from Fannie Mae ("FNMA"), Freddie Mac ("FHMLC") and Ginnie Mae ("GNMA"). Think of a Bonds' sales price similar to that of a Stock, it trades up and down during the course of a day. At the time of writing this article, the FNMA coupon we are tracking is selling for $101.03. This is down 22 basis points from the previous day's closing price of $100.81. In simple terms, the consumer would have to pay an additional .22% of their loan amount to have the same rate today that they could have locked in the previous day.

"So... what does all this mean?"

In our example, the client's interest rate could vary from 4.50% - 5.25%. The mortgage interest rate will depend on how the customer would like to set up their mortgage loan with regard to paying either higher or lower upfront fees. Clients locking in a rate should consider how long they intend to have this mortgage loan before considering the fees associated with obtaining any rate. The shorter amount of time you will have the loan, the more it makes sense to pay lower fees and have a higher interest rate. The longer your time horizon for keeping the loan, the more it makes sense to pay higher upfront fees, also known as buying down the interest rate.

A client locking in a rate of 4.50% (5.597% APR) today on a 30-year fixed FHA loan should plan on paying all the customary fees with two discount points. Customary fees would include appraisal, credit report, processing fee, underwriting fee, origination fee, title fees, and recording fees. That same client could lock in 4.75% (5.747% APR) with 1 discount point, 5.00% (5.896% APR) with no discount points and 5.25% (6.044% APR) without any discount points or origination fee. An origination and/or discount point is typically 1% of your loan amount.

With so many rates available on a 30-year fixed mortgage, how can a borrower get the best rate?

First, ask the lender to provide you with a total overall cost analysis. This should illustrate the proposed savings you will have on the loan options available to you both on a monthly and long-term basis. This analysis should also include total payments, total interest paid, total closing costs and points and balance remaining at a given point in time. One of the most important metrics to consider is how long you plan on keeping this loan on the home you purchase or refinance when selecting the right mortgage plan.

Second, we recommend working with a professional who watches, articulates and understands the interest rate markets. If you're a consumer, it's important to understand that interest rates can change daily, even hourly. So, if you are comparing lender rates and fees - this is a moving target on an hourly basis. If you are comparing two quotes from different lenders, you may be comparing apples to oranges. The only way to get a truly accurate comparison is to have the quotes prepared on the exact same day, at the exact same time, with the exact same terms and conditions. You also must know the length of the lock term (i.e. 15 day, 30 day, 45 day etc.) you are looking to secure, since longer rate locks typically carry slightly higher interest rates.

We provide a daily recommendation to our client's advising them to float or lock their home mortgage interest rate. In this update, we list the current pricing of the FNMA 30-Year Bond and the previous closing price. We identify the key current market updates and the daily economic news releases that are influencing interest rates. We also provide an illustrative picture with our written recommendation, which makes it easily understood.

In conclusion, we feel that having access to valuable information regarding the total overall long-term cost, along with mortgage options that best fit their needs, coupled with market knowledge will allow you to obtain the overall lowest cost mortgage with the best loan rate available.

For more information on rates, fees and your personal mortgage options, contact The Krushinsky Team at 602-695-7575 or email david.krushinsky@wjbradley.com.

You've been pre-qualified for a 3.5% down-payment, FHA home loan, to buy the house of your dreams in Scottsdale, Arizona. You and your Realtor have searched for months and finally narrowed it down to one home. It's a short-sale located in beautiful Scottsdale, AZ. This is the ideal location; not too far from your office, great schools for the kids, plus terrific dining and night-life for you and your wife.

Your Realtor is very sharp and has well over twelve years of experience selling high-end homes in Scottsdale. You make it through the inspection period with no items needing repair. Your Realtor gives your lender the go ahead to order the appraisal. The FHA appraiser returns the completed appraisal with a value equal to the sales price. You're feeling terrific because you've just locked in an incredibly low interest rate of 4.875%, which is fixed for 30 years, on an FHA home loan.

Everything seems to be moving along smoothly, until you get a call from your Loan Officer. She sounds concerned and you immediately begin to panic. She tells you that the lender has turned down your loan because the house has a shared well for water, which is connected to more than four homes. You don't understand why your loan was declined? Your Realtor doesn't understand either; he has sold many homes in this area without a problem, which were also financed.

The reason some lenders cannot finance a home with a shared well connected to more than 4 homes, is that it doesn't fall within the standard FHA loan guidelines. Prior to 2007, many of the homes in Scottsdale were financed with conventional financing. Therefore, very few Realtors and Loan Officers ever experienced a problem with this specific circumstance. Self-admitted, many industry professionals need to educate and enhance their knowledge of FHA guidelines. It is possible for this home to be financed under FHA guidelines; however, it will require some additional documentation, more work from everyone involved, and maybe even a few sleepless nights. Hopefully, you are working with educated professionals that will be able to alleviate many of those restless nights and extra stress!

This was an actual scenario we experienced with one of our referrals. Luckily, we were able to fund this client's loan after he received a loan denial from another lender. Although in order for this loan to work, there are a few specific requirements that need to be met. First, the water must flow through a valve dwelling service line, so that water may be shut off to each served dwelling without interrupting service to other properties. Secondly, the well must be connected directly to the pumping energy source (not a dwelling); and the energy being used for pumping must be separately metered. Finally, the well must be covered by an acceptable well agreement through one of the five documents/entities listed below:

1. Control by Public Utility Commission
2. Trust Deed
3. Third Party Beneficiary Contract
4. Property Owners' Association
5. Franchises from Governmental Authority

The following identifies the additional documentation required in order to close this loan for our client. These items do carry a few additional fees.

• Documentation provided by a Septic Inspector stating that the well sits a minimum of 50 feet from the septic tank, 100 feet from the drain and 10 feet from the property line.
• Certified pumping test
• Potable water certification

Special thanks to Beeman Pump Company and A-American Septic Service are in order for making this transaction successful.

If you're currently considering purchasing a home with a shared well connection to more than 4 homes and need some assistance, please contact David Krushinsky at 602-695-7575 or david.krushinsky@wjbradley.com.

Today, I had the pleasure of attending my daughter's 4th grade parent/teacher conference. Her teacher told me that she is a great student, but she noticed that Kelli rushes through her work assignments quite frequently. Kelli will quickly complete her assignments, often times with minor errors, and ask her teacher if she has something else she would like her to do. My wife and I had also took notice to this recently too. However, it also reminded me of myself when I was that age. I often think to myself, am I grooming my daughter for a career in sales? I think I may be doing just that.

This year has been a special year for Kelli and I. We have really had a lot of fun as she is beginning to mature into a young woman. She and I have formed a special father-daughter bond that will last for a lifetime. I have always joked with her about growing up and becoming a "Mortgage Consultant" or a "Mortgage Broker". This year I have started to actually think she is definitely cut out for sales.

Every week Kelli has an assignment to select a news article of interest to her. She has to read through the article, highlight the most important facts from the article, and answer ten questions. The assignment is called "Tuesday Newsday", which has to be about an event that occurred in the previous week, but it is also due on Tuesday morning. Kelli and I usually sit down on Saturday morning, although she always tries to wait until Monday night, to select the article she is going to write about. We always find the article together.

A few weeks ago she found an article titled, NASA Satellite To Intentionally Slam Moon, by Anne Ryman. The article was about a satellite slamming into the moon, at an extremely high speed, to create a large hole in search for water. It was a very informative article that had every last detail explained. The type of article an Engineer would love.

The last question on the homework assignment is, "Using your own words, summarize the most important facts from this article in 3-5 sentences". Being that Kelli is destined for sales, of course she always writes 3 sentences. We all know that sales people typically do the minimum amount of work required. The following paragraph is a break-down of her response.

The first sentence reads, "A 2 ton piece of equipment will put a 13 foot hole into the moon". Nothing wrong here, just her explaining what will happen when the satellite slams into the moon. The next sentence reads, "To see it you will need a 10-inch telescope". Here's where the sales mode officially kicks in gear. In order to see the 2-ton piece of equipment put a 13-foot hole in the moon you will have to go out and purchase a telescope with a 10-inch lens. Kelli's last sentence reads, "This is your only opportunity to see it crash into the moon". The last sentence is the limited time offer, which will cause you to buy the telescope that starts at $599.

When I read this paragraph I began to laugh. It sounded like the perfect telescope ad. Keep in mind, no where in this article were any of these sentences written. I guess I am molding my little salesperson more than I thought.

Do you have any good sales stories to share about your kids? Please feel free to share them with us.

I would be a disappointment to Kelli if I didn't mention; if you're considering purchasing a home or refinancing, please contact the Krushinsky Team. David can be reached at 602-695-7575 or david.krushinsky@wjbradley.com. This is your only opportunity.

Future questions will most likely be answered directly by Kelli Krushinsky - "Mortgage Consultant In Training".

FREE CONTINUING EDUCATION CLASSES FOR ARIZONA REALTORS

You are invited to attend the continuing education seminar " Answers To Tough Questions About Credit In Today's Market" on Wednesday, November 18th from 2:00 pm - 5:00 pm. This event is FREE and provides (3) three Accredited General Hours towards your continuing education requirements.

David Krushinsky, a Certified Mortgage Planning Specialist, will address those tough questions regarding your clients credit in today's real estate industry. The following are a few key topics that will be discussed:

-Is it better for your client to file bankruptcy or to foreclose?
-What is a short sale and how can it affect your clients credit?
-What about a Deed-In-Lieu of Foreclosure?
-Foreclosure vs. Short Sale
-What should my clients do???
-Many more items to cover!!!

Don't miss out on this opportunity to learn about new and changing information and get your questions answered by a mortgage professional.

The Seminar will be held at the Foothills Recreation & Aquatic Center 5600 West Union Hills Drive, Glendale, AZ 85308 on Wednesday, November 18th from 2:00pm - 5:00pm.

Please RSVP to reserve your seat. For any questions or to RSVP, please contact David Krushinsky at 623-594-7600 or email david.krushinsky@wjbradley.com

Hope to see you there!

Accredited by C. David McVay School - 3412 E. Dunlap Ave., Phoenix, AZ 85028
602-749-2098 Email: dmcvay@cdavidmcvayschool.com ; www.cdavidmcvayschool.com

Are you purchasing a home in Phoenix? Is the house bank-owned, does it need some TLC, or would you just like to paint, carpet and put in some new appliances? The FHA 203k Streamline loan is the perfect solution. Click here for a more detailed guide for specifics on how the 203k loan works.

FHA's Streamline 203(k) mortgage program allows Phoenix homebuyers to finance up to an additional $35,000 into their mortgage, to improve or upgrade their home before they move-in. Phoenix homebuyers can use this type of loan to pay for property repairs, such as those identified by a home inspector or FHA appraiser. These improvements are not just limited to repairs and can also be cosmetic upgrades to the existing property.

Now that you have gone through the whole financing process and you have reached your closing date, what happens next? Rehabilitation construction should begin within 30 days after closing, and all work must be completed within six (6) months from the closing date.

How does your General Contractor get paid? After the closing, your loan is typically sold to a servicing company, like Bank of America. This process normally takes 7-10 days, but is currently taking approximately 21 days. This is due to an influx of new loans being purchased from the recent closure of various mortgage lenders. After the loan is sold, 50 percent of the rehabilitation funds are disbursed immediately to the borrower and/or contractor. Included with the initial disbursement is an instruction letter that explains how the final disbursement will be made upon completion and provides the necessary contact information. The balance is disbursed upon completion of all work. If the cost of the renovation is over $15,000, an inspection by the original appraiser is required.

For borrowers working with a contractor, a W-9 must be provided to set up the contractor, and a two-party check is made out to the borrower and the contractor and sent to the borrower. If multiple contractors are being used, 50 percent of the cost of the repairs for each contractor is disbursed up front. For borrowers performing work themselves, a self-help agreement must be signed before the funds are disbursed. The check is then made out directly to the borrower. A borrower is typically only allowed to perform work themselves if they have experience in that line of work.

Who handles all of the disbursements and other requirements during the rehabilitation process? The servicing company handles all rehabilitation disbursements and project inspections. The amount designated for repairs and improvements, including the contingency reserve, holdback, and PITI, if applicable, are deposited into an interest-bearing repair escrow account, insured by the Federal Deposit Insurance Corporation (FDIC).

What happens if your repairs have unexpected costs? The contingency reserve is required to cover unexpected repairs. The reserve is usually only required if the repairs exceed $7,500 and is typically 10 percent of the total repair amount. The contingency reserve can only be used on those changes that affect the borrowers health and safety, or is due to an increase in cost for an item of necessity. If a change order results in a decrease in costs, the amount will be added to the contingency reserve. Additional improvements that do not affect the health and safety, or an increase in cost due to a necessity item, must be paid for directly by the borrower and not paid out of the contingency reserve fund. The remaining balance in the contingency fund, after all work has been completed, will be used to pay down the principal balance of your loan.

Congratulations! It's time relax and enjoy yourself.

If you're considering purchasing a home that may need some cosmetic upgrades or repairs, please contact the David Krushinsky Team to get pre-approved. David can be reached at 602-695-7575 or david.krushinsky@wjbradley.com.

* These are guidelines for loans funded by W.J. Bradley Mortgage Capital Corporation and may not be the same as other lenders. You should consult your mortgage company to see if the same rules apply.