What a week!!! It seems every morning I awoke to new earth-shattering economic news. If you want drama, don't watch the new fall lineups on your favorite network, just watch the news channels. The past month has brought us the collapse of big banks, bailouts of even bigger banks and insurance companies, natural disasters, and surprise running mates. Hollywood's best could not have thought this up.
Ok, don't watch the news channels. Usually their so-called experts play great to their audiences, but display their lack of knowledge to those of us that know better. This morning I saw one "expert" that I mostly respect state that although mortgage rates are very good right now, you need very good credit and 20% down to qualify. I guess she never heard of FHA.
What happened? Bear Sterns, Indy Mac, and Lehman Brothers were huge investment banks that bought into mortgages in a bad way and paid the price. Countrywide and Merrill Lynch only avoided the same fate thanks to buyouts by Bank of America. Fannie Mae and Freddie Mac wavered, but the government knew they held too much of the mortgage money and their demise would be catastrophic if not fatal to the housing market. AIG was next in line, but again the government stepped in to throw a lifeline to this insurance giant.
As this played out, we saw violent shifts in the market as investors attempted to navigate the waters and determine where to put their money, or just as important, where not to have their money. The stock and bond markets looked like yo-yos. Tuesday I saw mortgage rates climb a 1/2 point in about 2 hours as The Federal Reserve announced no change to overnight rates and AIG faltered. Some invested heavily in gold. Many more invested in treasuries knowing they would take short-term losses but their money as a whole was safe.
Thursday saw a virtual run on the bank as $180 billion dollars was withdrawn from money market accounts. Investing was no longer about making money. Now people just want to find a way to keep the money they have. Now the government is coming to the rescue and bailing out the entire market. They are going to insure money markets and create a company that will absorb all of the bad mortgages. This has put confidence into the market. Mortgages rates are increasing as a result, but our economy is becoming healthier fast.
We are at the bottom of the market!!!! Granted I cannot be sure of this, but if I'm wrong, I am not off by much. This injection of money into the market is going to speed up the process of recovery for the ailing housing market. If the government guarantees mortgages, investors will view this as a safer place for their money. Though we may not see a dramatic loosening of underwriting guidelines, we will see the money start to flow somewhat quicker and smart investors will become more likely to buy a houses.
Now is the perfect time to buy!!!
Realtors, explain to this to your customers.
Today's news is unprecedented.
We are unlikely to ever see this combination of high inventory, discounted sales prices, and historically low interest rates.
Call everyone you know and tell them the time is now.
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 Consumers are often baffled by the home appraisal process. They may feel their home is worth a certain dollar amount, and therefore, the appraised value doesn't make sense to them. It is important to know that appraisal guidelines are dictated by the lenders. In many states, the lenders must disclose the purpose of the appraisal, as each situation carries its own set of rules.In essence, lender guidelines force appraisers to put a fair market value on a home based upon comparable sales in the area where the home is located, as the home must be bracketed according to size and value. For example, there is no set amount associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, and the local marketplace supports the value of a pool at $15,000, that item will be bracketed as [$15,000] on the appraisal. Upgrades can usually be expressed at full value in newer homes since they required investing additional money onto the cost of building the home. On the other hand, the amount invested in upgrading or remodeling an older home is rarely reflected in full in the final appraisal. The reason is the home had value in its original condition, and again, the value of the upgrades must be supported by comparable examples within the same marketplace. These comparisons must be drawn from current market activity within the last six months. Some lenders may want to look at both closed and pending sales to see if there is any room for negotiation. This is a safeguard to prevent appraisers from over-valuing the home in question. It is further stated in the guidelines that appraisers can only place a value on homes that have closed escrow. However, when property values rapidly increase within a marketplace, appraisers are generally permitted to make concessions and put more weight on the evidence provided by comparisons to pending sales and listings. This allows for a "real time" appraisal. Although there is no formal standard to speak of, most lenders give the appraiser a 5% margin of error. If the file is reviewed and the appraiser is off by 8%, there is a good chance the value will be cut by the full 8%. It is in the best interest of both the appraiser and the homeowner not to push the value up higher than the market will support, otherwise the property evaluation may be exposed to a strict appraisal review. As a loan executive, I make it a point to follow lender guidelines at all times, and work within the systems they provide. This promotes a good relationship with the lender, and smooth closure for my borrowers. As always, you are welcome to contact me if you have any questions. Call me directly for a free consultation. |
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Uncertainty in Financial Markets Could Cause Dramatic Rise in Existing ARMs at Next Adjustment
If you or anyone you know has an Adjustable Rate Mortgage, this is an important point to consider. Many ARM loans are tied to the London Interbank Offered Rate (LIBOR). In fact, there are six million loans in the United States that use LIBOR to determine the interest rate and as the name suggests, many banks use this rate to lend money to each other.
But, today, banks lack confidence that the money they lend will be paid back. In light of what has happened with Lehman Brothers, IndyMac Bank and others, as well as AIG, banks are requiring much higher rates on LIBOR to offset the added risk.
The Federal Reserve Left Rates Unchanged but...
The Federal Reserve met yesterday leaving the target rate unchanged at 2.00% but just like LIBOR the actual rate being charged by banks to each other is closer to 6.00%. This again suggests that those with ARM loans should consider a refinance into historically low fixed rates.
What Happened?
Financial companies have been under attack. IndyMac was the largest bank to falter in twenty years. What brought IndyMac down was their exposure to defaulting loans. This sapped investor confidence and drove down the stock price until they filed for bankruptcy.
Following IndyMac, we saw Fannie Mae, Freddie Mac, Lehman Brothers and Merrill Lynch succumb and were either forced into conservatorship, to close their doors, or to sell themselves. AIG, the world's largest insurance company was also impacted, forced to make a deal with the U.S. government to stay in business.
What You Can Do Now?
I'd be happy to go over your loan situation and help you understand how the recent events may affect you, and how you can best be protected. Additionally, chaotic times like these often present opportunities. I look forward to hearing from you.
Many of you will recognize the name Todd Duncan. A quick search of his name will show you how well respected he is by so many members of AR. He has been in leader in mortgage sales training for over 20 years and works everyday to help us stay focused through these turbulant times.
Todd's wife Sheryl bravely fought and defeated breast cancer just over five years ago. Unfortunately, they have recently learned that her cancer has returned. The situation is very serious, and unfortunately little more is known at this time until her testing and preliminary surgeries can be completed.
Please join us in standing with Todd and his family, and keeping them in your thoughts in the trying days they have ahead. If you want more information, or to send a note of encouragement and support to Todd and Sheryl, you can visit http://www.sherylduncan.com/.
Todd Duncan has been a true leader and visionary in our industry and has continued to be here for us in our times of need. Let's return the favor.
The Difference Between Pre-Qualification and Pre-Approval
Pre-qualification is the first step in obtaining mortgage financing. A potential borrower answers a few questions to provide the loan consultant with a quick snapshot of the borrower's income, existing debt, accumulated savings and whether or not there is a co-borrower. Signature(s) allow the loan consultant to run a credit report and begin to determine what loans are good candidates for this particular client. However, there are literally thousands of loan programs available. It is important for the loan professional to know the long-term financial objectives of the prospective homeowner.
Pre-approval is a written documentation that proves the borrower has full support of a lender. It means the form 1003 Uniform Residential Loan Application has been completed and reviewed by an underwriter. Based on the borrower's income, debt ratio and savings, the underwriter will provide a dollar amount this borrower is eligible for. Now the borrower has the convenience of shopping for a home in the price range agreed upon by the lender.
Pre-approval allows potential homeowners to shop as cash buyers, and that means negotiating power. The seller will take an offer from a pre-approved shopper much more seriously and may even accept a lower bid because they know the financing is in place and the deal is secure.
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I am an Accredited Loan Cosultant with Pleasant Valley Home Mortgage Corp. I understand that each individual has their own needs and goals. My job is to find and recommend the best solution for you.
As a mortgage consultant, my job is to provide my customers with what is likely to be the largest debt they will ever have in their lives. I believe that this obligates me to personally ensure they have the proper understanding and resources to effectively manage this debt. I do this by spending a portion of each and everyday using resources such as the Mortgage Market Guide and the Loan Toolbox to make sure I am at the top of my game.
My responsibility starts by evaluating each individuals needs and goals to determine the best way to structure their mortgage. From time of pre-qualification through the day of closing, my customers and realtor partners know that I will be with them every step of the way. Communication and education are the most important pieces of the puzzle. These basic ideas ensure that we will be at the closing table on time and that everyone has a smile on their face on day of settlement.
Watching my customers be handed the keys to their new home is only the first step in my journey with them. Through the use of newsletters, market updates, and annual mortgage reviews, my clients know they can count on me to be here for them should their situation or market conditions change. Whether they are in need of stepping up to a bigger home, refinancing their existing mortgage, or enrolling in a mortgage acceleration program, I will guide them through the maze of options and assist them in making the right decisions.
Pleasant Valley Home Mortgage Corp.... Our staff have been fulfilling customers' real estate financing needs for 25 years. Using today's advanced automation systems, we provide our borrowers with tools and resources to make obtaining a mortgage loan from us a fast and efficient process. Offering a wide selection of products, great rates and flexibility, we tailor mortgage solutions to meet our borrower's needs.
What We Offer:
A Simple Mortgage Process Our borrowing process is fast, simple and hassle-free. We have eliminated much of the paperwork involved in applying for a mortgage loan in the traditional manner. With Pleasant Valley Home Mortgage Corp., you can inquire about a loan through the Internet, over the telephone or by fax. If you have any questions, our dedicated loan consultants will be happy to assist you.
Fast Credit Decisions and Closings Our online mortgage approval system expedites the loan approval by accessing national underwriting guidelines and confirming the conditions required for loan approval. You no longer need to provide the excessive information and documentation that was required under the traditional application process. As a result, it is possible for a loan to close within 14 days of receipt of the completed loan application and documentation (although we can't guarantee that every loan will close that quickly).
Big Savings Our automated systems and streamlined mortgage process have created an extremely cost-efficient mortgage operation. We produce big savings for borrowers by eliminating the high-commissioned loan officer, acquiring loan sources with low rates, origination fees, points, and other charges, as well as negotiating reduced fees for escrow, title insurance, appraisal, credit reporting and other mortgage services.
Personal Service After submitting your loan application, a loan officer will personally assist you through each step of the mortgage process by helping you meet your loan approval conditions through coordinating the signing of your closing documents.
"Someday, I will personally come to say to you thanks for helping me out all along the process of mortgage approval to closing. I am very happy for the rate you offered me and the highest level of customer service you provided me and wish you great success in every walk of life. I will certainly wish to recommend any body in my circle who would be interested to get a home mortgage.
Thanks."
- Mohammad
"We hope this email finds you well.
We truly appreciate all the hard work you put into helping us get approved for our loan- and making our dream of owning our first home a dream come true. The exceptional service and advise provided by you should be commended. You can definitely count on our recommendation for your services to everyone we know!
Kind Regards,"
Yris & Antonio
"Everything was handled very well... Open communication and always available."
-Michael & Michele Hetzel
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"Karl was excellent. He was very responsive and knowledgeable."
- Cristina Vacca
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Dear Karl,
"Just a note to say a huge THANK YOU for your help in securing my new townhome. I move in tomorrow and want you to know how much I appreciate your help in getting me to this point.
Thank you for guiding me through this process in such great detail. You were careful to explain everything to me in "layman's" terms to make sure I understood, and thanks to your careful eye on what was happening with the economy I was able to get that monetary break from FHA! I always felt that you were working in my best interest, and cared that you were doing the best job possible to meet my needs.
I could not have had a more positive experience, and within the next few days I will report my experience online via my subscription to Checkbook.org which is used heavily in our area for referrals. I am very glad I came to the ACC the day Superior was here!
As I mentioned to you, I always noticed the tag line in your emails that said if I felt I was not receiving five star service to contact Mr. Cors. Well I am pleased to report to Mr. Cors that the service I received from your office exceeded my expectations.
It was a pleasure doing business with you.
Kind regards,"
Lauri Nichols
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"As a first-time home-buyer I was a little uneducated on certian terms & principles, but Karl did an excellent job of making a very stressful situation more bearable to handle. An asset to the company."
Erin Sweeney
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"We appreciated his knowledge in the program that was able to get us into our 1st home. We appreciated his constant in contact attitude. Thank you!!!"
Cristina Trejos
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"Karl was wonderful. He was always one step ahead. He made himself completely accessible. He was extremely knowledgable. Well spoken & very thoughtful."
Michelle Dougherty
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"Karl's customer service is exceptional!! Very attentive and knowledgable. Also, Anton & Lillie are especially helpful, knowledgable, pleasant & efficient.
A great team!
Thank you"
James and Lucinda Reilley
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"He was always prompt to respond and was on top of everything. It was a stressfree experience, as much as getting a mortgage can be."
Erik & Susanne Spence
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"It was a pleasure working with Karl. He did everything in a timely manner for my clients and they were very pleased with his services. I was quite happy with all the updates and informative emails that I recieved from him. I was especially surprised to see him at closing. He made my job so much easier! Thank you Karl!"
Cindy Cori (Cardinal Real Estate Services)
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