Janet Guilbault California Mortgage Banker/Broker

Orange clouds over the redwoods at 6AM

Blushing orange: The first tomato from the garden

The one and only orange sunflower (among the yellows).

Papaya squash, orange and ready to pick

Pictures taken by Janet Guilbault, Mortgage Banker/Broker Based Out of the San Francisco Bay Area

The first sunflower bloom...and a beetle.

Too Many Peaches

Wine After Picking Peppers

Morning glory at 7AM

Written by Janet Guilbault, Mortgage Banker/Broker Based Out of the San Francisco Bay Area

What does it take to refinance your California home loan? Two words: WAITING GAME. Be prepared for a time line like you have never seen before.

How do you WIN that low interest 30 year FIXED RATE mortgage? Two words: BE PREPARED.

Yesterday was one of the LOW days in the mortgage office. You know, it is like a snow day. You stay in all day and don't dare leave your desk to go outside. You need to lock the loans.

But there still is one huge problem: the whole mortgage world is simply overwhelmed with refinances. Yesterday our bank reached its lock limit at around 2pm. Today, after opening at 7AM, all the locks were gone by before 8AM.

You think the mortgage brokers had a few files sitting around waiting for a LOW day? Once the 4% cat gets out of the bag, things go crazy.

We all know how high the stakes are:

1. These low rates are a window of opportunity that will disappear as the economy gets better.
2. This could be a once in a lifetime opportunity to eliminate the risk of your adjustable rate mortgage.
3. You could emerge with hundreds of extra dollars a month as a result of a lower payment.

Know this: You are out of the game if you owe more than your house is worth or you are unable to document your income.

If you think you have 20%-25% equity, the best rates are yours for the taking. Here is what you need to do to take advantage while the window of opportunity is open.

1. Forge ahead. Get a current payment and rate quote. You will also need a breakdown of your closing costs. Analyze your savings per year after you have paid for the closing costs to calculate your true savings.
2. Fill out the application. This will allow your loan to be ready for a lock on a LOW DAY, and for potential problems with your application or credit to be ironed out.
3. Know the rate you want, even if it isn't available that day. Your loan can be on the RATE WATCH list (ready to pounce when rates go that low).
4. Don't be mad at all of the documentation it requires to get a loan these days! It will seem stupid. It will seem over the top. It may even insult you. But try not to shoot the mortgage broker and consider yourself warned.
5. Don't be mad if the refinance seems to drag on forever! Refinance applications take a lower priority than purchase applications with banks. Expect a 45-60 day close and do not lock for LESS TIME than that.

If the purchase market heats up, which I fully expect it will, refinances could take even longer. This is why I am recommending you move forward early in the year to lock in your refinance and literally beat the rush.

Have questions about refinancing your California home loan? I am here to help and would love to hear from you! 925-552-3867 (direct) or email jguilbault@rpm-mtg.com

If every single person facing a loan adjustment had educated guidance, and a solid course of action for their pending loan adjustment, I believe it would THAW out much of the PANIC causing our current economic freeze.

Ever hear of the "fear of the the unknown?" It is alive and well in the heads of those with adjustable rate mortgages, I promise you.

In an attempt to keep things very simple, allow me to say this: Adjustable rate mortgage payments that pay off NO principal and have an unknown (and difficult to understand) future event that CHANGES the payment, are simply NOT GOOD for a person's mental well-being.

Maybe a bottle of sleeping pills should be included everytime someone signs an adjustable rate mortgage?

It would be far preferable to know that the worst possible outcome of making a commitment to a lending institution is this: you just keep making the same old payment you signed up to make. You just keep living in the same old house you bought a few years ago.

That used to be considered pretty boring, but funny thing: that sounds pretty darn good right now to a lot of distressed homeowners.

Everyone needs to feel deep down inside that they are getting a little closer to true ownership by paying a little each month towards that goal.

Okay, all of you financial planners who think paying off a house is stupid: I am referring to a person's mental state. Not their financial state. And I bet I've talked to way more people coming to the adjustment phase of their ARM than you have.

Let's just be honest. Building equity feels good and so does the security of knowing your payment is your payment. It won't be changing.

Repeat after me: adjustable rate mortgages are not disposable. They do not automatically cause financial ruin. If your loan is adjusting, don't wait till the last minute to figure out what this means to your finances and pop sleeping pills because you are so disturbed by this event.

You don't even THINK about walking away from your house without doing the arithmetic.

Sure, some people will lose jobs, get divorced, suffer financial catastrophes. Loans will default. This will always be a part of the lending world. But don't let the current panic and foreclosure epidemic cloud your ability to come up with a sound course of action.

Knowledge is power. An adjustable rate mortgage IS a sophisticated financial product. Know your options. Get help. Here are 10 things to do that will help you get a grip on your adjustment.

Things may not be as bad as you think. It pays to be prepared.

1. Find your adjustable rate rider which should be buried in your paperwork of the loan.
   
2. Contact a mortgage broker to help you.
   
3. Find out the exact date your loan will adjust.
4. Calculate what the rate and payment would be if the loan adjusted TODAY
5. If you would like to monitor the rate yourself, get a link to the index your loan is tied to, and add your margin to that number. This will give you the rate.
6. IMPORTANT NOTE in calculating your "new" payment: Your loan will no longer be interest only after the loan adjusts. Your remaining balance must be calculated on the remaining years left on the loan. (If you have paid interest only on your 5 year ARM, adjusted payment must be amortized on a 25 year basis. principal AND interest, at the new rate.
7. By all means, consider refinancing into a 30 year fixed with today's low rates. This is only possible if you owe less than the value of the house and you can qualify fully documenting your income.
   
8. If you are uncertain of the value, you may want to research this, or call your favorite Realtor. You can consider paying for an appraisal (around $400 in California)
9. If you cannot refinance, make immediate adjustments to your budget to handle the new payment.
   
10. If you cannot handle the new payment, and have no ability to refinance, call the customer service number on your payment coupon. Ask for restructure assistance and you should go to the right department within the bank to discuss possibilities for a restructure.
    

Written by Janet Guilbault, Mortgage Lending Specialist Based Out of the San Francisco Bay Area

If you need help with an adjustable rate mortgage that will be re-setting in 2009, please feel free to contact me for assistance and a no obligation evaluation of your options.

janetg@rpm-mtg.com

925-552-3867