Posts Tagged ‘mortgage’

Tales of a Home Buyer – part 1

May 11, 2011

Written by Shawn DeVries

Let me start by saying that this was not my first time.  Not only have I purchased a home before, but I have obviously been on the selling side of the process.  I have experienced a refinance and even rented for a period in my life.  I now work in the lending industry and know the process of buying a home and what to expect.  Yet, I still experienced the same stress, fear, anxiety, worry, excitement, joy, anticipation and ultimate relief that every other home buyer and owner experiences when going through this process.  My emotional range may have something to do with me doing this as a single buyer this time, but I felt it all just the same.

If you are considering purchasing a home, you may wonder just what this journey is all about.  I thought you might like to know.  If you fully understand this process please don’t disregard this series, for I know you will find warm memories and at the very least some great humor as I relate my story to you.

My story really begins nearly three years ago.  After a divorce I relocated back home to start my life over again.  Let me set the stage very clearly by adding that “moving home” was taken quite literally by moving back into my parent’s house.  Oh yeah, I did it.  God bless my parents, for despite their honest intentions and good will, I really don’t think either of us knew what this would all entail.  Most of my belongings were packed into storage with the remaining pieces finding basement corners and emptied closets.  I was prepared for this journey to start over to take some time, but not quite this much time.  Let the fun begin.  Oh, did I mention I have two children in tow?  (I told you my story would have humor.  Ha!)

Fast forward now through the past three years as I find a new career, pay off debt, and save some money all in preparation of buying my own home.  When January of this year finally came, I was ready to go home shopping!  I thought this day would never come.  I knew to take care of my credit over this time and felt it was in great shape.  I had money set aside for the down payment, plus some for reserves.  I had crunched the numbers and knew not only what I could afford, but what I wanted to afford.  Yes, I am a little anal about details sometimes, but I was preparing to buy a home and I wanted no surprises.

Knowing that the first step in buying a home is to get pre-approved I started by gathering my documents (yes all seemingly 4,000 of them) and verifying the information (just short of the blood work) for my Loan Officer as he prepared to pull my credit report.  Despite having a good clue of what to expect, that 15 seconds between him hitting “submit” and seeing the actual report can feel like eternity.  What are my scores?  Did I really behave?  Will that oops from 5 years ago show up now?  What surprises will he find?  Oh please, oh please let my score be above that golden 640 so that I can shop for a house.  See?  Even people who work for lenders have real emotions and understand the angst our clients endure.

Well the report appeared.  Great scores, good behavior paid off, no glaring marks, no surprises, and above the benchmark score needed.  Whew!  My information was then entered into a program that analyzes the data and based on preset criteria makes a decision on whether or not I could be approved for a loan.  However to the borrower the answers feel like: go away you are only kidding yourself; we had better have someone else take a look at this because we’re not so sure; or yeah, we can do that… provided nothing weird happens.  I was relieved to learn that my information was approved.  My pre-approval was then written and off I went to find my house.  This would be a snap.

Advertisements

Gaining Perspective

February 9, 2011


There are times when you need to view something from a different angle to better understand it.  We tilt our heads when appreciating abstract art.  We walk around a new car to take in all the lines.  We step back when we place an arrangement on the table.  Changing the view gives us new perspective in order to better understand what we are looking at.

 

The same can be said when looking at factors and indicators of the economy, housing sector and interest rates.  We have all heard that interest rates are at historic lows, but just how low is that?  Did you miss out on this recent refinance boom?  Is this refinance boom even over?  Just where are rates right now anyway?

 

Interest rates have been tracked and recorded for the past 39 years.  In that time if there has been one constant, it would be change.  Consider these facts on 30-year fixed rate loans:

 

  • The average interest rate from one month to another has only held unchanged 14 times in 39 years.
  • Interest rates have dropped 2.69 points from 1972 when the average rate was 7.38% to 2010 where rates ended at 4.69% on average.
  • Over the past 39 years interest rates climbed as high as 11.07 points above the yearly average of 1972.
  • Interest rates have dropped as much as 14.22 points since their highest in October of 1981 when that single month boasted rates at 18.45%.
  • The highest yearly average interest rates occurred in 1981 at 16.63%.
  • The lowest rates on record happened last year in 2010 at just 4.69%.
  • Over 39 years the average interest rate was 8.92%, almost double 2010’s yearly average.

So yes, we really are at historically low interest rates!  Yes, this is still a fantastic time to review your current home loan to see if refinancing makes sense for you!  No, you most definitely have not missed out on these low rates!  And yes, it is a fantastic time to buy a home.  Not a bad view from that perspective.  Give us a call to review your current loan or to help you with a pre-approval for your new home.

Pam Teachout

August 26, 2010

We would like to introduce you to another member of the Awareness Home Funding Team, Pam Teachout.  Pam is one of our Home Loan Specialists who not only helps clients with their home loans but also makes sure all your questions are answered.  Pam wanted to share her thoughts on our company and approach to customer service.

OK…I want to say something about Awareness. 

I have worked many places over the “decades” of my life….and this is one of the best companies I have worked for in terms of “doing what’s right” for the customer.  We are expected and encouraged to go the extra mile for the client.  How refreshing is that?  So many businesses today, in order to survive, have to meet “the quota”, and cut corners to get there.  That is not the philosophy here at Awareness Home Funding.  We know if we do the right thing, the business will come to us. 

Are you unable to refinance or purchase a home because life has thrown you a financial curve? What if your credit is too low and you do not qualify for a home loan?  Well, we will help you understand what you need to do to make your credit healthy again, and give you a path to get there.  We spend time with you.  We help you where it hurts.  When you are ready, and we will keep checking on your status, we do hope we can provide you with that home loan.   

Although we are a business that like all businesses needs to make money; we don’t throw you out with the bath water if you are not ready or decide not to get a home loan.  We’ll check on you later to see if your circumstances have changed.  We want to be your one stop-shopping FOR LIFE for all your mortgage needs. 

I am so proud to work for a company that TRULY has the client at heart.  Would you like to hear the icing on the cake?   Awareness Home Funding will donate $250 to the charity of the client’s choice!  How cool is that?   Personally, I have purchased and refinanced only with credit unions in the past.  I never realized there was a company out there like Awareness.  I just thought a lender would cost me more money and a credit union would not “take advantage” on one of its members.  While I do believe in what credit unions do care for their customers, they could NEVER spend the amount of time with a client the way that Awareness folks do.  They say either you are approved or not approved; that’s it.  For that matter, so do most banks and lending companies.  That is what sets us apart. 

I work for Harry Gribnitz.  And Harry, I do not mean to make you blush, but dang you are the influence that keeps this boat floating and makes me feel so good about coming to work everyday.  I get to help people get into their first home, or refinance to a lower interest rate!  But the best part is helping people “get there” if they have credit problems.  That is SO satisfying. 

Prove It!

April 5, 2010

Remember those days on the school playground when one kid made some bold statement and another kid made that challenging accusation back, “Oh yeah?  Prove it!”  These days it seems no matter what you do, you need to prove what you say and who you are.  You go through the checkout at any store, pay for your purchase with a credit card or even debit card, and you are asked to show identification.  Are you really John Smith like your card says?  Prove it.  You call your utility company to ask a question on your monthly statement.  Are you really Jane Doe at the address you say?  Prove it.

Have we become a society of disbelievers that no longer trusts anything that anyone says anymore?  Unfortunately, yes.  The sad reality is that people lie and in order to protect ourselves, we ask that information provided be verified as authentic and true.

But since we also like to see the other side of the coin, this can be a good thing.  Suppose you have worked to gain expertise in a particular area, your degree and licensing can prove it.  Those pieces of paper give you authority and build trust with your clientele.  Or if you have been responsible with your finances and now have zero debt and funds to purchase that new home; your credit report and bank statements prove it.  Those written documents show you can be trusted and are a low credit risk.

When purchase or refinancing a home there is a long list of items you need to provide to your loan officer:  your social security number, date of birth, bank statements, employment information, income, etc.  What does all this personal data prove?  How are these pieces verified?

Your social security number helps identify who you are.  By comparing what you verbally say with your check stubs, credit report and tax records, not only is your identity proven, but any errors or identity theft by others against you can be found and corrected.

Bank statements not only show how much funds you have but also whether or not they are fully available to you.  They help prove you are ready with a down payment, you have full access to your accounts and that there is consistency in your monthly cash flow.

Employment and income are closely related.  In order to be able to afford your home, you need an income and that means you need a job.  Verifying your employment with your employer proves you have steady employment, what you are paid and how consistently overtime and bonuses occur.  The income you earn is used to determine if you can afford the new payments.  (Our last post addresses this topic.)  Reviewing pay stubs proves what you are paid and how often.  Your lender reviews these items (verification of employment and pay stubs) to determine the likelihood that your income will continue in order to prove you can afford your new payments.

In early conversations with your loan officer, the two of you may recognize you are well qualified and prepared for a new home loan (for either purchase or refinance), but the underwriter who approves the loan doesn’t know you.  Your loan officer works to develop a strong case in your favor to prove this loan is a good thing – for you and the lender. 

Proving it doesn’t have to be intimidating or negative.  We work for our clients to help them with the loan process.  Let us “prove it” to you.

What’s Your Code of Conduct?

February 23, 2010

When any organization starts out, one area to develop and maintain is how you intend to run your business – your corporate philosophy or code of conduct.  As a growing company licensed to conduct business in 5 states (Michigan, Indiana, Kansas, Tennessee and Florida) with more to come, we needed our priorities to be established early on. 

The National Association of Mortgage Brokers (NAMB) provides a standard list of suggested business practice guidelines.  With a desire to focus on our clients, I think we took most of their suggestions a step further.  Here is a summary of our code of conduct, a Borrower’s Bill of Rights so to speak. (You can find the detailed list on our website.) 

  • You have the right to compare the fees of different mortgage companies.
  • You have the right to be informed about the total cost of your loan.
  • You have the right to know all fees associated with your loan up front.
  • You have the right to have us help you compare competitor’s fees – and we will.
  • You have the right to know what fees are nonrefundable if you decide to change your mind.
  • You have the right to ask us what we will do for you and how the process works.
  • You have the right to ask us to explain any charge or term you may not understand.
  • You have the right to a credit decision based on facts and to not be discriminated against.
  • You have the right to a full explanation if your loan is declined.
  • You have the right to home loan information, like HUD’s “Shopping for Your Home Loan” booklet.
  • You have the right to refer us to others. (We love this part!)
  • You have the right to be appreciated by your favorite charity for your continued support.

Bottom line – treat others with respect and honesty. 

What governs your business decisions?  What bottom line do you hold to?  Leave a comment and let us know what the non-negotiable details are for you.

Are You Confused Yet?

February 19, 2010

If you are not in the mortgage industry or pay particular attention to this topic in the media, you may be confused by the talk of impending changes by the Federal Reserve and how that will affect the housing market.  So let’s break this down so your mom can understand this.

When you secure a home loan, more often than not, the lender who provided you the mortgage loan is not the one you end of sending your monthly payments to.  Shortly after you close on your loan you can receive a letter stating you now have a new mortgage lender to work with.  Understand this does not change the parameters of your loan, it only changes who collects your monthly payments and (if you have an escrow account) who sends the payments out to your insurance provider, and local municipalities for property taxes, etc.  Behind the scenes some investor now holds the loan so that the original lender can in turn lend out more money.

When the housing market started getting soft and interest rates dropping, investors started slowing down on purchasing these investments.  Look at this from their perspective, they make less return on their investment and a much higher percentage of those loans were going into foreclosure.  So they stopped buying as many as they had in the past.  The trickle affect of this was that the original lenders had less money of their own to lend out to consumers like you and me.  The Federal Reserve stepped in and starting buying many of these loans to keep the market going; and it worked.

The reason for recent hubbub is that this particular program from the Federal Reserve is set to end on March 31 of this year.  Uncle Sam will then stop this support, that to date has purchased $1.3 trillion worth of mortgage loans.  (Just for fun, 1 trillion is a 1 followed by 12 zeroes; and 1.3 trillion is very close to the size of our federal deficit.  But what are a few bucks between friends?  Whoa.)

This is where the “what happens next?” question comes into play.  The big item of speculation now is the impact this will have on the housing market and the overall economy.  Industry forecasters are predicting anything from modest bumps in interest rates (less than a 1% increase) to a noticeable climb (a 2% increase or more) and everywhere in between.  Now, unless you have a crystal ball, no one knows exactly what will happen.  But let’s put some things in perspective.

Historically speaking, rates at 7% are still low compared to what they have been.  Anyone hear of a rate at 11%?  Any takers for relatives who once had a mortgage at 13%?  Also keep in mind the rule of supply and demand.  If interest rates suddenly or drastically increase, the amount of buyers will decrease – it now costs more to secure a home loan.  So if there are fewer buyers, there will be proportionately more homes on the market available to purchase.  As the quantity of for sale homes increases, the price will decrease due to an increase in supply for the available market.  So while the cost of securing a loan may increase, the size of your loan may decrease.  Again, it’s all relative.

My point in all this?  The marketplace is always moving and adjusting to outside forces.  If you don’t like the way the pendulum is swinging right now, hang on.  Like the weather in Michigan – it will change.

RD Loans – A Great Option to Consider

February 5, 2010

An RD loan is a Rural Development home loan offered by the Rural Housing Service specifically for moderate to lower income residents buying homes in rural areas.  A rural area is defined as a community with a population of 10,000 residents or less.  Although some communities located outside of a metropolitan statistical area can qualify with populations up to 20,000 residents. 

In plain English this means if you would like to purchase a home in an area that is not a large city there is a program available.  For most, when you initially think of what a rural area is you might envision acres of farmland or large acreage properties where your neighbor is a mile away.  Not so.  In many instances rural areas are just outside of major cities.  In fact in the state of Michigan, more areas qualify for rural status than areas that do not.  Many of these areas are cozy suburban towns with close knit neighborhoods and strong local schools. 

Another point to note is that the RD loan program cannot be used to purchase or refinance farms or large acre properties where the land far out values the home.  This is a program for consumers who meet the typical credit requirements of obtaining a home loan.  They are just in a slightly lower income bracket and do not have enough funds on hand for a 20%+ down payment.  If this isn’t a program that helps the “little guy” I don’t know what does!  The largest advantage of RD loans is that they currently remain one of the last true “zero down” home loan options.  (VA loans are the other zero down payment option.)

The basic guidelines for an RD loan include:

  • Loans may be used to purchase a single-family, primary residence.
  • On a refinance, the existing loan must already be an RD loan.
  • A borrower must lack sufficient resources to provide a down payment for a conventional loan (typically 20-25% of the purchase price).
  • The RD loan allows a borrower to finance up to 100% of the appraised value of the home without requiring private mortgage insurance. 
  • A one time funding fee is charged and may be financed as part of the loan.  (For purchases, 2% of the loan amount is charged.  On refinances, the fee is .5% of the loan amount.  See you Home Loan Specialist for specific details.)
  • The property must be located in a designated rural area, have all-weather street access, and have approved water and waste systems.
  • The value of the site may not exceed 30% of the total appraised property value.
  • Sellers may contribute up to 6% of the purchase price toward closing costs and pre-paids.
  • Gift funds are allowed.  (Consult a Home Loan Specialist for specific criteria.)
  • Currently, only above ground pools are allowed with RD loans.
  • The property may not be active farmland.

With comparable interest rates, high LTV (loan to value) allowance and no monthly mortgage insurance, RD loans provide a great option to home buyers who may have thought they could not qualify for a home loan.  Talk with one of our Home Loan Specialists (866-982-9823) about the specific details and how this program can work for you.

The Rules are Changing

January 25, 2010

Over the past couple of years requirements for obtaining a mortgage loan have become tougher to say the least.  For example, no longer can you simply just tell your lender what you earn – you need to prove it.  Your credit scores also need to be very good or excellent to be approved.  Just having a pulse no longer works either.

The plus side of tighter regulations is that consumers are more prepared to purchase a home.  They have worked to maintain a strong credit score; they have money to not only use as a down payment, but also funds available in reserve for after the sale.  Lenders themselves are also doing their homework.  They are paying much more attention to what is in the best interest of the borrower, and not just the bottom line.   Lenders that have not are no longer in business.

So what changes are being proposed this time?  The most significant changes are an increase in the minimum credit score, an increase in the upfront mortgage insurance premium, and a decrease in the amount a seller can contribute to a buyer’s costs. 

For most borrowers, the increase in the minimum credit score has already happened in effect because of what individual lenders will allow.  According to FHA policies, borrowers are required to have a minimum FICO credit score of 580 to qualify for the minimum down payment requirement of 3.5%.  Most lenders however, have a much higher requirement, most at a 620 score or better in order to qualify for a loan.  If you find a lender that will still accept the lower minimum score, be prepared to pay higher fees or accept a higher interest rate.

The increase in the upfront mortgage insurance premium is a significant change.  Until now, when a borrower has less than 20% invested into the home, mortgage insurance is required.  This insurance is to protect the lender in the event of a foreclosure.  FHA is a self-funded government agency that has been able to support itself from the monies raised from these premiums.  However, with the recent increase in foreclosures, the agency has had its reserves fall below the minimum level set by Congress.  FHA hopes that increasing the premium from 1.75% to 2.25% of the total loan amount will resolve this problem.  Unfortunately this means that the borrower of a $100,000 house will have the upfront premium increase from $1,750 to $2,250, or $500 more.  This change will become effective sometime this spring and for now only affects the upfront premium, not the monthly mortgage insurance premium.

The final change is a decrease in what a seller can contribute toward the buyer in a purchase transaction.  Until now, a seller could pay for up to 6% of the buyers closing costs.  This will now decrease to a 3% maximum.  This too will affect the amount of money a buyer will need to invest into a purchase transaction.  This change is expected to be effective in the early summer.

All this means that if you have been thinking about purchasing a home, ‘now’ is becoming a better and better time to do so.  Especially when you consider the extended home buyers credit that offers up to $8,000 for first-time buyers and up to $6,500 for other buyers who meet the qualifications.  If you need to wait though, don’t panic.  Simply be prepared to be more prepared when buying that home you have your eye on.

The Power of Suggestion

December 13, 2009

“We just wanted to write and say, ‘thank you’ for all
your hard work in helping us buy our new home.  We are
so excited about our new life together in our new home.”
– The Wilson’s

Everyone knows how powerful a word can be.  Yes, as the saying goes, at times talk is cheap.  But the impact behind those suggestions and ideas from another can be invaluable.  Where we go, what we wear, and how we act, are often influenced by the suggestion of another.  Add to the equation, the variable of that suggestion coming from someone like yourself – someone you trust – and you have a mighty force to contend with.

This is why the feedback we receive from our clients is treated like gold.  We can tell you we are a trustworthy company, but having that recommendation come from someone who has gone through the process is more meaningful.  It has the “wow” factor that actually carries some weight.

 “Thank you so much for all of your help throughout this entire process!  You have been so helpful and I appreciate you so much!”
– Margie

If you have shared your experience with Awareness Home Funding with us and others, thank you.  If not, why not now? We invite you to post your own thoughts on our company, our staff or on the service we provide.  Our goal is to continually develop a life long friendship.

“Thank you for all your hard work with my loan application.  If I hear of anyone looking for financing I’ll send them your way.”
-Maria

A New Paradigm in Fund Raising

December 9, 2009

Raising funds for any organization is a challenge.  The energy and effort it takes for planning, implementing, motivating and follow-up of most fund-raisers is unbelievable.  However, we also understand the passion, drive and financial support it takes to keep your organization going.  Our Awareness Works 4 U program can help you with this daily need.

How do we do this?  With every home loan we close Awareness Home Funding donates $250 to our clients’ favorite non-profit organization.  Whether they are purchasing a home or refinancing, we ask everyone one, every time about their favorite organization.  After their home loan closes, you could be that organization who receives the $250 to use as your group needs.

What do you have to do? Let your supporters know about this opportunity and encourage them to talk about it with their family, friends and co-workers.  Anyone who may be buying a home or refinancing a home loan can participate and benefit you.

How else do we help?  First, Awareness Home Funding is competitively priced to continually offer high value to our clients and support to our charitable partners.  Second, our staff provides an impressive level of personal service to ensure a great home loan experience.  You and your supporters will not be disappointed.

How do you start?  Simply visit our website (http://awarenessworks4U.com) or call us toll-free at 866-98-AWARE (866-982-9273).  We will earn your trust with honest answers and put you in control of sharing our program.  It is that simple.  We look forward to adding your organization to our growing list of partnerships.