Yes, that is right the good times are here. Now keep in mind, when I say good times I mean in a very specific part (a very very small part) of the economy.
I am talking about refinances.
The time is right and the rates are good. If you have any kind of equity position (I know, who does?) then most likely you can refi and drop your rate and your monthly payment. And with as low as the rates are, you might be able to drop your rate 1 percent which can save you a bunch of cash in your monthly mortgage payment and thousands in interest over the life of the loan.
Today, it all starts with the appraisal. So many people have a bigger mortgage balance than their house is worth. And because the house is "upside down", a lender will not take the risk and investment.
Now I can tell you that most of these upside down homeowners are going to be a good investment. They will certainly pay back their loan. They never miss a payment. But because by no fault of their own, they owe more than their house is worth, now suddenly they are not creditworthy.
So you're telling me that someone with a good mortgage history can't refinance but someone who had a foreclosure over 3 years ago can get a mortgage to buy a house?
Do you see how screwed up this finance business is?
Now some lenders may modify the terms for loans that they hold. But most won't. So you have a situation where a good paying customer is turned away and can't take advantage of the lower rates.
And in some cases, 2 years prior, the lender accepted the appraised value of a house and approved a mortgage for a buyer. Now 2 years later, that same lender will not approved a refinance because the value has gone down on that same house.
Now think about this.
The lender would be still holding the loan without doing the refinance. But what do you think puts more pressure on the borrower? The current loan with the higher rate or the new loan with the lower rate?
I'll wait for your answer............
Very good!! I would think , logically, that with the hardships that are associated with this economy, a lender would want to make sure that they would get their money back and allow good payers to refinance if they are upside down.
The word "logic" is open for interpretation.
Somehow the lenders are missing a little piece of trivia. I don't know the stats but I'm sure there are homes that could have been saved from foreclosure by allowing a refinance when the house has dropped it's value below it's current appraised value.
And doesn't that foreclosure hurt values in a neighborhood where that uncooperative lender has other investments?
Logic.
It's a beautiful thing.
If you have any comments on this article, I would love to hear what you have to say!
Feel free to comment below. Thanks for reading!
Dan Tenchall
Great Lakes Mortgage Funding
For FREE Mortgage tips, Mortgage Calculators,must have articles and much more please visit my website!
Michigan Mortgage Rates
(586) 532-0600
dan@glmf.com
Thursday, March 26, 2009
Thursday, March 19, 2009
Just One Man's Opinion
I typically don't use this blog space to spout off on how the world could be better. (I know it would if I was in charge!) And I don't get to political. I vote for the person I feel will do the best job (sometimes that's a hard choice). I don't vote for a party or any certain beliefs or agenda. So I try to keep the content in this blog light or helpful to the reader.
But there are things that have happened in recent days that I feel like commenting on. (This blog is a nice way to get things of my chest.) Here goes:
AIG
Well, what can I say. I feel like most Americans that there is no way that any bonus should have paid out to employees in a company that received a bailout with taxpayers money. With so many tax paying Americans out of work or in foreclosure or have already lost their homes, why is $165 million being paid out in salary instead of helping AIG get back on their feet? Performance? Retention? For a company that was knocking on the door of bankruptcy? You have to be kidding!
This is what Americans get so upset about. Somehow, whether we liked it our not, our leaders decided that the best thing for the country is to help AIG survive. That somehow our economy would be better which I'm assuming means we would all be better for it. (even though none of the leaders thought it was a good idea to bailout the average American)
OK. We bought into it. Make it work. Get us working again. And save our homes. But to slap us in the face with this bonus crap is just to much to take.
Congrats to Congress for passing a bill today that would tax these bonuses at 90%. How legal is it, I don't know. But at least Congress is trying to make it right.
I hope we don't have to go through this again the next time we bail out something.
Drunk Driving
In a nearby community, 4 teenagers were wiped off the face of earth thanks to some drunk driver. The 4 kids were not doing anything wrong. There were just guilty of being in the wrong place at the wrong time. The very wrong time.
The victims were doing the usual teen things. Going to the mall, getting a pizza, riding around and having fun. They were smashed by a drunk driving a full size van. This drunk driver had a suspended license due to drunk driving in the past. She had trouble with the law before. If fact, the police were called to house she was at earlier in the day where there was a domestic complaint. The police warned her not to drive.
But she didn't listen.
And now four innocent lives are gone.
What happened is tragic. No punishment the drunk driver gets will ever be harsh enough for the murder of 4 kids. And preaching about drunk driving doesn't work. This will happen again. People should be able to go out, have a couple of drinks and drive home in a responsible manner.
But most of the time, a drunk driver doesn't believe they are a danger. They believe that they are able to handle driving and are in control. We know this isn't true. And the hope is, that a cop pulls them over and busts them so all they hurt is themselves.
It didn't work that way for the teens that lost their lives and for their families and friends who now will suffer for the remainder of their lives.
I don't what the answer is. I can't imagine my children being involved in something like this. I'm hoping more people are more aware when thinking about driving if they are drinking.
Maybe the picture of the teen's smashed up car should be put in every bar in town as reminder of what happens when a drunk gets behind the wheel.
But I have a feeling that wouldn't stop everyone from drunk driving.
I just don't understand.
But there are things that have happened in recent days that I feel like commenting on. (This blog is a nice way to get things of my chest.) Here goes:
AIG
Well, what can I say. I feel like most Americans that there is no way that any bonus should have paid out to employees in a company that received a bailout with taxpayers money. With so many tax paying Americans out of work or in foreclosure or have already lost their homes, why is $165 million being paid out in salary instead of helping AIG get back on their feet? Performance? Retention? For a company that was knocking on the door of bankruptcy? You have to be kidding!
This is what Americans get so upset about. Somehow, whether we liked it our not, our leaders decided that the best thing for the country is to help AIG survive. That somehow our economy would be better which I'm assuming means we would all be better for it. (even though none of the leaders thought it was a good idea to bailout the average American)
OK. We bought into it. Make it work. Get us working again. And save our homes. But to slap us in the face with this bonus crap is just to much to take.
Congrats to Congress for passing a bill today that would tax these bonuses at 90%. How legal is it, I don't know. But at least Congress is trying to make it right.
I hope we don't have to go through this again the next time we bail out something.
Drunk Driving
In a nearby community, 4 teenagers were wiped off the face of earth thanks to some drunk driver. The 4 kids were not doing anything wrong. There were just guilty of being in the wrong place at the wrong time. The very wrong time.
The victims were doing the usual teen things. Going to the mall, getting a pizza, riding around and having fun. They were smashed by a drunk driving a full size van. This drunk driver had a suspended license due to drunk driving in the past. She had trouble with the law before. If fact, the police were called to house she was at earlier in the day where there was a domestic complaint. The police warned her not to drive.
But she didn't listen.
And now four innocent lives are gone.
What happened is tragic. No punishment the drunk driver gets will ever be harsh enough for the murder of 4 kids. And preaching about drunk driving doesn't work. This will happen again. People should be able to go out, have a couple of drinks and drive home in a responsible manner.
But most of the time, a drunk driver doesn't believe they are a danger. They believe that they are able to handle driving and are in control. We know this isn't true. And the hope is, that a cop pulls them over and busts them so all they hurt is themselves.
It didn't work that way for the teens that lost their lives and for their families and friends who now will suffer for the remainder of their lives.
I don't what the answer is. I can't imagine my children being involved in something like this. I'm hoping more people are more aware when thinking about driving if they are drinking.
Maybe the picture of the teen's smashed up car should be put in every bar in town as reminder of what happens when a drunk gets behind the wheel.
But I have a feeling that wouldn't stop everyone from drunk driving.
I just don't understand.
Thursday, March 12, 2009
Pre-Approval or Approval? That Is The Question.
One of the biggest parts of my job (if not the biggest) is analyzing documents from clients to determine if they are eligible for financing for a home they want to buy or refinance. By looking at income docs (pay stubs, W2's, tax returns,etc..), asset statements (checking and savings, 401k & retirement statements etc...) as well as the up to date credit report which will give me the credit scores and current obligations (car payment, credit card payment, mortgage history), I can get a good idea on what my client is able to afford for a mortgage payment.
Sometimes in the case of a purchase, I won't know exactly what a client is approved for because I don't have a property price and I won't know the yearly taxes and homeowners insurance premium. However, what I do is get an idea of what communities a client is looking in to buy and then I will have a good idea of what the taxes are based on the sales price of what I think they can afford.
The next step is running the loan scenario on one of the approval engines on the Internet that are available to mortgage originators. The loan is viewed by the AUS (Automated Underwriting System) which determines credit worthiness based on the information on the application and the current guidelines for the type of mortgage I am trying to obtain for my client.
If I receive a decision of "Approve/Eligible", I know I'm good to go (providing all the information on the application is CORRECT). If receive a decision that reads "Refer", that means that there is something wrong with loan and most likely would not get approved.
So based on all the documentation I have looked at and getting a "Approval" from the AUS, I can tell my clients, they can proceed with buying a house or getting refinanced.
That is a Pre-Approval.
That is not an approval. Because what happens next is that the lender must look at the complete package (along with the appraisal and title work, which I wouldn't have in the pre-approval stage) and decide if they will give my clients a formal approval. No matter what I think or what kind of AUS decision I have, a lender has the final say on if my clients get approved or not.
Assuming that the appraisal and title has no issues, and I have done my job correctly, I am fairly confident that I will get a formal approval from the lender. It doesn't make sense to send a file to a lender that I know will be rejected. Not only do I have to answer to my client, I have to answer to real estate agents as well. I certainly do not want to waste any one's time.
That causes a lot of anger.
There certainly are files (especially with tighter lending guidelines) that are iffy and have a 50-50 chance of being rejected by the lender for some reason or another. As a good loan officer, I will let all parities in the transaction know (without giving out private & sensitive details) that we could see an issue with the file and it may be tougher to get through.
But if the lender is happy with what they see after they examine the whole loan file, they will give the okay to proceed.
This is the formal Approval. (sometimes know as a Conditional Approval)
With this approval, a list of conditions is included. These conditions are where the lender is asking for updated or additional documentation. These extra conditions could include a recent pay stub, bank statement or copy of the credit report. Or they may want to see the appraiser's license or insurance. It could be anything.
But the idea is to send in everything in the file I believe that the underwriter would want to see. You have to look at the file from the underwriter's point of view and anticipate what they possibly they could ask for. By doing this, I save time and make the job of the underwriter easier (which is what I want when they are looking at my files!).
It is better and easier for me and the client to ask for all documents up front that I think the underwriter will need to make a decision instead of making repeated phone calls to ask for new documentation.
When all the conditions are met and the lender is satisfied, the lender will issue the Clear to Close and we can set up the closing.
So that is the difference between a Pre-Approval and an Approval. Some people will tell you that the decision from the AUS is as good as a formal approval. I'm here to tell you it's not. Based on recent experience, I have lenders that will overrule the Automated Underwriting System decision even if you have an "Approve/Eligible" file. The lenders have their own guidelines which can override the AUS guidelines.
Remember, "He who has the gold is King".
Before I go this week, I would like to comment on the Bernie Madoff scandal. Today, he plead guilty (really?) to ripping off billions of investors and is expected to get a sentence of 150 years in prison. He said he was “deeply sorry and ashamed”. Well thanks Bernie!
Short of execution, there is no punishment good enough for someone who rips people off in my mind. The only we can do now as a society is to punish this man so severely that it is a deterrent to anyone think about doing the same thing. I believe that all his assets along with the assets of anyone that would have benefited by Madoff's criminal actions, should be surrendered, sold and then distributed back to the investors by percentages of loss.
I know the punishment should justify the crime, but so should the pain and suffering by the victims justify the punishment.
Let's end this now before I get started.
If you have any comments on this article, I would love to hear what you have to say!
Feel free to comment below. Thanks for reading!
Dan Tenchall
Great Lakes Mortgage Funding
For FREE Mortgage tips, Mortgage Calculators,must have articles and much more please visit my website!
Michigan Mortgage Rates
(586) 532-0600
dan@glmf.com
Sometimes in the case of a purchase, I won't know exactly what a client is approved for because I don't have a property price and I won't know the yearly taxes and homeowners insurance premium. However, what I do is get an idea of what communities a client is looking in to buy and then I will have a good idea of what the taxes are based on the sales price of what I think they can afford.
The next step is running the loan scenario on one of the approval engines on the Internet that are available to mortgage originators. The loan is viewed by the AUS (Automated Underwriting System) which determines credit worthiness based on the information on the application and the current guidelines for the type of mortgage I am trying to obtain for my client.
If I receive a decision of "Approve/Eligible", I know I'm good to go (providing all the information on the application is CORRECT). If receive a decision that reads "Refer", that means that there is something wrong with loan and most likely would not get approved.
So based on all the documentation I have looked at and getting a "Approval" from the AUS, I can tell my clients, they can proceed with buying a house or getting refinanced.
That is a Pre-Approval.
That is not an approval. Because what happens next is that the lender must look at the complete package (along with the appraisal and title work, which I wouldn't have in the pre-approval stage) and decide if they will give my clients a formal approval. No matter what I think or what kind of AUS decision I have, a lender has the final say on if my clients get approved or not.
Assuming that the appraisal and title has no issues, and I have done my job correctly, I am fairly confident that I will get a formal approval from the lender. It doesn't make sense to send a file to a lender that I know will be rejected. Not only do I have to answer to my client, I have to answer to real estate agents as well. I certainly do not want to waste any one's time.
That causes a lot of anger.
There certainly are files (especially with tighter lending guidelines) that are iffy and have a 50-50 chance of being rejected by the lender for some reason or another. As a good loan officer, I will let all parities in the transaction know (without giving out private & sensitive details) that we could see an issue with the file and it may be tougher to get through.
But if the lender is happy with what they see after they examine the whole loan file, they will give the okay to proceed.
This is the formal Approval. (sometimes know as a Conditional Approval)
With this approval, a list of conditions is included. These conditions are where the lender is asking for updated or additional documentation. These extra conditions could include a recent pay stub, bank statement or copy of the credit report. Or they may want to see the appraiser's license or insurance. It could be anything.
But the idea is to send in everything in the file I believe that the underwriter would want to see. You have to look at the file from the underwriter's point of view and anticipate what they possibly they could ask for. By doing this, I save time and make the job of the underwriter easier (which is what I want when they are looking at my files!).
It is better and easier for me and the client to ask for all documents up front that I think the underwriter will need to make a decision instead of making repeated phone calls to ask for new documentation.
When all the conditions are met and the lender is satisfied, the lender will issue the Clear to Close and we can set up the closing.
So that is the difference between a Pre-Approval and an Approval. Some people will tell you that the decision from the AUS is as good as a formal approval. I'm here to tell you it's not. Based on recent experience, I have lenders that will overrule the Automated Underwriting System decision even if you have an "Approve/Eligible" file. The lenders have their own guidelines which can override the AUS guidelines.
Remember, "He who has the gold is King".
Before I go this week, I would like to comment on the Bernie Madoff scandal. Today, he plead guilty (really?) to ripping off billions of investors and is expected to get a sentence of 150 years in prison. He said he was “deeply sorry and ashamed”. Well thanks Bernie!
Short of execution, there is no punishment good enough for someone who rips people off in my mind. The only we can do now as a society is to punish this man so severely that it is a deterrent to anyone think about doing the same thing. I believe that all his assets along with the assets of anyone that would have benefited by Madoff's criminal actions, should be surrendered, sold and then distributed back to the investors by percentages of loss.
I know the punishment should justify the crime, but so should the pain and suffering by the victims justify the punishment.
Let's end this now before I get started.
If you have any comments on this article, I would love to hear what you have to say!
Feel free to comment below. Thanks for reading!
Dan Tenchall
Great Lakes Mortgage Funding
For FREE Mortgage tips, Mortgage Calculators,must have articles and much more please visit my website!
Michigan Mortgage Rates
(586) 532-0600
dan@glmf.com
Friday, March 6, 2009
Some Help Is Better Than Nothing
I was waiting for the Obama Administration to unveil their "Making Home Affordable" program.
I was hoping that it would help the millions of homeowners that are out there who need help to save their home.
I was hoping that this new program would not end up like the old programs that sounded good but in truth did not really help anyone.
I was hoping the homeowner didn't have to rely on their mortgage servicer to give them help.
Well like the old saying says: "I have some good new and some bad news".
According to the U.S. Department Of The Treasury, Making Home Affordable will offer assistance to as many as 7 to 9 million homeowners to make their mortgages more affordable.
There are 2 parts to the plan:
The Home Affordable Refinance program will be available to 4 to 5 million homeowners who have a good payment history on an existing mortgage owned by Fannie Mae or Freddie Mac. The issue with so many homeowners is that they are upside down. In other words, they owe more than the house is worth. Under the Home Affordable Refinance program, many of these home owners will now be eligible to refinance their loan and take advantage of today's lower mortgage rates and what is really big, convert an adjustable rate mortgage into a more stable fixed rate mortgage.
Many lenders already have the information on these borrowers on file, so documentation requirements shouldn't be out of hand. And in some cases, an appraisal may not be necessary, which will save the homeowner some costs. This will result in a quicker and less costly refinance.This program ends in June 2010.
The Home Affordable Modification program will help up to 3 to 4 million at risk homeowners avoid foreclosure by reducing their current monthly mortgage payment. Loan servicers can begin immediately to modify eligible mortgages under the Modification program so that at risk borrowers can better afford their payments. (This assumes that servicers are willing to modify the existing loan in the first place.) That was the problem with the old "Hope For Homeowners" program, it was hopeless and it didn't help anyone.
The Home Affordable Modification has eligibility and verification requirements so not everyone will be able to use this program.
Like I said in the beginning, some help is better than nothing. This is still too new to determine how effective this will be. I'm sure there will be some bugs that have to be worked out.
But what I don't see is all the media experts, print and television, applauding this program like it is the answer to all our problems. They all seem confused and uncertain what the long term results will be.
I'm hoping their confusion and uncertainly clears up.
And fast.
If you have any comments on this article, I would love to hear what you have to say!
Feel free to comment below.Thanks for reading!
Dan Tenchall
Great Lakes Mortgage Funding
For FREE Mortgage tips, Mortgage Calculators,must have articles and much more please visit my website!
Michigan Mortgage Rates
(586) 532-0600
dan@glmf.com
I was hoping that it would help the millions of homeowners that are out there who need help to save their home.
I was hoping that this new program would not end up like the old programs that sounded good but in truth did not really help anyone.
I was hoping the homeowner didn't have to rely on their mortgage servicer to give them help.
Well like the old saying says: "I have some good new and some bad news".
According to the U.S. Department Of The Treasury, Making Home Affordable will offer assistance to as many as 7 to 9 million homeowners to make their mortgages more affordable.
There are 2 parts to the plan:
The Home Affordable Refinance program will be available to 4 to 5 million homeowners who have a good payment history on an existing mortgage owned by Fannie Mae or Freddie Mac. The issue with so many homeowners is that they are upside down. In other words, they owe more than the house is worth. Under the Home Affordable Refinance program, many of these home owners will now be eligible to refinance their loan and take advantage of today's lower mortgage rates and what is really big, convert an adjustable rate mortgage into a more stable fixed rate mortgage.
Many lenders already have the information on these borrowers on file, so documentation requirements shouldn't be out of hand. And in some cases, an appraisal may not be necessary, which will save the homeowner some costs. This will result in a quicker and less costly refinance.This program ends in June 2010.
The Home Affordable Modification program will help up to 3 to 4 million at risk homeowners avoid foreclosure by reducing their current monthly mortgage payment. Loan servicers can begin immediately to modify eligible mortgages under the Modification program so that at risk borrowers can better afford their payments. (This assumes that servicers are willing to modify the existing loan in the first place.) That was the problem with the old "Hope For Homeowners" program, it was hopeless and it didn't help anyone.
The Home Affordable Modification has eligibility and verification requirements so not everyone will be able to use this program.
Like I said in the beginning, some help is better than nothing. This is still too new to determine how effective this will be. I'm sure there will be some bugs that have to be worked out.
But what I don't see is all the media experts, print and television, applauding this program like it is the answer to all our problems. They all seem confused and uncertain what the long term results will be.
I'm hoping their confusion and uncertainly clears up.
And fast.
If you have any comments on this article, I would love to hear what you have to say!
Feel free to comment below.Thanks for reading!
Dan Tenchall
Great Lakes Mortgage Funding
For FREE Mortgage tips, Mortgage Calculators,must have articles and much more please visit my website!
Michigan Mortgage Rates
(586) 532-0600
dan@glmf.com
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