MortgagesUndressed

One of my favorite events last week involved Lockhart Steele. More on a later post. Larry Cragun

Several articles have been written recently poo poohing 40 year mortgages. I think its fashionable to take this position. I also think it is stupid. The arguments against are about all the interest people will pay or about owning the mortgage for your lifetime.

I am in favor of any program that allows people to purchase a home. I have always encourage my clients to purchase the most home they qualify for. Why? Like my sister told me today, she and her husband are looking forward to retiring. They have a nice home they felt lucky to get when they bought it. They still feel that way. Now, they are considering they can sell, make some great money, supplement their retirement, and move down in price, even in a non city market.

They won’t own their home mortgage forever, because they will value down. Thank Heavens for their home. So let us not be so provincial in our attitudes. If it takes a 100 year mortgage to get people into their home, so be it. They will be better off for it, I am certain of it.

CLICK HERE FOR THE FULL ARTICLE ON THE WELLS FARGO ARTICLE BY EAST BAY BUSINESS TIMES
Larry Cragun

My comments apply, even to this, true to the my home is my castle concept.

Wells Fargo Home Mortgage said Tuesday that it will offer 40-year mortgages, adding to the bevy of creative loan products on the market to help home buyers secure financing.

“The primary advantage of a 40-year mortgage is a smaller monthly payment without the risks associated with interest-only loans or Option ARMs,” said Joe Rogers, an executive vice president at Wells Fargo Home Mortgage. “A 40-year term reduces monthly payments, making home ownership more affordable.”

But the loan comes with a big asterisk. Non-conforming loans — essentially those for more than $417,000 on single-family homes this year — are amortized over 40 years but must be paid off with a balloon payment at the end of 30 years.

The easiest sucker to snooker is the person that picks up the local Sunday paper and starts calling all the banks and mortgage companies for a low rate.

I worked at a bank that thrived on this. The problem is the rate they quoted in the paper was sent to the paper on Wednesday. Now it is Monday, 5 days later. So the unethical loan officer quotes a good rate. They then exhaust the client by filling out an application on line or on the phone . This takes forever and an hour. No one wants to do that again.

So an appointment is made for Tuesday. The borrower comes in expecting 6 days ago rate. Hey the rates change daily. The loan officer quotes a high rate now, they have nabbed the poor soul, worn them out, pulled them in. A bad experiece, a common one too.

So, dont pick a lender that quotes a low rate.

However, you should know the market when you are borrowing. Not so you can squeeze every last .125 out of the rate, but so you don’t get rate raped.

From time to time I will post places to get a feeling on rates. Here is Freddie Mac’s site. Larry Cragun

NEVER

PS: This isn’t me.

PSS: It isn’t Norm either.

The law protects discrimination against age. The same rules apply to all of us, even those my age. Take that great grandchild.

I will never forget an old guy who was one of my first mortgage customers. I guess that is only partially true, I have forgotten his name. Otherwise, I remember him clearly. He was 72. His wife had died about a year previous and he was buying a new home. I queried him if he was up to a new mortgage payment - he told me to mind my own business. I queried my boss - he told me to be careful of violating the law. So he got his mortgage. And me, I plan on following his example. It is fun buying real estate.

The comments I make in this posting were inspired by a Los Angelos times article posted in the Seattle Times titled:

Mortgage Payments and Medicare Cards in More Households.

By Jonathan Peterson

Los Angeles Times

Larry Cragun

This article was written in May, brought forward for your review because of a recent comment by a realtor. Larry

So you want to buy a home do you? You have a what? A friend (family member - neighbor) that is a loan officer. They will cut you a deal? Oh my! Read this, an all too often real life experience for people that choose their neighbor.

Realtor: (R) Inexperienced Loan Officer (ILO)

R: My client wants to make an offer. ILO: Go ahead they qualfy.

R: I need an approval letter: ILO: I will fax it over, I’ve checked them out, they qualify.

R: The offer was accepted, we have 30 days to close: ILO: Great, I’ll be ready, they qualify.

R: The clients have to remove the financing contingency today. ILO: Do it, they qualify.

R: Closing is next Friday, where are the documents? ILO: I will check - be write back to ya on these qualified borrowers.

R: Hello, whats up, where are you? They just ordered the UHAul. ILO:Good, i just checked, no problem on these qualified folks.

R: Its Thursday, everyones panicking, where are those doc’s? ILO: They should be sent by email today. Remember, they qualify.

R: It’s Friday, we are at the Escrow company, whats the deal here? ILO: Sorry, I just found out they don’t qualify.

This almost seems like fiction. Perhaps more like a tragedy. It isn’t fiction, it is a tragedy. It’s why real estate agents don’t just let anyone do their clients loans if they can help it. Purchases are more critical than refinances. Purchases have ending dates. A lot that is serious is at stake. The seller has to close, his seller has to close, and so does his, and on and on and on it goes, where it stops one never knows.

Some sellers have remorse, want to back out, perhaps to raise the price. If closing goes beyond the contract date, they may not have to close. Even if the buyers boxes are packed and U haul ordered, they can lose the deal.

Commissions are at stake, as is credibility. Customers expect the professionals to do their job, bring the transaction in on time. There are no excuses that are good excuses.

Certainly not every missed closing date results in a cancelled transaction. However, every missed contract date brings extra stress on the many parties. Every missed closing date offers hazards unseen.

So don’t be a party to a future Saga of the wrong lender. Pick a Professional. Professionals do purchases, they have real estate agents to vouch for that. Larry Cragun

I met a founder of a company that can save you money on your closing costs: Click Here to go to SaveOnClosingCosts.com

Some people tend to delay working on things like this. Get your FICO. If it is under 680 figure out why, then fix it. If you need help, let us know.

Where’s the beef fees? A play on an old Wendy’s advertisment to open an article on the no fee loan.

There is such a thing as a no fee loan, but it is going to cost you a higher rate. That isn’t necessarily a bad thing. The fees are flexible in that the rebate can pay some or all of them. As you meet with your lender, always ask them for more than one option. It might be best to come up with a little money rather than paying the rate of a no fee loan. I saw a situation last week that had a small amount of fees. It was a loan that would only be in place for a few months. If possible, this borrower should pay a higher rate for no fees. it is a special product and may not give enough rebate to cover all of the costs, but they should ask. Larry Cragun

In other words, something you need to fix.

There is no time as good as the present.

Transparancy is the theme of this Inman Conference. Appropriately that is the theme of our websites. Thus the Undressed names. If we aren’t addressing you, the consumer, and your needs, just let us know. We truly want to take our years of experience as agent, owner, and loan officer and make all important things transparent to you. Larry Cragun