mortgage

Just a thought-What loan term is right for YOU?

Whether you’re refinancing your current home or buying a new one, something worth considering is a 15 year loan rather than a 30 year term. The payments will be a little higher but you’ll get a lower interest rate and you’ll build equity much faster.

Let’s look at an example of a $200,000 mortgage with the choice of a 30 year term with a 3.75% rate compared to a 15 year term with a 2.875% rate. The payments would be $442.94 higher on the shorter term but the equity would be considerably higher even after you adjust for the higher payments.

Another benefit is that the shorter term loan creates a forced savings situation where the savings on a longer term loan might end up being spent rather than being saved and invested. Contact me if you’d like to discuss your options further at 952-929-2577.

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Choose Your Deduction – Just In Time For TAX TIME!

One third of all U.S. households, 75% of households with more than $75,000 income and most homeowners itemize their deduction on their federal income tax returns. It makes sense because the interest paid on their mortgage and their property taxes probably exceeds the allowable standard deduction.

However, with interest rates as low as they have been in the last two years and the price of homes having come down considerably, it is possible that the standard deduction may be the better choice.

Each year, the taxpayer can compare the total of the itemized deductions to the standard deduction to select which method will result in the most benefits. The 2011 standard deduction is $11,600 for married couple filing jointly and $5,800 for single filers.

Sincerely,

RE/MAX Results

John Mazzara

7300 France Ave S #410

Edina, MN 55435

Off-952-929-2577

Cell-612-386-7027

Fax-952-928-3799

Google Voice- 952-491-0884

john@johnmazzara.com

http://www.MinneapolisStPaulHomes.com

Watch my Youtube video on how I sell a home:

http://www.youtube.com/watch?v=oz1zGDOXcoQ

RE/MAX real estate intro video athttp://youtu.be/EJE_s67xIWI

NMLS # 332556

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Client Letter-unsolicited Thank You letter

I recently opened my mail and received this client testimonial letter. We were very touched that they took the time to write an unsolicited letter. We try and make every client transaction as smooth as possible. Happy clients lead to referrals which lead to longevity in the business. That’s why we’re still here after 26 years in real estate and 17 years in mortgage. We thought we’d share this one with you. We have others on file for you to view as well. If you’d like to meet and see how we can help you with your real estate and mortgage needs, please give us a call.

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mortgage

In the middle of the Winter we all need some “Summer Madness”

I could listen to this song over and over. It has nothing to do with real estate or mortgage-but what the heck-it’s a great tune. Sit back and enjoy!

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mortgage

4 Tips to Determine How Much Mortgage You Can Afford

By knowing how much mortgage you can handle, you can ensure that home ownership will fit in your budget.

Here are six surefire ways you can get your finances in order before you buy a home.

Homeownership should make you feel safe and secure, and that includes financially. Be sure you can afford your home by calculating how much of a mortgage you can safely fit into your budget.

Instead of just taking out the biggest mortgage a lender qualifies you to borrow, consider how much you want to pay each month for housing based on your financial and personal goals.

Think ahead to major life events and consider how those might influence your budget. Do you want to return to school for an advanced degree? Will a new child add day care to your monthly expenses? Does a relative plan to eventually live with you and contribute to the mortgage?

Still not sure how much you can afford? You can use the same formulas that most lenders use, or try another of these traditional methods for estimating the amount of mortgage you can afford.

1. The general rule of mortgage affordability
As a rule of thumb, you can typically afford a home priced two to three times your gross income. If you earn $100,000, you can typically afford a home between $200,000 and $300,000.

To understand how that rule applies to your particular financial situation, prepare a family budget and list all the costs of homeownership, like property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care costs.

2. Factor in your downpayment
How much money do you have for a downpayment? The higher your downpayment, the lower your monthly payments will be. If you put down at least 20% of the home’s cost, you may not have to get private mortgage insurance, which costs hundreds each month. That leaves more money for your mortgage payment.
The lower your downpayment, the higher the loan amount you’ll need to qualify for and the higher your monthly mortgage payment.

3. Consider your overall debt
Lenders generally follow the 28/41 rule. Your monthly mortgage payments covering your home loan principal, interest, taxes, and insurance shouldn’t total more than 28% of your gross annual income. Your overall monthly payments for your mortgage plus all your other bills, like car loans, utilities, and credit cards, shouldn’t exceed 41% of your gross annual income.

Here’s how that works. If your gross annual income is $100,000, multiply by 28% and then divide by 12 months to arrive at a monthly mortgage payment of $2,333 or less. Next, check the total of all your monthly bills including your potential mortgage and make sure they don’t top 41%, or $3,416 in our example.

4. Use your rent as a mortgage guide
The tax benefits of homeownership generally allow you to afford a mortgage payment—including taxes and insurance—of about one-third more than your current rent payment without changing your lifestyle. So you can multiply your current rent by 1.33 to arrive at a rough estimate of a mortgage payment.

Here’s an example. If you currently pay $1,500 per month in rent, you should be able to comfortably afford a $2,000 monthly mortgage payment after factoring in the tax benefits of homeownership.

However, if you’re struggling to keep up with your rent, consider what amount would be comfortable and use that for the calcuation instead.

Also consider whether or not you’ll itemize your deductions. If you take the standard deduction, you can’t also deduct mortgage interest payments. Talking to a tax adviser, or using a tax software program to do a “what if” tax return, can help you see your tax situation more clearly.

G.M. Filisko is an attorney and award-winning writer who’s owned her own home for more than 20 years. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

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Rebuilding Credit To Get A Mortgage

Often, especially in this market due to the recession, we find potential home buyers who have had a life event or “bump in the road” that affects their ability to obtain a new loan. If you want to buy a home, you will have to have a certain number of reporting trade lines and for certain length of time. MOST mortgage programs require 3-5 trade lines and a minimum of two years of reporting. The other criteria is the actual credit score-which generally has to be 620, 640 or even 660 as it is all lender dependent. A manual underwriting where they use alternative credit such as rent payments, cell phone bill, utility bills, and the cable bill might be able to be used-but only with a few certain programs and lenders. So, the best bet is to re-establish credit as quickly as possible. HOW ABOUT NOW!! Don’t wait-it will only extend the time until you are going to be eligible. I have put together a list of resources that might be helpful. This list is only a starting place for your research. If you find another good resource please post it in the comments below so that the list can be expanded upon.

TOP IDEAS FOR CREDIT RE.doc

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Loan Modification Vs FHA – Hope For Homeowners Program – Comparative Analysis!

By Steve Linnin

Current Housing Market Status:

In the last 3 or 4 years, a large number of homeowners have been trying to complete a “loan workout” with their current mortgage lender to lower the interest rate and improve the terms of their loan. Many lenders have chosen not to accept any new terms, rather, let the property go into foreclosure.

Because lenders have an overwhelming number of properties in foreclosure, they are starting to accept loan modifications via their loss mitigation departments. The time is ripe for consumers (who own homes) to take action and request that their loans be modified towards better terms and a lower interest rate they can afford, if they have high interest rate sub-prime loans or are at risk for foreclosure.

Since, the rate of foreclosures is increasing, everyday, the federal government, congress and the president have approved and signed a new bill which will allow homeowners to take advantage of a new “FHA – Hope for Homeowners Program” designed to save more than 400,000 homeowners from foreclosure. This program will go “live” on October 1st, 2008.

The new FHA loan program will assist homeowners who are currently in foreclosure, close to foreclosure or those who have high interest rate mortgage loans like those called sub-prime loans. The program is different than a loan modification in several ways.

The following is a bulleted layout of the deference’s between completing a loan modification and getting approved to do a FHA -Hope for Homeowners program.

Loan Modification:

1. You can recast your current loan into different terms, with the hope to benefit from a lower interest rate, which is fixed rather than an adjustable interest rate.

2. The costs of the loan modification are rolled on the “back-end” of the loan, which will increase the amount of money you owe.

3. The loss mitigation department may choose to keep the amount (that you own on your loan) higher than your current home value. Or they may choose to lower that amount, some, but not as much as it could be to make your new payment comfortable in the long term. This could mean that you may be in financial jeopardy, in the future.

4. It’s a fact, what cause your current lender to be interested in keeping your loan on their books are the servicing rights. They make money servicing your loan over the term of the amortization schedule. The problem is that many lenders have filed for bankruptcy or just got out of the business (due to poor credits markets) and the servicing rights have been sold to other investors. This often causes a strain, since; the servicer does not actually have your loan documents at their facility, so they rely on others to get your original loan information to them for review. This process can cause the loan modification workout to be slow, in many cases. Timing is very important, since, homeowners are not knowledgeable in the process and they often wait to late to get the loan modification process started. It is important to communicate with your current lender and get the loan modification process stated, months before your home goes to foreclosure sale.

5. If your request for a loan modification is rejected, you may want to try it again in a few months, since; some lenders don’t document the loan modification attempt you made. They are often motivated by changes in the housing market and their intent changes as more and more loans go into default. It does not hurt to try again. It is smart to work with a loan modification specialist, a seasoned loan officer or an attorney who specializes in real estate, mortgage lending and loan modifications. They understand how to speak to loss mitigation department, personnel and can get a general idea of the mood and trends of your lenders loss mitigation department.

6. Many loan modification specialist work together with attorney firms to get the loss mitigation departments to act in a timely manner. Those same attorney firms work with the loan modification specialist to make sure the original loan documents are not fraud ridden. This is a good approach, yet it can cost the homeowner additional money, since both the loan modification specialist and the attorney need to be paid for their services.

7. Homeowners are required to pay the loan modification specialists and attorneys for the services, provided. Many homeowners think that the cost will be included in the new loan amount, but this is not the case. Logically, lenders are already loosing money when they agree to modify the loan terms and conditions for the homeowner, so, you can bet that they will not agree to “package” the costs of doing the loan modification into the new loan. That cost is paid by the homeowner, directly to the loan modification specialist and/or the attorney. The cost can range between $995.00 and $, 5000.00; as an average. Many loan modification specialist, senior loan officers and attorney firms can work out a payment plan, yet, many require at least 1/2 upfront before they start the loan workout. Understand, there is no guarantee that your loan modification or loan workout will be accepted. You will still have to pay your representation your agreed amount. A large percentage of loan modifications and workouts are accepted. So, it’s a good bet, since, most people do not want to loose their homes to foreclosure.

8. Loss mitigation representatives, (most often) do not require you to pay for a new appraisal. Instead, they have your representative provide census track data, a BPO (broker price opinion) or a print out of valuation from title company market sales data. 9. If you are in foreclosure and costs have been incurred from posting your foreclosure sales data, attorney fees, title costs or other costs; you could be liable for those costs, if our current lender requires it (as a requirement to the loan modification).

10. Loss mitigation departments may choose to approve you for a new loan which is (another adjustable or tiered -fixed loan). Be careful. Do your homework or “talk-it-over” with your representation.

FHA- Hope for Homeowners Program:

1. The federal housing administration (FHA) has required that all homeowners who become approved for this program accept a 30 year fixed rate program. No other loan types will be accepted. You can only qualify for this program.

2. FHA will loan up to 90% of the current value of your property. This means that if you purchased your property for a higher purchase price and currently have a loan amount higher than what the value of the property is presently, you can become approved to do a loan amount at 90% of what your current house is worth.

3. If you have more than a 1st trust deed lien (subordinate liens) on your property and your property value has severely, diminished; your current lenders may take the loss when you get approved under the “Hope for Homeowners Program”. Usually, the subordinate lenders loose, unless they purchase the primary lien. Most do not purchase the 1st trust deed lien. So, the subordinate lender takes a loose on their investment.

4. FHA’s goal is to keep as many homeowners in their homes. They understand that it would be better to do a loan for a homeowner rather than have that property go into foreclosure, be place into the retail real estate marketplace, causing a further degrading of the housing market.

5. The FHA underwriting guidelines are currently more liberal than any other loan guidelines in the current market. FHA is more forgiving in their approach to mortgage lending.

6. The FHA underwriting guidelines have not been disclosed. As October, 1st, 2008 approaches, lenders, processors and underwriters will have a more clear idea as to what is required to get a loan approval.

7. Homeowners will (probably) be required to pay for a new FHA appraisal, as a condition for loan approval and closing. Underwriting guidelines will determine if this is true. The average costs for an FHA appraisal is ranges, $300 – $450.

8. Income to debt ratios will be determined and posted in the underwriting guidelines. Consult your loan modification specialist or loan officer.

9. The loan servicing companies that service, sub-prime loans will (probably) be more inclined to accept a loan modification, since they will want to transfer the lien to FHA, rather than keep it on their books. They have taken huge losses and have an overwhelming desire to get rid if their current problems. Have patience with these lenders, since, they do not keep your actual loan documents at their facilities. They will have to request them. Many loss mitigation personnel are stressed and will want to make a determination as to your file, fast. This is an advantage to you! Work closely with your loan officer to get the items needed for loan submission.

10. If you live in a heavily populated area like Los Angeles, Orange County, San Francisco, Seattle, Portland, Denver, Miami, etc., you will more than likely have a higher percentage of success with a loss mitigation department. This is because there are more homes in foreclosure in concentrated housing areas.

11. Even though we have not seen the FHA underwriter guidelines, (since they have not been delivered to the underwriters) they will be available on or before October, 1st, 2008. We can expect that the guidelines will probably focus on a person ability to make the new housing payment and not the persons credit score. We call this “ability to pay”!

12. If you’re, FHA -”Hope for Homeowners Program” loan application is accepted by FHA; your current lender will still have to accept the condition which FHA places on the loan. This means that your current lender may to take a loss in equity by accepting the FHA loan buyout, offered.

13. The good news is that your current lender (already) understands that they will take a loss in equity, if the property goes into foreclosure. If they don’t accept the FHA buyout, they may have to place your foreclosed property into the retail sales marketplace. This means that they may have to pay a Realtor up to 6% commission, wait for the property to be purchased, incur additional holding cost, pay a gardener, electricity and water bills. All the while, they realize that the property will probably be reduced in value even more as additional foreclosure properties come on to the marketplace. This is not a rosy situation for them, so, most will realize that it would be better to sell the loan to FHA and take less of a financial loss.

14. The main benefit to your current lender in accepting the terms of a FHA buyout is that under the FHA guidelines, they can benefit from a portion of any equity gain in the property for up to 5 years, at the time FHA buys the loan. If the homeowner chooses to sell the home within the 5 year period after the close of the new FHA loan; the lender can participate in a percentage of any equity gain. This single condition will cause many lenders to accept the FHA loan buyout. Ask your loan officer for information regarding lender participation in an equity gains.

15. Many lenders are fully; “FHA approved lenders” and will require that your loan be recast within the FHA loan department of your current lender. Therefore, ask your loan officer if your current lender (note holder) is FHA licensed. This will save you time and headaches, since; many loan officers will try to do the loan on your behalf without determining if your current lender wants the new FHA loan on their own books. This may be a condition for an FHA loan approval, by your current lender. If our current lender is already an approved lender, they might as well sell the loan to FHA, direct, correct?

16. Third party cost like, attorney fees, loss mitigation fees, foreclosure posting fees, etc., will be absorbed by your current lender under the FHA – Hope for Homeowners Program. You will not incur these fees under the program. The lender will take this loss, too.

17. As part of the Foreclosure Prevention Act of 2008, 1st time homebuyers are encouraged to purchase homes between April, 2008 and July 2009. They can receive up to $7500 dollars in tax credits from the federal government. This program has been established to speed up the housing recovery by getting people to purchase homes. Additionally, it will cause home sellers to purchase homes, as well, since they are often “move up” buyers. This program is part of the overall attempt to correct the bad housing market.

18. Credit Score vs. Your Ability to Make the Payment: These two factors will be outlined in the underwriting guidelines. I would expect that the ability to pay will override the credit score issue, since, most people having problems making their housing payments, already, have degraded credit scores. Consult your loan officer for details.

Summary:

Loan Modification:

Consumers, now have several options to preserve home ownership. If one option does not work try the other. Remember, time is of the essence, so act promptly to give your self time to use one or both options.

1. Loan modification is a good option for many, if your have proper representation and get a favorable deal. 2. You will have to pay the costs for this type of loan modification. 3. You will not have to pay for an appraisal, in most cases.

Visit this site for more information: http://www.LoanModificationContacts.com

FHA – Hope for Homeowners Program:

1. This program may be a better deal for you, if your lender is no longer in business (sub-prime lenders and prime lenders). It can still be a great benefit to you if your lender is still in business and wants to remove some bad assets from their books (understanding) you might become one of those bad assets. Your loan officer can provide this information for you.

2. Since, FHA will go to 90% of the current value of your property; you can be the real winner. This simple fact means that you will have a better opportunity to qualify under a 30 year fixed loan and your housing payment will be more affordable, then what you are currently paying.

3. You will most likely, be required to pay for an appraisal. Ask your loan officer about this, since; the underwriting guidelines have not come out, yet.

4. You may or may not have to pay for the closing cost to procure the loan. It has not been determined, who actually pays for the closing costs. It will be in the underwriting guidelines, when they come out. Ask your loan officer.

5. Credit Score vs. Ability to Pay: Underwriting guidelines will determine these two factors. FHA underwriters will probably be more forgiving and weight their approval on your ability to make the monthly housing payment. We will have to wait for the underwriting guidelines. Ask your loan officer about these two factors.

Author: Steve Linnin
A Real Estate and Mortgage Broker for over 23 years. An educator and Trainer to loan officers and real estate agents. An on-going trainer and educator of real estate agents and loan officers.

http://www.linnin.info

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