Posts Tagged ‘Mortgage Industry’

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What could I really Save?

December 8th, 2010

In the last couple of weeks, the mortgage industry has seen interest rates bottom out and start to move back up.  Most analysts believe that we have tested the lows and now the Fed wants to get inflation back to its target of 2% and to do so, it will start raising interest rates.

Even so, you can still get great interest rates.  It is still possible to get your rate in the 4% but if you don’t act soon, you may miss that window.

Let’s look at some examples of what the principle and interest payment on a $200K mortgage would be over a range of interest rates:

Interest Rate                   Monthly Payment

4.50%                                  $1013.37

4.75%                                  $1043.29

5.00%                                  $1073.64

5.25%                                  $1104.41

5.50%                                  $1135.58

5.75%                                  $1167.15

6.00%                                  $1199.10

Now someone could look at this and think, “The difference between 6.00% and 5.00% is only ~$126/month; That is not worth the cost of refinance.”  But you have to remember that this is just comparing different rates for the same loan amount.  If a borrower had an original loan amount of $215K at 6.00% and has had this mortgage for 5 years, their payment savings would like more like this:

Original Payment at 6.00% = $1289.03

New Loan Amount $205K

Interest Rate      New Payment       Monthly Savings

4.50%                  $1038.70                 $250.33

4.75%                  $1069.38                 $219.65

5.00%                  $1100.48                 $188.55

Now I know that the odds of this being your example situation are pretty slim but this example is designed to show you that even though we have seen the bottom of interest rates, rates are still good and can save you thousands of dollars in interest.  But you do not want to wait long.

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Posted in Know Your Mortgage, Mortgage Industry, News, Real Estate Industry

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Why Should You Have Your Own REALTOR® When Buying a Home?

November 5th, 2010

This is a question that has come up more and more in recent months.  The interesting thing is that the biggest reason for the question is the misconceptions of what part a REALTOR® plays in the transaction.

The first misconception is that if the buyer works with the seller’s agent, that they will get a better deal.  This couldn’t be further from the truth.  Sometimes if a REALTOR® is working with both the buyer and the seller, the REALTOR® will offer a discount in the fees to the seller, but not to the buyer.

The second misconception is about who pays the REALTORS® commission.  Real Estate commissions are by default paid by the seller.  99% of home sales happen that way.

The third misconception is what is the REALTORS® role if they are representing both the buyers and the sellers?  At that point, the REALTOR® becomes a transaction broker.  Their job is to facilitate the transaction, not to negotiate for either side.  To me, this is the greatest thing lost by not using your own REALTOR®.  Why not have a paid negotiator working for you, especially when you are not the one paying for them.

Always remember that when buying a home, the first thing you should do (even before looking at any homes) is talk with a skilled mortgage professional about what you qualify for.  The Kunselman Team is always hear to help!

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Posted in Mortgage Industry, News, Real Estate Industry, Uncommon Useful Knowledge

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Is It Still Worth it to Buy a Home without the Tax Credit?

November 5th, 2010

Over the last couple of months some people have expressed disappointment about the $8,000 tax credit expiring in June. Now while it’s always nice to get money back, all is not lost.  The interest rates are now much better than they were a year ago.

Let’s look at a $200K 30 year mortgage at a current rate of 4.25% vs. the rates from a year ago, around 5.25.  At 4.25% the principle and interest payment would be $983.  At 5.25% the same mortgage would have a payment of $1104.  That is a difference of over $120/month.  A $120/month over the life of the loan is $43,200.  So even if you subtract out $8000 tax credit.  You are still better off buying now at the better interest rates by over $35K.

So what does this mean?  If you have been thinking about buying a home, go out and do it now!  Don’t wait for the market to take a big swing up because by then, you will pay more for the same home, and the interest rates will be higher.  Give The Kunselman Team a call today and make owning your dream home a reality!

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Posted in Mortgage Industry, News, Real Estate Industry, Uncommon Useful Knowledge, Understanding Your Mortgage

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Success Stories #2

August 25th, 2010

Over the last few months, The Kunselman Team has had the opportunity to work with some wonderful clients with unique situations, and was able to get them the perfect mortgage solution to fit their needs.  We would like to highlight a few of these situations here.  The names have been changed but the scenarios are real.

Client #1 John
John is a single dad with two kids heading off to college over the next 3 years.  John owns two properties (his home and a rental condo).  The condo currently has a 15 year first mortgage and a HELOC.  The rent he receives for the condo is less than what his two mortgage payments are so every month, he has a negative cash flow.  He has been making the payments just fine but realizes that with the upcoming expense of college, he needs to better his monthly cash flow.  The solution that The Kunselman Team found for John was another 15 year mortgage that lowered his payment enough so that he now has a positive cash flow on his rental property.  The refinance of this investment property did not require an appraisal.  John also refinanced his home at the same time.  The combined monthly savings of both properties was $415/month.  This will help John substantially in the next few years.

Client(s) #2 Jim and Sarah
Jim and Sarah have been in their home for about seven years.  They have looked into refinancing in the past but because of flat or declining home prices in their neighborhood, it just never made sense.  The Kunselman Team found a new loan program that would not only reduce their monthly payments but shorten the term of their loan by three years.  In eight years from now (when they may be moving) they will have an additional $22K in equity as a result of going with a 20 year mortgage, instead of another 30 year.  In addition, this refinance require no new appraisal for Jim and Sarah.

Client(s) #3 Fred and Mary
Fred and Mary bought their home just over two years ago.  They had good credit and because of their unique situation, they had to do a stated income loan to purchase the home at a rate of 6.375%.  They were concerned that they would not qualify for a refinance since the last time they applied for a mortgage, they were stated income borrowers.  The Kunselman Team reviewed their tax returns thoroughly and were able to show enough income so that Fred and Mary were able to lower their interest rate to 4.50%.  This lowered their monthly mortgage payment $200.

These are just a few examples of the unique situation that The Kunselman Team has come across in the last few months.  The only thing that is certain anymore is that EVERY LOAN IS UNIQUE! Give The Kunselman Team a call to see if we can help with yours.

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Posted in Know Your Mortgage, Mortgage Industry, News, Uncommon Useful Knowledge

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What Does It Really Take to Qualify for a Mortgage Now?

August 25th, 2010

The majority of the mortgage news you hear about these days has to do with how low the rates are and that it is a great time to refinance.  While this is true, these low rates also make it a great time to buy a home.  I thought this might be a great time to review really what it takes to buy a home in our current market.  When working with a client, The Kunselman Team review five key components: Property, Assets, Credit, Income and Transaction or PACIT.  If you want to buy a home, here is what your PACIT needs to look like.

Property: This one is really straight forward but there are a few key points to address.  The property has to be livable, you can’t buy a dump.  Additionally, a property has to appraise for what you have offered for it.  Very unique properties or the largest in the neighborhood can sometimes have trouble with this but a skilled REALTOR can help you with this.

Assets:  FHA loans require a 3.5% down payment or $7,000 for a purchase price of $200,000.  (Note: there is a program that does not require a down payment but it is both income and location restricted. Contact us for details.) Lenders will also sometimes require reserves in addition to your down payment.  Reserves are monies you have left in the bank after your down payment that can be used to help cover unexpected expenses so you don’t miss your mortgage payments.  FHA does not have a reserve requirement but most conventional loans require at least two months of reserves and the more reserves you have, the stronger your loan application becomes.

Credit: You have to have a minimum credit score of a 620 to get a new mortgage now a days.  In addition, to the score, you will usually have to have at least three trade lines reporting to the credit bureaus for at least 6 months but sometimes as many as 12 months. These trade lines are things like credit cards, card loans, student loans.

Income: Income has to be documentable for it to be counted on a mortgage application.  The type of documentation varies with the type of income but a few examples are pay stubs and W-2s for employed borrowers, tax returns for self-employed borrowers, Stamped court papers and proof of receiving the funds for child support and alimony, and award letters for pensions and social security.  The income you have is used to calculate your debt to income ratios or DTI. There are two ratios that are looked at, a front end or housing ratio and a back end or total debt ratio.  The typical ratios a borrower needs to work within are 29/41. If you wanted to buy a $200K home, you (and all borrowers) would have to document about $55K a year income.  That is one borrower who makes about $26.50/hr or two borrowers that each make $13.25/hr.

Transaction: A purchase or refinance.

If you think you might be ready to buy a home, give us a call. Rates are REALLY good right now.    Let The Kunselman Team find the right mortgage to fit your needs!

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Posted in Know Your Mortgage, Mortgage Industry, News, Real Estate Industry, Uncommon Useful Knowledge

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