After 3 grueling days in the trenches of mortgage origination, I am compelled to share 3 reminders of why I love helping people achieve the American dream.
1. About a week ago I submitted a customer's VA loan application to buy a home for which they thought they had little chance of approval. Yesterday we received the underwriter's initial loan approval and she was THRILLED by the news that they are well on their way toward home ownership.
2. About a month ago I began working with someone who said she wanted me to be "brutally honest" about her and her husband's chances to buy a home. I was not able to prequalify them initially but reviewed some strategies to improve their situation. She put some of the advice into action and yesterday I delivered her a prequalification letter. I thought I heard tears through the phone. I'm expecting them to make an offer on a house today.
3. This morning connected on Facebook with a past first-time homebuyer client who closed on their house in March. I was able to see pictures of the work they've already completed and read their expressions of excitement and joy to be home owners!
Thank you for allowing me to be a part of your American Dream!
Wednesday, August 18, 2010
Thursday, August 12, 2010
Are you a buyer on the fence?
I just crunched some numbers for a customer who has been in the market to buy a home for a few months. Her current favorite house is priced about $220k and she would be applying for an FHA loan with 3.5% down payment. At the current rate (which is hitting lows not seen since the 1960's) her total monthly payment would be about $1400 (principal, interest, taxes, insurance, and pmi). So the question is, "For what is she waiting?"
I believe there are 3 market influences that should help her jump off the fence and land in her new backyard.
1. FHA is going to change both the "up front mortgage insurance premium" and the "annual mortgage insurance" sometime in next couple months. The upfront premium calculation is to be lowered but the annual mortgage insurance is increasing by about 60% for most borrowers. The net effect will increase my customer's payment about $50 per month; even if the interest rate stays the same.
2. Perhaps she is waiting for home prices to fall further. Well let's do some math! If her current favorite house price drops 5% to $209,000 but interest rate jumps 1%, her payment will actually increase by about $69 per month, or almost $25k over the life of her loan. In a nutshell she pays $25k more for a less expensive home.
3. What if the rates go up and the price stays the same? An increase in the rate by 1% increases her payment about $130, or a little more than $47k over the life of the loan.
I'm by no means predicting rates will rise soon (see previous post in May about not predicting rates); but come on! The time is NOW. Make an offer and call me to lock the rate.
I believe there are 3 market influences that should help her jump off the fence and land in her new backyard.
1. FHA is going to change both the "up front mortgage insurance premium" and the "annual mortgage insurance" sometime in next couple months. The upfront premium calculation is to be lowered but the annual mortgage insurance is increasing by about 60% for most borrowers. The net effect will increase my customer's payment about $50 per month; even if the interest rate stays the same.
2. Perhaps she is waiting for home prices to fall further. Well let's do some math! If her current favorite house price drops 5% to $209,000 but interest rate jumps 1%, her payment will actually increase by about $69 per month, or almost $25k over the life of her loan. In a nutshell she pays $25k more for a less expensive home.
3. What if the rates go up and the price stays the same? An increase in the rate by 1% increases her payment about $130, or a little more than $47k over the life of the loan.
I'm by no means predicting rates will rise soon (see previous post in May about not predicting rates); but come on! The time is NOW. Make an offer and call me to lock the rate.
Sunday, August 8, 2010
A credit repair story
For about 18 years or so I've been looking at other people's credit reports for one reason or another. And probably more than a couple hundred times I've remarked to people about the injustice of the medical collection business. Well it has finally struck home.
My wife had all three of her reports run and learned that the Equifax report contained a $20 medical collection from our pediatrician in Florida. The doctor's office was always very nice and either collected our co-pay upfront or sent us a bill if they failed to charge us at the time of service. We always paid immediately when asked. The $20 collection pulled down her Equifax score about 100 points.
Since my oldest son has some mild asthma issues we had been to see this doctor many times. We even discussed our move to North Carolina and he provided some advice on choosing a new doctor. I figured that we probably owed the $20 but there was never any attempt by the doctor or the collection agency to collect the money. They would rather charge it off and damage an otherwise perfect credit history. I was not pleased and immediately logged onto the Equifax website to dispute the collection. After all these years of talking about medical collections and credit, I was about to embark on my own dispute story.
Logging on and submitting the claim was a piece of cake. The automated email response read that our dispute had been received and we would be notified of the status within 30 days. It seemed much too easy.
But about a day or so later, I received a phone call at work from my wife. I had used her email address when submitting the claim. She doesn't check her email every day so we were lucky that she happened to receive it in time. It read that we had 24 hours from the time the email was sent to fax her social security card, driver's license and a utility bill statement with a matching address to Equifax to verify the legitimacy of the dispute. Fortunately we had time to copy the three documents and fax them first thing in the morning; an hour before the deadline. Again, an automated email response indicated receipt of our fax and instructed us to wait for approximately 30 days.
So every day she checked, and checked, and checked her email for another surprise. Then one day the email came that the dispute was resolved and the collection would be removed. That was about two months ago. Just yesterday I logged onto www.annualcreditreport.com to find out if it was removed or not. Low and behold it was gone. We saved the email and the "collection free" report, just in case.
I guess the moral of the story is that medical collections are still a racket but they CAN be removed. Be patient, follow the dispute instructions to the letter, check your email every day and go to the http://www.annualcreditreport.com/ to receive the only true free copy of each of your reports once per year.
Good luck!
My wife had all three of her reports run and learned that the Equifax report contained a $20 medical collection from our pediatrician in Florida. The doctor's office was always very nice and either collected our co-pay upfront or sent us a bill if they failed to charge us at the time of service. We always paid immediately when asked. The $20 collection pulled down her Equifax score about 100 points.
Since my oldest son has some mild asthma issues we had been to see this doctor many times. We even discussed our move to North Carolina and he provided some advice on choosing a new doctor. I figured that we probably owed the $20 but there was never any attempt by the doctor or the collection agency to collect the money. They would rather charge it off and damage an otherwise perfect credit history. I was not pleased and immediately logged onto the Equifax website to dispute the collection. After all these years of talking about medical collections and credit, I was about to embark on my own dispute story.
Logging on and submitting the claim was a piece of cake. The automated email response read that our dispute had been received and we would be notified of the status within 30 days. It seemed much too easy.
But about a day or so later, I received a phone call at work from my wife. I had used her email address when submitting the claim. She doesn't check her email every day so we were lucky that she happened to receive it in time. It read that we had 24 hours from the time the email was sent to fax her social security card, driver's license and a utility bill statement with a matching address to Equifax to verify the legitimacy of the dispute. Fortunately we had time to copy the three documents and fax them first thing in the morning; an hour before the deadline. Again, an automated email response indicated receipt of our fax and instructed us to wait for approximately 30 days.
So every day she checked, and checked, and checked her email for another surprise. Then one day the email came that the dispute was resolved and the collection would be removed. That was about two months ago. Just yesterday I logged onto www.annualcreditreport.com to find out if it was removed or not. Low and behold it was gone. We saved the email and the "collection free" report, just in case.
I guess the moral of the story is that medical collections are still a racket but they CAN be removed. Be patient, follow the dispute instructions to the letter, check your email every day and go to the http://www.annualcreditreport.com/ to receive the only true free copy of each of your reports once per year.
Good luck!
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