Will the Federal Reserve Raise Interest Rates This Week? What does this mean for you?

This is a big week for economic news, particularly when it comes to interest rates. This Wednesday and Thursday, The Federal Reserve will meet to decide if the economy is stable enough to raise interest rates. The Federal Reserve has chosen NOT to raise short term interest rates for the last 7 years. Yes, 7 years!  Why is there a buzz that The Fed will raise interest rates now? There are several signs that our economy has stabilized, the first of which is the unemployment rate. There's lots of buzz on this regarding if the unemployment numbers are accurate or not. The biggest concern is that people who are unemployed are no longer counted in the statistics after six  months. So, if you have been unemployed for six months and 1 day you are not included in the unemployment numbers. That's some funny math.

Binyamin Applebaum wrote an interesting article for the New York Times, published today
entitled The Fed's Policy Mechanics Retool for a Rise in Interest Rates. Binyamin's article has some great points about how The Fed's plans may affect lending and our economy.

Seems to me if you are in the process of purchasing a home or refinancing, it's a good time to lock your interest rate!

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How Does Oil Impact Interest Rates?

How does the economy impact interest rates? Oil, stocks, bonds, Federal Reserve Chairman Yellen, flying monkeys...how do these factors play out in regards to interest rates? This is a hot topic right now, as reported by CNBC's Trading Nation this morning.

Well, you can watch a plethora of TV shows, read a ton of newspaper and blog articles. Or you can consider interest rate as merely one factor in your choice to buy a home.

I think that interest rate is an important factor while considering whether or not you will purchase a home. However, there are several other critical items to ponder. Obvious questions to ask yourself would be, "Can I afford the total monthly payment?" "What other bills may come up that I'm not anticipating?" "Will I need a new car in the near future, how much will that payment be?"

In addition to the economic piece of the equation, I think this is a very personal decision.  I know that sounds obvious, but just as important as how hot the real estate market is or is not or where interest rates will go, is an individual's plans for the future.

I believe there are at least two sets of questions that we should ask ourselves when considering the purchase of a home. The first set of questions has to do with a person or family's plans. Am I going to stay in this city, this state, this neighborhood for 1-2 years?  3-5 years?  How is my job stability? Do I love my job?  Can I work from anywhere? Am I single or engaged? Am I planning on growing my family?

The second set of questions has to do with the economics. What do I need/want in my housing? Can I rent a luxury apartment or do I need a 4 bedroom house? What's the cost of renting vs. buying? What's the cost per square foot of renting vs. buying? Does it cost more or less to rent than to buy? Any excellent licensed loan originator as well as real estate agent should be able to help you with this calculation in your local area. Basically you take your total estimated monthly mortgage payment including property taxes, home owners insurance and any monthly home owners association or condo fees and compare it to the cost to rent something similar in location and size. To make it more complex, factor in your down payment and estimated closing costs spread over the time you think you will be in that location as well as any interest deduction your CPA thinks you would benefit from by owning. Other factors to consider are leverage and appreciation.

Grab our new kindle version of my #1 Best Seller on Amazon. You can get it for FREE for a limited time if you have Amazon Prime or Kindle Unlimited or it's just $2.99 and that's a steal too!

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How Can Knowing Your Mortgage Options Help You?

Rich Rosa, co-founder and co-owner of Buyers Brokers Only, LLC asks “Is a Lack of Understanding About Mortgages Holding Back Home Buyers?”

Possibly….this is one of the reasons I wrote my book. The mortgage process is confusing to say the least and whether you’ve never applied for a mortgage before or have multiple mortgages, the more you know about the process, the better. I believe that an educated consumer is our best client. An educated consumer asks better quality questions and is more comfortable discussing and exploring their loan options.

Most people don’t know how much home purchasing power they have, how much to expect for closing costs (varies by state), or how much paperwork is involved when applying for a home loan. Most people have no idea the difference between loan programs from bank to bank, lender to lender, or broker to broker— or what the differences are between the main types of residential mortgage providers. Most people have no criteria for choosing a lender, the type of loan to seek, or how much down payment is best for them. For example, are their differences between the types of property that may affect down payment?

The mortgage industry is packed with nuance, which can lead to confusion for the consumer. While trying to buy a home, you may have people from many different professions telling you what you should do and how to make decisions—who should you listen to in which situations? Your most personal financial information is critical to the mortgage process and yet do you know who you are sending it to? What about mortgage insurance? Why is it required and when?

The two questions I most often hear are: “What’s the payment?” and, “What’s the interest rate?” While these questions are important, there are several other questions that are just as critical: what is the right loan type for me; is there an up-front funding fee for this loan; what are the differences in available mortgage insurance; how will property type restrictions affect my loan; what are the pros and cons of this loan; what is the down payment requirement with this loan choice over another; what are the closing costs associated with each loan type; and, who is allowed to pay the closing costs? Successfully navigating the maze of questions, regulations, and requirements ultimately leads to a mortgage closing.

Email me at info@bestmortgagebook.com for my Free Checklist “Questions to Ask When Selecting a Lender”.

For more information on loan documents, read my #1 Best Selling Book on Amazon

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The Fun and Excitement of Loan Documentation - Ok, its Not Really Exciting, More of a Necesary Evil

Teresa Mears of U.S. New & World Report, Money has written a great article about the documents needed when applying for a loan.  Thank goodness someone else is talking about this! I can’t emphasize enough how much documents impact your loan timeline as well as your loan approval.

While this may seem more boring and makes you want to Stick A Fork In Your Eye, documents can make or break your loan. With documents, the devil is in the details. You will submit your asset accounts (checking & saving accounts, money market, IRA, CD, 401K, 403B, brokerage accounts, etc.)— any accounts you plan to draw money from for your down payment and closing costs. Supplying the proper documentation in the correct form can save you days of frustration and loss of time. The clock starts ticking when you sign a sales contract and everyone is working hard to get you to closing; so, if you do not respond quickly to document requests, you are not only risking your mortgage and your binder, you are also making it very difficult for the lender to finalize full approval for your loan. Also, if you cut corners and do not send documents in the proper form, you are burning time. Sending incorrect documentation can burn up several days—a day for the request, another day sending incorrect documents, another day the lender has to request correct documents… and so on.

If you want to be a proactive participant in your loan process, pay attention to what is requested and what you send. Failure to provide the correct documentation for loan approval will stop the loan process. If you are not able to provide the requested documentation for the underwriter, sorry to say, you will not be approved for the loan. I was working with a client last year that sent a scanned copy of his wife’s driver’s license that was illegible. After months of requesting a clear and legible copy of the driver’s license, we finally received a clear copy and were able to move forward. Thank goodness! Something as simple as taking a picture of your driver’s license with your smart phone and emailing it to your lender is a silly thing to hold up your loan closing.

Be prepared to get lots of documents and you will save yourself time and mental anguish. I once had a client that was wondering why his loan was not closing quickly. We had asked the borrower again and again for the documents, but he just said he couldn’t find them. Unfortunately, as much as I despise paperwork, if the underwriter needs it to approve your loan, you must provide it. If you need help with the document format or where to find some documents, just ask your lender. They should be happy to help you. If not, get a new lender!  Email me at info@bestmortgagebook.com for my Free Checklist “Questions to Ask When Selecting a Lender”.

Many of the documents you are asked to supply, such as a driver’s license or photo ID, are required by law. If you have questions about the document requests— wonderful!— I can’t preach enough about staying informed. Just make sure to ask your questions right away to keep the momentum going towards full approval and a fast closing. As you’ll see in more stories below, just a little attention can save tons of time and contribute to the smoothest loan process possible. Although everyone is working for you via the fees you pay them, they are also human beings working to get you a lump sum of money that you would not have otherwise. Keep in mind that all of these people want your loan to be approved and they have the best intentions in being your advocate for loan approval.

For more information on loan documents, read Chapter 11 in my #1 Best Selling book on Amazon.

For more mortgage tips check out our website www.bestmortgagebook.info

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What? Interest Only Loans Are Back!

Just when you thought the mortgage environment was safe….Oh NO! According to USA Today Interest Only loans are back!  This can be seen as both a good and bad thing. The fact that Interest Only loans are being offered means that the higher ups in the lending world think that the real estate market will stay flat or go up. The fact that banks are betting on that reminds me of 2006, that makes my insides flip and that’s not good.

What’s an interest only loan you ask? I’ll tell you…An Interest Only loan is a type of balloon loan. Each month you are only required to pay the interest on your loan, not the Principal & Interest. Why is this scary to me? If you only pay the interest, you will not be paying down the principal of the loan. So, in 10 years you will still owe the exact same amount as when you started. Most of the Interest Only loans require that the interest start being paid in five or ten years. That means a big payment increase for you; OUCH! Or possibly your entire loan coming due; OUCH OUCH! Be extremely careful and consider all your other options if you are considering this type of loan.

Is there a benefit to an Interest Only loan? Yes, when you pay over the interest required any principal is applied to your loan balance and the loan is recast. What does that mean? The extra you pay towards your principal is applied to the outstanding balance and your new payment reflects the updated balance. If you are disciplined and want to pay down your mortgage faster, an Interest Only loan may help you achieve that goal. An interest only loan can also be beneficial to those of you on commission. If you can pay your Interest Only payment with your draw or base and when you get your commission or bonus and you put that towards your loan balance that may also benefit you in paying off your loan quicker.

Keep in mind that this type of loan is not for everyone and you need to clearly understand what you’re getting into with this type of loan product.

For more information on loan types, check out my #1 Best Selling book on Amazon.

For more mortgage tips check out our website www.bestmortgagebook.info

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There's No Need to Get Stressed Out Buying a Home!

The stress of buying a home is right up there with death of a loved one, getting married or divorced. Moving is a life stressor and a major contributor of mental and physical disease according to HealthCentral.com. Add to that you can lose hundreds of thousands of dollars in the biggest purchase of your entire life and you can be stressed out if you don’t know what to avoid!

I wanted to share with you some of the information I presented last month at the FL Times Union Home Buyers Expo 

One of my presentations was 3 Monumental Money Mistakes To Avoid.

1.     Shop for the best lender, not the best rate.
-Do you start haggling with a car salesperson before you pick your car? No, so don’t make that mistake with the biggest purchase of your life. Shop for Lenders who are licensed, knowledgeable and can give your written references and success stories.  The best lender will get you the best loan program to suit your needs as well as the best interest rate.  This will save you thousands of dollars over the life of your mortgage loan.

2.     Get PreQualified or PreApproved before you start home shopping – Don’t waste time and money looking for houses you don’t qualify to buy.  Know your buying power.

3.     Choose your Team Wisely
– Would you choose a school without knowing where they rank in test scores in the state?  Would you choose a heart surgeon without knowing their education, what hospital they work for and how long they have been practicing?  You need to interview everyone who will be working for you during the home buying process:  Lender, Realtor, Title Company, Home Inspector, Insurance Agent.  They all need to work together to get you to closing on time.

I hope you find this information useful.

All of this information can be found in much more detail in my book on Amazon

To grab my new book, How To Get Approved for the Best Mortgage Without Sticking a Fork in Your Eye™, click here: elysiastobbehomeloans.com

For more mortgage tips check out our website www.bestmortgagebook.info

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July's Real Estate Market

Welcome to July.  It seems that it is a seller’s market, with about 5 months of inventory available.  Once this surpasses 6 months supply we may see a transition to a buyer’s market. But for now, the sellers have the upper hand.

What does this mean for you? Well, it could mean higher sales prices, bidding wars and less contingencies. What’s the best way you can be prepared?

As always, I recommend getting pre-approved instead of pre-qualified. This lets you know your true buying power. Also, a pre-approval is stronger than a pre-qualification.  In some markets, usually the hotter markets, Realtors ® and sellers won’t accept pre-qualification letters, they will only accept pre-approval letters.

In addition, select your team ahead of time so once you are under contract you are not scrambling to put together the pieces.  By team, I mean your Real Estate Agent, your lender, your title company, your home owner’s insurance agent and your home inspector. Take the time to ask questions of each and make sure you are comfortable with their answers. Once you are under contract you will have limited time to make decisions and that’s no fun if you are stressed out.

Here are Key Considerations when Selecting a Real Estate Agent

·        Look for Success and Experience

·        Look for a Listener that Hears YOU

·        Choose Team Sports Over King of the Hill – Look for a Real Estate Agent that works well with Others

·        Are there specialties that are relevant to YOU?  Such as MRP- Military Relocation Professional.  For a complete list of the National Associations of Realtors ® Certification, check out www.realtor.org/designations-and-certifications

For questions to ask your lender, check out my free download, Top 10 Questions to ask your Lender at www.BestMortgageBook.com

All of this information can be found in much more detail in my book on Amazon

To grab my new book, How To Get Approved for the Best Mortgage Without Sticking a Fork in Your Eye™, click here: elysiastobbehomeloans.com

For more mortgage tips check out our website www.bestmortgagebook.info

For video mortgage tips and tools subscribe to our YouTube

Channel: https://www.youtube.com/watch?v=YsL6BuJ8b-M

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Is Now a Good Time to Buy a Home?

We are in the midst of Spring Home Buying season and there are quite a few positive indicators that it’s a good time to buy a home. There are many factors to consider before deciding if it’s a good time to buy a home, such as the economy, interest rates, supply & demand, the cost of renting vs. buying and your own personal situation.

Where are interest rates?

Interest rates are hovering around all time lows (again!) right now, so that’s one important factor to take into account when considering buying a home.  What does this mean to you in real numbers? Well, let’s say you are considering purchasing a home with a sales price of $300,000.  In a perfect world, you put down 20%, which is $60,000. That leaves you with a loan amount of $240,000. Don’t worry; there are many other loan programs available with much smaller down payments, such as 3% and 3.5%, which would be $9,000 and $10,500 respectively.

If your interest rate is 4.0% for a 30 year fixed mortgage with a loan balance of $240,000, your monthly principal and interest payment would be $1145.80.

Let’s say your interest rate is 5.0% for a 30 year fixed mortgage for the same $240,000 mortgage; your monthly principal and interest payment would be $1288.37.

See the difference? That’s $142.57 a month you save on interest alone! Let’s look at it over the long haul…$1710.84 a year = $51,325.20 over the course of a 30 year loan!

Now, of course there’s more than one way to look at this.  That same $142.57 could also be a tax deduction for you.  Be sure to check with your CPA for interest deductions. The $142.57 a month could also be the same amount as one of your student loans. Only you know what’s comfortable for you when it comes to a monthly payment and what makes sense. Keep in mind that you are also responsible for home owners insurance, property taxes and any monthly home owners or condo association fees in addition to the principal and interest on your loan.

If you are a first time home buyer, you can save yourself time and money with my first time home buyer video tips at https://www.youtube.com/watch?v=YsL6BuJ8b-M

See what DS News has to say about buying a home now, "Analyst Says Buying a HomeNow Is a Solid Investment"

How long do you plan on staying in your area?

I think your own personal situation is the most important thing to consider when buying a home. Do you like the area? How long do you think you’ll be there? How long do you think you’ll be at your job? I bought my first home about two years after I graduated from college. My Mom was so nervous for me, but I wasn’t scared at all. I knew I liked the area (dear old Baltimore, MD my heart goes out to you) and wanted to be there for a while. I had moved around quite a bit in my early years and was looking forward to growing roots in the Baltimore community. I ended up living in that house for eight years. I rented out my house for the last two years I owned it when I moved down the road to Arlington, VA before I sold it. It became my first rental property. Since then I have owned and rented homes as I moved around the East Coast. Whether I bought or rented depended on all the factors I am sharing with you here; the economy, interest rates, the cost of renting vs. buying and my own personal situation.

CNN Money also says it’s a good time to buy, "Home Buyers In These Markets Have the Upper Hand"

What’s the cost of renting vs. buying?  

Does it cost more or less to rent than to buy? Any licensed loan originator as well as real estate agent should be able to help you with this calculation in your local area. Basically you take your total estimated monthly mortgage payment including property taxes, home owners insurance and any monthly home owners association or condo fees and compare it to the cost to rent something similar in location and size. To make it more complex, factor in your down payment and estimated closing costs spread over the time you think you will be in that location as well as any interest deduction your CPA thinks you would benefit from by owning. Other factors to consider are leverage and appreciation. For more help with this calculation feel free to contact me at bestmortgagebook@gmail.com.

Julian Castro, the Director of Housing and Urban Development is positive about buying a home in 2015.

***Please keep in mind this is only an example for illustration purposes.  These interest rates may not be available and/or you may not qualify for this loan type.

To get on our waiting list for my new book, How To Get Approved for the Best Mortgage Without Sticking a Fork in Your Eye™, go to our website www.bestmortgagebook.info

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Getting the Best Mortgage may help you financially in the long run

Cash is King. Well, maybe not if you want to buy a home. According to the recent Washington Post article, The case for not paying off yourmortgage by retirement by Jonnelle Marte there’s good debt and bad debt.  Jonnelle considers a mortgage good debt. Cash is liquid and you can’t access your cash if it’s tied up in your home. Of course, there’s also the added benefit of deducting the mortgage interest on your home. There are quite a few mortgage options now that allow you to put down a small down payment. If you are a first time home buyer you can put down as little as 3% if you qualify for a conventional loan.  FHA currently allows for down payment of 3.5%.  For all you veterans (thank you for your service!) if you qualify, you don’t have to put anything down.  Yes, VA loans allow for $) down payment, which means 100% financing. The USDA loan also allows for $0 down payment. So, as you can see, there are many loan options available right now. However, it’s important to know the different features of each. For example, VA has $0 monthly mortgage insurance fee.  USDA has .30% monthly mortgage fee.  FHA’s monthly mortgage insurance is .85%. The VA, USDA & FHA loans are government loans and they ALL have up front funding fees, so be sure to discuss those with your mortgage lender. Also, FHA now has monthly mortgage insurance for the life of the loan. It’s not removed once you have over 20% equity in your home like other loan products. Ask your lender all the questions you can about the differences in all the parts of your monthly mortgage payment as well as the costs of the loan, such as the funding fees.

***Please keep in mind this is only an example for illustration purposes.  These interest rates may not be available and/or you may not qualify for this loan type.

For more mortgage tips, tools and info check out bestmortgagebook.info

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