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Help For Home Buyers

There’s no question that high home prices in Silicon Valley makes it difficult for first-time home buyers to purchase homes.   Difficult…but not necessarily impossible.  Recently (past year), qualification requirements have eased somewhat for many higher balance programs including the minimum down payment required. Alternate income sources, that weren’t considered in the past, are now allowed […]

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Net Tangible Benefit

Refinancing a mortgage must make sense…and by “make sense” I mean to the lender receiving the application. For refinance transactions, lenders require that the loan provide a documented “Net Tangible Benefit” to the client. Lowering interest rate and/or payment, or taking cash out are popular reasons for refinancing. Others include adding or deleting someone to […]

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Regulated Honesty

Business regulations, including extensive ones governing financial services and lending industries, would be unnecessary if all business people operated honestly. One of the regulations in RESPA (Real Estate Settlement and Procedures Act) addresses “kickbacks”. It’s illegal to pay commissions, referral fees, etc., to any non-licensed person for the referral of mortgage loans. Simply stated, loan […]

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Credit Scores – How They Affect Mortgage Loan Cost

Credit, with debt-to-income ratio and equity, is a critical factor in determining mortgage loan approval.  And, for approved applicants, credit score plays a major role in determining loan costs. For example; let’s assume a mortgage amount of $400,000, 80% of a $500,000 value, for either a purchase or refinance with no cash-out submitted to a […]

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Loan Qualification – Not a Mystery

Despite numerous regulatory changes, new disclosure requirements, and lending restrictions, the same basic loan qualification factors still apply.  Does a potential borrower earn enough to be able to make payments on all their monthly obligations?  Have they shown consistent willingness to do so as evidenced by their credit history and if, for whatever reason, they […]

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Housing Inventory’s Affect on Home Prices

A recent article indicated that all-time low housing inventories and higher prices have hampered affordability both for first-time and move-up buyers. Today’s low inventories began with the 2008 housing collapse. Foreclosures reached all-time highs and investors bought up foreclosed properties at bargain-basement prices. Former homeowners became renters, thus increasing demand for rentals, and that pushed […]

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“What’s the Rate”

The question most often asked by mortgage applicants, is “What’s the rate”. But that’s not often their real concern. It’s understandable to think interest is key but it’s only a part of a transaction. The primary concern for most mortgage applicants is monthly payment. No one really wants a drill…what they want is a hole. […]

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More About Mortgage Math

Recently, I wrote about mortgage math and this article is another aspect of that math. Over the years, I’ve observed that most people, but not all, know the approximate rate on their mortgage. They know because it’s usually their largest monthly payment obligation. Fewer know their auto loan rate and fewer still, know rates on […]

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FHA Rollback of the Rollback

As noted recently, Julian Castro, the HUD (Housing and Urban Development) Secretary, announced a rollback of the FHA (Federal Housing Authority)-required mortgage insurance premiums from .85% to .60%. The change was to be effective on January 27th. The decision to reduce the premium was made partly because, for the past two years, the FHA loss […]

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Mortgages…Math Is Important!

There is more math in the mortgage process than meets the eye and most borrowers, and even many loan officers, don’t understand all potential ramifications.  It’s important to work with someone who does in order for them to present the best, most appropriate information and options to mortgage clients. Interest rate and monthly payments are […]

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How To Compute Blended Rate: The real cost of all money borrowed

A person called me today concerned that the Fed Discount, Prime Rate, etc will be rising and is considering a refinance. I computed for him the cost of ALL money that he has borrowed and this is the formula to compute blended rates. Note. Interest rates that are averaged will not work because the amount […]

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Two Kinds of Mortgage Loan Officers

There are two kinds of mortgage loan agents….those who simply want to get paid and those who want to provide truly valuable assistance to their clients. There are other valid comparisons, but an agent’s core value determines the commitment to service for a client. The mortgage industry contributed greatly to the 2008 recession. Problems therein […]

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