Refinance Free Credit

Friday's bond market opened well in positive territory following early stock market losses and weaker than expected economic news. The stock markets are showing weakness after disappointing earnings news from GE that has fueled concern about the impact that the slowing economy is going to have on corporate earnings. The Dow is currently showing a 146 point loss while the Nasdaq has fallen 31 points. The bond market is currently up 22/32, however, we likely will see a slight increase in this morning's mortgage rates due to weakness in bonds late yesterday.

The only relevant economic data on tap today was the University of Michigan's Index of Consumer Sentiment. It revealed a reading of 63.2 that was well below forecasts and indicates that consumer sentiment about their own financial situations is still falling. This is good news for bonds and mortgage rates because waning confidence usually means consumers are less apt to make large purchases in the near f uture. Since consumer spending makes up two-thirds of the U.S economy, any signs of slowing spending eases inflation concerns and makes long-term securities such as mortgage-related bonds more attractive investors.

Next week is very busy in terms of relevant economic releases for the markets to digest. The week kicks off with Monday's release of March's Retail Sales data. This is a very important piece of data because it tracks consumer spending at retail level establishments. As with the consumer confidence related indexes, any data related to consumer spending is watched closely and can have a noticeable impact on bond trading and mortgage rates.

Monday's data is not the only important news of the week. We will also see two very important inflation related indexes the middle part of the week and a couple of less important reports as the week progresses. Look for more details on next week's events in Sunday's weekly preview.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers

Triad Guaranty Inc. (TGIC: 2.477, +12.59%) said Friday that despite a recent ratings downgrade, it continues to write new mortgage insurance business, and that its qualification with both Fannie Mae and Freddie Mac remains intact.

Triad had seen a key insurer financial strength rating tied to its primary insurance subsidiary, Triad Guaranty Insurance Corporation, downgraded by Fitch from ‘AA-’ to ‘BBB-’ roughly two weeks ago. The AA- minus rating level is generally considered the minimum to remain qualified to work with both GSEs, but both Fannie and Freddie have said they’re looking to work with the insurers rather than force the issue.

Both GSEs would stand to record substantial losses otherwise, say sources that spoke with Housing Wire last week.

“The GSEs are supporting Triad,” said Mark Tonnesen, president and CEO at Triad. “There is no change in our status as a qualified mortgage insurer.”

Tonneson also said that negotiations with a key investor were progressing, and that should a deal be reached, Triad would put its existing MI portfolio into voluntary run-off while it reinvents itself as a separate company.

“These are trying times for our company,” he said. “Although we face significant challenges, we remain committed to all key stakeholders as we attempt to complete this transaction.”

For more information, visit http://www.triadguaranty.com.

Disclosure: The author held no positions in TGIC when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

So much for those earnings that GE CEO Jeffrey Immelt had said were “in the bag” just a few weeks ago — in a stunning reversal that caught investors and analysts alike by surprise, General Electric Co. (GE: 32.32, -12.05%) reported Friday its first decline in quarterly earnings since 2003 and cut its earnings forecast amid historic troubles in the capital and mortgage markets.

The company reported a 6 percent drop in first-quarter net profit, with earnings falling to $4.3 billion, or $.43/share. Revenues were at $42.2 billion, up 8 percent.

“We knew the first quarter was going to be challenging, but the extraordinary disruption in the capital markets in March affected our ability to complete asset sales and resulted in higher mark-to-market losses and impairments,” Immelt said. “Our inability to complete these asset sales and higher mark-to-market losses and impairments impacted earnings by $.05 per share versus plan.”

GE Money saw quarterly earnings drop 19 percent on a yearly comparison basis to $995 million, while commercial finance took a 20 percent hit, falling to $1.16 billion.

As a result, Immelt revised the company’s outlook for 2008, saying that the company now expects to report earnings per share of $2.20 to $2.30 per share and that financial services earnings will decline 5 to 10 percent on the year.

Investors and analysts wanted answers for one of the biggest earnings misses by GE in recent memory, according to a report at Bloomberg:

On a conference call today, analysts demanded that Immelt explain why he told retail investors on a March 13 Webcast that Fairfield, Connecticut-based GE would likely meet its annual forecast of at least $2.42 a share.

“Two days after the Webcast, the Bear Stearns situation took place,” Immelt said. “The last two weeks in March were a different world in financial services.”

Goldman Sachs immediately moved shares of the conglomerate to a “neutral” rating on the news, saying that the earnings miss raised “credibility concerns,” according to a separate report at Bloomberg.

Sources that spoke with Housing Wire wondered aloud if the miss was a sign of things to come this earnings season.

“We’ve got a few senior execs on record saying we’re nearly out of this mess,” said one source, a bond trader who asked not to be named. “If the market conditions can drive a ’surprise’ 5 cent per share hit at somewhere like GE, what are we looking at for the investment banks?”

Morgan Stanley CEO John Mack told reporters this week that he believed the credit crunch was nearly over, although he didn’t comment on earnings expectations for the Wall Street firm.

“We are seeing the collateral damage to the economy,” Bill Strazzullo, chief market strategist at financial advisory firm Bell Curve Trading, said in an interview with Bloomberg Television on Friday. “We saw this with retail sales, consumer confidence, now we are seeing this with the General Electric earnings. When you look at this from the vantage point on the effect of the broader economy, things are getting worse.”

Disclosure: The author owned no positions in any publicly-traded firm mentioned in this story when it was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

This post is from the Blown Mortgage Hall of Fame.  It was originally published back in July 2007 and highlights the tips to saving money on your mortgage refinance loan.  I’m still traveling and will be back in a few days.

——————————————–

People sure are talking a lot about refinances these days - maybe it is because there is a boat load of short-term ARMs resetting over the next few years; or maybe it is because rising interest rates have short-term loan holders jumpy. Whatever the case may be - if you are out shopping for a refinance of your current home loan (subprime or prime) then you need these 8 steps. Using these 8 steps will save you at least $2,500, probably much more. So consider this Blown Mortgage’s mortgage refinance coupon - and you don’t even have to buy anything from us to redeem.

The Steps

1. Get a baseline
2. Get three referrals
3. Interview
4. Get your act (documentation) together
5. Select your lenders
6. Review Good Faith Estimates and Programs
7. Get copies of your lock confirmation and loan approval
8. Bring GFE, lock and loan approval to signing

Get a Baseline

How can you enter the arena when you don’t know the rules of the game? Do these three things first:

1. Go to the Wall Street Journal’s Money and Rates page. Know what the average interest rate is on the type of loan you are considering.
2. Go to MyFICO.com and obtain a copy of your credit scores & report. Get all three scores.
3. Get familiar with a few different mortgage terms like amortization, interest only, impounds, etc. Even if you don’t know it all sounding more savvy will save you hundreds of dollars right off the bat.

Get Three Referrals

The single best way to ensure getting a great mortgage is:

1. Working with someone who has a great reputation and;
2. Knowing your stuff.

Where do you get those three referrals from? Try any of these sources:

1. Your relatives, friends, co-workers or neighbors (in that order) who had a great experience
2. Your CPA who has handled your taxes for several years
3. An attorney you trust
4. Someone from your church

Google those referrals-seriously-and see what comes up. Learn about each of your referrals and see what has been written about them. Check them out at your State’s regulatory agencies and Better Business Bureau to see if their business practices have gained any unfavorable action. Drop any with red flags immediately. Find 3 that pass the first test to get to the next step.

Interview Your Referrals

Set aside 20 minutes to interview each referral. Don’t talk rates and programs - talk about their background, experience, company culture, personal belief systems and more. Talk about goals, long-term plans and more. Ask lots of questions. See which one is a fit for your personality. Who makes you feel comfortable and understood?

Have Your Act (documentation) Together

Have the following documentation organized and at your disposal. You can keep it in a file folder, scan it to your computer or put it on a CD; just have it ready to go for when you choose your lender:

1. Your last 2 year’s W2 statements or tax returns for yourself (and your spouse if they’ll be on the loan as well)
2. Your last 2 paystubs available
3. A copy of your current mortgage bill
4. A copy of your hazard insurance declaration page

If you have any alternative sources of income (like social security or pension) be sure to have those award letters as well. If you are self-employed you will need items like your last 2 years K-1 and business profit and loss statements.

Select Your Lenders

Choose the two lenders that had the best combination out of your research in steps two and three. Call the lenders and inform them of your decision to work with them. Send them the documentation above. Once they’ve received it spend 15 minutes on the phone talking about the type of program, payment and closing costs you are expecting. Ask them both for quotes and Good Faith Estimates for the loan or loans you are seeking. Ask for one GFE for each loan. (e.g. If you want to compare a fixed loan and an ARM ask for GFE’s for both.)

Review the Good Faith Estimates

Take a look at the GFE from each lender. NOTE: We are not looking for lowest costs or rate. We are looking for HONESTY and honesty is in the accuracy and completeness of the document. Look for the following items on your GFE:

• origination points
• appraisal fee
• title fee
• escrow fee
• processing fee
• underwriting fee
• document prep fee
• notary fee
• recording fee
• tax service fee

These are all relatively standard fees that will typically be on a loan in one form or another. If any of these are absent inquire as to how they’ll be paid. Sometimes different lenders call fees different things or don’t charge for certain items. Also look to see if impounds are being collected for taxes and insurance if you requested those to be included in your loan. Ask your lender to go over the fees line by line with you. The more complete the document the better. While this may make the loan look more expensive rest assured that you are getting a fairly accurate estimate on your closing costs. Now, ask them if they’ll guarantee the final fees within a range of no more than $500 dollars. Try to determine how confident your lender is in the estimate they sent you.

Negotiate with the lenders on their fees and charges. Work to lower fees that you feel are excessive, repetitive or nebulous in nature. Ask for clarification on all fees and their reason for being charged. While you should grind your loan officer a little realize that they and the lender need to be compensated for their time. You should work for a discount, but should not expect the loan for free. The exception is if you choose a no-cost or no-points (two different things) loan where you pay a higher interest rate over the life of the loan to eliminate closing costs.

Sign the GFE and application from the lender of your choice (the one you feel most comfortable with, not the cheapest!) and inform the other lender that you are holding their offer as a backup offer if anything should turn sour with your lender of choice. Be honest, its a good karma thing.

Get Copies of the Lock Confirmation and Underwriting Approval

Want to know the nasty secret about Good Faith Estimates and Truth-in-Lending disclosures you get from brokers and banks? They are not guaranteed, they are not binding and they are not required to be by law. So Good Faith Estimates are esentially worth the paper they are printed on. That is why I said we are not shopping by Good Faith Estimates. One of the biggest mistakes when shopping for a refinance is to shop by comparing GFE’s. It’s a sure way to lead you straight to the most unsavory of originators.

What we want to see is REAL proof that we’re approved for the loan we were quoted. Do this by the following methods:

1. Once you’ve sent in all of your documentation and chosen a loan program the loan officer should be able to lock your rate. A rate is not yours until it is locked with the investor or secondary marketing department. What you want is a copy of the rate lock with the investor or with their secondary marketing department. Ask them to scan and email you a copy. NOTE: Some times it may make sense to “float” your interest rate and lock at a later time. If you choose this route initially make sure that when you decide to lock you receive a copy of this document that same day.
2. After your documentation and application is submitted to your originator give them 72 business hours to return to you with a fully underwritten approval. Some originators may do it faster, some slower, but 72 hours is an adequate amount of time to get an approval once you’ve provided the above documentation and signed application. You want them to send you a fully-underwritten loan approval. A loan approval will show you your exact interest rate, terms of the loan, prepayment penalty, any buydown or discount points charged to you for the interest rate, your decision FICO score and any outstanding conditions needed prior to funding your loan. This approval is how your loan is scheduled to fund with the bank. If there is anything wrong here it needs to be fixed immediately.

With those two documents (along with the GFE) in tow you are in good shape to know where your loan is going to come out.

Bring the GFE, Lock and Loan Approval to Signing

Now is the moment of truth. The remaining conditions on the approval have been cleared and your loan is ready for you to sign and fund. Before you agree to set up the signing of your loan do the following:

• Request a copy of the Estimated HUD-1 (settlement statement) to be sent to you for review 24 hours prior to signing
• Compare the Estimated HUD to the GFE
• The fees should be within the range specified during your first call
• If there is a large discrepancy tell them to get the fees in-line with what they originally sent you
• Once you are comfortable that the fees are in-line with your expectations set up the signing

When at the signing of your loan reaffirm the following:

• Compare the Final HUD to the Estimated HUD that you signed off on; ensure the fees are consistent
• Compare the terms of the note to the rate lock - confirm rate, term of the loans and any prepayment penalty
• Review the prepayment penalty language to ensure that it matches the approval - check to ensure that the number of months match up (24 for 2 years; 36 for 3 years; 60 for 5 years, etc.) Also ensure that the prepayment penalty is either hard (payable no matter what) or soft (payable only upon refinancing) as agreed with your lender
• Review the ARM rider (if you have an adjustable rate mortgage) to ensure that the first rate adjustment is the appropriate time in the future

Congratulations - You Have the Loan You Actually Chose!

If you follow the above 8 steps you will end up with a better mortgage than you would have otherwise received going in blind. You will save yourself at least $2,500 - perhaps much, much more. You will feel confident that you were not taken advantage of and that you worked with a trusted partner who delivered on what they promised. Feel free to have a beer or glass of wine, you deserve it!

Remember, if at any point after signing you feel uneasy about the loan you have 3 days to rescind (cancel) your loan (on your primary residence during a refinance only) by faxing and mailing in your Right to Rescind.

If you’ve taken the above 8 steps you’ll most likely not have to worry about rescinding. Great job! Now pass the 8 steps and a confident referral on to a friend and save them some money too!

It was a relatively quiet week for mREITs - the iShares FTSE NAREIT Mortgage REIT ETF (REM: 23.07, -2.00%) fell slightly, reflecting the performance of most stocks in the sector.

Crystal River Capital (CRZ: 8.51, -5.13%), NorthStar Realty Finance (NRF: 8.97, -0.55%), Arbor Realty Trust (ABR: 16.04, -5.59%), and Anthracite Capital (AHR: 7.28, +0.28%) all participated in the Credit Suisse 2008 Global Real Estate Conference this past week. In its presentation, Crystal River disclosed that it had sold all of its agency-backed securities, in response to a jump in the average haircut on repo funding. The company saw the haircut on its repo agreements go from 3 percent to as high as 7 percent, thanks to a frenzy of selling activity in March. However, the company did say that it is looking to reinvest in agency securities again, once repo funding becomes more attractive.

The big winner this week was manufactured home lender Origen Financial (ORGN: 2.32, -0.85%), which announced Wednesday that it had received $46 million in term financing from the company’s largest shareholder. The financing didn’t come cheap, however, as the three-year note bears a 14.5 percent interest rate and obligates Origen to issue warrants for 2.6 million shares of the common at a $1.22/share exercise price.

Nonetheless, the $46 million is sufficient to pay off Origen’s remaining obligations to Citigroup under its supplemental advance facility, which had been set to mature in June. With the overhang of the debt maturity removed, Origen shares rocketed up 70 percent on Wednesday to close at $2.28. Shares were at $2.35 in early trading on Friday.

Editor’s note: Mortgage REIT Insider will run each week on Friday, and looks at trending and movements in the unique mortgage REIT industry. Patrick Harden is a Certified Public Accountant with three years of experience in auditing publicly-traded real estate investment trusts. For the past two years, he has been involved in the mortgage finance industry as a member of the financial reporting group at a publicly-traded mortgage bank.

Tony

You have probably heard of auto refinance before. Or simply refinance. The term "refinance" actually refers to a financial situation wherein a borrower finds financing to pay off a current loan. Refinance is often put into practice in home buying. In fact, refinancing is one of the most popular methods of getting financing for a home loan.

With auto refinance, the same thing applies. Auto refinance is basically paying off one loan with a new loan. The goal of auto refinance is to allow the borrower to save some money from your monthly loan obligations. And as such, it is one of the best kept secrets in the financing industry. For years now,
people have refinancing their homes and saving thousands of dollars. However, the practice of refinancing car loans has yet to be indulged by most. Why? Continue Reading »

khali S.

Refinance Your Home Now and Lower Your Interest Rate

What is a refinance home loan?
A refinance home loan or a home loan refinance is a new loan obtained through your lender or a new lender to pay off existing loan. However, you may opt to apply for a lower interest rate and or cash out on your homes equity.

When should I refinance my home? It is a known fact that interest rates are lower than they have been in years. This is due to our fast paced and ever changing economy and market. Now would be the perfect opportunity to refinance your home to obtain a lower interest rate. Even a .25 difference can save you thousands of dollars a year in mortgage payments.

Why should I refinance my home?
There are several reasons home owners decides to refinance. The four most common reasons include:
To obtain a lower interest rate
Home owner generally are aware of interest rate down fall. They take advantage of this opportunity by applying to a refinance loan to lower their existing interest rates and save money on mortgage expenses. The money that a borrower saves on mortgage expenses can be invested in other financial investments.
To receive a refinance cash out
Some home owners who have enough equity accumulated in their homes refinance to cash out their equity and get a lower interest rate
To make home improvements
Sooner than later you will find that maintaining your home is hard work (not to mention quite expensive). In most cases, home owners will pursue a refinance, rather than a personal loan, in order to save on interest rates. A personal loan may have higher interest rates and are normally, not as large as a home improvement loan.
To change loan programs
A majority of home owner refinance because they are not satisfied with their current loan program. They may be under a 5 year arm, but somewhere down the line they decided they would prefer a 30 year fixed loan. Whatever the reason may be, a refinance home loan will solve the problem.

What are the benefits of refinancing my home?
There are several benefits included with refinancing your home, including:
Your credit may be in better standings then before you purchased your home, now you can refinance and obtain a more suitable loan, with lower interest rates and terms.
Or, you can obtain a home equity line of credit and have cash available when you need it.
With refinance cash out, your lender can consolidate your bills and pay off all of your debt. You will not have to deal with the hassle by yourself.

What are the different refinance loan options?
As with a traditional loan, refinance home loans offer some of the same loan programs, such as:
10/15/30 year fixed
Zero Down
Interest Only
And so on

Where can I refinance my loan?
You can apply for a refinance home loan through your current lender. Or you may search for a new lender more suitable to your financial needs. This search can be done by internet search, flipping through the yellow pages, or consulting with your real estate agent.

About the Author

Khali S. founder of Home Loan Guidance (http://www.homeloanguidance.com/) - a free online guide to help discover more home loan options secrets.