The best Fixed Rate refinance is not always going to be the quote with the lowest rate. When refinancing an adjustable rate mortgage, or ARM loan, to lock in a low fixed rate, a variety of other factors are significantly more important than rate alone.
When comparing potential sources of financing, remember that many lending institutions considered household names employ rather unscrupulous "bait and switch" tactics with alarming regularity. By quoting you the best rate, they hope to lock you into a process both financially and emotionally with the hope that by the time they give you the real rate, often at the closing table, you will be too exhausted and afraid to explore your options. Comparing Good Faith Estimate documents is also next to impossible because lenders with something to hide know you will do this. There are a variety of methods by which the costs of an unrealistically low rate can be concealed on a Good Faith Estimate, and it is after all only an estimate, and can be changed with no enforceable penalty at any time.
Choose a firm which you feel represents your interests, whose good faith is more than just a piece of paper, and you will be assured to find the best fixed rate with the best features and terms for your family's financial situation.
Obtaining the best fixed rate, for example on a 15 year fixed rate mortgage, should not compromise your ability to consistently make the higher payments required of the loan. Mortgage companies can qualify you for payments which are much higher than you can truly afford, and do not account for any unexpected disruption of your income due to a break in employment, illness, or family emergency. While minimizing interest expenses is important, obtaining payment flexibility may be significantly more important to you, and may help you prevent an unforeseen future event from ruining your credit, bankrupting you, or even losing your home to foreclosure.
When looking to get the best fixed rate, always remember that everyone lends from the same pool of money. One mortgage lender may offer the best fixed rate but the costs may not be favorable. Another mortgage lender may offer a higher rate but the costs may be significantly lower.
There are other factors affecting your payment besides the interest rate. For example if your loan requires that you carry Personal Mortgage Insurance (PMI), these payments would be added to your monthly payment amount until this mortgage would no longer be necessary. This is normally when you acquire 20% equity in the home.
When choosing a Fixed Rate loan, take into consideration how long you plan on being in the home. If you plan to stay there without intention to refinance for a couple of years, take a loan with a pre-payment penalty. Mortgages which carry a pre-payment penalty usually carry a lower interest rate. Since you won't be selling or refinancing inside of the penalty anyway, it is a benefit to you for a lower rate.
A fixed rate mortgage (FRM) is a mortgage loan where the interest rate on the note remains the same through the term of the loan, as opposed to loans where the interest rate may adjust or "float."
Fixed rate mortgages are available in terms from 10 to 40 years. By choosing a program with a shorter repayment term you will receive a lower interest rate. Even with a lower interest rate your payment will be higher with a shorter term mortgage. Take everything into consideration when choosing interest rate and mortgage programs.
In a normal economic environment, Fixed Rate Mortgages (FRM) have interest rates that are 1% to 2% higher than that of Adjustable Rate Mortgages (ARM). However, when a slow or declining economy is expected and the interest yield curve is inverted, Fixed Rate Mortgages may have interest rates about the same as those offered by Adjustable Rate Mortgages.
Borrowers can get the best fixed rate by working with a mortgage professional they trust. Getting the best fixed rate will depend on a borrowers credit, type of loan and LTV.
The best fixed rate mortgage (FRM) can often be found by using a mortgage broker. The mortgage broker has access to numerous lenders wholesale interest rate pricing.
Ask your Mortgage Broker to quote you fixed rates from 10-40 yr amortization schedules to determine which is best for your needs.
To get the best fixed rate, do yourself a favor and review your credit report for any errors. Good credit is required to obtain the best fixed rate.
-Darin Zabel
(530) 753-5657
There has been quite a bit of news coverage regarding Adjustable Rate Mortgages adjusting upward. There are many ways to refinance an ARM Loan to a Fixed Rate Loan. The next few paragraphs will examine the benefits and strategies of refinancing an arm loan to a fixed rate loan.
Fixed Rate loans are available even to borrowers with bad credit
The FHA Secure Loan Program can be of benefit to clients who have fallen behind on their mortgage due to an increase in the rate. Their are many parameters one must qualify for in order to obtain financing through this program. Contact an experienced mortgage proferssional to see if you qualify for the FHA Secure loan program to refinance your adjustable rate loan to a fixed rate.
FHA loans are great and are a very safe way to go when deciding on what type of mortgage financing to get.
Their is still many different conventional loan options available today, along with FHA.
An experienced mortgage broker can help you to decide what type of financing would be best for you and your family.
Another hurdle in today's lending environment is called declining markets. If you live in an area that has been identified as a declining market you can expect a reduction of as much as 10% in some cases of the maximum allowed loan to value of your home.
Consumers who have opted to obtain an adjustable rate mortgage are now feeling the crunch of their rates adjusting. This is one of the top causes for the high numbers of foreclosures in so many areas. However, there is hope for those of you who have an adjustable rate mortgage, also known as an ARM loan. Contact a mortgage professional today and find out how you can convert that ARM loan into a fixed rate mortgage loan before you are left with a high rate loan that you can no longer afford.
Darin Zabel
530.753.5657
Be sure to ask for copies of the Good Faith Estimate before you agree to a deal. Granted this document is only an estimate, it should be very close to an accurate assessment of all fees and charges. If a broker tells you that they cannot provide information on a particular charge, begin to ask questions until you are satisfied. Most good brokers will provide a Good Faith Estimate (GFE) during the loan process, and come the day of closing you will find that you have to pay less than estimated.
Your mortgage professional will help you to choose the right type of refinancing for you. Be prepared to provide them with your reasoning for the refinance, as it will help them to better assess your situation. Are you looking only for a better rate or do you need cash out or debt consolidation?
Be sure to answer all of your mortgage brokers questions as accurately as possible. This will help your mortgage broker in determining which loan program may best fit your needs.
Before contacting your preferred mortgage professional, you may want to gather these documents before hand:
Most recent paystubs totalling 30 days
Most recent bank statements for checkings, savings, IRA, 401(k), etc. totalling 3 months
Last 2 years of W2's if salaried or wage earner. Last 2 years tax returns if self-employed
Any other documents to show income from social security, alimony, rental income, etc.
Homeowners insurance declaration page
Most recent mortgage statement(s)
Everything you will encounter in your mortgage experience you can find on the internet, if you are reading this, you have access to learn more than you can handle in regard to this transaction...Gather info, research that info, get more info from second source, research that info, repeat that process until you feel that you can make a well informed decision, if you don't think after that that you can make a good decision for yourself, seek legal advise...Just involving a lawyer will minimize the games and tactics that may otherwise be used...You'll never be good at anything you don't do often, but you can be as informed as possible...Just knowing where to find the answers and explanations can be money saving!...You don't always get what you pay for, well you do, but it's not always worth what you paid for it so when you take advise from the person that stands to make the most, be wary and research before making a decision...
In order to have a better refinance transaction, keep all copies of your original application disclosures. At closing you are allowed a 3 day period to rescind your loan if you do not feel comfortable with ANYTHING about the loan. Tell your mortgage professional upfront you will review your disclosures against the closing docs at closing.
Taking the time to fully document your income is one of the best ways to prepare for any mortgage application, in particular a jumbo loan application.
Whatever you do, be honest about your income, your job history and your credit history. Don't even fudge a little bit. These things are verified during the process and just a little bit of misinformation can result in your approval being invalid because your loan officer relied on it when recommending a loan program. This can cause substantial delays even if the information is not something that would cause your loan to be denied. To talk about improving your mortgage refi experience give me a call at (530) 753-5657 or go to www.lucentloans.com.
Darin Zabel
Equistar Funding Corporation, Inc.
Senior Loan Consultant
204 F Street, Suite B5
Davis, CA 95616
Email: DZabel@MortgageitDown.com
Phone: (530) 753-5657
As seen and published in:
http://www.associatedcontent.com/article/898327/a_guide_to_recessionary_success.html?cat=3
As the economy continues to struggle, I want to take a few moments to give you perspective from my professional standpoint.
We are currently amidst one of the largest banking crises since the Great Depression of the 1929 era. As a result of that time period, the government sponsored two banking entities that would be used for times of crises, and they are known as Fannie Mae and Freddie Mac. However, to confirm our troubled times, even Fannie Mae and Freddie Mac are on the brink of collapse. They are currently in need a government bailout. To assert even more truth of our times, IndyMac Bank, the #2 mortgage lender behind Countrywide, recently collapsed. Many (over 10,000) lost hundreds of thousands of dollars due to the $100,000 FDIC limit to be insured. Washington Mutual, the largest savings and deposit institution is also in trouble, with its stock value down significantly compared to previous value. Wachovia’s wholesale mortgage is coming to an end as well and it has all but abolished its exotic loan products, which were at one point its own unique product. Bank of America’s revenue was announced to have dropped 42% from this time last year. If you see a pattern forming, you are right. Banking is in trouble. That means our money system may be in trouble.
American Express, one of the largest and most successful credit card companies in the world, has recently reported losses of 40% compared to this time last year. American Express noted a rise in delinquencies with card holders. Google’s profits also fell short of analysts’ expectations. In short, we are going through a massive economic slowdown and a potential recessionary period.
What can you expect in the future? Who knows, really.
But there some certainties we can all agree upon.
First of all, oil prices will not come down anytime soon. This is a multi-faceted issue dealing with supply and demand, our currency valuation and degradation, political affairs affecting oil, our current administration’s outlook and solution to the problem, as well as corporate interest in maintaining oil as our primary source of energy mostly for profit. Aside from everything else, the cost of oil is grossly affected by the low value of the dollar; in a perfect world, where our dollar had a good value comparable to other currencies, oil would be about $60 to $70 per barrel. This drop in price will not happen anytime soon.
Secondly we can agree that consumer debt will remain the same, or possibly increase, since income has not increased in proportion to the cost of living. Subsequently, more and more Americans will continue to sustain their lifestyles with debt. It is quite noticeable that more and more commercials for credit help and credit consolidation are trumping on our television screens? Between American Idol and Boston Legal, it is almost predictable to expect one or two credit repair or credit consolidation commercials. Well, those commercials cost money. So these companies have recently seen an astronomical increase in business.
Thirdly, we can be certain that Americans’ savings are not going up in proportion to goals for retirement. Savings has a parallel relationship with income. The fact that income has not gone up in proportion with the cost of living means more and more Americans are not adequately saving for long-term goals, such as retirement. Due to this, either one of two things will occur: Americans will work longer into their supposed-retirement era OR Americans will retire with much discomfort than originally planned.
This is a very volatile time. With unemployment rates up, inflation up, and everything else mentioned above, I have a few suggestions. My advice is to pay off consumer debt (as much as possible), limit luxury expenses, seek increases in income by proactively being more of an asset in your work environment, and ultimately save more than you ever have. Saving is vital. There will be opportunities to buy assets and equity positions in the coming months/years, and you must be liquid to do so since credit is very tight. For example, real estate prices will be at a very low level. You will want to purchase solid real estate investments and will thank yourself ten years from now. This will include residential as well as commercial property. The same will follow for strong company shares in the stock market. You may want to buy index values in the S&P 500 and such, due to their overall low price levels compared to company valuation. However, only being liquid will allow you to do so. And if you do invest in the coming months/years, you will be very happy with the end result.
From a mortgage standpoint, you may want to get into an Interest Only ARM fixed for a good five to ten years. Paying off a mortgage may not be a priority in a time where savings are so low for most Americans. So pay interest only and save the rest or invest it in interest-earning accounts, to ward off inflation and increase liquidity. We may be entering a recession and controlling these two variables is important.
Also, as you know, money sitting around actually loses value over time due to inflation. More money printed by the Fed and distributed/injected into our economy makes the dollars you and I have in our wallets worth a bit less than they were before that injection. So in order to simply counteract inflation, you need to have your money appreciating at a level of about 4-7% annually simply to come out even.
Additionally, from a mortgage standpoint, you may want to refinance now rather than later. With the turmoil escalating more each day, qualifying for a mortgage will be tougher next week than it is today, tougher next year than it is this year, etc. Banks do not even have the liquidity to lend in some cases; this holds true in IndyMac’s case, where the Fed actually shut them down. We see remnants of that reality with the Government Sponsored Entities Fannie Mae and Freddie Mac as well; if you were to liquidate their assets versus their debts, they would be negative. So in short, Fannie and Freddie are in trouble—as are most lenders. If these big lenders are in trouble, where will you be able to get a loan from? That is the rationale you should use in evaluating your current finances and assessing the single largest debt/asset in your life (your home). Remember that Fannie and Freddie are entities formed for times of crises. If they are troubled during crises, then what happens?
Simply put: save, save, and save. Invest when the opportunity arises. And don’t sweat it too much; downturns in the economy are necessary.
This is simply my opinion and is made for your reading experience.
Cheers.
Cyrus Khadivi
Managing Partner
Freedom Lending Group, Inc.
www.freedomLG.com
Copyright 2008 Cyrus Khadivi. All rights reserved.
Here is an email I received about keeping you home if have an Upside Down Mortgage!
Read all the way through and see the update at the bottom!
Hi Brent,
I am searching for answers! I hope you can guide me.
Right now there are at least 6 foreclosed homes on our street of only 24 houses.
We can pay our mortgage payment, but in Sept. our payment is going up because our escrow account for taxes was reviewed and came up very negatively. WAMU is having us make up the balance starting in Sept. for 12 months.
I had started refinancing but my husband was laid off one day after I started.
So bottom line is we can still afford our current payment with my income. Our payment is going to more than double in Sept. My credit is not good. My husband's credit carries the mortgage and two small credit cards which are always paid on time, and his credit is good, but he is unemployed.
I've read your info about short selling, but we want to stay in the house. I am beginning to think that we are SOL.
We bought our house for $273,000 and the foreclosures are listed at $169,000 for a better comp than our house. They are not selling because we have very high taxes and a special assessment.
Any ideas?
Thanks,
Tina
Hi Tina!
Thanks for the email!
Your situation is a tough one and never easy to deal with!
SO DOWN TO BUSINESS!
Let me start by saying, it doesn’t matter how many foreclosures you have on your street or how upside down on your mortgage you are when it comes to finding a solution. Many times people assume because there are other REO properties on their street that they can’t do anything about their own situation.
I would gamble to say the opposite holds true, This should give you leverage if nothing else!
As you know, Banks/Lenders out there don’t WANT to foreclose on a home. Sometime it feels that way to people but mostly banks can’t seem to get out of their own way not having the right systems in place to handle the volume they are dealing with.
Knowing that, we should leverage that scenario as well and only use professional loss mitigation negotiators who have bank contacts because most call center people at banks/lenders can’t make decisions and often times just flat out don’t want to help! The professional loss mitigation negotiator has the right contact who has decision making authority and that in and of itself is priceless in this type of situation.
Often times people try and handle this situation by themselves and see minor results IF ANY! Know one thing, a “Freeze” isn’t the best form of Note Modification. This is typically the first thing offered by lenders but it isn’t the only thing that can be done in most cases.
IF YOUR ARE UPSIDE DOWN ON YOUR MORTGAGE AND WANT TO STAY IN YOUR HOME, you only have two ways to make that happen.
1. Short Refinance
2. Note Modification
Each has their own unique approach and can be handled simultaneously by a single Professional Loss Mitigation Negotiator.
So Tina, My long-winded answer sums up nicely as, Hire the Professional Loss Mitigation Negotiator.
I have attached the contract for this service if you want to look it over and please ask me LOTS of questions so I can help you get through this.
Please don’t ignore this problem or wait until it’s too late.
As always, I am here to help! Let’s get through this together.
Brent Lane
The Lane Group
Www.brentlane.wordpress.com
I sent this email out well over a week ago and have yet to hear back. I hope that something positive has happened or at the very least some action steps were taken. If you are in a similar situation please Ask for help and Don't go about doing this on your own.
My email: Brent@brentlane.net
Tell me your story and I will help the best way I know how.