Spring Is Here?

Well the calander says it is, but the Northeast is still singing “baby it’s cold outside”.  So, if your selling right now you may feel pretty good and may even have a little warm and fuzzy feeling.  So sell baby sell, but remember, you may get the bite on the buy side.  Now I may have lost some readers, but for those of you selling today you know what I’m talking about… inventory is way way down.  Which means if your having an open house it probably looks like your giving something away based on the amount of people that showed up at the first showing.  Yes, it is exciting and you probably want to consider all offers but as I said earlier, you may feel the same hit on the buy side.

There is a way to win on both sides, but only few can do it.  If you would like to learn how please reach out to me for a personal consultation.

I say this with a heavy heart but with great optimism moving forward.  Dodd/Frank has won the war, they have successfully brought about the demise of the mortgage broker. Consumers beware! Your choices for mortgage financing have been greatly diminished.  If you thought 2013 was a tough year to qualify for a mortgage just wait and see what comes along.  I have been a broker for almost 15 years, I left the “big Bank” environment and loved every minute of helping my customers gain acsees to lenders all over the country. Something their local S&L or credit union could never do.  I procured financing from $30,000 to over 3 million, good luck with that now Mr.Consumer, at least not without doing your own due diligence and proper Q and A questioner which is what the Broker business was all about, by the way, at no charge.  I took great pride in knowing that 90% of the time I could place any customer into an affordable mortgage (that’s right I said affordable) don’t mistake my professional mortgage planning advise for the scam artists at CountryWide, Beneficial Home Finance (HSBC Bank), Washington Mutual Bank, I can go on and on.  The mortgage Broker had nothing to do and let me repeat nothing to do with the mortgage meltdown.

So why am I still optomisitic you might be wondering? Because I did loose my Branch, I lost my identity, I lost my entrapenuearial  spirit but I didn’t loose my drive, my fight my pledge to every customer that has supported me for 28 plus years.  I will always do what is best for my customer, I will always be a leader, I will always guide you without concerns of personal compensation, I will be your personal mortgage planner for the rest of your (or mine) life.

So where can you find me in November?  I will be joining Genesee Regional Bank (GRB), the Bank is a small commercial lender under great management. I say great because I know the President personally I know their CEO/CFO and the rest of the team that have made the Bank successful. That is why I have decided to join, I am willing to put the time in (again) if we can make a difference. 

Stay tuned.

John Milano signing off. 

Don’t Give Up On Fannie Mae Yet

Fannie Mae (FNM : 0.2461, -0.0455) and Freddie Mac (FRE : 0.34, -0.02) are two of the most hated agencies on Wall Street. These quasi government agencies are blamed for much of the problems related to the housing crisis. They are criticized for backing risky loans and encouraging an environment of risk taking by guaranteeing liar loans. Many politicians and citizens have even called for the abolishment of both agencies. Although Freddie Mac and Fannie Maemay be terrible investments, they are a necessary cog in our economy.

 

Fannie Mae and Freddie Mac play a crucial role in our economy. They provide guarantees for most of the housing loans that are given to individuals for real estate purchases.

Here are a few reasons why these agencies are necessary evils.

Without these two agencies, homeowners would find it nearly impossible to get a loan. Banks would only lend money to individuals with excellent credit. This doesn’t mean that people with bad credit should get home loans but individuals with good credit should have access to funding. Banks would not take the risk of lending to individuals with good credit without federal backing.

There would be no more long-term mortgages. Lenders would not grant 20 or 30 year mortgages to borrowers. Loans would be much shorter in term length. Banks look to make a quick profit and would not tie up their funds for such a long period of time. For example, a 10 to 15 year loan would be favorable financially to borrowers over the long run but would constrict the number of borrowers looking to borrow.

These two agencies have actually helped bail out the banks indirectly. The billions that have been pumped into Fannie and Freddie have been paid out to cover losses on mortgages granted to national and international banks. The banks would have been sunk if Fannie and Freddie had gone under. The $150 billion dollars in taxpayer bailouts will never be repaid but has helped to stabilize the United States economy. The entire mortgage market would dry out without the government aid.  This is more serious than you think, yes they need to be scrutinized more and after their colossal failure to protect the real estate markets across the country they are looked at under a microscope.  Most of the incompetence should have been shown the door by now.  Without them do you have 20% down to buy your next home? How about first time homebuyers? Real estate starts the cycle of correction, instead of banishing these important entities start demanding better management.  Let your voice be heard.  When run correctly we can all reap the benefits of a healthy housing market.

When To Consider An Adjustable Rate Mortgage

If you have heard the word ARM in the mortgage business I assure it doesn’t get followed with “and a leg” although many people feel that’s what it takes to get approved these days.  What it does stand for is “adjustable rate mortgage” and simply put, it is an interest rate that can adjust based on the lock in term.  In other words you can look at 1 year, 3 year, 5 year, 7 year and even 10 year terms.  Now this does not mean that your mortgage has to be paid off at the end of the term.  These mortgages are still usually amortized over a 30 year period still giving you a manageable mortgage payment, assuming you were properly qualified by your mortgage broker.

Most if not all of these ARM’s have annual and lifetime caps meaning they adjust based on margins and the index they are tied too.  Without getting to complicated let me just say that for the most part these loans are excellent choices for the individual that is pretty sure they will stay in their home for at least the term.  Statistics have shown that a mortgage usually stays in place anywhere from 5 to 7 years, making these ARM’s worth considering.  Today’s adjustable rate mortgages are very attractive and may even be a full percentage point lower than the 30 year fixed interest rate.  Depending on the size of the mortgage, this could offer significant savings over the term compared to its 30 year counterpart. Like with any mortgage, you should get professional advice before you decide which loan best fits your financial needs. If you would like a confidential analysis of your income to debt ratios, or would like to discuss mortgage options please feel free to send me an email at john@centerpointemortgage.com.

Or you can visit us at www.centerpointemortgage.com/getpreapproved where we offer free pre-approval services.

Sincerely

John Milano
Mortgage Planner
CenterPointe Mortgage

Mortgage Broker -vs- Big Bank

If I had a dollar every time I was asked “why should I use a mortgage broker instead of my bank” I probably wouldn’t be writing this blog.  Now, you may think I am biased since I run a mortgage broker business but let me say “aha”  to you because in my 25 year career I have seen all sides of the mortgage business.  Starting as a Broker, moving to a Mortgage Bank following a move to what would be considered an S&L (your typical neighborhood savings and loan Bank) then to a commercial lender,back to a Mortgage Bank and eventually opening up a Mortgage Brokerage branch. So when the question comes in I am well prepared to answer it.  And the answer is (drum roll here)…… Broker, Broker, Broker.  Why? Because you will get better advice, pricing,and mortgage choices.  Now with that said, you should still call around and get recommendations from friends or family members (don’t always count on your realtor especially if their company owns or is affiliated with a mortgage company).  The industry calls that steering, I call it illegal.  Community Lenders and/or Banks have their place in the mortgage business especially when it comes to CRA (community reinvestment act) lending which are special programs that usually Brokers can not offer.  But if you are not eligible for those programs (and few are), I believe you will always save money using a Mortgage Broker and have better mortgage product options and mortgage planning advice.

If you would like to have a more personal discussion on this topic please feel free to email me at john@centerpointemortgage.com.

Selling Your Home? 5 Tips You Need To Know

Home Sellers: Read This Before Listing Your Home!

In todays real estate market it seems as though all sellers are looking to save a buck by selling their home on their own. That may be fine but you should know what you are up against.  Below is a list of potential problems that could arise when trying to sell your home on your own.

1. Using A For Sale By Owner Company

There are some companies for a flat fee as low as $500.00 will offer you a “how to listing packet”.  Usually you are required to advertise the property on your own, prepare your own “spread sheet” and hold your own open houses. The problem often is that the homeowner has no idea how to properly advertise their home or manage an open house. Knowing what the interest rate environment is like is very important in regards to showing potential buyers the total cost of owning your home. 

2. Paying A Realtor A Flat Fee To List The Property In The MLS

This is becoming more popular with Realtors who are looking to make a quick buck.  The home seller usually completes a bona fide listing contract for a flat fee, again this can be as low as $500.00.  In return the agent inputs their information into the multiple listing service which is the site that professional agents use to list and sell homes.  This is a proprietary site that is only available to licensed Real Estate agents.  What the homeowner doesn’t realize is that professional agents are not going to bother to show a home that has no selling commission.  So in other words your home is overlooked. Even if you are willing to pay a small commission it still doesn’t relieve you of supplying accurate property condition disclosures, reviewing purchase contracts that could be very complex, properly showing your home and disclosing all potential defects.

3. Under Selling Your Home

Thats right, under selling.  This is a tough market and many times a homeseller wears their heart on their sleeve when it comes to selling their own home.  I have seen instances in divorce cases, estate sales and relocation where the homeowner is so filled with emotion or needs to get out fast that they take the first offer that comes in. In the case of a death, the remaining spouse just wants out of the home and all the memories.  A professional Realtor can separate the emotion from the transaction and many times get the homeowner more money.

4. Over Pricing Your Home

Otherwise known as the “Taj Mahal” syndrome. Every homeowner thinks their house is worth more than it actually is.  I remember hearing a story where the homeowner was asking $5,000 more because they used Martha Stewart paint instead of Glidden or Dutch Boy.  In their mind it was high quality custom paint. FYI…buyers don’t care.  Over pricing a home will lead to extended time on the market which leads to the abyss.  When homes are on the market to long buyers immediately think something must be wrong.  NOT KNOWING THE PROPER VALUE OF A HOME IS THE NUMBER ONE MISTAKE THAT “FOR SALE BY OWNERS” MAKE.

5. How Do You Separate The Tire Kickers From Potential Buyers?

Lets face it the term nosey neighbors came from somewhere. Are you going to open your house to everyone? Including potential thieves? That’s right it has been known to happpen.  While you are distracted with a neighbor your other guest is upstairs ripping off your jewelery. Even if you do end up with a potential buyer do you know how to confirm that they are pre-approved?  Just when you think the transaction went smoother than you could have ever thought, 60 days later your potential buyer just got declined from the lender. Can you say “start all over again”?

If you still think you have the patience and determination to sell your home on your own at least KNOW YOUR VALUE.  For a limited time we will offer you a FREE property analysis.  This is the same tool a Professional Real Estate Agent would use to determine value.  It is not just by asking your neighbor what they sold or bought their house for.  This report takes into consideration your specific demographics, home sales in your surrounding market and most important it separates short sales, foreclosures, relo sales and distress sales from your homes potential selling price.

Click this link www.centerpointemortgage.com/sellingyourhome and complete the form at the bottom of the page and one of our specialists will contact you for your free home valuation report.

First Time Buyers Use FHA Financing To Buy Multi-Units!

The timing is still right to buy a home, rates are down and it’s a buyers market. Could it get any better? You bet! How about buying your first home that is a 2, 3 or 4 family? Not only will you have an income stream coming in, you will also have a great start to building your real estate portfolio. What many people don’t realize is that they can use the FHA government insured loan to buy up to 4 units as long as they owner occupy one of them. In almost all cases the down payment is only 3.5% and the seller can even pay the closing costs up to 6%. Why such a secret? Probably because what doesn’t get talked about usually gets forgotten.

Let me give you some very interesting and wealth building examples. Lets assume you find a 3-family home selling for $175,000 with yearly real estate taxes of $10,000 and the property allows for a 3.5% down payment (cash flow has to equal total PITI 1 to 1). Your loan amount would be approximately $170,500 with mortgage insurance included. At a 5% fixed 30 year rate, the mortgage payment would be approximately $915.00. Adding in real estate taxes, mortgage insurance and property insurance, your total payment would be about $1,976.00. Assuming rents are in the neighborhood of $900.00 x 2, you could be grossing $1,800.00 in rental income, leaving you a whopping $176.00 that is left to pay on your mortgage payment. Starting to get the picture? Even if you have a vacancy the balance is about $1076.00. Probably not much more than what you would pay in a nice rental.

Not excited just yet? How about using gift funds and seller concessions in order to buy the same house with close to nothing out-of-pocket! And now to save the best for last, maybe down the road you are ready to buy your next owner occupied property and you completely rent this one out. Not considering any increase in rents, which you know is not likely, you could gross $2,700.00 and have a net income of $724.00 per month. This is not counting the deductions you will get from Uncle Sam. So, what are you waiting for? Get pre-approved today and enjoy all the wealth building strategies of real estate.

Are You Still Renting?

To many of my loyal blog readers i’m sure this is going to sound repetitive, but I really can’t say it enough…GET OUT THERE AND BUY!  As of this writing we are seeing APR’s (annual percentage rate) in the very low 4 percent range.  This is truly amazing, it is like legally stealing money from the Banks.  I am pushing so hard on this because I still remember when I was buying my first home, rates were 11.5%!!  There is a very interesting change of events happening and I don’t want you to be a victim.  And that is, Landlords are back in the drivers seat again.  So that means higher rents. Why? Because many mortgage programs are now extinct and you no longer can just fog a mirror to get approved.  You actually have to have some money and good credit.  But with that said, you can still by a home with as little as 3.5% down and the seller can still help pay closing cost.

Think of it this way, to buy a $120,000 home with taxes of $3,500 annually, your total mortgage payment all in would be about $971.00.  That same amount would probably get you a very small apartment with strict rules on how you can “make it your own”.  And remember, no tax write off’s no pride of ownership and no equity build up.  Do you see what I am getting at?  Once these rates start ticking up again you will loose purchase power and possibly the opportunity to get into a starter home that a few years back may have been considered a move up home.  Don’t delay anymore get pre-approved or at least start investigating what you need to do to get the ball rolling.  And of course, I am here for any questions you may have.

Good Luck

John Milano

Email:  john@centerpointemortgage.com

Be Careful What You Wish For

Well, well, well, here I am deep into the Red Flag Rules, the Grahmm-Leach-Bliyley Act, RESPA, TIL, Section 32, Reg Z, Reg X, Reg C, so on, and so on, and so on.  So… how do I feel now? I asked for it, I got it.  Those that know me personally, know that I have been inviting licensing into my industry for years (actually decades, but who’s counting?). Well, I got my wish, cause here it is and now I must pass a test that I have not had to do since leaving college 20+ years ago.  Cramming now, doesn’t seem to have the same fun I remember from my college days, you know, dorm rooms, funnels, buddy’s etc… I have been finding myself hitting the books after work every night for the last 3 weeks, and I must say after 8+ hours of work, it hurts.  But again, I asked for it so I better accept it, and I do.  Not just for me but for you. Yes you, the customer, the Realtor and every other potential client I may have.  Call me old school, but I truly want to offer the best financing solutions available.  I really do believe that this instrument known as a “mortgage” can help us reach our financial goals.  It is not and let me repeat NOT a commodity, if structured professionally by a licensed Mortgage Loan Originator, one who has put the time into studying, to be better, to know more, to offer more, than you may think twice about asking your Banker “whats your 30 year rate” because there is so much more to wealth creation through your mortgage than just shopping rate. 

Ok, well I must go back to the books, I have a Federal test coming up shortly, please wish me well at john@centerpointemortgage.com.

2010- The Year Of Change

Well here we are, another year gone by and if you are in the Real Estate business as either a Realtor or mortgage professional you probably didn’t let the door hit you in the tush.

So where does that leave us?  The first word that comes to mind is “patience”. For the first time in decades, the mortgage industry is going through some significant changes, some good and some…well lets just say that is to be determined.  But good or bad, as a Realtor and Mortgage Planner you must practice patience.  We are all learning the do’s and don’ts with the HVCC laws and I can say they have mostly been don’ts.  Now even though HUD has suspended the HVCC requirements on FHA appraisal’s it is earmarked to start on February 15th, so it appears for now it is here to stay.

As of this writing, we all have to contend with a new Good Faith Estimate and I have yet to see how this will make the industry any clearer for the consumer.  By the way these changes are not just going to affect the mortgage broker, they will affect the mortgage Banker, Realtor and consumer.  Let me give you one example of how the process could be impacted very negatively.  The new GFE now requires the Lender to be held to very strict closing costs figures with very slim tolerances on some items.  The problem is that if there is a delay due to documentation, appraisal, legal work etc..that may lead to a rate expiration. That process will no longer be a simple phone call into the pricing department to adjust.  It will now require something similar to a change order that may trigger a “rescission period” before the new clear to close can be issued. It will have to be determined if the expiration was due to an acceptable condition before a rate can be changed or extension fee can be granted. In the past this was usually handled very quickly and adjustments could be made at the closing table. My suggestion would be to stick tight to 30 day commitment time frames and 60 day closing time frames on your purchase contracts.  It is always better to under promise and over deliver.  At least lets see how the new guidelines impact closing times before we shorten our dates. 

Lets also keep in mind that these are industry changes, the consumer will have no idea that the process and documentation has recently gone through an overhaul, and they probably won’t care much since they are focused on buying their new home.  I am planning on taking a “business as usual” approach but will stay very close to the behind the scenes details that our industry is going to experience.  Hopefully excellent communication with Lenders, compliance officers, Fannie, Freddie and HUD will smooth out the bumps.

My suggestion to all Realtors would be to contact your loan officer and discuss the new changes, see how you both can handle questions that may come up and make sure you both are under promising and over delivering.

Good luck in 2010, I believe it will be a great one!