Our Blog

In the previous blog, I suggested that the decisions you make today will impact your results, tomorrow. Well, we made a decision to close The Home Team Mortgage and have joined Freedom Financial Services. This change allows for:

1. The regulatory expertise needed in today’s mortgage environment
2. Product offerings that meet the circumstances of today’s borrower
3. The backing of a mortgage bank that is strong and determined to stay that way

I don’t expect you to know the changes that have taken place in today’s mortgage world. I’ll bet you don’t even care. All I will say is that the next time you apply for a home loan, the process and procedures will look a bit unfamiliar. For example, the Good Faith Estimate will be 3 pages, not just one. While saying a lot, it leaves out some information that most borrowers find critical:

1. How much is my monthly payment?
2. How much money do I need to bring to closing?
3. How much will I get at closing?

Now, do I have your attention?

Today’s mortgage professional must be just that, professional! The days of anything less are behind us. Do your shopping. Trust your next mortgage to people who care about doing the right thing and have the backing to make it happen!

In light of all the challenges in life that seem all too real these days, I thought it would be of interest to pass along a story. It may make you think a bit about your attitude in life but also thankful that you live in a country that allows for opportunity to make changes. If you’re a Christian, it may also remind you of the God given gifts that you possess and your obligation to the creator to use them to the best of your ability, all the time.

The story comes from Christian Godefroy with trailing comments by Craig Garber, both copywriters. It’s called the Carpenter’s Mistake and goes like this:

An elderly carpenter was ready to retire. He told his
employer-contractor of his plans to leave the house
building business and live a more leisurely life with his wife
enjoying his extended family. He would miss the paycheck,
but he needed to retire. They could get by.

The contractor was sorry to see his good worker go and asked
if he could build just one more house as a personal favor.
The carpenter said yes, but in time it was easy to see that
his heart was not in his work. He resorted to shoddy
workmanship and used inferior materials. It was an
unfortunate way to end his career.

When the carpenter finished his work and the builder came to
inspect the house, the contractor handed the front-door key
to the carpenter. "This is your house," he said, "My gift
to you."

What a shock! What a shame! If he had only known he was
building his own house, he would have done it all so
differently. Now he had to live in the home he had built
none too well.

And so it is with us. We build our lives in a distracted
way, re-acting rather than acting, willing to put up less
than the best. At important points we do not give the job
our best efforts.

Then with a shock we look at the situation we have created
and find that we are now living in the house we have built.

If we had realized, we would have done it differently.

Your life today is the result of your attitudes and choices
in the past. Your life tomorrow will be the result of your
attitudes and the choices you make today.

So choose wisely.

Change is a word we hear a lot about these days and without a doubt, it hasn’t escaped the mortgage experience. So, we’d like to share a couple of the changes so you have a clue what to expect the next time you are in need of a mortgage.

Probably, one of the hardest hitting changes has been what we call by acronym, HVCC or Home Valuation Code of Conduct. This change was brought about by New York’s Attorney General, Andrew Cuomo. He discovered appraisal fraud (inflated value) from a large lender (Washington Mutual) and sued Fannie Mae and Freddie Mac for accepting these loans without more stringent safeguards. To avoid the suit, Fannie and Freddie agreed to implement an across the board change!

The change in a nut shell requires the loan officer to not have any influence on the proposed value of a property by making any contact with the appraiser. In fact, all appraisals must be ordered through third party appraisal management companies and they must select the appraiser in some random order. A result of this process is that all appraisals must be paid in advance of the order and nobody will have an idea of the appraised value until the appraisal becomes available. Some of the criticism of this process:

>Borrower pays more for an appraisal with another layer of management

>Borrower risks the cost of the appraisal if the required value isn’t reached

>Borrower risks the cost of the appraisal since appraisal is lender specific and if lenders are changed, a new appraisal will likely be required

>Since values are somewhat subjective, will the “selected” appraiser know the area?

>Borrower receives the appraisal in advance of closing (a good thing) but must sign a receipt document and experience a waiting period prior to closing that could delay closing

As you can see, not what we’d call a good change but it has been in effect since May 1, 2009. We, being some in the real estate industry, are fighting this change with hopes that legislation will overturn this requirement.

The second change we will talk about impacts rate locks and is part of the new Truth in Lending Act requirement. Here’s the deal – you must have the most accurate view of the cost for the loan as possible. In order to accomplish this, you will be provided an initial Good Faith Estimate (GFE) of itemized costs and fees from the lender of your loan. (You should get a GFE from your loan officer, but the requirement is that it also comes from the lender – in case your loan officer “forgets.”) In order to be absolutely sure you have received this disclosure before proceeding with your loan, they have established a waiting period for mailing and review time. So, closing cannot occur until 7 business days after initial disclosures are sent to the borrower and if there are any changes to the terms of your loan that increases the APR more than 0.125%, new disclosures are required during the process. Yes, there is additional waiting periods for these disclosures as well. You can see that as things change during the loan process, so can your expected closing dates.

By the way, due to this change and the additional waiting periods for new disclosures, we are recommending minimum 45 day locks.

At this time, I won’t put you to sleep with any more details but please be advised that the mortgage process as you may have grown to know it has changed. And guess what, more changes are coming. If your loan officer doesn’t talk to you about the process of getting your loan done, please ask. I think it will help avoid frustration as you move forward.

IS THE $8000 STIMULUS GIFT MORE OF THE SAME?

We, the tax paying citizens of the USA, are giving an $8000 tax credit to first time home buyers this year. Sounds like a reasonable incentive. You know, it’s part of the stimulus package – we want to stimulate first time home buyers to buy and help our economy!

First, let me make it clear that $8000 is a great incentive for some who have their eyes wide open to the full responsibility of owning a home. But, what about the buyers who are just focused on taking advantage of $8000? Are they thinking beyond the excitement of owning their first home?  Have they thought far enough ahead to be prepared for the full responsibility of home ownership?

We just experienced years of aggressive mortgage programs. These programs literally opened the home buying doors for people with poor credit, no money for a down payment and creative payment plans that were sure to increase over time. We know the result. And, while the programs are long gone, have we learned our lesson? Are we once again enticing some people into homes for the wrong reason?

Think about it. Is throwing $8000 at this problem really the solution? Who will be to blame this time when people default because $8000 didn’t go as far as they thought it would? Certainly not the legislators who have encouraged the relaxed home buying guidelines of the past and are enticing some of the first time buyers of today with $8000!  I’m guessing the people on the front line will, once again, carry the brunt of blame.

Tell us what you think? Will the $8000 incentive entice some new home buyers into a financial trap? 

There certainly are many topics we will address over the upcoming summer months. Before we do I would like to take a quick opportunity to address the most important aspect of this business…client relationships.

First, we are very grateful for our current and past customers. As you have heard us say before, referrals are the “lifeblood” of our business, and without a close bond between ourselves and our customers, this would not be possible. So, to all of you who have done loans with us in the past or who may currently have a loan in process, THANK YOU!

Second, let me take this opportunity to extend an invitation to build new relationships with those we have not had the privilege of working with. Obviously, right now is a great time for a refinance or a purchase and we would be happy to get right to work on this for you. If you have a scenario we could look at or maybe just find out if you could qualify for a loan, please let us know. Remember our pre-approvals are absolutely free.

Finally, we would like to inform you of what is currently going on here at The Home Team Mortgage. We are having record months of production because of your faith in our business. Like I stated before, rates are great and many of you have taken advantage of them, but that’s not all. Customer service continues to be the backbone of our company. You can be assured that we will continue this great service as well as finding ways to make it even better. One of our realtors gave us a great compliment when she said, “you actually call people back.” I know that may sound like such a simple task but in this business it is huge and one way to show that we really care. Home loans are not just about numbers and terms, they are about building trust and long term relationships for future success.

I would also like to invite anyone to email or respond to any of our blogs if you have a topic regarding home loans that needs some discussion. We would be happy to answer a question or do some research and get back to you. Who knows, we may even use it as the feature for future blogs.

Hey you first time homebuyers out there. If you have been on the fence, trying to decide if now is the time to buy – it just may be and here’s why. The American Recovery and Reinvestment Act of 2009 or the commonly called ‘STIMULUS PLAN” is intended to gift, yes, give you without repayment, a tax credit of 10% of your purchase amount up to $8000 maximum!

Here are a few “bites” to wet your appetite and a web site for even more information. And, yes, of course we will help answer any additional questions you may have.

You (and your spouse) must be first time homebuyers. Anyone who hasn’t held home ownership for 3 years prior to closing your new home is a first time homebuyer.

The purchase must close between Jan 1, 2009 through Dec 31, 2009 to be eligible

This must be a primary residence – sorry, no investment or second homes

Income limits apply - $75,000 gross for singles, $150,000 for married couples

You claim this credit as part of the tax return process, either 2008 or 2009 returns

The tax credit is a gift – you don’t have to pay it back (unlike the 2008, $7500 credit)

Want more details? Check out - http://www.federalhousingtaxcredit.com/2009/home2.html 

Rates are great! It must be time to refinance, again. Right?  The answer to that question may very well be yes, so here are some pointers to help with your decision.

What’s the magic sign to know when the rate is right for you? Is it a rule of thumb, 1% or 1.375% below your current rate? Is it when the rate is at 4.5%? Or, can it be something else?

Let’s try to make this easy. Just because the rate is great, yes, even lower than it has ever been in your lifetime doesn’t mean a refinance is right for you. Stay with me as we take a look at what really makes sense when you get the itch to refinance.

First, look at the big picture. That means take an inventory of the key factors that go into your decision to refinance. Things like your home’s current value, how long you plan to live there, the payoff on your current debts against your house (1^st / 2^nd / 3^rd mortgages and/or any lines of credit tied to your home equity), your credit score, your current interest rate(s) and resulting mortgage payment(s) and finally, what will it cost to complete the refinance. Sometimes other things sneak in, unexpected, like, has anyone filed a judgment against you or placed a lien against you that is tied to your house? If so, it will have to be paid off as part of the refinance.

Looking at these factors, here are some things to consider. Your home’s current value is a strong consideration. Has it increased in value over the years, remained flat or even lost some of its value. Your mortgage professional can help you find out. Realtors and appraisers are also great resources for determining your home’s value. The key thing here is that you want your homes value to exceed the amount of your new mortgage by as much as possible. Mortgage insurance is required on most loans where your loan amount is greater than 80% of the appraised value. You may not have mortgage insurance now, but under new circumstances, you may need it with a refinance, thus, quite possibly increasing your payment.

A very key factor to making the refinance decision is how long you plan to live in the house and the cost to refinance. A basic formula to help here is: take your closing costs and divide them by the monthly payment savings (principle and interest) to see how many months it will take for your new, lower payment to recoup the cost of doing the loan. Then, how long will you be living there? And, before you’re done with this analysis, consider if you had a 30 year note and refinanced it with another 30 year note, how much longer will you be paying for your home in total? However, this is not a deal breaker if your goal is to just plain save money monthly and keep your house or if you plan additional principle payments to shorten the term of your new mortgage.

How’s your credit right now? If your scores are strong, say over 740, you’re in good shape. Lesser scores can have an impact on your new interest rate and what you see published may not be a reality for you.

There’s a lot to consider when you plan to refinance your mortgage. It’s not rocket science, but most people want to know they are making the right decision for them. After all, you’re quite possibly talking about your largest purchase and most costly investment. Good decisions require education and we’re all about that!

There have been a couple of mortgage questions that we’ve been asked over and over recently. So, why not put our thoughts in this blog. Maybe it will help many of you who have wondered the same thing.

It goes without saying that we are experiencing, first hand, a unique time in our nation’s economy. With a finally admitted recession taking place, government bailouts and who knows what else, we are seeing a myriad of economic fix-it theories and just as many opinions on why they will or won’t work. So, having said that, here’s a common sense view on how all of this is impacting mortgage rates.

If you’ve read our web site “RATES” page, it will tell you that the primary indicator for 30 year fixed mortgage rates is the 10 year treasury yield. (see our “RATES” page for more details about this relationship) Mortgage rates have “traditionally” followed above the treasury yield at about a 1.5 point gap. If the treasury yield was 4.5, the mortgage rate was around 6.0%.

Now, over the past year, we’ve seen that gap grow to about 3 points. Just yesterday, the 10 year treasury yield was 2.63 and the 30 year mortgage rate was about 5.6%. So why the change?

The risk of mortgage backed securities has grown over the last year. The foreclosure rate and continued forecasts for more of the same is making it hard for investors to choose mortgages to place their investment dollar.

But, what about the government now guaranteeing Fannie Mae and Freddie Mac, since they took over that operation? Doesn’t that make it safer to invest in mortgages? Here’s the simple answer. The government bailout commitments and pending plans for much more of the same is making all of us wonder if they can really cover all the bases. The confidence level that our treasury can hold up under all of this is just, plain uncertain.

OK – well how about the 4.5% interest rate that’s coming? When will we see it?

You just gotta love the times we live in. Our communications and media are so fast, you can hardly toss around ideas without it being translated into hard facts.

Our treasury is looking for ways to stimulate the housing market. They have mentioned that a Fannie Mae and Freddie Mac based rate at 1% below market may do just that. Their suggestion was intended for home purchases only. But, there is feedback that the existing homeowners who would love a 4.5% refinance will feel like second citizens. So, the ideas keep coming. If and when it becomes a fact and the programs are ready, believe me, you will know.

Finally, let us take this time to wish all of our faithful customers, prospects and friends a Merry Christmas. We appreciate each of you and pray the blessings of this season will fill you with joy and peace.

I’m sure you all have seen and heard the commercials for the new website called wimgo - a place to find events and activities in Oklahoma. So, finally, after seeing the commercial a thousand times and having the “WIIIIMGO” jingle playing over and over again in my head, I went and checked it out. While exploring wimgo, I decided to give a TOP 10 LIST of things I enjoy in Oklahoma. Maybe this will start up your recreation engines and you’ll enjoy our fall weather at one of your favorite Oklahoma spots. In case this top ten list doesn’t have what you are looking for, here’s the link for wimgo where you can search for more activities or locations. Wimgo

10. Take a weekend getaway at one of Oklahoma’s most beautiful camping grounds - Beavers Bend @ Broken Bow lake. WOW, what a place! Fishing, camping, golf, hiking, and much more at this beautiful landscape. Beavers Bend

9. Something closer to Oklahoma City with a lake setting is the new Route 66 Park at Lake Overholser. It’s a great place for families with children who like to eat ice cream and play on the huge playground. Located on the west side of the lake, it also has fishing available. Enjoy! Lake Overholser

8. Pops in Arcadia, pops66. For you soda lovers (or anyone else) you have to go check this place out. Take the family and enjoy the fizz!

7. Leonardo’s in Enid, Leonardo's. A great place featuring discovery and adventure for kids. Stay for a few hours or make a day out of it since the kids probably won’t want to leave.

6. Eischen’s Bar in Ocarche, Best Chicken in America. Great place for a fun date or take the entire family for great chicken at the oldest bar in Oklahoma. It’s unique.

5. The Elephant Bar in Oklahoma City is Matt’s personal favorite restaurant. The food and atmosphere are great. Bring your appetite or ask for a box because the portions are generous. Elephant Bar Directions

4. Martin Park Nature Center by Mercy Hospital in Oklahoma City. It’s time to go back if it’s been awhile since you were there. Plenty of nature trails and wild life. They have Sunday nature hikes, a museum, library, and gift shop. Martin Park Nature Center

3. For Tim, Cheeseburger in Paradise is the spot. The blackened fish sandwich with a side of broccoli is unbelievable. You don’t have to like fish or broccoli to like this combination. Try the sweet potato fries too! Fun family atmosphere. CIP

2. Holiday lighting displays. There are so many, but the list in the link details some of the best in Oklahoma. During this upcoming holiday season this is a great way to get out and enjoy the view. Holiday Lights

1. Play GOLF!! Ok, I am a bit biased on this one because I’m sure some of you could care less about golf, but hey, I’m a mortgage guy. J If you like to play there are great golf courses to choose from here in Oklahoma so grab those clubs and have some fun!!

There you have it, a list of things I enjoy in Oklahoma. I’m sure you have some of your own and we would like to hear about them and share them with others. If you have a favorite place or activity in Oklahoma please reply to this blog with your idea for others to enjoy.

There was a time when mortgage programs were plentiful and the guidelines were, well, just plain easy for most borrowers. If you had challenges in your credit, income, assets or even the property, there was likely a lender, somewhere, that would get you approved for a home loan.

But, unless you’ve had your head in the sand, times have changed. The outcome of those relaxed standards has crippled the lending world. It’s almost unbelievable how so many lenders have gone out of business and the uncertainty of the ones that continue to exist. The recent Fannie Mae and Freddie Mac news just makes us wonder even more, “who will be left to provide home financing and with all the program changes, who will qualify?”

So, as a help for those of you who may be looking to purchase or refinance a home, here’s a general summary of what it takes to get a mortgage approved these days. As you look at this, note that it is simply common sense and probably the same things you would consider if you were making a lending decision for an unknown borrower.

1. INCOME – Is the borrower’s income adequate enough to cover the mortgage payment, including property taxes, hazard insurance and mortgage insurance if included in the loan? Other debt payments are included in this analysis as well, such as auto loans, credit cards, signature loans, and the like.
2. CREDIT – What is the borrower’s track record for taking responsibility of past and current debts? Have payments been made on time? What is the credit score?
3. ASSETS – Does the borrower have documented funds available that they can use as a down payment for their purchase? Strong liquid assets as reserves can also show an ability to make payments in case of disruptions to a borrower’s income or other unforeseen circumstances.
4. SUBJECT PROPERTY – How likely will the property that is being considered for the loan maintain its value?

Pretty logical points, aren’t they? If you are sound in all of these areas and have the documentation to prove your case, you are likely to succeed in your quest to finance your mortgage. I’m not saying a weakness will exclude you from loan approval, but it may make the process a bit more challenging. A talk with your mortgage professional should help clarify any factors that you may have in question or that may challenge the process.

As an added bonus, here are a few more tips that you must keep in mind, especially if you’re in the process of acquiring a mortgage. First, don’t do anything that will change what you indicated on your mortgage application! Don’t change jobs, don’t apply for any more credit, don’t transfer credit card balances, and don’t buy large ticket items, like new furniture, that will significantly increase your current credit. But do keep making your payments on time – even your current mortgage payment. Don’t ever let anyone tell you to stop your mortgage payment for any reason, until your new mortgage is closed and funded!

It all adds up to taking responsibility and making sound financial decisions. If you’re not sure of some things, just ask. We enjoy the opportunity to help.