Refinance and Modification - What's the Difference?

October 19th, 2010

We all are hearing about home loan modifications and refinancing as opportunities for those who are struggling financially to stay in their homes. So, what's the difference between the two? Here are the basics, but before you decide, talk to a trusted mortgage broker so you know you're making the right decision.

Refinancing basically means that you pay off your current mortgage with a new mortgage that has better rates, payments and terms. You will have title, escrow and appraiser fees as well as taxes to pay with a refinance. Normally you are required to have equity in your home, a good credit score and proof of income.

Home Loan Modification is the process of changing the terms of a mortgage to a more affordable monthly payment, and a good credit score is not required. Often a lender will choose to modify the loan instead of foreclosing. With a modification, you have to show proof that your current loan creates financial difficulty. For those who have lost their job or have any other financial hardship, modification may be a good solution.

Which option is best? It depends on your situation. Understanding the pros and cons of each will help you decide. Just remember, there are a variety of options to help you stay out of foreclosure.

Why Trust and Reputation Matter

October 12th, 2010

Everyone is aware of all the negativity that's in the news regarding the mortgage industry. Just a few examples:

Possible FHA Fine For First TN
Ponzi Scheme Alleged with Bankrupt Mortgage Funds
Mortgage-Related Casualties Continue

Because of this, now - more than ever - it is important to work with someone you trust when you need a mortgage broker. Grandview Lending, and myself personally, have worked diligently and professionally to earn your trust and confidence. Not in the practice of tooting my own horn, I believe it is important to let you know how our customers feel. Some emails and feedback we've received:

"If more people who claim to be mortgage experts were like Mike and his team, there would be significantly fewer frustrations in this process."
"I will be happy to direct potential future customers to your company."
"It was wonderful working with such a professional, knowledgeable, and virtuous person. Of course we will tell everyone about your great service."
"I can't imagine using another lender - ever!"

I could go on, but you can read more on the Grandview Lending website. The point is, when you're ready for your first or next mortgage, be sure to work with someone who has earned that honor.

Is Your Credit Report Information Accurate?

October 5th, 2010

Are you considering buying a new house? Do you know if the information on your credit report is accurate?

Knowing what's in your report - and correcting/removing any inaccurate information - will benefit you when you apply for your loan. Your credit score weighs heavily with lending institutions when they determine if or how much you will be eligible to borrow. It's not uncommon for one or all of the three - Experian, Equifax and TransUnion - to have items that need to be removed or corrected.

In addition to cleaning up your credit report prior to applying for a loan, you'll also want to continue to monitor your report. This will enable you to immediately catch and fix new, inaccurate information, as well as be aware of any possible fraud.

To learn how to contact the credit bureaus, visit the Credit Basics section of our website.

Is now the right time to refinance?

September 28th, 2010

The economy has caused interest rates to be extremely low. There are so many opportunities to buy "more" of a house than you could previously afford. Or buy the house you want for a lot less. Another opportunity is to build that dream home, as builders are also offering great opportunities.

And then, of course, there is always the option to stay where you are and refinance for a lower payment. Or, refinance for a shorter loan period, possibly cutting your 30-year mortgage down to 20 years or even 15 years. Or, after reviewing everything, you might find it is best to stay where you are and do nothing with your mortgage.

There are numerous options, and each circumstance is different for everyone. So how do you know what to do? A good place to start is to consider your particular needs and wants; then you'll have some numbers to discuss with a professional mortgage broker. We have mortgage calculators that can provide answers to many of your questions. We invite you to plug in some numbers, consider what you'd like to do, and then you'll have a better idea of the best options to consider.

Grandview lending is here to help you sort through your options and guide you to the best answer for your situation.

Peace of Mind in Your New Home

September 21st, 2010

It's a great feeling when moving into a new home. Whether it's newly built, or new to you, owning another - or your first - home is exciting! We at Grandview Lending completely enjoy sharing these times with you and are pleased with the great feedback we receive about the smooth and professional process we provide.

When moving into a new house, often new furniture, appliances and decorative items are purchased. We'd like to encourage you create an inventory of your belongings.

Why? You know you have proper insurance coverage on the house itself, as the value is determined. But what about the contents – the items that might be stolen or destroyed by fire or natural disaster? Do you have high-end clothing, a lot of jewelry and/or collectibles? Are your furniture pieces high-dollar, name brand items? If so, you might not have enough insurance because the personal property coverage is based on a percentage of the house value. So, how do you know? A list of your belonings will supply that answer.

You’re probably thinking, “But I have insurance, so why do I need to have this information?” If you have to file an insurance claim, even though you have insurance, you will be required to list each item in your home, when you purchased it and what it cost. That’s a daunting task! Try it … list everything in your garage without looking. Hand tools, power tools, lawn and garden equipment, toys, sports equipment, possibly even a compressor, power washer, ladders - the list goes on. Do you know the manufacturer and model numbers of the tools and lawn equipment? It’s overwhelming thinking of doing that for the entire house; can you image pulling this information together when under the stress and emotion caused by the situation that created the need to file a claim?

A record of all that you own (photographs and written report), prepared now, will help you remember and prove value. If you don’t want to create your own inventory, Hartman Inventory will complete that task for you. They will also help you identify items that should be appraised or covered on a rider. All of this will ensure you’re properly insured, and will be able to recover if you have a disaster.

The right mortgage, the proper insurance coverage and a thorough inventory. Ahhh…now you can sit back, feet up, and enjoy peace of mind.

Will That Be Debit or Credit?

September 14th, 2010

The current economy has encouraged entrepreneur Jack Loop from New Canaan, Connecticut, to re-introduce his innovative "HomeCard" idea.

The card was introduced in 1995 without much success, and he has made several attempts since then. Unfortunately, each has been unsuccessful. Loop is hoping that the result will be different this time.

The idea is for the debit or credit HomeCard (either a Visa or MasterCard branded card) to be used by prospective home buyers. Consumers would receive up to 25% cash back on purchases that can be deposited into an interest-bearing savings account and used toward expenses related to a home purchase.

But Loop is having a hard time finding a bank to work with him on this concept. He stated, "Consumers need more help than ever getting on the path toward buying a home. The key for us is finding the right bank to partner with us to bring this to market."

It's an interesting concept and we'll keep you informed if Mr. Loop has success with finding a bank partner. And, of course, whenever you're ready to make a new home purchase, Grandview Lending will be here to help you with your mortgage needs.

When Will Mortgage Fraud Go Away?

September 8th, 2010

The short answer to that question is, not any time soon. According to the Mortgage News, the FBI has been working in states that recently passed residential mortgage fraud acts to stay abreast of the latest fraud tactics. They have found that those committing fraudulent activities are taking advantage of others and have clever ways to hide their intent. Some of the mortgage fraud happening today:

Flipping vs. Serial Flipping: A fraudulent flip is when it increases the value by using an inflated appraised value. This example from Mortgage News: "if a property was purchased for $175,000 and soon thereafter was sold for $500,000, most professionals would notice. However, serial flipping is trickier. Say a house sold for $175,000, soon after sold for $250,000, then $325,000, then $400,000 and then $500,000. Fewer professionals would even raise an eyebrow. This scheme takes more time, but the end result is the same: fraud."

Chunking: This is similar to flipping, but involves multiple loans to the same person rather than multiple sales. Often this begins when attending "get rich quick" real esate seminars. Knowing a person is vulnerable, they are contacted by a third party who offers them an investment opportunity. This third party acts an agent and submits loan applications on the borrower's behalf (often without their knowledge). At closing, he then pockets the loan, leaving the borrower with the debt.

Fraudulent Qualification Documents: Incorrect or completely false statements of bank balances, employment, income and credit records provide false information regarding the borrower’s ability to qualify for a loan. These are becoming increasingly common due to sophisticated editing software.

Bogus Assignment Fees, Liens or Invoices: Misrepresentations, inflated prices, inflated appraisals and even shell companies fall under this category of fraud.

Reverse Mortgage Fraud: Those seeking ways to creating fraudulent acts find foreclosed, empty or distressed properties. Seniors are recruited to purchase the property without the exchange of money. After living there for 60 days, the seniors obtain a reverse mortgage using an inflated appraisal, usually based on repairs or remodeling that were not done. A lump sum disbursement of the equity is requested, and the fraudster takes the funds at closing. Unfortunately, this type of fraud is not often discovered until after the death of the borrower.

These are just some scenarios that the FBI is investigating. When you're ready to invest, purchase, refinance or obtain a reverse mortgage, it is in your best interest to work with someone you know and trust. As in most every situation, if it sounds too good to be true, it is too good to be true! Grandview Lending will be happy to assist you with all of your mortgage needs.

Are you one of the 1.3 million homeowners who received help from HAMP?

August 31st, 2010

We are hearing a lot about the low interest rates and what a great time it is to purchase a house or refinance your current mortgage. But what's happening with HAMP (Home Affordable Modification Program) and all the people who were - and still are - struggling to pay their mortgages?

According to SimplyModify.org, 1.3 million homeowners started the payment trials and nearly half (616,800) have dropped out or were cancelled since the start of the program in the Spring of 2009. Most of these removals were due to insufficient documentation, missed payments or their mortgage payments were already less than 31% of income. The HAMP initiative was created to reduce the mortgage payments to 31% of income, so this one statistic would immediately remove you from the program.

Some interesting statistics regarding the program are reported by SimplyModify.org. "HAMP servicers have approved 434,700 permanent modifications and 421,800 are still active as of July 31.

"In the June report, Treasury provided HAMP re-default data for the first time. But within a week the promising data had to be corrected. Unfortunately, this information is very bleak.

"The corrected June data showed the re-default rate (loans 90-days or more past due) on HAMP modifications completed in the third quarter of 2009 is 9.7% after six months, not 2.3% as originally reported. After nine months, the HAMP re-default rate is 14.9%."

Let's hope those who need help will continue to qualify and receive the assistance they need.

Interest Rates Down; Refinancing Up

August 24th, 2010

Refinancing activity increased more than 17% as of the week ending August 13. According to the Mortgage Bankers Association, that's the highest level in 15 months.

Lower interest rates are behind this renewed interest in refinancing as homeowners realize the opportunity to lower their payments. This, then, will reduce their monthly expenses. Many are also choosing fixed-rate loans and for a shorter term. For those of you who remember the 70s when interest rates were double digits, compare those times to now. A 15-year fixed-rate mortgage was at a record low of 3.9% last week and a 30-yer fixed-rate mortgage averaged 4.42%. Adjustable-rate mortgages were almost non-existent, with more than 95% of the refinances being fixed-rate

Unfortunately, for a variety of reasons, some of those who could benefit aren't taking advantage of the lower rates - and the resulting lower house payments. Two key reasons for this are tougher credit score requirements and tighter lending conditions.

So, is now is the right time for you to consider refinancing? A major question is if it is worth it to pay the fees that can range from 3% - 6% of your outstanding principal. This includes homeowners insurance, along with application, appraisal, inspection, closing and other fees. Additionally there will be loan origination fees to your lender or broker. Therefore, if you don't plan to remain in your home for more than a couple of years, you will most likely find you're better off not refinancing.

Not sure what to do? A broker who has your best interest in mind will help you make the right decision.

What It Takes To Become A Mortgage Broker

August 17th, 2010

Our previous blog post discussed the sizeable drop in the number of mortgage brokers. However, as with any business, there is always room for ethical, knowledgable professionals in the mortgage industry. If you have an interest, following are the key requirements to apply for a license:

Submit a properly completed application through the National Mortgage Licensing System
Be subject to an FBI criminal background check
Obtain a $50,000 surety bond
Obtain an FBI fingerprint card (FD258)
Submit a properly completed branch application
Have a properly registered principal manager for each office location
Take and pass the SAFE Act test before you can get a license.

It's a rewarding profession. Assisting people to make the right choice regarding the type of loan that is best for them thrugh understanding their needs and goals. Whether they are purchasing their first house or even their sixth, they still need proper guidance from a professional. Helping others achieve the American Dream is a rewarding career!

For more information regarding the requirements to become a mortgage broker, click here for the Indiana Secretary of State Webiste.