CHANGE or REFORM. Is it one in the same or are we just saving the middle class.

CHANGE or REFORM. Is this one and the same thing or are we just saving the middle class?

Wondering which way to vote? Not to worry. Just about everyone who is uncertain which way to vote has now become an ‘Independent’. Forgive me for saying this but if all the Independents had views that bordered between the two parties, why not start the 50/50 ballot system and split the votes. Because in all fairness, why must the in-between voter or for that matter, the ‘I like neither party’ voter be swayed to choose between someone who advocates ‘CHANGE’ and another who advocates ‘REFORM’. Truly both words nearly mean the same thing, so are we just dealing with ‘nuances’ or ‘semantics’ in the language used? But in this political climate, ‘CHANGE’ applies only to the middle class.

I was buying breakfast at a local fast food joint last week and had friendly conversation with the Hispanic floor manager. I asked him how business was going and he said… “Slow.. very slow. No one can afford even fast food these days!”

I asked him, what he hopes will happen on November 4th. He said “I don’t know what is good… all I know is that I want ‘CHANGE’ and I will vote for the person who tells me that he can ‘CHANGE’ my current situation.”

I felt compelled to ask him this next question, so I said to him “I understand your frustration, but what does ‘CHANGE’ mean to you?”

He responded, not indicating the party but using the current buzz word, “Well, if I vote for ‘CHANGE’, that means I will get a tax break immediately. My daughter is not working, not married and she has a baby. I told her she can go on welfare to help her baby. I want a President who is thinking about me….. So why do you ask me this question?”

I decided to explain myself. “CHANGE’ has two meanings - one, change for the better - because we know for sure, it will present a better outcome. Two, change can open up an arena for problems because the plan for change has not been well thought through. This means we are just glossing over the current problem and introducing something new, with the hope that it give Americans what they want.”

The manager was obviously still not clear, as he said to me “Well that’s what I want, ‘CHANGE’.”

I asked him again, ” And what is that exactly?”

He said “I don’t want to have to keep working so hard. If there is ‘CHANGE’ I can get a tax break and medical benefits. Maybe I can save the tax break to start my own business.”

“Ahh.. I see.” I replied. “I’m glad you are excited for change. Both parties have valid points that can either make or break the progress of the United States. However, I hope you will think about this too. As a business owner and a parent, who do you want controlling your money. Also do you think you have been living beyond your means? Are you willing to cut back on your expenses and help others who have less than you?”

He responded quickly “No.. I live paycheck to paycheck. I want my children to have a better life. What do you mean I have to help others? I have very little right now. I just lost my house and now I am renting. I need the tax break to pay for food.”

The manager kept quiet for a long time and then said to me “Why are you saying that I live beyond my means?”

I replied “I never said that. The party who advocates change wants everyone to share the problems 50/50 because that is fair. Not only will we share the problems, we will split the costs, split the difference, which ever way you call it, this party says they can fix America. Are you prepared to do this?”

He replied “Why are you making me choose? I just want ‘CHANGE’… any ‘CHANGE!”

Dear voters, do not rest until every stone has been turned. Until every ‘i’ has been dotted and ‘t’ crossed. Until every voice is heard. Every person who considers himself American, black, white, rich, poor or middle class, think for a moment what America means to you and then go out and vote.

We have not fought for freedom and rights just to benefit one group of Americans.

Choose wisely and vote. Vote for the rights of America and all Americans.

Written by Holly Leano - REALTOR and Sr Mortgage Consultant

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The buzz word is FHA - The conscience loan for Loan Officers.

The buzz word is FHA, Federal Housing Administration. 3% down towards a purchase of a home and like magic you are now approved to buy a home. What might surprise you is that it is not a new loan product by any standards. FHA has been around for a long time and one might consider it ‘the’ loan for the Loan Officer who has a conscience.

The sub-prime market of liar loans are falling by the way side. However there are still products out there that ask borrowers to just verify employment with a telephone call. The lenders are not asking to see paystubs or income taxes. I called a reputual bank (whose name I shall not devulge in this article) to ask this questions. The response I received was shocking!

The account executive informed me that they do not ask for paystubs or income taxes, they assume that the employment information provided by the Loan Officer on the form is correct. What the account executive actually meant is that they assume that the information provided is ‘the truth’.

So what about FHA loans and how can they help borrowers afford a home today. First of all federal legislation recently raised the FHA loan limits nationwide. Although this is just a temporary measure, FHA has opened the door for a large number of borrowers who need loans as high at $729,750.

The FHA does not lend money directly. It provides mortgage insurance (aka MI) to borrowers through private lenders. What this means to you is that the FHA is responsible for any defaulted loans.

Applying for an FHA loan is a long tedious process. Unlike sub-prime loans that slip through the cracks with no docs and stated income stated assets loans for example. FHA requires full documentation of income. Borrowers who can make at least a 3% down payment or have at least 3% equity in their homes can qualify for an FHA loan.

Written by Holly Leano - REALTOR and Sr Mortgage Consultant

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What is an Annual Percentage Rate (APR)?

Betcha didn’t know this. The annual percentage rate (APR) is different from the note rate. Period.

The APR does NOT affect your monthly payments. Your monthly payments are a function of the interest rate and the length of the loan.

The APR is commonly used to compare loan programs from different lenders.
It is designed to measure the ‘true cost of a loan.”

The Federal Truth in Lending law requires mortgage companies to disclose the APR when they advertise a rate.
It prevents lenders from advertising a low rate and hiding fees.

If life were easy, all you would have to do is compare APRs from the lenders/brokers you are working with, then pick the easiest one and you would have the right loan. Right? Wrong!

Unfortunately, different lenders calculate APRs differently! So a loan with a lower APR is not necessarily a better rate.

What I suggest is to ask the different lenders you’re calling on to provide you with a good-faith estimate of their costs of the same type of loan program eg 30-yr fixed with a 30-yr fixed rate at the same interest rate.

Then delete all fees that are independent of the loan such as homeowners insurance, title fees, escrow fees, attorney fees, Admin fees, Appraisal, credit report etc. Now add up all the loan fees. The lender that has lower loan fees has a cheaper loan than the lender with higher loan fees.

The reason why APRs are confusing is because the rules to compute APR are not clearly defined.

What fees are included in the APR?

The following fees ARE generally included in the APR:

Points - both discount points and origination points
Pre-paid interest. The interest paid from the date the loan closes to the end of the month. Most mortgage companies assume 15 days of interest in their calculations. However, companies may use any number between 1 and 30!
Loan-processing fee
Underwriting fee
Document-preparation fee
Private mortgage-insurance
The following fees are SOMETIMES included in the APR:

Credit life insurance (insurance that pays off the mortgage in the event of a borrowers death)

The following fees are normally NOT included in the APR:

Title or abstract fee
Escrow fee
Attorney fee
Notary fee
Document preparation (charged by the closing agent)
Home-inspection fees
Recording fee
Transfer taxes
Credit report
Appraisal fee

PLEASE NOTE!
An APR does not tell you how long your rate is locked for. A lender who offers you a 10-day rate lock may have a lower APR than a lender who offers you a 60-day rate lock!

Calculating APRs on adjustable and balloon loans is even more complex because future rates are unknown. The result is even more confusion about how lenders calculate APRs.

Do not attempt to compare a 30-year loan with a 15-year loan using their respective APRs. A 15-year loan may have a lower interest rate, but could have a higher APR, since the loan fees are amortized over a shorter period of time.

Conclusion :
There is no substitute to getting a good-faith estimate from each lender to compare costs. Remember to exclude those costs that are independent of the loan.

Written by Holly Leano - REALTOR and Sr Mortgage Consultant

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Shopping for a Loan Officer in todays real estate market

“Am I approved yet?” says Mr. Smith.

Loan Officer - “Well, no, Mr. Smith. I need to have a complete loan application filled out before I can qualify you for a loan.”

“Why does it take so long?” says Mr. Smith “I just walked into my bank and they approved me on the spot at 5%. If you can match this rate, you can be my loan officer.”

My dear readers, if he was already approved, why he is asking me to help him is a question that I hope to be able to respond to by the end of this article. The truth of the matter is that any loan officer can quote a rate off the top of their head to win over the borrower. But until the loan is fully processed, submitted to the lender, underwritten and the rate locked, the loan is not fully approved. Here are some factors that the average borrower should consider when ‘shopping’ for a loan officer:

When the loan officer takes a loan application, within three days, the borrower must be given a copy of the GFE (Good Faith Estimate) and Truth in Lending (APR) disclosure. If the borrower does not receive these documents, I can almost accurately predict one of two outcomes have taken place. The first being, the loan officer is not following the rules of RESPA (Real Estate Settlement Procedures Act). Secondly, the loan officer does not what to scare the borrower off by disclosing all the fees upfront.

Being that the fee disclosure sheet is an estimate, these are some of the fees you can expect to see at close of escrow i.e. loan origination points charged up front, rebates paid to the loan officer by the lender, escrow, title, appraisal, credit report, property insurance and taxes to be impounded, to name a few.

Yes all these fees should be disclosed because they are indeed a cost that is involved with any purchase or refinance loan. Mortgage brokers often charge brokerage fees but banks do not. Mortgage brokers have access to many lenders who sell loans at wholesale rates. This gives the loan officer flexibility to find a loan that will work best for the borrower without being tied down to the rates of just one lender.

I know that this is a lot of information for the average borrower to consider when ‘shopping’ a loan officer. But could this lack of knowledge be the reason for so many borrowers falling into foreclosure? Could a false sense of security be driving borrowers to find a loan officer who will tell them what they want to hear? In answer to this question, all I can say is this:

Loan Officer “Mr. Smith, how much are you willing to pay for first class service? I won’t cut costs. Nor will I quote a rate that does not exist. What I will do is listen to your needs, keep you informed and provide you with service that is second to none.”

Written by Holly Leano - REALTOR and Sr Mortgage Consultant

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Credit Card Companies Boosting Your Rate

Source www.suzeorman.com

Current foreclosure crisis does not affect your ability to get a loan!

Can’t get a loan to buy a house? Whose fault is it?

There seems to be an epidemic of misunderstanding with the foreclosure market and mortgage loans. That being, today’s buyers are unable to qualify for mortgage loans like the ‘good old days’. Now there are so many rules and regulations, apparently buyers feel that they are getting the short end of the stick. With the number of homes in foreclosure flying off the shelf at ridiculously low values, it’s amazing that more buyers are not getting approved for loans in droves.

The rumor going around is that the people to blame for the ‘rules and regulations’ to get a loan are those who have gone into foreclosure, hence why banks and mortgage lenders are giving everyone a ‘hard time’.

Oddly enough I thrive on such idiosyncrasies of society’s current mortgage dilemma. It gives me a forum to spout my brand of wisdom about this situation and divulge an amazing secret to all who choose to listen.

The secret is - There have always been rules and regulations!

So what or who shall I say is to blame for why buyers are finding it harder to qualify for a mortgage loan today.

Owning a home is the American dream. But in actuality it is not for everyone. Buying a home is the largest financial purchase you will make in your life. It is not a purchase that you can turn around the next day and return the keys and walk away. There are consequences.

The solution to the foreclosure epidemic lies in being accountable. Anyone can qualify for a mortgage loan. How you apply for a loan and what you or your loan officer provides to suffice the rules and regulations of the lender is key to the final outcome of whether you’ll still be making mortgage payments in six months or bailing ship into the murky foreclosure market.

Remember the old adage ‘rules are meant to be broken’? Herein lays the answer to the question of who is to blame. Rules and regulations are broken in one way or another on a daily basis; take jay walking for example. Whether one chooses to accept responsibility for these actions is an ethical issue that few will acknowledge.

So we are all left to face this problem together as homes go into foreclosure and existing home owners watch their equity drop lower and lower each week. My best advice to you my avid blog readers, the next time any of you wish for lower interest rates and a carrot worth 1% is offered to you, stop and read the fine print!

Written by Holly Leano - REALTOR and Sr Mortgage Consultant

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Do you know how to read your fico?

Tell me this – “What is your fico score?”

Bet some of you immediately draw a blank and you wouldn’t be alone in that response too. In fact, it is one of the hardest questions to answer especially when it comes to buying a house or to refinance.

Perhaps you let a department-store credit card lapse with a $5 balance due. This kind of glitch is usually easy to fix and won’t stand in the way of your loan. Bankruptcy, on the other hand, stays on your record for up to 10 years. Understanding how lenders look at credit will help you make some strategic changes to clear your credit before you apply for a loan.

So, what is the magic number that Lenders look for in a fico score?

More and more Lenders are streamlining their underwriting processes by automating part of the home loan business. Big players like Countrywide for example use credit scoring as one way to speed up the loan process. A quick automated scan of your fico score will deliver an immediate response to whether you deserve a high interest rate for bad credit or a low interest rate because your fico shows that you are a good borrower who pays all your debt on time!

Most consumers never see their credit score when they apply for a loan. Your credit score is a statistical analysis of the likelihood that you’ll pay back a loan on time. It draws from approximately 100 variables in your credit report; including delinquent bills, outstanding debts, the number and amount of balances you owe your creditors, and your credit history.

Your credit score is a number between 400 and 900. The magic number is anything over 620. If you score above 680, lenders will usually consider you a premium borrower, which makes you eligible for lower rates and a high loan approval. If your fico is below 620, get ready for high interest rates and being approved for a low loan amount.

Red Flags - Lenders don’t want to see these on your credit report: Late payments recent credit inquiries, overextended credit liens, paycheck garnishments and bankruptcy. Your credit report will reflect a LOW FICO SCORE, a result of those red flags.

So, if a lender turns you down for credit reasons find out exactly what those reasons are and take steps to remedy the situation. A recent amendment to the federal Fair Credit Reporting Act requires each of the nationwide consumer reporting companies – Equifax, Experian, and TransUnion – to provide you with a free copy of your credit report, at your request, once every 12 months. But there’s only one online source authorized to do so. That’s www.annualcreditreport.com. Beware of other sites that may look and sound similar. You’ll know the difference as those other sites will ask you to pay to see your fico score.

So remember - the next time you call me to purchase a home or to refinance your current home, think about your fico score.

Written by Holly Leano - REALTOR and Sr Mortgage Consultant

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