Mortgages, Divorce, Refinance and Quit Claim Deeds

A couple of great mortgage questions have come in over the last few weeks …

Question: We’re considering selling our place and purchasing another and we would like to do back to back closings. Is this something that can be done?

Not everyone can pay cash for real estate and there are consumers taking advantage of the great prices to move around or upsize. Much like stacking rows of dominos, counting on one closing to fund the next closing is a tricky position to get into. Besides a home owner having to sell one to get into the next home, there are circumstances where the actual buyer of your home must close sale on the home they live in to be able to purchase your home, you must close sale on the home you live in to be able to close your own new home purchase.

There are one hundred and one possible ways that back to back closings can go haywire. They can also go well, but it really takes some homework and investigation of the contracts and mortgages involved in each transaction in the long line of dominos. Plus, even as careful and thorough as everyone can be, things can still go wrong; last minute underwriting issues, a lender decides not to fund mortgages in the state of Florida, one of the borrowers loses their job in the process, one of the borrowers financed another big ticket item and no longer qualifies for the mortgage, if it’s a condo and the condo questionnaire goes hinkey. The list of last minute surprises can go on.

Like I said, the situation is tricky and you most seriously need to have an experience real estate agent and very good mortgage broker who understand your situation inside and out or you could end up wondering where you’re going to sleep and where to park that moving truck full of your possessions.

Question: Is it possible to finance the down payment or closing costs for a home purchase?

The short answer is there are a few mortgages available where this is possible, but it’s not possible with all mortgages. The long answer is you need a superb mortgage broker who can direct you to the proper mortgage product and determine whether the property you’re interested in qualifies for that particular type of mortgage. There are a few mortgage products which may allow you to roll in the closing costs as long as the purchase price, which may include a sum or percentage for fees, is supported by the appraisal.

Question: We’re breaking up and my spouse would like to keep the house and has asked me to sign a quit claim deed to get my name off of the house. Is it really as simple as filing this new deed with the clerk’s office?

Call a real estate attorney before you sign a anything. I’d guess that the first question an attorney will ask you is if there a mortgage on this home and is the spouse also refinancing to take you off of the mortgage? If not, you could be relinquishing ownership of the home by signing the quit claim deed but still be responsible for the mortgage. Not only financially responsible for that mortgage but also jeopardizing your ability to qualify for other large purchase down the road, like a new car or another home because the debt from “the quit claimed home” shows on your credit report. It’s worth seeking professional legal advice to make sure you’re doing the right thing and not making a poor financial decision in haste.

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Real Life in Bonita Springs is a project by Chris Griffith dedicated to writing useful blog posts for consumers about the Bonita Springs, Florida area.  Find out what it is really like to live in Bonita Springs, Florida by reading about our fair city. You’ll get the latest in local real estate information, Bonita Springs real estate market reports and a little bit of humor.  If you have topic ideas, feel free to request a story about the idea, after all, this site is just for you.

You can subscribe to a weekly email newsletter by visiting www.LifeInBonitaSprings.com and entering your email in the subscription area on the center pane of the web page or by adding us to your reader by subscribing to this blog. Oh, and if you’re reading this content anywhere else but www.LifeInBonitaSprings.com or Naples Daily News it is probably stolen.

Private Money Mortgage Lending

Chris Brown from Certified Mortgage planners sent me an email with a new program that may interest a few real estate shoppers.  For those of you mentally ready, but not credit-ready, to get back into the real estate market this may be an alternative to a traditional mortgage for real estate purchases. 

The thought process being, you may be able to pick up homes at bargain prices and get your foot back in the real estate market, then refinance your loan after the dings from the credit are healed. 

Can’t qualify for traditional financing for your real estate dreams?  Just experienced a personal bankruptcy, short sale, or foreclosure?

We lend up to 65% loan-to-value with in-house mortgage underwriting and servicing.

• No Income, No Credit (in most cases)
• Interest Rate 12%-12.99% "Interest Only"
• Primary Residence, Second Home, Investor
• Up to 10 year balloon
• No Prepayment Penalty
• 4 points

For more information contact Chris Brown: 407-367-2974  chris@cmpfl.com or visit his website www.MortgageChiliBlog.com 

Certified Mortgage Planners

1331 S. Int’l Pkwy #2251

Lake Mary, FL 32746

1331 S. Int’l Pkwy #2251

Lake Mary, FL 32746

Wouldn’t it be great to see the other credit bureau’s follow Experian’s lead?  Bonita Springs real estate buyers would be able to rebuild dinged credit by paying their rent on time.  Those who may have gone through the short sale process, foreclosure or bankruptcy could begin rebuilding their credit and prove they’ve developed credit worthy habits. Thoughts?

15 Year, 30 Year Fixed & Jumbo

The Labor Department released its August Consumer Price Index data earlier this morning – and mortgage investors yawned with the year-over-year rate of inflation remaining stable at 1.0%.  Could be we’re in for mortgage interest rates staying in the 4’s range– at least in the near-term. 

Looking ahead to next week, news from the housing sector will predominantly dominate the balance of next week’s economic calendar – ranging from Tuesday morning’s August Housings Start and Building Permit numbers through the existing and new home sales data on Thursday and Friday respectively.  The collective story is expected be one of almost imperceptible improvement – a condition not likely to cause mortgage investors to aggressively push mortgage interest rates notably higher.  

William Dukes  ~  Senior Mortgage Banker

With more than 25 years of financial advising experience including 10 years in mortgage lending Will Dukes understands clients’ borrowing needs and concerns. More importantly, being a "survivor" in the current mortgage lending atmosphere speaks volumes about Will’s integrity and ability to navigate rapidly changing conditions. If you have questions about finance contact Will at Summit Home Mortgage, Inc. 239.272.2241.

Coughing Up Info Before The Real Estate Hunt

What do you have to divulge before you buy real estate?  The short version is “it depends”. 

The longer version comes after you decided what you’re thinking about budgeting for your real estate and how you’re going to pay for the real estate.

It really doesn’t matter if you’re a cash or a financing buyer, you have to provide proof for how you’re going to pay for the real estate you want to buy.  It doesn’t matter if it costs $100,000 or $1,000,000. 

The real estate market is not without woes and a good deal of bank involvement in many of the transactions.  By bank involvement I mean there is a chance that there is a bank or financial institution that makes the final decisions on the price and sale of the property if it’s a short sale or a foreclosure.   You, as a buyer, are going to have to send either a mortgage pre-approval or “proof of funds” along with any offer that you make on a home or condo.

If you’re financing your real estate purchase you should be talking to a local, reputable lender, not a “dot com” lender, that will gather your information and help you properly prepare for a mortgage and home ownership that is affordable for your budget. 

There’s more to buying and owning real estate than the purchase price.  It’s rather important to know exactly what you’re getting yourself into financially and to be able to afford the real estate, the expenses that come with it; taxes, insurance, repairs, etc.  Lenders help budget all of those fees into the transaction.  They want you to be a successful home owner also.

If you’re a cash buyer you simply need a few things – the cash and a letter from your banker, financial planner, a copy of a recent statement that reads that you have $xx,000 cash on hand available for the purchase of the real estate. Nobody needs to know all of your finances, about gold coins under your mattress or blood samples.

If you feel that you do not wanting to share some of the information needed to buy real estate you might not be shopping with the right real estate agent.  You might not be ready to buy or you may not have found the trust you were looking for in a real estate agent. 

Buying real estate is a huge financial decision and your finances have to be talked about and disclosed on some level.  If you build relationships with the right mortgage broker and real estate agent you shouldn’t have anxiety about getting from point A to point B and doing it the right way.

Taking Mortgage Broker Recommendations

There’s a big difference between inexpensive and a good value where home loans are concerned. Throw in a few dozen flashy ads with teaser interest rates and all the magic the loan officer promises to work for you and let the mortgage cyclone begin.

Getting a mortgage is unsettling for some people. It’s actually a little bit of work to weed through the piles of paperwork and documentation.

Over the years I’ve had the opportunity to work with some very skilled mortgage brokers and loan officers. In spite of the bad press about the mortgage industry there are some quality folks out there whose main goal is to get families into homes. There’s no subterfuge involved.

When a buyer asks for a local recommendation there are only a handful of top performers out there I would trust enough to recommend. They’ve been tried and tested and over performed through difficult circumstances as well as the smooth loans.

Odds are that you’ll get a good recommendation from your real estate agent or at least a decent place to start. The name of the game is getting you moved in so we only want to work with the pros anyway. Most of the former sub-prime specialist, mortgage brokers have moved on and are now riding the gold bubble and throwing broken bracelet house parties, any way.

I’m still amazed when a buyer goes rogue and starts throwing darts to find a home loan. It’s usually not the kind of rogue where they’ve walked through the doors of a bricks and mortar bank but a “borrowing cashola dot com” crap-shoot that over promises and eventually under performs.

Here’s a little bit of advice for you buyers out there that sidle up to the keyboard looking for blind solutions to one of the largest financial decisions of your life: Prepare for debacle on a cataclysmic scale, book a hotel for the day of closing and don’t show up with your moving truck and the ridiculous notion that you’re even crossing a threshold.

If you’re extremely lucky whatever puppy mill is processing or underwriting your loan just might even be in the same time zone. If your crap shoot involves Pacific or Mountain Time prepare for the pain of losing two to three hours at each end of the work day with the time differences, alone.

I’ve seen more buyers create their own hostage situation by choosing an unknown, unproven lender for their home purchase. It just doesn’t have to be that painful.

Lending guidelines are stricter than they’ve been in quite some time. As a consumer you need to be able to pick up the phone and have a living, breathing human on the other end of the line with some authority, willing to answer questions and be able to tell you precisely where you’re at in the process.

When your more passive than aggressive underwriter is sleeping in California when the rest of us are trying to help you close on your home you need to know that there’s a good chance that you’re going to wind up at the Inn. They’ll leave the light on for ya.

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Real Life in Bonita Springs is a project by Chris Griffith dedicated to writing useful blog posts for consumers about the Bonita Springs, Florida area.  Find out what it is really like to live in Bonita Springs, Florida by reading about our fair city. You’ll get the latest in local real estate information, Bonita Springs real estate market reports and a little bit of humor.  If you have topic ideas, feel free to request a story about the idea, after all, this site is just for you.

You can subscribe to a weekly email newsletter by visiting www.LifeInBonitaSprings.com and entering your email in the subscription area on the left pane of the web page or by adding us to your reader by subscribing to this blog. Oh, and if you’re reading this content anywhere else but www.LifeInBonitaSprings.com or Naples Daily News it is probably stolen.

When a borrower enters into a contract to make bi-weekly payments on their mortgage, the amortization schedule is accelerated. For example, with a 30-year amortization schedule, the borrower makes 12 payments per year. In a bi-weekly arrangement, the borrower makes 26 ‘half’ payments, which allows the loan to be paid off in 22.8 years instead of 30 years. It’s the same as making 13 monthly payments.

This ultimately saves the borrower thousands of dollars in interest rate fees. However, bear in mind that bi-weekly programs usually have some type of setup, transaction, and maintenance fees associated with them. A custodian manages the bi-weekly payments in a trust account (and also makes a profit on the interest accrued there). Because the lender really doesn’t accept partial payments, this middle man is still making monthly payments to the lender on some type of pre-payment schedule.

It is important for the consumer to know that the same results can be achieved without hiring an outside company to do this. As long as your loan program carries no pre-payment penalty, pre-payments can be made on a monthly or annual basis to shorten the loan term to save money on interest or remove PMI charges on loans that have less than a 20% down payment. The borrower simply needs to indicate the extra payment is being made toward the principal balance, and have the discipline to make these extra payments as scheduled.

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Wednesday, 3rd February, 2010:

Keith Cloak, Senior Mortgage Banker

Summit Home Mortgage

Keith Cloak understands clients’ borrowing needs and concerns. More importantly, being a "survivor" in the current mortgage lending atmosphere speaks volumes about Keith’s integrity and ability to navigate rapidly changing conditions. If you have questions about finance contact Keith at Summit Home Mortgage, Inc. 239-919-0719 or via email at KCloak@Summit-Mortgage.com

The Low Interest Rates Won’t Last Forever

To everyone’s great relief, fixed mortgage rates have been extraordinarily low for the last year averaging between 4.75% – 5.25%.  However, perhaps you remember the summer of 2008?  Gas prices crested $4/gal, inflation was all the rage and home buyers were snapping up 6.5% mortgage rates like they were deals on last year’s golf balls at the new PGA Tour Superstore in Naples.

Then, the dam leaked. Banking fell apart, the economy went to the brink, and the Federal Reserve stepped in to clean up the mess. The Fed made many moves to heal the economy, but one of its most important ones was backstopping the mortgage-backed securities market to the tune of $1,250,000,000,000 (that’s $1.25 TRILLION folks!).  Visualize that for a minute. It’s a huge number! The Fed used this money to become a big-time buyer of mortgage bonds to the tune of buying ~80% of ALL bonds being sold!  The goal?  Lower long term (15 and 30 year) rates and that is exactly what happened. 

Starting April 1, 2010, though, life goes back to normal. L The Fed is ending its monetary support (minutes for this week’s FOMC meeting) and the market will adjust according to prevailing market forces.  So this news is the very large elephant sitting in the corner of the room that everyone is trying to ignore.  Fact is however, most economists (and even most of the Fed governors) believe that without the Fed keeping rates artificially low, we’ll be seeing higher rates in the very near future. 

This news is worth shouting out to all of your customers still waiting to make that offer!  On a $400,000 loan, a 1% change in rates equates to $250/month and that’s not chickenfeed!!!  Mortgage rates are going up.  The question is "how soon until markets react?" For now, rates are great. Economic data is soft and inflation is tame. Plus, the dollar is rallying.  These are all conducive to low mortgage rates.  However, at some point, Wall Street will start pricing bonds for the Fed’s exit.

Rate shoppers should really have a plan in place.  Be patient, but not too patient. Locking mortgages is a game of timing and, for that, people need help.  That’s why your Summit Mortgage Loan Officers are all well versed on this marketplace and are monitoring this developing story as it unfolds.  Pick up the phone and call us, our numbers are below this email.  You’ll be glad you did!

As always, your Summit team is here to help you. 

William Dukes

Senior Mortgage Banker

With more than 25 years of financial advising experience including 10 years in mortgage lending Will Dukes understands clients’ borrowing needs and concerns. More importantly, being a "survivor" in the current mortgage lending atmosphere speaks volumes about Will’s integrity and ability to navigate rapidly changing conditions. If you have questions about finance contact Will at Summit Home Mortgage, Inc. 239.272.2241.

The Homeowner’s Parting “Remarks”

If you do not see the video above Click Here.

We’ve seen it all and we’re still seeing it, the trashed foreclosure.  Occasionally, the owners have just walked away and left the home intact.  Other times they take it out on the walls and strip the home bare. 

Recently, I had a home in Village Walk of Bonita Springs not appraise for financing.  It was being compared to homes that where short sales and foreclosures which were not in good condition. They did not have appliances and likely had mold issues since the air conditioner was not on for months.  The subject property was a walk away in pristine condition with all of the appliances. 

Foreclosure effects more than just it’s home owner. It effects the neighborhood, the property values and the person trying to get an appraisal next door because the property appraiser compared apples to apples with bruises and rotten spots all over it.

All’s not fair in love and foreclosure.

Mortgage Rates Hit All-Time Low Levels Again!

In case you haven’t caught the news, home loan rates have done it again, dropping to their lowest level…ever. Not only has the 30 Year Fixed rate returned to its lowest all time level, rates across the board are at their lowest levels.

Yes, that means, go ahead and choose your flavor – 30 Fixed, 15 Fixed, 5/1 ARM or 1/1 ARM – all loan types hit their lowest levels of the year! For the weekly Freddie Mac survey of all lenders, this is the first time that all have been at their lowest level.

You must understand, though, that rates are artificially low! Last November, Ben Bernanke and the Fed put into place a program to lower rates. That program though is nearing its end, as the Federal Reserve has purchased over $1 Trillion of mortgage backed securities this year and with less than 20% of allocated funds left in the program, rates are sure to increase. The only questions remaining are by how much and when.

The chart above shows the 30 Year Fixed Rate over the last 11 months. The first red arrow shows what took place when interest rates shot up in May, rising nearly 0.75% in a matter of days. And just as when the holidays come and go this month, the rates that are available today are likely to take off as well, only this time for good.

Interest rates that were in effect prior to the implementation of the announcement of the Fed’s program last year were well above 6.00% and a return to those levels cannot be ruled out. If you are looking to refinance or currently shopping for a loan, lock your loan quickly to take advantage of the lowest rates we are likely to ever see in the future.

Remember, the reason I wanted you to see where rates have been this year is also to see how quickly they can rise. If you would like to know how I can help you, call me today. Waiting could cost you an opportunity to have an even bigger smile on your face when you say "Happy Holidays!" this month.

Keith Cloak, Senior Mortgage Banker

Summit Home Mortgage

Keith Cloak understands clients’ borrowing needs and concerns. More importantly, being a "survivor" in the current mortgage lending atmosphere speaks volumes about Keith’s integrity and ability to navigate rapidly changing conditions. If you have questions about finance contact Keith at Summit Home Mortgage, Inc. 239-919-0719 or via email at KCloak@Summit-Mortgage.com