The Benefits of a Professional Consultant

Choosing the right lender is a key element to managing your mortgage. As a mortgage consultant, my goal is not just to provide you with a loan, but also to help select the one most beneficial to you and your long-term goals, and then, help you manage that debt over time. There are not many lenders out there who provide this type of personalized service.

My job is just beginning when your first loan closes. I will continuously monitor rates on your behalf, and stay in touch with you to make sure we remain on target with your financial goals.

Seek Pre-Approval

What's the difference between pre-qualification and pre-approval?

Pre-qualification is the starting point in your search for mortgage financing. A quick snapshot is taken which includes income, existing debt, savings, length of employment, etc. All of these factors will then be analyzed to determine your loan eligibility.

Pre-approval is written documentation that shows you have the support of a lender who is willing to finance you. It means an underwriter has reviewed your loan application. Based on your income, debt ratio and savings, the underwriter provides the dollar amount you are eligible to borrow. Now you can shop around for houses that fit into that loan amount category.

Here is the nice thing about the pre-approval: It gives you the leverage to shop as a cash buyer! With a pre-approval in hand, you now have the power to negotiate. The seller will take your offer much more seriously knowing you are already approved by a lender. Pre-approval can also shorten the time it takes to close, making even a lower bid attractive to sellers who are seeking to move quickly.

What will my monthly payments be?

The amount of your monthly payment depends on what loan program you choose. We like to provide our clients with an easy-to-read spreadsheet that narrows their choices down and compares different loan programs that meet both current and long-term goals. You will have the opportunity to select a program you feel comfortable with before you make an offer on a home.

What does it cost to get pre-approved?

Pre-approval is FREE! You have absolutely nothing to lose and everything to gain. Call me directly for a free consultation.

Follow this handy list (and check it twice) to make sure your home is secured against the winter elements.

Heating system: The colder it gets, the more it costs to fix, so check your heater well before winter. Follow seasonal maintenance in the owner's manual. Change the air filter.

Cooling system: Hose down fan blades and condenser coils on the outside unit. Cover the unit with a securely wrapped tarp to prevent debris and rust. Remove and store window units.

Chimney/Fireplace: Clear the chimney of debris. Ensure flue damper opens properly. Have a professional clean chimneys and stovepipes. Have a professional repair cracks in brick or mortar immediately.

Piping: Insulate all exposed piping and exterior hose bibs and faucets.

Windows: Place a lit candle or burning incense stick nearby to check for drafts and leaks on a windy day. Use rope caulk to seal.

Doors: Check all weather stripping and reinstall new if it appears worn.

Roof: Replace missing or damaged shingles. Check flashing around chimneys and other roof projections. Clean gutters and downspouts.

Sprinkler system: Purge all lines of water with an air compressor to prevent freezing and bursting. 

Source: My Home Ideas

In the 3rd quarter, housing activity was as slow as the dog days of summer. But in October, the autumn air came and with it brought the lowest home loan rates in over a year, according to Freddie Mac.

A market-wide Stock selloff resulted in relief for the Bond market. And since home loan rates are tied to Mortgage Bonds (also called Mortgage Backed Securities), this prompted more activity in the housing market than in recent memory.

Early figures from the Mortgage Bankers Association reported that home loan applications rose week over week early on in the 4th quarter, with refinances accounting for the majority of the activity. Despite this, refinances were still down by almost 30 percent during the same period one year ago.

Higher home prices were largely blamed for deterring first-time homebuyers from purchasing during the usually busy summer months. On the other hand, higher prices and values led to an inverse benefit for current homeowners, who were previously unable to refinance due to insufficient home equity on capped loan limits.

Home builders also remain positive about the housing market, according to the National Association of Home Builders Housing Market Index. Though builder sentiment dipped in October after rising for four straight months from June through September, the NAHB chairman stated that this was in line with the gradual pace of the housing recovery.

Sales of newly built homes took a huge 18 percent leap from July to August, but this figure may be further revised downwards, as reported in a mid-October CNBC report.

As the year comes to a close, many prospective homebuyers, as well as those in the industry, await 2015 with anticipation. Will next year bring looser credit guidelines to encourage more home purchases? Will rates stay low and prices stay high? Check back for a winter recap in the next issue of the Homes & Money Newsletter, coming February 2015.

Those who take property ownership seriously often look for options to build equity at a faster pace. An aggressive approach is to select a 15-year loan program over a 30-year mortgage. 

A 15-year loan works well for home buyers budgeting time and money, those who are possibly looking forward to a debt-free retirement, or those who plan to upgrade to a larger home within 15 years. But this requires a sincere commitment to making substantially larger monthly payments. 

Provided the homeowner can afford the financial commitment of a 15-year loan, they will pay significantly less money in interest simply because the life of the loan is spread over a shorter period of time. This will result in a smaller tax deduction over a shorter period of time. However, they need to be aware that unless they are extremely financially secure, even a minor setback can have a tragic impact on their ability to make mortgage payments on time and in full. The bottom line is that it's probably not a good idea to put all available cash into a mortgage payment and lose any hope of a financial cushion in the event of emergency. 

A less vulnerable approach is to consider making principal prepayments on a 30-year loan, or to invest the extra dollars into another type of asset accumulation account. Here the compelling question is, is it better to take the risk of a non-guaranteed investment, or bank on the guaranteed savings on mortgage interest? 

Making prepayments on a 30-year loan is often deemed to be the safer route, and the borrower can make the extra payment when they want to, rather than through obligation. If the homeowner has made less than a 20% down payment, principal prepayment offers them the ability to have their loan reviewed by the lender for the purpose of removing any private mortgage insurance payment (PMI) earlier than expected. First, the borrower needs to discuss prepayment procedures with their lender, and take into consideration whether there is any prepayment penalty associated with their financing before initiating prepayments. They should also note that principal prepayment reduces mortgage interest, which is tax deductible. Depending on what their tax bracket is, this may or may not be beneficial to them. 

If the extra money is invested in some other vehicle, the earnings will be reduced by taxes (unless the money goes into a tax-exempt fund). The borrower should compare the mortgage rate to the rate of return on another type of investment, and decide if it makes more sense on an after-tax basis to invest the extra money somewhere else and have the ability to liquidate those assets if necessary. 

Bi-weekly mortgage plans are another option for building equity at a faster rate, but consumers should be wary of companies that ask for a setup fee and monthly charges. The most important thing to note is that each client has different goals. These are just a few options for building equity.

The Mortgage Place, Inc. is a registered mortgage broker with the New York Department of Financial Services. Loans are arranged through third party providers. NMLS# is 872824. 
© 2014 Vantage Production, LLC. All rights reserved.