Bi-Weekly Mortgage Myths

Retirement with a Mortgage Case Study: Biweekly Payment Plans - Myths, Misconceptions and Alternatives

Maybe you are considering or paying on a mortgage every two weeks, in most cases, the loan servicer is paying the loan monthly. A consumer who buys into a biweekly plan is actually loaning the servicer half of your mortgage payment, interest free, for at least two weeks every month.

In addition, the convenience of biweekly payment programs comes at a cost. Of the top five mortgage-servicing institutions, four charge enrollment fees that range from $295 to $379. Three also levy additional charges on every transaction. If your elect to pay biweekly , thus avoiding the hefty upfront charge, fees from the same top five servicers range from $4 to $9 a month.

The truly beneficial aspect of biweekly mortgage payments is the two additional half-payments going toward the principal each year. In other words, by making 26 biweekly payments, you are effectively making 13 monthly payments instead of the customary 12. Depending on specific loan terms, one extra payment a year may enable you to pay for your home an average of six to eight years ahead of schedule

Myth #2: Paying twice a month reduces the mortgage’s compound interest.

A true biweekly mortgage, set up at loan origination or during refinancing, is rare, and is not offered by all lenders; however, it is possible to get many of the benefits of a biweekly payment schedule without the extra costs.

Alternatives include:

• paying an additional one-twelfth of the mortgage payment each month, while specifying on the payment stub or coupon that the amount should go toward the principal.
• inquiring about the option of sending a half-payment every two weeks without enrolling in the bank’s biweekly program.
• adding the equivalent of one extra payment to the mortgage, possibly from the proceeds of a bonus or tax refund. The consumer should specify that the additional money is meant to go toward repayment of the principal.
• for borrowers who are paid biweekly, taking half of the amount of the mortgage payment from each paycheck and putting it in a savings account, then using all of the funds in the account to pay the mortgage each month. At least twice a year, the borrower will be including the equivalent of an extra half-payment.

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Things you can do!

4 Steps to Enhance Your Credit

We all know that a high credit score can help streamline life events like buying a house or landing a new job. But do you know how to boost your score? Try these four moves to give it a quick lift.

Fix Credit Errors -- Don't wait for a lender to check your credit before reviewing it yourself. Request a credit report from each of the three major bureaus every year, reviewing the accuracy of your personal info, credit limits and the open or closed status of each account. Dispute any errors immediately.

Ask for Forgiveness -- If you have blemishes on your credit, try clearing them up. Negotiate paying an old debt if the creditor will mark your account "paid as agreed." For a late payment on a long-held account, write the creditor, acknowledge your otherwise good history and ask for a goodwill adjustment that will wipe it from your credit report.

Make Strategic Repayments -- You may not be able to pay off your credit cards quickly, but you can strategically pay them down. Start by dividing each card balance by its limit. Demonstrate restraint to lenders by keeping each card balance below 30 percent. If your card debts are higher, make a plan to pay balances down to reach a more desirable ratio.

Increase Your Credit -- Another way to reduce your debt-to-income ratio is to ask for an increased limit. It's a bit of a numbers game, but if you keep future spending in check, you can end up with a lower ratio. (Experts say this ratio accounts for up to one-third of your credit score.)

Credit Scores

Fair, Isaac and Company (a.k.a. FICO) came into being in 1956 to help lenders determine the likelihood of consumers to repay loans. By issuing credit scores ranging from 350 to 900, FICO estimates that the higher the consumer's score, the more likely he is to pay back money borrowed timely and in full. 

Five factors comprise the credit score: payment history (35%); credit balances (30%); length of credit (15%); credit types (10%); and recency of inquiries (10%). 

If a borrower is required to pay a higher interest rate on money borrowed due to credit problems, his credit rating will improve once payments are made on time, creating opportunities to refinance to a lower interest rate.

Did you know...

...the Wait Periods for Derogatory Credit?

If you have filed for bankruptcy, did a short sale and lost your house, perhaps you think you’ll never be able to own a home again. Fortunately for you, you’re wrong! With bankruptcy becoming more and more common these days, mortgage loans have been developed to help finance those who want to try again. Don’t assume lenders are not willing to lend you money, you'll just have to pass the waiting periods above. 

Overall, the best strategy to getting back into a home after bankruptcy is to wait.  It won't be a walk down easy street though; you’re going to have to work harder but that easy working with the right mortgage broker. 

Find out more today with just a few clicks below.  Steve Morgan - Fairfax Mortgage Investments 302-541-5363.

Social Media - Realtor, Post, Likes & Leads

Realtors and Agents Only

I'm seeking agents that are interested in teaming up to find leads out of Facebook that I qualify and you sell. If your interest in getting results like my post 20 hours ago, 3,412 reached, 127 Likes and Shares, 393 Post Clicks -  just take a minute to fill out the form below. 

See Post on Facebook

Because of the  upfront effort and time I'm limiting it for now to 3 to 4 new agents. A baseline understanding and believe in social media is required to ensure the highest success in working together.

Affordable Housing - Locals

Is there a gap to make affordable housing that's reasonable priced for locals and within a budget similar to renting?

From my experience of doing pre approvals at Fairfax Mortgage as Mortgage Broker over the last 11 years I said "YES".

Affordable housing in Sussex County Delaware is tough;  anybody that has looked at homes in the price range of $140-$199k typical finds dated designs, places far inland and most needing capital to modernize.   Locals and new locals can see that there are tons of inventory of new construction homes and communities priced high 230's and up.

At my office we are seeking homeowners that want to own new construction, stick built homes; typically three bedroom two bath with garage similar to the picture above.  Most of these homes are located in Dagsboro where the property location qualifies 100% financing by USDA.

My office Fairfax Mortgage is seeking out homeowners who are interested in affordable homes in the price point of $199k to $229k.  Some basic information to help you determine if you should fill out the form below; stable jobs for last two years with verifiable income and living history of last two years.

We at Fairfax Mortgage ask if the builder is willing to pay for the closing costs, so the cash to close  at settlement can be $1k to 2k, in some cases less that rent and a security deposit,  payments typically for these homes are projected about $1100 -$1200.

USDA requires a borrower have a credit score of 620 or better to qualify and  one's  annual household income should  in the range of $50k to $79k .

If you know someone that is seeking an affordable home, share my blog; ask them to fill out the questionnaire below.  We work on finding solutions; we might be able to help whether it's today or for buyers who are planning a purchase within the next 18 months.

How much can I afford?

A Home Mortgage: How Much Can I Afford?


Home-owning is the American dream. If it is one of your dreams, you may be wondering how you can ever make it a reality. Home prices in many areas today are very expensive, in some areas prices have even doubled during the past five years because of the housing boom. The key to becoming a home owner is determining just how much of a house you can truly afford.

One of the most basic measures of how much you can afford to pay for a home is to choose a property that costs two to two-and-a-half times your yearly income. So for example, if you make $50,000 each year, the guideline suggests that you look for a home that costs between $100,000 and $150,000. If you live in one of the former real estate hot spots like Florida, Arizona, or California though, you may complain that even a salary twice that of the example would barely pay for a decent home. Fortunately this basic measure is not the only way you can calculate how much you can afford.

One of the ways most lenders determine your eligibility for a certain mortgage loan amount is by figuring out how much debt you have. They will plug that dollar total into a debt-to-income ratio. The ratio consists of two numbers. The first is the amount of money you plan to spend on your mortgage payments, divided by your monthly income. Lenders like to see this number under 28%, but some will accept higher percentages. To calculate how much money you can put towards a monthly mortgage, find a sum that meets the 28% ratio. The formula is to multiply your monthly income by 28% or 0.28. For example, if your monthly income is $4500, multiply that number by 0.28, and you find that the amount of money you should be able to devote to your monthly mortgage payment is $1260.

The second number in the ratio may change the real total of how much you can afford. This ratio takes into account your total debt. The basic principle is that the more debt you have, the less able you are to take on new debt, like a home mortgage. This ratio is calculated by adding your proposed monthly mortgage debt to your other total monthly debt and dividing that by your monthly income. Lenders prefer this ratio to be below 36%, although there are of course lenders who will make exceptions to this rule.

Beyond simple income qualifications and calculations, in order to determine how much mortgage you can afford you must take into account the down payment requirement. Traditionally lenders required a down payment that was 20% of the value of the loan. Contributing that much today is still preferable and will secure a great loan with a nice, low interest rate but such a sum is sometimes impossible for borrowers to scrape together today. Fortunately there are lots of lenders who will accept some lesser percentage. There are even some programs that offer a no-down payment feature. Be aware those that these types of loans will cost you in points and the interest rate. You should plan to make some sort of down payment, even if it is just 3% or 5% of the home price. This means taking money out of your savings, money you will not be able to use for further mortgage payments. Be sure to calculate how much a down payment will set you back in the home owning process.

There are many things to consider when figuring out how much home you can afford, including many personal and lifestyle preferences. Be sure to consult with a financial or mortgage professional to help answer your questions about the right house price range for you.

In life we always have changes, it's planning , planning and still more planning - the world didn't stop 12/31/1999 at 11:59 pm.  Will there be a learning curve for real estate agents, builders , lenders and mortgage professionals - 100%!  There's always a way of finding how to keep business moving - great ones are already doing so - PreApprovals are still part of the business.

FROM Origination News

The TRID Loophole the CPFB Says Is Legit

by Ari Karen

MAY 28, 2015 

Anyone who's closely read the nearly 1,900-page final rule for the TILA-RESPA Integrated Disclosures likely noticed a nifty loophole when it comes to how lenders can issue mortgage pre-approvals.

For everyone else, the Consumer Financial Protection Bureau recently clarified how a loan pre-approval doesn't automatically trigger TRID's three-day window for delivering initial disclosures.

The workaround was mentioned during a webinar hosted by the CFPB and Federal Reserve Board that also addressed new rules that prohibit lenders from requiring a borrower to provide verifying documentation prior to providing the Loan Estimate.

The CFPB first pointed out that TRID only prevented lenders from "requiring" such information, but that if voluntarily provided by the borrower it was permissible. Of course, the agency immediately followed up by explaining that a lender that explicitly or implicitly requires such documentation would be violating the law.

This obviously creates risks for lenders who expect to rely upon the borrowers' "voluntariness," since a borrowers' subjective belief they implicitly had to provide documentation could create risks for a lender.

However, it is only after all six pieces of information are collected that the requirement of a Loan Estimate is triggered. The CFPB also indicated that as long as a lender did not collect the six pieces of information necessary to trigger the Loan Estimate, a lender could obtain verifying documentation.

"The bureau does not believe that the definition of application will restrict creditors' ability to provide prequalification cost estimates or grant pre-approvals, because creditors could provide prequalification estimates and grant pre-approvals without obtaining all of the six elements of information that make up the definition of application," Pedro De Oliveira, counsel at the Consumer Financial Protection Bureau, said during the webinar.

Hence, as long as the lender does not, for instance, obtain the subject property address, the lender has no obligation to provide the disclosures and/or Loan Estimate.

Accordingly, those lenders that wish to provide pre-approvals may be well advised to consider making pre-approvals general, as opposed to specific to a designated property.

Ari Karen is an attorney at Offit Kurman.

BK, Short Sale & Foreclosure

Do you know someone that wants to own property again?

Especially after a BK, Short Sale or Foreclosure ...  A lot of people got caught in that BUY high and ops - had to hit the reset button.   The question I get often - how long do i have have wait?

Listen to the YouTube Clip

Fill out the form below ...

Luxury 2nd Homes

Lower interest rates on mortgages, in recent years, have encouraged more and more people to invest in real estate. Most of them are opting for buying vacation homes. In fact, a recent survey from National Association of Realtors suggested that vacation home sales surged as much as 30 percent in 2013 compared to 2012. Popular places for buyers include Bethany beach, Ocean city, and Panama City beach.

Investing in second homes 

Some people buy second luxury homes as a place for relaxing with their families. Some buy it for generating passive income. Others purchase it to spend their post-retirement days in a calm and serene place. It’s all about personal preference.

Getting mortgage for a second home has been difficult for an average borrower after the new mortgage lending regulations. Now, mortgage lenders screen consumers’ complete financial picture before lending them home loans. The regulations also suggest that a borrower’s entire debt payment should not exceed 43 percent of their gross income prior to tax withdrawal.

If you are planning to buy a second home in Coastal Delaware can help you to qualify for a second home loan even under such stringent regulations. They usually suggest you to make a down payment greater than 20 percent of the price. My clients are just blow away when they discover they can make that dream happen as little as 10% down.

If you feel that investing in a Scoond home is what you need and you can afford it right now, then by all means fill out the form below. Having a home where you can spend your post-retirement days in peace is a dream for many and reality for a select few. Having a second home in a popular vacation spot can have its own perks in terms of a healthy passive income too.

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Hockessin Properties

Hello Clip from Steve Morgan - Mortgage Broker

 

 

 

Would you do business with this loan guy?

Have you seen this house old Mill Road?

Anybody driving by wondering what's going on with this particular property, what kind of financing,  affordability, can I buy a house with no money maybe, what are payments for something like this for a brand new home ...reach out to me I can tell you all about it. 

http://www.bethanybeachlender.com/freeReports/Affordable%20New%20Construction/

What can I afford?

With locals and others moving to our beach area I get this a lot with first time homebuyers what can I forward? 

And really it's a two part question what can I look at the price of a house for my payments and two the second part is what I qualify for in payments. 

This clip I whiteboard and show what you can afford and expect a price point to be looking at properties. 

And the hardest question I see people having to answer me is ... What budgeted in your mind or comfortable level with a monthly payment. 

Most people are taken back because they think like a car sales person trying to sell them how much you want to spend that's not necessarily the case especially when you putting yourself in debt for hundreds of thousands of dollars. 

See when you buy a $200,000 house with interest you gonna pay about $400,000 for that house over the life of the loan. 

So I work backwards and I break it down check out the clip it's a little awesome in helping understand The complexity that can be overwhelming.   What you think?

http://youtu.be/7TUtBxLmopE 

Is there a paradigm shift with rates sheets?

Is there a paradigm shift with rates sheets?

Agents, Realtors, LO's What is a paradigm shift? It's a shift in one’s thinking in the way of doing business.  It's a transformation, a sort of metamorphosis, that is driven by agents of change. For me , it's seeing new ways of marketing,  new ways of communication,  new ways of gaining market share,  and connecting with buyers looking to buy.  I have been shifting the way I do business using various social media platforms, and I am noticing a shift in perception of my clients.  This shift is working. I am seeing an increase in my customer base, and through the power of social media, am reaching clients beyond my immediate sphere of influence. I hope to continue to partner with you as the shift in being an agent of change impacts our market. Check out my “Paradigm Shift” with providing how RATES are shared as your partner today and tomorrow – best if opened on Laptop , if smartphone you can get my FREE APP called Mortgage Coach. Regards,     Steve Morgan “Life is Better at the Beach” Cell 443.226.5297 Fairfax Mortgage Investment, Inc 34026 Coastal Highway Bethany Beach, De. 19930 Office 302.541.5363 eFax 302.261.0261 www.bethanybeachlender.com

Surfing and lightning in January

Unbelievable caught my son in the middle of a wave with the slow-motion iPhone 6 clip check it out. 

Amazing were surfing in this weather second even more Anazing that the waves are awesome. Seeing Lightning and catching it on video clip priceless. 

http://www.youtube.com/watch?v=kR75csMwpPI