Getting the best rate
A lot of the national lenders now allow us, as the brokers, to renegotiate a rate in order to keep a deal "in house". IN the past, this was not the case.
The way that it used to work is this. If the client was real sensitive to the rate, we would lock the loan with one lender and if the market changed for the better, we could actually close it with a different lender at the lower rate. This is sort of a "hedging" effect. Of course, this could not be abused because lenders did track the ratio of locks to closed-loans, and if you had too poor of a ratio, they would delete your account. In addition, the unscrupulous mortgage brokers will still charge the borrower the same rate and move it to another lender and make more money on the back end of the loan for selling the customer on a higher rate.
Now, we have the ability to lock a loan and if the market gets better, the lender we locked with will "renegotiate" the rate down to the new, lower rate. For example, if we locked the loan at 6.25% for 45 days, but as it gets closer to the closing, the market rate is 5.875%, the lender will now move the rate down to either 5.875, or at least 6%.
What are the advantages to this? The customer gets the market rate at or near the time of their closing, plus protection from a rising market. The lender gets to keep a loan that they otherwise would have lost. The mortgage broker gets to keep a loan processing through a particular lender. As mortgage brokers, we develop good relationships with particular lenders and we learn how they work. This is important in being able to deliver on the intangibles of speed and ease-closing.
Labels: Buyers, Interest Rates
I was editing some pictures and I could not resist posting this one of my two kids.
Labels: Family
Helpful Tips!
I heard about this website that has over
6000 helpful tips for around the house and other areas.
Credit for finding this need to go to Jerry Fowler, a local real estate broker that is very successful. Jerry has a very informative
website. In addition, he has a weekly radio show on WVOC (560 AM) and has little one minute updates every weekday in the morning and afternoon. Thanks Jerry!
Labels: Home
Get ready to sell
If you are thinking of selling your home, I found a link to a good litle article that lays out the top
10 things you can do to your home to boost the value. Thanks to
AGENT CEO blog for this link.
Now is a great time to start those little renovations / fix ups to get that home in top shape for the buying season that is right around the corner.
Labels: Selling
A simple idea to save money
I wanted to take a moment to throw an example out about the power of putting some money to the side. I am comparing this to the question of paying extra on your principal balance on your home loan, or investing the money.
Lets say that you just bought a home and borrowed $170,000 at 5.75% on a 30-year note. That payment would be $992.07 per month. You have budgeted and decided that you have $100 extra per month to put somewhere. Now, does that go to the lender or in a bank account?
If you give it to the lender as an extra principal payment, you will pay the loan off in almost 24 years (287 months to be exact). You will save a gross amount of $44,150 on the tail end of the loan. But, you did have to send in $100 per month for this time frame, so your “investment” in the home made $15,450 over the course of this time frame. That is a rate of return of 3.35%.
Now, what if you put that money to the side? The logical question is where is the best place. That answer is beyond the scope of this article, but I know that some online banks pay about 4% for simple money market accounts. CD’s pay in the 5 to 6% range. And, if you an find a good planner, I know that most of them can get you 10% if you give them enough time (7 to 10 years). So, lets just average it at 6%.
You take that $100 and put it somewhere that will earn ON AVERAGE, 6% per year. You pay the normal payment on the home. At about the same time (month number 287), you will have enough in this side account to pay the loan off in full. This assumes that you make 6% on average. If it makes 8% on average, you will have thousands more in the account than is needed.
The other benefit to this is that the side account is liquid. It is money that you can access for good or bad reasons, for investment opportunities, or to get you through a job loss or disability. I know from working in the mortgage business, lenders do not like to loan to people that do not have a job. There are loans, but there are strict limitations on cashing out equity and higher than normal rates. What if you had one-year worth of salary in this account and could take your time looking for a new job?
I know that this is very verbose and I apologize for the length. I am simply passionate about this topic. Americans have become HORRIBLE at saving, and anything that I can do to help people save just $25 per month, I will do it.
Labels: Financing, Mortgage Planning
