Gene Mundt - Let's Talk Mortgages & Real Estate! : February 2012

 

 

Good News to Share

  Regarding My Services!   

  

 

 

Considering Helping Your Child

Buy a Home?

What Parents and/or Co-Signors Need to Know

 

   

   Within the current housing market, there is great opportunity to be found, especially if you're a first-time home buyer.  Home prices are down ... lower than they have been for almost an entire decade.  And Interest Rates??  The cost of borrowing, in regards to Interest Rates, is at historic lows ...   truly a gift, should you be able to take advantage of them.

 

    With all the positive opportunities that exist, many buyers, along with their families, are looking for ways to take advantage of these current positives by buying properties with the assistance of Co-Buyers/Co-Signors.  Most considering this path to home ownership are parents and/or relatives.

 

     As a mortgage lender, it is not uncommon for me to receive  questions regarding this method of home buying.  "Co-Signing" is happening more and more often.  In mortgage terms, this method of buying/borrowing is called being a "Co-Mortgagor" ... a fancy term for "another borrower".

    This practice is typically utilized when the "non-occupying" Co-Borrower (let's just say a parent) is the stronger applicant on a mortgage ... and his/her income, credit, and assets make for an approvable loan when the "main borrower/buyer" is not able to qualify for a mortgage on their own.  Put another way, the child in this scenario is buying their first home, often has adequate credit ... but lacks the job history or income to qualify on their own. 

    Considering the (child's) parent's income and credit and debt, makes the loan approvable because the parents' "vitals" help the numbers ... meaning the debt-to-income ratios ... needed to reach the approval level. With FHA, the down payment requirement is only 3.5%, and the Borrower (who MUST occupy the purchase residence) gets as good of Interest Rate as if they had borrowered on the mortgage alone.

    Obviously this is great for the son/daughter, but what about the "Co-Signor, Co-Mortgagor, Parent" involved?  The fact is, they will share the same debt and note responsibility as the main applicant.  That debt/responsibility will appear on their credit report as their mortgage obligation.  If the child misses a payment, the parents (Co-Signors/Co-Mortgagors) credit report will show as having a late payment.  A very valid reason for all parties involved to give this great consideration prior to agreeing to start the mortgage process.

 

     Consider this tho ... Co-Signors/Co-Mortgagors (in my most recent Co-Signor/Co-Mortgagor case) were considering buying a home on their child's behalf, because they didn't think the child could qualify on their own.  These parents were fully-prepared to put forward a 20-25% down payment, purchase the home in their own names, and then move the child in as a tenant.  The ability to become Co-Signors/Co-Mortgagors changed the financial scenario they received significantly for them and their child.

 

     How did it change?  What are the differences to be found within the two methods of home buying?

 

     The biggest difference is in how the bank perceived their upcoming ownership.  Parents that just buy a property outright and rent it to their child are considered investors by the bank lending money.  Investors pay higher interest rates to borrow money (typically a minimum of 3/4%) ... and/or their Closing Costs rise several thousand dollars.  Why?  Because the bank considers this type of loan a higher RISK because of the "occupancy" status of the property.

 

     Now you know a bit about the ins-and-outs of Co-Signing/Co-Mortgaging.  But if you're a parent, or someone considering Co-Signing/Co-Mortgaging, you're going to need to know ... where and how do you start the process?  What financial documentation will be expected from you?  What funds will be subject to verification?

 

     Much of the process of mortgage financing will be the same for Co-Signors/Co-Mortgagors as for the actual resident(s) of the property. A handy list of those financial documents needed for mortgage application can be found via my website, by clicking ...  "HERE".  

 

      What is probably the most common concern or question I hear from Co-Signors/Co-Mortgagors (parents), is ... "How has the mortgage process changed since I last participated in it"? 

      There is no denying the truth.   For a great many parents the mortgage process will be unrecognizable from their own prior financing experiences.  And admittedly, the requests for documentation and verification will seem a bit overwhelming. 

 

     But documentation and verification is what is required to move the modern mortgage process along to successful completion.  Underwriters and end-lenders will not be deterred from it.  Co-Signors/Co-Mortgagors must be prepared to have monies/accounts/downpayments verified, along with their employment, credit/debt, and more, just as their child will. 

 

     Now, more than ever, the mortgage process itself is specific to those borrowers taking part in it ... so individual and personalized instructions regarding your financial scenario will be provided by your mortgage lender.  Listen.  Learn.  Comply.

 

    If you do so, those requests are completed in a timely fashion, and the lender's instructions are followed, Co-Signors/Co-Mortgagors can help their child successfully establish credit, obtain historically low interest rates, and buy a home at very friendly housing prices. 

 

     Should this be a financial step you are considering within your own family ... contact me, or your own mortgage professional, to obtain information specific to your needs. 

 

     Becoming a Co-Signor/Co-Mortgagor for your child could be the gift that sets them down the path to a healthy financial future.

 

 

 

      *  For personalized mortgage information and service regarding your family's Co-Signor/Co-Mortgagor options in Chicago, Chicagoland, or across the nation, please contact me.  I will put my 35 years of mortgage experience and expertise to work on your family's behalf.

     I can be contacted through any of the following:

Direct:  815.277.4036     Cell/Text:  708.921.6331

Email:  gmundt@thefederalsavingsbank.com

www.genemundt.com

Skype:  630.219.1316

Click here 4 a: NO Cost NO Obligation Mortgage Consultation

 

 

    

 

    

 

    

 

    

    

 

    

 

     

 

As I wrote in my comment to Ginny Gorman (Phillips Post Road Realty, North Kingstown Homes for Sale - North Kingstown RI), I cannot praise the message contained in her post below strongly enough!  I say Amen!

And Ginny is so right.  Even after having multiple discussions with multiple real estate professionals (agent AND mortgage lender) ... some buyers will still go out and buy, buy, buy ... or have credit inquiries run for future purchases. 

It needs to be known and stressed ... sometimes even the smallest change in credit can have a huge impact on credit scores, so please, should you be in the process of home buying  ... DO NOT MAKE A PURCHASE OR CREDIT MOVE WITHOUT SPEAKING TO YOUR MORTGAGE LENDER FIRST!  And I add, for the short-term after your loan closing, as well.  Depending on the mortgage program you are in, it could still cause issues.

So play it safe ... and make the call to your mortgage lender first PRIOR to any financial actions.  Better to be safe, than sorry ...

Gene

 

 

 

"Connecting the Mortgage Dots in Today's

Real Estate Market"

Carra Riley, Cosmic Cow Pie, and

Gene Mundt, Mortgage Lender Answer

YOUR Mortgage/Credit Questions

    

 

 

     Looking for answers to your mortgage/credit questions? 

 

     Tune-in to Carra Riley's Cosmic Cow Pie blogtalkradio program tomorrow, February 23rd at 10 AM CST to receive the answers you need and seek. 

 

    

 

     Carra will be talking to me, Gene Mundt ... a mortgage lender  at The Federal Savings Bank (formerly known as Chicago Bancorp) regarding some of today's most important and timely mortgage, credit, and home buying questions in a  Cosmic Cow Pie segment entitled,  "Connecting The Mortgage Dots in Today's Real Estate Market".

 

     Together, Carra and I will be discussing and answering mortgage questions, such as:

 

•   Which are the best mortgage loans available with minimum down payments?
  
•   How do I tackle my credit issues?
•   How and where do I start the home buying process?
•   What financial information and documentation will I need to present at mortgage application?
•   Who can be a co-signor on my mortgage, if I need one?
•   What are typical loan fees?
•   What is the difference between Town homes and Condominiums
•   What kinds of lending programs exist for investors and investment property purchases?
•   What is HARP 2.0 ... and how can it help me?
  
•   More ...

    

     As someone with 35 years of mortgage experience, an in-depth, multi-decades background as a licensed real estate appraiser, and as a Certified Financial Planner, I have the extensive knowledge and expertise needed to answer the questions you have ... and also provide the services you need in Chicagoland and across the entire U.S.

     It's easy to take part in this Cosmic Cow Pie session.  Just dial (347) 994.1903 and ask us your questions!  If you can't join us during the live blogtalkradio program, you can listen to a replay of this program at any time.  Just go to Carra Riley's Cosmic Cow Pie  blogtalkradio site and  "click" to listen  at your convenience.

     I can always answer your mortgage and credit questions at a more convenient time for you through any of the following means:

Direct:  815.277.4036    Cell/Text:  708.921.6331

Email:  gmundt@thefederalsavingsbank.com

Website:  www.genemundt.com

Skype:  630.219.1316

 

     Have your questions ready!  Carra Riley and I look forward to assisting you with all your mortgage/credit questions and needs when you join us tomorrow, February 23rd, at 10 AM CST on Cosmic Cow Pie's blogtalkradio program,  "Connecting the Mortgage Dots in Today's Real Estate Market".

 

     See you then!

 

 

    

For more Cosmic Cow Pie and Carra Riley's insights ...

 

 

 

 

 

What's Your Point??

 Nawwwww ... Not THAT Point!

 

 

 

 

     A great scene, isn't it?  But it's not those "points" I'm going to talk about in this blog.  No, I'm talking the "points" referred to when discussing mortgage costs and options. 

 

     I've had several discussions as of late, with some pretty confused borrowers regarding these "points".  They've had no real grasp of exactly what a "point" is prior to our discussion.  What it can equate to in cost to them.  How the cost of a "point" is figured.  This is especially true with first-time home buyers.

 

     Here's what I tell my clients when starting this discussion ... 

     The best way to think of a "point" cost, is to remember a percentage point equaling the number 1 ... 

One percent (1%)  =  1 point

One percent (1%)  =  .01

 

     Then the cost of the "point" should be thought of this way:

Cost of Point  =  .01  X  Your Loan Amount

 

    

     Okay, let's put some actual dollar amounts into the equation.  It will make better sense to you.

 

     Let's say you are borrowing $200,000 for your mortgage.  One (1) "point" then costs you an additional $2,000 at Closing.

Here's the math equation for that:

.01  X  $200,000  =  $2,000

 

     The question I typically hear as a  mortgage lender  during these conversations is this ...  If these "points" COST me as a borrower ... why would, or should, I even think of buying them?  What does buying a "point" accomplish for me

 

     Think of "points" (and the dollars associated with them) as interest earned or paid to the bank.  The "reward" for you as the Borrower when buying that "point" is the lower interest rate received for the life of their loan at that bank.

 

      Alot to digest, isn't it?  It must be remembered too, that as the markets fluctuate, so does the benefit of paying a "point" ... and the resulting reduction in interest rate earned for doing so.

 

     As a rule ...

1 point paid  =  1/8% lower interest rate

 

      Again, let's revisit the math we did above for that:

$200,000 Mortgage

Paying 1 "point"

Cost of "point" equals $2,000

     

     Let's say, on the day this "point" and mortgage costs are being quoted to you, the interest rate is lowered by 1/4%.  We'll say from 4% interest rate to 3.75% interest rate.  The savings realized by the borrower each month (for buying a "point") is then $28.60.

 

     Now, there is one more very important thing to figure into considering a "point" purchase ... and whether it makes sense for you to buy the "point" for your mortgage.  And that's, how long you expect to be in the property you are buying or refinancing.

 

     Why does that matter?  Again, the numbers tell the story ...

 

     We now know that the amount you save in interest monthly for buying your "point" was figured at $28.60 above ... and that you will pay $2,000 at your closing to receive that monthly savings.  So to figure what your "break even" time is ... meaning the point where the savings in interest would equal the dollar amount paid on the "point" ... you do the following:

 

Amount paid for "point" ... $2,000

divided by:

Amount saved in interest each month ...  $28.60

Equals:  

70 payments

 

     Knowing how long it takes to payback the savings realized by paying a "point" is absolutely essential when making your decision to buy that "point" ... or not.  Then you simply need to consider if you plan on being in the property you are buying long enough to reach that "break even" time. 

 

     Helping you understand HOW the savings on "points" are figured ... and HOW buying "points" can affect your bottomline ... is an important part of my job, as your mortgage lender. 

 

     But the answer and decision is one that only you, the borrower can ultimately make.   I hope that this blog helped you do that ...

 

 

     *  Having an experienced, knowledgeable mortgage lender at your side during the many decisions your are called upon to make during your home buying is crucial.  Contact me today.  I'll put my 35 years of mortgage experience, knowledge, and expertise to work on your behalf.  I'll be very glad to hear from you.

     I can be contacted through any of the following means:

 Direct:  815.277.4036   Cell/Text:  708.921.6331

Email:   gene@chicagobancorp.com

Website:   www.genemundt.com

Skype:  630.219.1316

Click here 4 a: NO Cost NO Obligation Mortgage Consultation 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    "Rumours" ... catapulted Fleetwood Mac to the top of the charts during the year 1977 ...

•   3.5% down payment for FHA Loans
•   $100 Down - on HUD Foreclosed properties
•   $1,000 Down on IHDA Loans
•   5% Down on Traditional Conventional Loans
•   No Money Down on VA and USDA Loans
•   3% Down on some Homepath Properties
•   .... and More!

   Obtaining mortgage loans has become a much more detailed and nuanced process.  There is truth to that.  And seeing to ... and dealing with these many details ... can likely take mortgage and real estate professionals' focus off the most fundamental of concerns that potential home buyers have.  The basics, like that of down payments.

Don't "Cut Your Nose Off and Spite Your Face"

when it comes to your Mortgage Financing

 

 

 

 

     There's an old saying ...   

 

    "You're cutting your nose off and spiting your face" ...   

 

     Stretching the point just a bit, I want to use this saying to get a message across regarding interest rates ... and the intense focus that most home buyers, and those refinancing, place on them.

 

    Now I know that sounds a bit ironic coming from me, a  mortgage lender.  But as much as I think the interest rates we are seeing right now are a huge HUGE advantage to those seeking mortgage financing ... I also think that the extreme attention and importance placed on rates by consumers can be rather myopic and ultimately end-up being detrimental to their long-term financial health. 

    Using a play on another old adage, I believe  ... "man/woman cannot (and should not) live on interest rates alone".  And too many times I see mortgage clients doing just that.  They make decisions based SOLELY on interest rates. 

 

     Typically a lower interest rate, and the subsequent lower payment attached to it, puts a "fire out".  Meets a need in their mind.  They see a tangible difference in the numbers they're going to shell-out each month ... and that's obviously important.   I understand that ...

 

     No one ... NO one really WANTS a mortgage.  No one WANTS to pay money out of their pocket each and every month.  But the need is there, right?  And call it the financial planner in me,  but a home buyer or homeowner is typically talking the biggest financial "stake" and financial need they have in their lives when speaking to me about their mortgage financing. 

     So I ask you ... Why not get the  "biggest bang for your buck"  that you can from it?  Utilize it?  Maximize the benefits you receive? 

 

     A wise decision on your mortgage rate and mortgage program CAN do that for you.  And simply put, the lowest interest rate ... and the mortgage program/term attached to it ... may NOT be the best overall financial decision for you.  And ultimately that's what you're trying to do ... pave the way to a better, more stress-free financial future, right?

 

     But you have to be working with a mortgage lender that has the expertise, experience, and knowledge ... and will take the time ... to explain ALL options available to you.  Options that may serve a better financial purpose for you in the short and long-term.  Options that may leave you much healthier financially for the future.

 

     Many times the difference in interest rates between mortgage programs can be small ... but still carry a HUGE and reverberating impact on your finances.  The importance of working with a mortgage lender  that can and will "paint the picture" for you regarding the short and long-term benefits of each of your mortgage options cannot be overstated.

 

     That's why I believe making your mortgage selection based solely on interest rates can be like ... "cutting your nose off and spiting your face".

 

     So I suggest ... don't make the decision hurredly.  Take the time to do the homework necessary to find the  mortgage lender  that can provide you all the information, products, and services you need.  Then listen intently to what they say.  Take notes.  Ask questions.  Get ALL the facts regarding ALL the mortgage options and interest rates currently available to you.  Have the mortgage lender you're speaking with "paint you the picture" in hard numbers.  Consider carefully the comparisons provided you. 

    Then and only then, make your final financing decision.   That way when you move ahead with your financing you will know for a fact that you chose the right mortgage lender.  On your Closing Day,  you will know for a fact that you have the best mortgage financing for YOU personally ... in the short-term AND long-term. 

 

     You'll feel .. and be ... much happier and healthier financially for it.

 

    

 

    

     *  Work with a  Mortgage Lender  with 35 years of experience, expertise, and knowledge in mortgage lending, appraising background, and financial planning.  Contact me today.  Together we will discover the mortgage financing that best suit your needs, in the short-term and long-term both.

     I can be contacted through any of the following:

Direct:  815.277.4036   Cell/Text: 708.921.6331

Email:   gene@chicagobancorp.com

Website:  www.genemundt.com

Skype:  630.219.1316

Click Here 4 a:  NO Cost NO Obligation Mortgage Consultation  

     

 

   

 

 

     I hope that the information provided here on interest rate "lock-in" will assist those presently pursuing mortgage financing.  Should you need further information or explanation regarding this part of the mortgage process, please do not hesitate to contact me.  I'll be glad to assist you further and in every way I can.

     *  Looking for further information or answers to your mortgage and credit questions?  Contact me!  I'll put my 35 years of mortgage experience and expertise to work on your behalf.

     I can be found through any of the following means:

Direct:  815.277.4036      Cell/Text:  708.921.6331

Email:  gene@chicagobancorp.com             Website:  www.genemundt.com

                                                   Skype:  630.219.1316                                                                             

Click Here 4 a:  NO Cost NO Obligation Mortgage Consultation

           

 

 

Answering Mortgage and Credit-Related Questions

and Connecting the Dots ...

How Can I Help??

 

    

 

     Sometimes I wonder ...

 

     Am I really getting through to my clients?  My referral partners?

 

     Now I know there are ways to measure some of that.  Analytics are available and increasingly detailed for your website, social media, and more.

 

     But I still sometimes wonder ... am I providing the information or answers to questions that are really on the minds of those finding and engaging me?  

 

     I remember having some heart-to-hearts with my kids when they were young.  Giving them a fairly thorough explanation on some topic ... only to find out afterwards that I had just given them a bunch of info they really could have cared less about. 

     What they'd REALLY wanted to know was ..... (fill in the blanks).   I in my zeal to help them or explain something had totally misinterpreted what they really were asking me.  Or I had assumed I knew what they wanted to know ... or should know.  Confused it or saw it through my own agenda.

 

     I do believe the information I typically provide my clients or referral partners is very worthwhile and has value.  It IS information they should have at some point in the process. 

 

     But I also think that it can sometimes have holes within it.  Or miss the mark, if it's not thee information they want, need, seek, or are ready to digest at the time.  I can still be leaving many dots unconnected for them.

 

     Obviously implementing better and more thoughtful listening skills all the time improves this issue.  But I also realize that nothing solves it like simply taking the time to ASK ... "What it is YOU want or need to know"?  "What questions do you have"?  Or ... Simply ASKING ... "Did I answer the questions you have or provide you the information you seek"?

 

    

 

     I'm thinking I should provide some real opportunity. Give YOU that chance now.     

     So ... Put your "Thinking Caps" on!

 

   

 

     What questions do YOU have regarding mortgage lending, mortgage processing, credit, appraisals, securing loan approvals, or more ... that you'd like answers to ... or information on ... that haven't been addressed??  What dots haven't been connected for you?  Here or elsewhere ...

     Simply ... How can I assist you and answer your questions better?

 

      I'll be taking the questions asked ... and the topics raised ... and addressing them in upcoming posts.  Should you have need for a more timely or personal response ... I will contact you directly.

 

      This will prove very educational and insightful for me ... so I thank you ahead of time for your participation and your questions.  I hope it proves educational and beneficial for all that participate, as well ...

 

 

 

     *  Should you have more direct mortgage and credit needs or questions, please contact me at any of the following:

Direct:  815.277.4036     Cell/Text:  708.921.6331

Email:   gene@chicagobancorp.com

Website:   www.genemundt.com

Skype:  630.219.1316

Click Here 4 a: NO Cost NO Obligation Mortgage Consultation