Karl's Mortgage and Related Info Site

Once your loan application is filled out and sent to the lender for review, the first thing they will look for is your ability to payback the loan you are requesting. My team and I have a streamlined loan process to help you get your ducks in a row prior to this review. A grand slam loan package is in perfect order and answers all the important questions up front. We know what the lenders are looking for, based on long-term relationships with them and extensive knowledge of guidelines for a multitude of loan programs that are available today.

What is the lender looking for when they review the loan application?

The lender wants to know about your personal financial picture, including savings and credit history and your employment stability. The co-borrower's history is also taken into consideration. The lender also considers the loan amount and appraised value of the home you are looking to purchase. Not every applicant is approved the first time through the process. If the underwriter has any questions or concerns, he or she will require certain conditions be met before they approve the loan. Pre-approval prior to house hunting lets you know exactly how much you are qualified to borrow in advance.

What can I do on my end to make it easier?

Before taking out a home loan it helps to establish a consistent record of paying your bills on time. If you have utility bills that are overdue, bring these up to date. Make sure you are paying credit card installments in a consistent and timely manner.

We can help you evaluate your debt-to-income ratio to determine what mortgage payment will be comfortable and affordable for you on a monthly basis. Aim for having enough savings to cover your down payment, closing costs if necessary, and two month's expenses in case of emergency. We'll help you find the loan program that works for you.

If I just started a new job six months ago, can I still apply for a loan?

A stable employment history is important, but the lender does take human factors into consideration. If you've recently completed college or vocational training, or were released from the military, you have good cause to have a lack of consistent work history. If your profession is seasonal, and gaps in employment are normal in your field, there are loan programs that can work with your situation. If you are a freelancer or do contract work, the lender will look for consistency in income over the last two years.

Consistency is the key word in the lender's mind. But know that lenders have developed many different loan structures to meet the needs of the general public. When your grandparents bought their first home, they probably put 50% down and made a lump sum payment when the note was due. Times have changed, and so have loan programs. My team and I stay on top of current mortgage trends. We monitor rates daily and have a support network of Realtors®, CPAs, Financial Planners and Credit Repair Consultants to lend you additional assistance.

Title: Warren Buffett, Pete Peterson & Dave Walker in Exclusive One Night Event
Date: Thursday August 21, 2008

Description: Fathom and Roadside Attractions present I.O.U.S.A.: Live with Warren Buffett, Pete Peterson & Dave Walker in an exclusive one night event in select movie theaters nationwide. This event will include the critically-acclaimed documentary, I.O.U.S.A., and a LIVE discussion about America's economic crisis and what we can do to change course.

The live discussion with America's most notable financial leaders and policy experts, including Warren Buffett, CEO of Berkshire Hathaway; William Niskanen, chairman of the CATO Institute; Bill Novelli, CEO of AARP; Pete Peterson, senior chairman of The Blackstone Group and chairman of the Peter G. Peterson Foundation; and Dave Walker, president & CEO of the Peter G. Peterson Foundation and former U.S. Comptroller General, promises riveting dialogue and keen insight into the crisis we currently face.

This one night event will be shown LIVE at 8:00pm ET / 7:00pm CT / 6:00pm MT / and tape delayed at 7:30pm PT.

Average ticket price ranges between $11.50 and $20, depending on location. Click here to find theatres showing the film near you and visit the I.O.U.S.A. official website for more information about the film.

I spent Monday evening at the apartment of a First Time Home Buyer going through her initial RESPA disclosures.  My client is young and nervous.  She read the paperwork more thoroughly than I have ever seen in my 5 years of originating mortgages.  She obviously understands the magnitude of the transaction.  As she carefully read each page that she was about to sign, she asked many of the same questions I have heard time and time again. 

Quite a bit of my business involves working with First Time Home Buyers.  They are typically not the largest deals, and usually involve more work, but I truly enjoy the satisfaction of helping someone become a homeowner for the first time.  I always tell them that they are welcome to call me at anytime with any questions they have.  Often, I'll make a comment that they will probably have the same questions that everyone else asks, so don't be embarrassed about not knowing something.

Monday night, I was asked something in a way I had never been asked before...  "Is this one of those Fannie Mae or Freddie Mac loans?  I've been hearing a lot of bad things about them and do not want one of those loans".  Her mortgage is an FHA mortgage.  Though she knew the loan was through FHA, she did not know all of the nuances of FHA vs Freddie and Fannie.

Her concern about Fannie Mae and Freddie Mac causes me concern.  Public perception of the mortgage industry and housing industry is tough enough, but this takes things to another level.  Fear of specific banks, brokers, or programs is something we will always have.  Fear of Fannie Mae and Freddie Mac scares me.  Though the percentage may be declining, I heard yesterday that 42% of mortgages are currently going through these two sources.  We need to hope someone can solve the problem quickly and the government can keep Freddie and Fannie afloat.  In the meantime, we nee dto continue to calm the fears the media continues to cause.

Urban legends have been a part of popular culture for years. We've all heard suspicious stories that supposedly happened to a "friend of a friend" but which couldn't be verified. Remember the story about Mikey, the Life® cereal spokes child, whose stomach allegedly exploded from mixing Pop Rocks and soda?*

The Internet has added a new twist to the urban legend phenomenon by making these stories easy to spread to a large audience over a short amount of time. What's worse, these stories are often distributed in the form of a plea for help from an unfortunate victim who could be saved if you just contributed a few dollars.

After the tsunami disaster, several fraudulent emails were circulated, some of which contained links to phony charity websites. The same problem occurred after September 11th. Whether it's a plea for money, an email containing false links, or a virus alert that isn't true, these scams have made it difficult to trust anything you hear via email. Here are some resources that can assist you with discerning what's real and what's not!

Emails - The next time you receive a dire virus warning or a chain email promising great wealth, visit http://hoaxbusters.ciac.org. This website contains information about over a dozen different categories of hoaxes, ranging from virus warnings to scam chains. If you receive an email that looks suspect, chances are this site will have a listing about it.

Charity Websites - If you are unsure about whether to give to a particular charity, visit www.charitynavigator.org. This website examines over 4,300 charities and evaluates how well they are using your donations. It also contains tips to assist you in choosing where to give and how to document your donations for tax purposes. Once you've selected your charities, you can usually make your contributions online. Just be sure to visit the organization's official website, rather than using a link in an email. This will ensure that your contribution is going where it should rather than into a scammer's pocket.

Urban Legends - Is there an urban legend that you've been wondering about for years? Visit www.snopes.com and find out once and for all if it's true. They have urban legends categorized by subject matter and even provide a bibliography at the end of their listings to reflect their research! The Discovery Channel is also exploring urban legends through their television show, MythBusters. To learn more about the show and the myths they have pursued, visit the Discovery Channel website at www.dsc.discovery.com and click on MythBusters.

*Mikey was played by an actor named John Gilchrist. He is alive and well and is currently working as an advertising executive!

Lock durations can vary for mortgage financing, but most lenders lock in the interest rate for 30-60 days from the date the loan application is submitted. As long as the loan is closed within that lock-in period, the lender honors the agreed upon interest rate.

Some consumers are misled by advertising that quotes unrealistically low rates based on 15-day lock durations. This is called 'short-pricing.' The lender basically knows the borrower doesn't have time to meet their conditions and have all the necessary paperwork in order within that brief time period. As a result, the lender is not obligated to honor the low rate that was listed in their advertising.

For simple refinance transactions, a 30-day lock-in period is more realistic. For purchase transactions, which are typically much more complex, you're much safer going with a 60-day lock, even though the interest rate might be a little higher than the rate you see quoted on billboards and the Internet.

Borrowers should make sure they have a written rate lock agreement, and allow themselves a reasonable amount of time to close their loan. I prefer to lock in all my clients as soon as their application is filed, rather than gamble with predicting short-term interest rate movement. My team and I focus more on assisting clients with long-term goals and management of their mortgage debt to secure a strong financial future.

Just over a year ago I started giving gifts to my clients after they close on their loan.  It is something that I had not practiced until attending a seminar and hearing Greg Frost.  Greg was America's first $1 billion loan originator.  One of the keys to his success has been his ability to develop repeat and referral business. 

Greg's favorite gift is a fruit basket.  He suggests sending the fruit basket to the customer's place of business and having it arrive on a Monday.  His theory is that the basket will be proudly displayed on their desk all week causing their co-workers to ask where they received such a wonderful gift.

Personally, I have begun sending baskets containing blueberry products.  My office is in Hammonton, New Jersey, which happens to be known as "The Blueberry Capital of the World".  Ronald Reagan himself actually proclaimed this statement on a visit here.  I am able to send a unique, personalized gift thanks to help from a local business called The Blueberry Factory.  I have become friends with the owner to the point that he actually found house-shaped baskets.  The response from my customers has been terrific as they love such a unique thank you.

Another great idea is to give a book.  Though they may not read it, your customer will be touched by the gesture.  Besides, books are something that people just don't throw away and you can personalize it with an inscription on the inside cover.  One suggestion would be your favorite motivational book.  If the client is relocating from another area, a book about local attractions or stories would be a good welcome.  For families with younger children, try The Bernstein Bears "Moving Day".  Just be sure to read the book before sending a copy.

Please share your closing gift ideas or contact me if you'd like to know more about some of the gifts I send.

Quieting Your Critic

 Robert Kiyosaki's bestseller, Rich Dad, Poor Dad,* has helped millions to create roadmaps to their financial goals. Central to his series is the notion of open-mindedness. Instead of sizing up a situation and saying, "I can't afford that," he suggests saying, "How can I afford that?" By reshaping the idea into an open-ended question, creativity is stimulated, which leads to inspiration.

Here's a list of critical thoughts and their positive replacements. I hope these help to prime your mind for money-making thoughts.

As open-ended thinking becomes more natural for you, you'll also find yourself better able to help clients who have critical objections. Plus, the difference in this kind of thinking is tremendous. If you aren't already quieting your critic, you'll find that these suggestions bring excitement into your daily life.

Consider writing out this list, and adding to it when you discover new negative thoughts. Invent positive replacements, and write those down, too. Review the list frequently, and practice!

Stay tuned for more Business Boosters coming your way!

*Rich Dad, Poor Dad by Robert Kiyosaki and Sharon Lechter, © 2000 Warner Books. Available through Amazon.com.

SAFE Mortgage Licensing Act was created to "encourage" a nationwide licensing and registry system.  In the next few years, individual states will:

1. Establish a minimum net worth for recovery fund requirements.

 

2. Require originators to register with the National Registry and obtain a unique identifier number. This will help regulators track individuals and prevent originators who receive complaints in one state from starting a new origination practice in another state.

 

3. Develop a state license program.

 

4. Require pre-licensure education.

 

5. Require eight hours of continuing education every year.

 

The bill helps homeowners who are currently upside down on their homes and owe more than their homes are now worth.

 Mortgages must have been originated prior to January 1, 2008.

 Borrowers must:

 

1. Certify that they did not default intentionally (there is penalty of jail if they are found to lie here).

 

2. Have had a DTI ratio over 31% as of March 2008.

 

The lien holder will work with the borrower to write down the mortgage to no more than 90% of the appraised value. For example, if a borrower owes $300,000 but the home is worth $250,000, the borrower will receive a new loan for 90% of $250,000, which equals $225,000. The $75,000 difference is forgiven.

 The lender shares equity in the property going forward, on a sliding scale:

 

1. If the home is sold within one year, the lender receives 90% of the appreciation and the home owner receives 10%.

 

2. If the home is sold within two years, the lender receives 80% of the appreciation and the home owner receives 20%.

 

3. If the home is sold within three years, the lender receives 70% of the appreciation and the home owner receives 30%.

 

4. If the home is sold within four years, the lender receives 60% of the appreciation and the home owner receives 40%.

 

5. If the home is sold after five years, the lender receives 50% of the appreciation and the home owner receives 50%.

 

The floor for Jumbo Loans will remain at $417,000, despite the depreciation in home prices.

The ceiling for Jumbo Loans will decrease from $729,750 to $625,500 as of January 1, 2009