Eight Tips for Hiring a Real Estate Agent

Once you’ve decided to work with a realtor who specializes in working with a senior clientele, it’s time to compile a shortlist of candidates and begin scheduling interviews. Let’s consider eight essential rules of thumb that you’ll want to keep in mind for these next crucial steps in the hiring process.

1. Ask someone who works with seniors if they know a great real estate agent.

There are two reasons for this. First, real estate agents cannot give or get kickbacks for referrals. Because of this, the only reason real estate agents get referrals from other professionals is because they’ve earned a reputation for doing a great job. Second, professionals who work with seniors are a wonderful resource because they know firsthand how the needs of a senior can differ from the needs of the general public. It’s very important for the real estate agent who gets referred to a senior client to do a great job; otherwise, both the senior professional and the referral look bad.

2. Get to know the real estate agents you’re considering for the job—and interview at least two of them!

While you may expect to find some big differences between brokerages, keep in mind that real estate agents are independent businesspeople. As such, you may find two agents from the same brokerage who do things very differently. It’s worth spending the time to get to know the professionals whom you’re asking to handle the sale of one of your largest assets. Ask whether the person you’re considering is a full-time agent, who will be your main point of communication, and ask for references from past clients. Don’t forget: work with someone you like!

3. Get to know the brokerage firm.

Although the brokerage you go with isn’t as important as the real estate agent with whom you choose to work, there are certain factors that may influence your decision. Here are a few questions to consider: How long have they been in business? What are their hours of operation? (They should be open seven days a week for your potential buyer.) Are they local and reputable? What is their market share in the neighborhood where you live?

4. Understand the marketing plan.

Creating the marketing plan is one of the most important things your listing agent will do for you. It should identify who’s the most likely buyer for your home, how your buyer usually shops and how your buyer will be targeted. Depending on the kind of home you have and where it’s located, you may want ads in the paper, print ads in real estate magazines, open houses, mailings, Internet advertising or a combination of these marketing efforts. Your listing agent should make information about your house available seven days a week, twenty-four hours a day. By the way: get the marketing plan in writing.

5. Establish how you’ll get updates on the market and on feedback from showings.

One of the biggest complaints consumers have is that they don’t hear from their real estate agents often enough. Ask your agent how you’ll be informed about the market in general and how many times your home was seen on the Internet, feedback from open houses and realtor open houses, and feedback from buyers’ real estate agents.

6. Stay in the driver’s seat.

A good real estate agent knows the local real estate market and stays on top of the most recent technology to market your home effectively. A great agent knows how to show you information about the local market and the most recent trends in marketing so you’re in a position to make informed decisions about your home. If your real estate agent makes recommendations and you’d like more information, just ask. For example, “I understand your recommendation. On what information are you basing that recommendation?” Never be afraid to ask why something is or is not being done to sell your home. You are the client, and you are in charge.

7. Ask whether your agent offers any other services to simplify your move.

Real estate agents run their own small business, so you’ll find some, particularly those who specialize in working with seniors, who offer additional services. These services could include staging your home, helping you find a senior housing community, and hiring movers or an electrician, plumber or handyperson to get your home ready for market. If your real estate agent does offer these additional services, ask whether they cost extra or are included in the commission.

8. Ask about commissions—but consider all the factors before making your decision!

Many consumers who are shopping for an agent make the mistake of comparing them solely on the basis of what they charge for commission. For example, if Rick Realtor charges 8% and Sally Seller charges 3%, you may decide Sally is a much better option. But what if Rick pays the buyer’s agent 4%, and Sally pays the buyer’s agent just 1%? What if Sally is a part-time agent and her office is only open on Wednesdays and Thursdays from noon until 3:00? Is it still a “good deal”? Make sure you understand how long the listing agent wants to have you under contract, how much he or she will pay the buyer’s agent, and what will be done for you from the time the home is listed until the home clears escrow.

Why Jumbo Mortgages Are So Cheap

Submitted by Aaron Crowe on November 03, 2014

Jumbo mortgage rates are at 25-year lows , beating interest rates on traditional, conforming loans. At first glance, that doesn't make sense because jumbo loans are for expensive homes.
Why would a bank give a lower loan rate to someone who wants to buy an expensive home? If they can afford a higher priced home, can't they afford a higher loan rate? Why help the rich get richer?
The answer is simple economics, along with some greed to attract more wealthy clients.
"The rates on jumbo loans are a symptom of the overall credit markets," says Bennie Waller, a professor of finance and real estate at Longwood University in Farmville, VA. "Lenders are very conservative in the lower- and middle-priced home markets. Such borrowers need a high credit score and an above average amount of capital. That is, lenders are focusing on the most highly qualified borrowers."
In other words, the loans offer banks low risk and high return.

How jumbo loans work

Recent jumbo loan interest rates for a 30-year fixed at Wells Fargo were 3.875 percent, while a conforming loan for the same term was 4 percent.
Jumbo loans traditionally have higher interest rates than conforming loans, and are meant to help highly qualified borrowers afford expensive homes. Jumbo loans are for more than $417,000 -- or $625,500 in Hawaii and Alaska -- the limits set by Fannie Mae and Freddie Mac as conforming loan limits.
To qualify for such high loans, jumbo loan borrowers are often required to have lower debt-to-income ratios, higher credit scores of 700 or better, larger down payments of at least 20 percent, and higher reserve funds than conforming loan borrowers.
Jumbo loans aren't sold to Fannie Mae or Freddie Mac, so banks have more flexibility to down payment and debt-to-income ratios, says Travis Saling, a mortgage loan officer at Sierra Pacific Mortgage in San Diego, CA. Fannie and Freddie charge specific fees called "guarantee fees" to help guard against defaulted loan exposure. Jumbo loans are cheaper, in part, because they don't have such fees, Saling says.

Go where the money is

By making jumbo loans appealing to high-wealth customers, banks can use the loans as an opportunity to cross sell auto loans, credit cards, home improvement loans, lines of credit, checking accounts and other bank services, says Norman Koenigsberg, president of First Choice Loan Services, Inc., in East Brunswick, N.J.
"It creates a client for life relationship," Koenigsberg says. "It's been a strategy for many, many years."
More affluent customers will likely have more equity in their property, partly because jumbo loans require down payments of at least 20 percent, and the home will be a better piece of collateral for the bank to have, he says.
"This has allowed the larger lenders to reach an audience that would have been harder to reach without this," Koenigsberg says.
Some lenders give a 0.25 percentage point jumbo loan discount to borrowers who open a checking or savings account with them and sign up for automatic mortgage payment, says Van Tran, vice president of The Federal Savings Bank in Chicago and owner of My VA Rates, a website that helps veterans get VA jumbo loans.
"If you have a mortgage with them and they can see all your assets, then they're going to call you from time to time and try to sell you services," Tran says of banks going after clients who are worth millions.

Investors seeking mortgages

Another reason jumbo loans are cheap is because investors want them and there isn't much supply, says Casey Fleming, president of the Silicon Valley chapter of the California Association of Mortgage Professionals. Historically the spread between conventional conforming loans and non-conforming jumbo loans is 0.50 to 1 percentage points, though on many days in today's market there's no difference at all, Fleming says.
Almost all mortgage loans are packaged into pools and sold to investors, he says. "The investors then replenish their cash by raising money, usually by issuing debt in the form of bonds, secured by the cash flow from the mortgages in the pool," Fleming says.
But worldwide unrest and financial uncertainty is increasing demand for U.S. bonds, but supply is down, he says. New mortgage originations are at a 20-year low, and competition among bond buyers and low supply drive the price up and the interest rate down, Fleming says.
Jumbo mortgage rates should go up within the next five years, Koenigsberg says, which could cause potential harm to banks holding such loans for 30 years that are collecting historically low interest rates.
Lastly, jumbo rates are low because banks are offering very low yields on their customers' deposits, often less than 1 percent on a savings account, Saling says. Having a borrower pay around 4 percent interest on a jumbo loan for 30 years leads to healthy returns that banks want to keep on their books instead of selling them on the secondary market, he says.
"Smaller companies that don't have the luxury to hold the loans are having no issues selling them as the big banks are eager to take on these clients," Saling says. "The underwriting standards are still very tight so the banks see these clients who are able to obtain jumbo loans as extremely safe investments."
Aaron Crowe is a freelance journalist who specializes in personal finance topics. Follow him on Twitter @AaronCrowe or find his website at AaronCrowe.net.
First published on MortgageLoan.com at: https://www.mortgageloan.com/why-jumbo-mortgages-are-so-cheap-9797

Using APR to Assess Mortgage Costs

By Kirk Haverkamp, Published: August 30, 2013

Shopping for a mortgage can be confusing. Borrowers have to sort through a mix of interest rates, fees, points and all the rest to try to figure out what's the best deal.

The figure called the APR is supposed to help make that easier. But most borrowers don't understand just how it works or how you're supposed to use it.

APR stands for Annual Percentage Rate. Put simply, it's a way of expressing the actual cost of a mortgage in terms of an interest rate, a rate that's supposed to be a more accurate reflection of the loan's true cost than the stated mortgage rate.

It's a useful tool to have because lenders often offset a low advertised mortgage rate by charging higher closing costs. A higher mortgage rate may actually be a better deal if it comes with lower fees. The APR is intended to help you sort that out.

The APR must be included on any advertisement that offers a mortgage rate for a given loan. So it provides a quick way to sort through competing loan offers at a glance to get a sense of how they compare to each other. Generally speaking, the lower the APR, the lower the total cost of the loan.

(The APR must also be featured prominently on the Good Faith Estimate you receive when you apply for a mortgage, as well as on the Truth in Lending Statement you receive before closing the loan.)

How APR works

The way APR is calculated is that it's the interest rate that, charged on the base loan amount, would produce the same monthly payment as the actual mortgage rate would if you rolled all the various fees into the loan. It's best explained through an example.
Suppose you're borrowing $200,000 on a 30-year fixed-rate mortgage at 4.75 percent. That would give you a monthly mortgage payment of $1,043.29. Closing costs typically range from about 2-5 percent of the loan amount, so let's say $6,000 in fees on this loan - or 3 percent.
If you roll that $6,000 into the loan, you'd be borrowing $206,000 at 4.75 percent interest, which would raise your monthly payment to $1,074.59. To get the same monthly payment on $200,000 (the actual loan amount), you'd need an interest rate of 5.008% - which is the APR.
Now consider another loan offer which would charge 4.65 percent interest but with $10,000 in fees. Adding that onto the base loan gives a total of $210,000, which at 4.65 percent over 30 years produces a monthly payment of $1,082.84. To get the same monthly payment on $200,000, the interest rate would be 5.075 percent, which is the APR.
So you can see the first loan appears to be a better deal, even though it has a higher interest rate.

The limitations of APR

A few things to note about APR.

First, it doesn't necessarily reflect the true cost of the extra fees and charges - it only expresses them in terms of the mortgage rate itself.
For example, if you have an extra $10,000 in a CD or savings account that is only earning 1 percent, you're better off using that to pay the costs up front than rolling $10,000 in closing costs into a mortgage that will cost you 4.65 percent. In effect, you're only paying 1 percent for the money (lost earnings) compared to 4.65 percent (actual interest paid).
Second, the APR assumes you'll pay off the loan through normal amortization, and won't refinance it or pay it off early (such as if you sell the home in a few years). That's going to affect the math. Generally speaking, it's better to have lower fees if you expect to sell or refinance before the loan is paid off, since it takes awhile for the benefits of a lower interest rate to balance out the cost of higher fees.
Third, APR doesn't work very well with adjustable-rate mortgages (ARMs), because the rates on those start changing before you ever get close to paying the loan off, and ARMs vary on how much their rates change. So keep that in mind as well.
But even though it's not perfect, APR is still a very valuable tool to use when shopping for a mortgage. A loan with a significantly higher APR than competing offers should send up a red flag. Otherwise, use a mortgage calculator to run all the numbers and try to figure out what loan makes the most sense for you.

First published on MortgageLoan.com at: http://www.mortgageloan.com/making-sense-apr-and-mortgage-costs-9556

HARP Refinances Doubled in 2012

The Home Affordable Refinance Program (HARP) topped 2 million mortgages refinanced in November, with half of those coming in just the past year after new guidelines were adopted.

Nearly 1 million low- and negative equity mortgages were refinanced from January through November under the program, which had struggled to live up to expectations since its launch in spring 2009. New rules adopted in late 2011 made the program more attractive to lenders, who began to approve more refinance applications as a result.

The 130,000 mortgages refinanced through HARP in November were the second-highest total in the program’s history, trailing only the 137,000 refinanced in June 2012. HARP accounted for nearly one-quarter of the total dollar volume of home loans refinanced during November.

Big increase in underwater refinancing

Among the biggest beneficiaries of the new guidelines have been homeowners who are underwater on their mortgages. Over 40 percent of HARP refinances in 2012 were classified as underwater mortgages, compared to less than 10 percent during the first two-and-a-half years of the program.

Furthermore, 24 percent of those who refinanced through HARP in November were underwater on their mortgages by at least 25 percent of their home value (125 percent loan-to-value ratio). Prior to 2012, HARP guidelines did not permit refinancing mortgages that far underwater.

Not surprisingly, HARP refinances are most heavily utilized in states that saw the greatest impact from the downturn in the housing market. HARP accounted for 68 percent of all mortgages refinanced in Nevada during November, 56 percent in Florida and 47 percent in Arizona. In those states, two-thirds or more of all HARP refinances were for underwater loans.

New rules cut fees, protected lenders

Prior to the adoption of the new guidelines, the vast majority of mortgages refinanced through HARP were classified as low equity, with loan-to-value ratios of 80 percent or greater (less than 20 percent equity). The new guidelines gave lenders certain exemptions from financial liability, making them more willing to take on such loans, eliminated some fees for borrowers and removed the 125 percent loan-to-value cap, opening the program up to homeowners who were deeply underwater.

Since its inception, HARP has been available only for mortgages that are backed by Fannie Mae or Freddie Mac. President Obama has proposed expanding the program to other borrowers, but it’s not clear whether he will get the necessary support from Republicans who would prefer to limit government involvement in the mortgage and housing markets.

FHA STREAMLINE REFINANCE SAVINGS

FHA Commissioner Carol Galante announced significant price cuts to the FHA Streamline Refinance Program that could benefit millions of borrowers whose mortgages are currently insured by FHA. Currently, 3.4 million households with loans endorsed on or before June 1, 2009 pay more than a five percent annual interest rate on their FHA-insured mortgages.


If your existing FHA mortgage was endorsed prior to June 1 2009, your mortgage insurance premiums have been “grandfathered”. You can refinance to an FHA Streamline Refinance program and pay reduced rates for both upfront MIP and annual MIP. To qualify, borrowers must be current on their existing FHA-insured mortgage which were endorsed on or before June 1, 2009.


Beginning for FHA case numbers assigned on or after June 11, 2012 and for loans endorsed prior to June 1, 2009, the new FHA upfront mortgage insurance is equal to 0.01 percent, or 1 basis point . So for example if your FHA refinance is for a new $100,000 mortgage, the FHA will assess a $1 upfront mortgage insurance premium (MIP ) to be paid by you at closing. The FHA automatically rolls the $1 payment into your new loan balance. This is a huge discount over the FHA’s standard UFMIP payment of 1.75% beginning April 9.


Meanwhile for FHA Case Numbers assigned on or after June 11, 2012 and for loans endorsed prior to June 1, 2009 costs for the other type of FHA mortgage insurance-annual MIP moves to a standard 55 basis points. Currently the standard annual MIP is as high as 120 bps starting April 9, 2012. Example on a new $100,000 mortgage the Annual premium or monthly MI would be $46 vs $104. This is a savings of over 65%.


"This is one way that FHA can make a real difference to help homeowners who are doing the right thing, paying their bills on time and want to take advantage of today's low interest rates," said Galante. " By significantly reducing costs for these borrowers, we can make certain they cut their monthly mortgage burden which will benefit the housing market and the broader economy in the process."

Please contact me if you have any further questions please contact me directly at 314-400-6378

5 Things That Can Sink a Mortgage App

A low credit score and lack of income aren’t the only things that can keep you from qualifying for a mortgage. Here are five other things that can sink you as well.

Are you getting a divorce?

A divorce proceedings in the works won’t automatically disqualify you from obtaining a mortgage or refinancing, but it can make the picture more complicated. Basically, the lender doesn’t want to get left high and dry in a battle over marital property, or refinance a mortgage when one of the two earners will no longer be contributing to the monthly payments.

In fact, people often refinance a mortgage as part of the divorce process as a way of getting one partner’s name off the loan. To do this, however, you have to be in agreement as to who’s going to get the house and the other party needs to be willing to sign off on the deal.

Don’t even try to omit the fact you’ve in a divorce proceeding or simply “neglect” to include it – if your lender finds out, which it probably will during the background check, you’ll be turned down for sure. You could also be charged with mortgage fraud for intentionally lying on a mortgage application.

Did you change jobs recently?

Lenders like to see evidence of a stable employment history before approving you for a mortgage. Typically, that means you should have been in your current job for at least two years before applying for a mortgage or mortgage refinance.

That’s not a hard and fast rule. If you’ve recently taken a new job in the same field at higher pay, it probably won’t hurt you. However, if you’re venturing out in a new career direction – even if you’re earning more – lenders are likely to be reluctant until you’ve established yourself. And if you’re starting a new business, it’s going to take even longer before lenders will be assured you’ve got a reliable income.

Under no circumstances should you change jobs during the loan application process – sit tight until after the mortgage closes, or you’ll have to start all over again. And if you’ve been unemployed for any reason, you’ll probably have to be in a new job for two years before mortgage lenders will be willing to consider you again.

Are you in a lawsuit?

Being a party to a lawsuit makes lenders nervous. If you’re being sued, there’s the chance you may get stuck with a large settlement that may make it difficult to meet your monthly mortgage payments. If you’re suing someone and lose, you could be end up with some hefty attorney bills, not to mention the chance of a countersuit.

Being a potential beneficiary of a class-action lawsuit doesn’t count. To be involved in a suit, you either have to have filed a suit against someone in court, been served as a defendant or have hired an attorney to represent you.

Your mortgage application will ask if you’re involved in a lawsuit of any kind. Again, you have to answer truthfully – this is another situation where you could end up getting charged with mortgage fraud if you misrepresent the facts on your mortgage application.

Are you making major repairs?

When you’re in the midst of major renovations or home repairs is not a good time to try to refinance. While repairs and upgrades can enhance the value of your home, the same work left unfinished will diminish it. Given that completion dates for home improvement projects can be a moving target, lenders will prefer to see the work completed before signing off on a new mortgage.

Some people may seek a cash-out refinance or home equity loan if they find themselves running out of money in a home improvement project they intended to fund by other means. But unless you’ve got a lot of equity already tied up in the home, you’re probably better off seeking to refinance or take out a home equity loan before starting the project.

You recently took on new debt obligations

One of the last things you want to do before applying for a mortgage or mortgage refinance is to take on a big pile of new debt right before doing so. The classic example of this is buying a car – driving up your debt-to-income ratio right before seeking a new mortgage.

Lenders typically want to see your total debt payments be no more than 43 percent of your monthly income, with the mortgage no more than 31 percent. A new car is one major purchase that will sharply drive up your debt load, as will other large purchases – it’s probably best to wait to buy new furniture and carpet until after you’ve secured the mortgage or refinance.

Also, be careful about other ways of incurring debt obligations – if you’re co-signing a loan for an adult child to buy a car, for example, that debt registers against your credit, even if you’re not the one who’ll be making the payments. If the primary borrower defaults, you’ll be the one they come to next, and your mortgage lender takes that into account when figuring your debt load.

Making Sense of Closing Documents

The flood of documents to be signed at closing is one of the most confusing parts of the mortgage process. A typical borrower can expect to be presented with over two dozen documents to sign at a mortgage closing. How do you know what you’re signing?

Like anything else, you need to prioritize. While some documents are critical and need to be carefully scrutinized, others are routine and can be quickly dispensed with. The question is, which are which?

Fortunately, federal law gives you the right to receive copies of all closing documents 24 hours in advance of closing, so you can review them to ensure everything’s in order. Unfortunately, many borrowers fail to take advantage of this right, trusting instead that everything will be in order.

Key mortgage closing documents

The key documents are going to be the ones that set forth the actual terms of the transaction itself. These include the HUD-1 Settlement Statement, Truth in Lending disclosure and the mortgage agreement itself. Copies of these should be reviewed prior to closing and the actual documents you sign should be checked again at closing itself.

The HUD-1 is a detailed listing of all the costs of the transaction, and specifies who is paying each – for example, the seller typically pays certain costs associated with a home sale. The division of costs between buyer and seller – such as for city and county taxes – should reflect what was agreed upon in the sales contract. Also, any payments to the lender should match those provided in the Good Faith Estimate – and are so marked with the designation “from GFE.”

The HUD-1 will also detail a number of other “third-party fees,” such as various types of insurance, real estate agent’s commission and different taxes. Most of these will also have been listed on your Good Faith Estimate, though they can vary by as much as 10 percent from those figures.

The final Truth in Lending (TIL) disclosure details all the terms of your mortgage, including the amount borrowed, interest rate, payback term, total interest to be paid over the life of the loan, etc. Some of these will correspond to figures on the GFE and should match. The TIL also provides a figure called the Annual Percentage Rate (APR), which is a way of expressing the total cost of your loan. Basically, the APR is your mortgage interest rate plus an adjustment to reflect the cost of any fees paid to obtain the loan.

The mortgage agreement

Another major item is the actual mortgage agreement, which is usually in two parts. The first is the actual mortgage note itself, which again states the terms of the loan, gives you the money and commits you to repaying it. It also sets forth such things as when payments are due, grace periods, penalties for late payments and the steps the lender can take if you fail to make payments.

A second document, variously called the mortgage or deed of trust, establishes the right of the lender to repossess the property if you violate the terms of the note, most notably by failing to pay the mortgage, taxes or insurance.

Finally, the deed is the document that actually transfers ownership of the property to you. Although fairly straightforward, it’s important to make sure everything is in order, including your name, the name of the seller and the description of the property. You won’t take this home with you after closing, but it will be sent to you once it is recorded with the county.

Formal notifications

Another group that should be paid close attention to are notifications, which spell out certain conditions in your loan or home purchase that might not be covered in the other agreements or which are spelled out separately for emphasis. These will likely include a notice of your right to cancel, which gives you three days to cancel a refinanced mortgage and recovery your money if you change your mind for any reason, and a notice of no oral agreements, which basically means any verbal promises from your lender carry no weight.

Another is your initial escrow statement, which details the estimated charges for insurance premiums, taxes, PMI and anything else to be paid from your escrow account over the coming year. Any documents that provide additional information about the terms of your loan or home purchase, or about your or your lender’s rights and obligations, should be reviewed and understood prior to closing.

Getting your ducks in a row

Another batch of documents might be termed “ducks,” since they’re about getting your ducks in order so the mortgage and property sale can proceed. These include your title and homeowner’s insurance, property survey, private mortgage insurance (PMI) if needed, sewer and water certification, termite inspection and homeowner’s association agreements if required, certificate of occupancy for a new house and all the other things that have to be done before the sale can proceed. These should be reviewed before the sale to make sure they’re in order, but don’t demand close scrutiny.

Finally, a last batch of documents are for routine matters, many of them simply confirming that you have received or signed off on other forms, that you have had certain terms of the agreement explained to you or that you understand certain terms of the agreement. They don’t demand a lot of attention from you, but you should at least recognize what they refer to. If not, don’t sign off on them until you’re sure about what you’re signing.