Increasing Your Visibility at Work - Career Skills From MindTools.com

Increasing Your Visibility at Work - Career Skills From MindTools.com

Just read this article - Why Renters Want to Own But Can't (see link below)

click here for the article

Bottom line - There are numerous low down payment programs available. Forget all the doomsayer articles and millennial spew you read about. Simple number crunching is the answer in order to arrive at a decision.

The question: If you put 3% down, do your payments of PITI (principal, interest, taxes and insurance) = what you would pay in rent, taking into consideration the net fed tax benefit.
The answer: if yes, consider taking the plunge because in addition to the equity you are building, you also have the possibility of appreciation.

Bottom line: The American dream is still alive
Let me know your thoughts

Is Sub-Prime lending dead? I would say not really judging by the last deal that I closed. Don't get me wrong the borrowers were good borrowers. They had a score in the 500's and put 5% down and bought a really nice home in a great neigborhood. In the old days that loan would have been called "sub-prime." The funny thing is, that loan was insured by none other than out Government under the FHA guarantee program. I am also seeing a big come back on Jumbo loan product and low down payment mortgage products. Right now you can do 10% down up to $1,500,000 believe it or not. Those borrowers on the fence who are now paying rent take a jump into home ownership while the iron is hot and before it gets hotter.

Re-Evaluating Financial Priorities

“While scrimping to retire our debt and save appropriately, my wife and I have come to realize that each person has their own priorities, and we can’t measure ourselves next to them because each family is putting their resources to use in a different fashion, according to their priorities.”

While I recognize that everyone’s priorities are different, there are similarities that we can all discuss.  Life is not about living up to the standard of the “Jones” family but about living up to the standards of your own family’s comfort zone.

In researching information for this blog, I came across a balanced money formula from the book “All Your Worth” by Elizabeth Warren and Amelia Tyagi.  Their formula is to take your income and divide it into three unequal parts.  50% needs, 30% wants and 20% savings.  Were this so easy in today’s current fiscal crisis!

We all know the basic needs – food, clothing and shelter – but to what extent do we include them in our “needs.”  Does eating out in restaurants (food) qualify as a “need?”  For some people the answer might be a YES!!!  Connecting as a couple over a dinner out might enhance your relationship in ways that are not possible when you are eating at home.  But how often do you need to “connect?”

When figuring out your needs vs wants, please include a discussion of the following: dining out, life insurance, private school tuition, pets, health care, emergency fund, size of your home, college funds, retirement funds, family entertainment (movies, outings, vacations,) etc.  What must you absolutely have and what might be qualified as a want for the time being.  Of course, you will need to revisit your “list” as your family situation changes and as your financial situation changes.

Going back to that formula, what happens when your needs are more than 50% of your income – are you willing to go into debt for your loved ones?  And for what “needs” would you be willing to go into debt and what “needs” are really “wants” when you are considering debt.

We all would be carrying less debt, if we really considered and thought about our real “needs” – honestly, they really may be “wants.”

Please share your thoughts.

Thank you

Carl

After all this time, and all that we went through, it seems that all these big lenders care about is pushing product without any concern for the consumer borrower. Yes many consumers are sophisticated, but even those that are can be persuaded to take mortgage products that just aren't good for them. I have over 20 types of mortgage products and show you the positives and negatives of each one. The problem is, many mortgage loan officers seem to just "accentuate the positive!" I received and email today from one of my wholesale lenders and this is an excerpt:

"Did you know?

Choosing a 5/1 ARM instead of a 30 year fixed rate mortgage could enhance buyer affordability by about 15%.*  This is due to the ARM having a lower interest rate and lower payment versus a 30 year fixed rate mortgage during the initial fixed rate period (5 years).  

As interest rates trend upward, the ARM share of purchase mortgage applications increases as more buyers opt for the lower rate and payment of an ARM."

Now, while I understand that they mean to help us sell mortgages, zoom down on the sentence of affordability by about 15%*. What this means is that the borrower can qualify for more mortgage, more debt, right now, but where does it say make sure you take into consideration the probability of future earnings. Take a look at the next paragraph and the sentence purchase mortgage applications increases. If interest rates are moving up, why should a borrower take an arm? Why should we let them bet that rates will be the same or lower in 5 years? What if rates really moved up in 3, 5, or 7 years?

My opinion is as follows: ARM's are good if: 

1.You get big bonuses.

2. Plan on inheriting money to and plan to pay your balance down.

3. Plan to sell your home before the rate can rise or adjust.

BUT NEVER take an arm just to slide into a property without a back up plan otherwise your bet may be detrimental to your cash flow. To be clear I am talking about residential 1-4 properties as commercial property financing lives in the adjustable rate world. Have a good day 

I sit here in my office going about my daily business of assisting those who need mortgage financing. I glimpse at the right corner of my screen and there it is, the reminder that today is September 11^th. My eyes tear as I think back to where I was 13 years ago on that horrific day of unforeseen unimaginable tragedy. My thoughts are mixed. On one hand I feel a sense of guilt, grateful for my family’s outcome, and on the other hand, I am terribly sad and heartbroken for those families that lost their loved ones - the unbearable loss of heroes and friends on that fateful day.

I remember like it was yesterday. My wife, who was five months pregnant with our first child, was working as an attorney for the New York Department of Housing directly across from City Hall.  I was working from home when the phone rang. “Carl, my building shook what should I do?” My wife was on the phone. “They are telling us to stay.” I responded, “get out of there NOW!” Shortly thereafter, the second tower was hit. My pregnant wife made her way and walked from downtown Broadway to 58^th street and 5^th where my Mother waited for her to take the train to Queens. My wife told me how nice and caring strangers were to her on her walk to safety. Ironically, disasters usually bring out the goodness in New Yorkers.

I don’t ask why this happened because I am just a human being who cannot even fathom a just reason. I can remember this day along with the rest of the world, and mourn the memory of those that we lost way before their time. 

Remembering just does not seem enough. It seems too trite. I believe that the souls of those who left us on that day are looking down at us and waiting for something positive to come from their deaths. I would imagine that they might be wondering why in times of disaster and tragedy, people unify, and are helpful and respectful of one another, and yet, one day goes by and we return to our old ways. How soon we forget.

I asked myself, and now I ask you, how can we show those that we lost that tragic day, that we have learned and changed for the better because of their sacrifice. I would venture to say that we, at the very least, should also have to make some sort of earthly sacrifice. The sacrifice of self. We have to change our behavior and actions and remember and honor those that we lost that day. It sounds easy, but true change for the better is not.

May I make a humble suggestion? In the memory of those that left this earth on that Day of Sept 11^th let us try to:

• Be respectful to one another and our loved ones
• Not judge others
• Make time for friends and family
• Give the benefit of the doubt
• Be inclusive
• Be kind, caring, and courteous and…..

To always remember Sept 11^th as the day that sparked unity and love in NYC, the United States and the peaceful nations of this earth. We honor all those that left us that day. I am hopeful that they are looking down at us with the confidence and optimism that we will do our best to make sure that their souls remain perpetually at peace.

Avoid These Don’ts to Get Your Mortgage Financing

When you apply for a mortgage loan, avoiding the obstacles below will help minimize any delays during the mortgage process and lead to a smoother quicker closing (also, forewarned is fore-armed).

Don’t change your job, quit, or become self-employed before you apply for or during the processing of your mortgage. Job security and consistency are key factors in the approval process. If you change your job, you may need 30 days on the new job to count the income, and if you switch to self-employment (your own company or you work on commission) you need 2 years of self-employment to use that income to qualify. In addition, lenders will verify income by calling the current employer, asking for a CPA letter, and, in addition, pull a transcript of the tax returns filed using a 4506T. It is important to make sure that the tax returns supplied, are the actual tax returns filed. Often, copies of tax returns are supplied, and amendments are made in between, and the numbers on the 4506 transcript do not agree to the furnished tax return.

Don’t create a paper trail nightmare. Avoid last minute bank account changes and transfers. Today, the trail of all large deposits into a savings account must be verified to ensure that additional debt has not been taken out. If you are receiving a gift, bonus, repayment of a loan, or you are transferring funds, they must be documented so it is best at the outset to keep this in mind and do it or avoid it from the start (or call me to structure properly).

Don’t innocently run up debt during the process. Avoid buying or leasing a new car, getting new appliances or furniture on credit. Once you are qualified on your income, you do not want any surprises to surface that can affect your mortgage commitment. The additional debt can hurt your credit score, affect your rate, and more importantly jeopardize your loan approval as an increase in debt may affect your debt ratio ceilings allowed by the lender (The maximum debt the lender will allow calculated by debt/income).

Don’t have multiple credit reports pulled by different companies. This may lower your credit score and any inquiries must be explained to make sure no additional credit was taken in between the initial application and the closing. In addition, credit is re-pulled before a closing so it’s important to keep credit card charges below 50% of the maximum credit line extended and not to run up credit bills. Needless to say, do not pay late on bills especially during the processing of your loan. Drops in your credit score may cost you thousands of dollars, so please heed my advice.                                                       
Don’t co-sign on a loan for it becomes –your loan and shows up on your credit report as such. The debt may also affect your ability to obtain the mortgage loan you are trying to qualify for. If you have co-signed, some lenders may accept proof that the co-borrower pays the debt if you provide 12 months cancelled checks.

Don’t leave out liabilities that might not appear on your credit report. Aside from misrepresenting your actual financial situation (which may be construed as fraud), lenders will perform background checks and verifications and those left off liabilities may surface, slow the process down, and jeopardize the mortgage commitment.

Don’t spend your savings before you close. You need more than a down payment to get to the closing table. You will have tax and insurance escrows as well as closing costs so I would suggest calling a mortgage professional to get a strong estimate of exactly how much cash you should have on hand in order to complete the deal. You can also see what alternative and creative options you have in the event you are short on the cash needed to complete the deal such as: 

1.  Seller concessions
2. Lender credit for closing costs
3. A lower down payment program which may incur private mortgage insurance
4. A lower down payment program with lender paid mortgage insurance
5. Family gifts

The Anatomy of a Rate Quote

There are many variables that go into each and every mortgage deal, and every deal is unique unto the borrower. I will try to provide you with some a general guidelines of the “ Other information” you need to better understand the components of a rate quote, and so that you can appreciate the value, as our clients do (check me out on linked in), of working with a mortgage professional who knows the ins and outs of a real estate transaction and so that you can save thousands of dollars by allowing us to navigate you towards a smooth mortgage financing experience and smooth out the process and lifeblood  and mortgage financing transaction, the lifeblood of a deal what they are doing which may, consequently save you thousands of dollars.

1.Rates fluctuate daily. Some lenders lag behind the market, and some lenders adjust immediately to the market.

2. A conforming mortgage conforms to Fannie Mae and Freddie Macs’ (the biggest purchasers of mortgages) underwriting guidelines. Their 2014 loan ceilings are: 1 family homes $417,000 2 family homes $533,850 3 family homes $645,300 and 4 family homes $801,950. The rates are generally competitive among lenders give or take an eighth to a quarter of a rate. “Jumbo” mortgages exceed the conforming ceilings. Jumbo rates are usually higher than conforming rates.

3. Occupancy affects rates. A primary residence is occupied by the borrower.  A rate may have an add- on (increase), if the property is a second home, vacation home, or if the property is used for investment (you rent it out).

4. Loan to value (LTV) is the mortgage amount divided by the value of the property. The higher the LTV, the greater the risk to the lender, and the possibility of a higher rate.

5. A cash out refinance (cash over and above your existing mortgage) may incur an increase in rate depending on the lender.

6. Generally, the shorter the loan term (30 year vs. 15 year), the lower the rate.

7. The better the credit the better the rate. Today lenders are really focused on a credit score. A number determined by comparing your credit pattern and history to the credit bureaus database of proprietary mathematical formulas and models of historical consumer credit patterns. If your score is low, you might be a candidate for rescoring your credit (legally) to bring up your score and consequently give you an opportunity for a better rate. Make sure that your time frame for getting the money you need coincides with the time it takes to correct or repair your credit. Otherwise, the time it takes to correct or repair your report may prevent you from taking advantage of current low rates or special deals which defeats the whole purpose (“A bird in the hand…”).

8. Compensating factors affect the rate. The lender may offer you a lower rate because of a low LTV. A great credit score with borderline income may allow you to squeeze into a better mortgage rate.

9. Mortgage Brokers and Lenders have different programs for different types of borrowers. Generally, the more financial information you supply the better the rate. The programs are Full income Full asset verification,  Stated income with asset verification. The key is to make sure that you match yourself to the right program so you not only get the appropriate rate, but to also make sure you don’t get turned down. E.g. you apply for a full income full asset loan program, but you do not show the income needed to qualify on your tax return, but you may have qualified on a No income verification type of program.

10. There is, or supposed to be, a correlation between rates and points. A point is an up front fee of 1% of the loan amount you are borrowing.  “Buying down the rate” means paying points to lower your rate. ”Buying up the rate” means, paying fewer points to increase the rate. You would most likely want to pay points if: (a) you need to lower the rate to qualify (b) you will own the property long enough to amortize (recapture) the point money you paid up front (c) You have the extra cash. You will most likely not want to pay points if: (a) You don’t have the extra money (b) You will own the property for a very short time (c) You think rates are going to decline shortly. There are other reasons for paying and not paying points, which should be discussed on a case-by-case basis.

I have saved the best for last!

11. LOCKING THE RATE. When you call and ask “what is your rate”? You will generally get quoted the prevailing rate, a/k/a as the floating rate, which means, if you are ready and able to close within 15-21 days (which means you have applied for a mortgage, supplied your financial information, have a commitment from the lender, an appraisal, a title report, etc.), and you locked in the rate right now, this is the rate you would get. Now, how many first time homebuyers do you think fit that situation, Hmmm? Most residential purchase real estate transactions do not realistically fit a prevailing rate time frame. Most borrowers are not informed, at the time they are quoted the rate, about the if you are ready to close in 15-21 days closing time frame. Therefore, if rates are dropping, fine. BUT, if rates are increasing – Surprise!

Prevailing rate quotes will always be lower than locked in rate quotes. So, if you are rate shopping and want to compare apples to apples, when you are quoted a rate, the key thing is to make sure you ask: How long the rate is locked in (protected) for? Are there any points, origination fees, broker fees? What lock-in time frames are available? More importantly, make sure you can close within that time frame otherwise you may be subject to extension fees. Generally, the longer the lock the more it costs. Lock in periods are usually 15 days, 30 days, 45 days, 90 days, 120 days, 180 days. Paying points, increasing the rate, or both, incorporates the cost of the lock. You may want to ask if a float down option is available (if the rate drops after you lock can you get the lower rate.)  More importantly than getting a rate lock agreement in writing, make sure the person you’ re dealing with is honest, reputable, and whose word means something.

12. The APR (Annual percentage rate). I call it Another Proven Rip-off. A borrower is supposed to be given the APR along with the closing costs and rate information. If you look in the newspaper adds you will often see a rate advertised about one half to one percent lower than the real market rate. If you look on the side of that rate you will see what is known as the APR. This advertisement is perfectly legal, as long as the rate stated is accompanied by the APR rate, but in reality this is very tricky. According to the federal regulation Z, the APR is supposed to be the measure of the true cost of credit, expressed as a yearly rate. The government is trying to assist you, the consumer, in your loan decisions by making loan providers give you the APR  “ true cost of credit.”  They mean well, but, unfortunately, most people do not have the sophistication, knowledge, time or financial calculator needed to figure out the APR.  Long story short, by taking the loan amount, the rate you are quoted, and factoring closing costs into the calculation you arrive at the APR.  So the rate you see in the newspaper that appears to be lower than everyone else means nothing unless you know exactly what the closing costs are. In these cases, the APR conceals the closing costs. You will find out that most of these advertised below market rates have several points built in to the closing costs. When mortgage shopping, instead of comparing APR’s, for your sake keeps it simple. Find out the rate, how long it’s locked in for, and all closing costs included and then compare. 

First Post - Introduction

Welcome and thank you for sharing in my thoughts about life, family and mortgage financing. My name is Carl Guzman and I am the founder and President of Greenback Capital Mortgage Corporation a residential and commercial mortgage banker/broker licensed in NY, NJ & FL. I have been lucky and blessed enough to have had the support of our clients for 25 years. 

We are all busy people and overloaded with information. It's a full time job just to "shop around" for anything today, so when people say they are shopping for a mortgage, I think to myself "they just bought themselves a job." More than that, they have traded in their precious living time (in an area, for most, of uncharted territory). I used to be a "do it yourselfer," but then it occurred to me why trade time for the possibility of saving dollars when you can find a professional who can save you time and money (I know easier said than done). I always try and choose to work with professionals based on the following: excellent reputation, good rapport, thorough knowledge of topic at hand, Ethics & morals, care, dependability, and demonstrable references & track record. I have worked long and hard to make sure that my clients find those qualities in me and from my team at Greenback.  

Our mission for my clients and referral partners is to: 

1. Get the best mortgage choice and structure.
2. Get the most competitive rate and closing costs available.
3. Experience a smooth stress free mortgage process.
4. Get to the finish line with a smooth and stress free closing
5. Answering any questions before, during and after the process
6. Give advice that could save them thousands of dollars!

I would appreciate it if you would reach out to me with any questions that you might have concerning your current mortgage situation at ceg@greenbackcapital.com.