Housing and Retirement Planning

Ideally, financial security should be your primary goal for retirement, which means three things:

(1) your expenses should be manageable, (2) you should have adequate income and (3) you should have some money to invest.

Easier said than done. Retirement planning is particularly complicated for our middle-aged

baby boomers. They have to deal with financial pressures that past generations have not had to

deal with—such as supporting kids in college while at the same time providing help to

aging parents. Being the middle of a sandwich pushes many to postpone their retirement planning. Other economic changes that have impacted retirement planning have been (1) the erosion of the traditional company retirement plan, (2) the discarding or replacement of defined benefit plans with defined contribution plans and (3) unstable job paths, e.g., job hopping, downsizing, relocations, mergers and bankruptcy.

Answering three key questions can help you form the base structure for planning your retirement.

(1) When can you or do you want to retire?

Mental attitude and financial resources will determine the answer.

(2) What kind of lifestyle do you want after retirement?

Your economics will define and allow you to choose from a basic, comfortable or luxurious retirement.

(3) Do you want to move when you retire?

There are many locations and housing styles. Consider as well family dynamics and logistics.

We all hear bits of advice from our friends and family about retirement strategy. Some of those things may even be accurate, but some ideas are based on retirement myths.

Myth 1: Plan 10 to 15 years out. Busted—Planning for 25 years of retirement is far more realistic because advances in medical care and healthier lifestyles extend the average

single 65-year-old man by another 15 years and woman another 19 years (studies and averages—notguarantees; only God gives those).

Myth 2: Loyalty and retiring with one company leads to the best benefits.

Busted—Staying with one employer at lower pay only to increase your pension will reduce your retirement benefits. Changing employers may increase your salary and your retirement benefits from any fixed plan maintained by that company upon vesting. Even a raise of 5 percent could be enough to justify switching to a new job. Be aware that changing jobs too often may impact vesting requirements and prevent building large sums in fixed pension plans.

Myth 3: The Government guarantees pension benefits. Busted—If a company’s pension fails, the Pension Benefit Guarantee Corporation only pays a fraction of company benefits owed, possibly one-fifth. In addition, major benefits such as severance, vacation or sick pay are not covered and disappear if a company’s pension plan collapses. To be safe, check the safety of your employer’s retirement plan.

Myth 4: Preserve your capital. Busted—Preserve your capital is a given, but more importantly, hedge your buying power. Inflation rates of even 4.5 percent reduce the buying power of your income, so it becomes important to grow existing capital while generating additional income. How? By working part time and staying within the Social Security earning limits while continuing to invest in growth assets. Don’t let retirement stop you from earning and saving.

Myth 5: Taxes are less when you are retired. Busted—If income decreases, retirees may drop into a lower tax bracket. If the effective tax rate, which has consistently risen, continues

to rise, then you may pay more in taxes after retiring. Moral of the story: Retirement income may put you in a lower bracket, but don’t assume less will go to taxes.

Myth 6: Social Security will fill the hole. Busted—Many people think that Social Security will cover the shortfall in their savings and retirement benefits. Some even think that Social Security will cover most of their retirement expenses. All I can say is “no way Jose.” The intent of Social Security was to meet basic retirement income needs. To maintain your current standard of living in retirement, studies indicate that you’ll need 70 percent to 80 percent of your old working salary. Social Security will most likely be around for a while but may have reduced benefits in the future.

Myth 7: Medical bills will be covered by company insurance and Medicare. Busted—Under Medicare, you can’t collect until age 65, and they pay, on the average, less than half of senior healthcare bills. The continuous and annual double-digit rise in insurance-premium costs will push employers away from covering the high-premium policies that future retirees currently get. Realistic and practical strategies would be to take care of your health, allocate some money for health insurance, and check out health maintenance organizations (HMOs).

Myth 8: Housing Costs Are Less. Busted—Even if your mortgage is paid off, by the time you retire, you will still have to pay property taxes, hazard insurance, property maintenance and dues if in a co-op or condo, which all are expected to increase in cost. According to the Bureau of Labor Statistics, people 65 and older actually spend a greater percentage of income (31 percent) on housing than those between 45 and 64 (27 percent). Many retirees, on fixed incomes, are being forced out of their homes simply because of the ever-increasing property taxes and maintenance required to care for a property. Consider downsizing to a smaller property and/or taking advantage of reverse mortgage financing. You may lower housing costs with the possibility of walking away with some cash.

Housing is a primary if not the most integral part of your retirement planning. Housing options can be: (1) staying in your current residence, (2) moving to a new residence, (3) retiring in your second or vacation home, (4) moving in with an adult child or (5) moving to a retirement community.

Considerations:

(1) Are there compelling reasons to retire at home?

(2) Is your current house accessible and comfortable?

(3) Is your neighborhood changing for the better or worse?

(4) Can you afford your home? Even if your home is paid off,

you have to pay real estate taxes and insurance. Reverse mortgage financing can be a savior.

(5) Are you centrally located?

(6) Should you sell or rent out your old house? If you sell your home see if you can avoid the capital gains tax §121. Explore the possibility of renting your home for cash flow.

(7) Should you buy or rent your new residence? Buy if you want the potential for equity build-up and tax benefits. Rent if you have a short-term game plan or the monthly rent is lower than owning.

(8) What type of housing suits you? A house, condo, retirement village or planned community?

(9) Where do you want your retirement home to be located? Some relocation factors to consider are: cost of living, climate, medical care, state and local taxes, proximity to family, culture and recreation.

Looking ahead, how do living expenses generally change in retirement?

(1) Housing costs decline about 25 percent to 50 percent often due to paying off the mortgage or trading down to a smaller and less expensive abode.

(2) Retirees spend more time at home, so utility costs rise.

(3) Business-clothing and travel expenses generally drop 20 percent to 35 percent because of not working.

(4) Medical expenses increase (take care of yourself).

(5) Fun and leisure expenses increase (whoopee).

(6) Food costs stay about the same.

(7) Most seniors drop life insurance premiums or scale them down.

(8) Many children of retirees have finished their schooling, so educational expenses decrease.

(9) Grooming and beautification costs will increase slightly.

(10) Risk tolerance decreases along with saving and investment activity.

I feel like a bit of a hypocrite for ending this way, but “If you fail to plan, you plan to fail.” I better get going.

By Carl Guzman

Carl Guzman, NMLS# 65291, CPA is the founder and President of Greenback Capital Mortgage Corp., a Zillow 5-star lender. http://www.zillow.com/profile/Greenback-Capital/Reviews/?my=y. He is a residential and reverse mortgage financing expert and a deal maker with over 26 years’ industry experience. Carl and his team will help you get the best mortgage financing for your situation and his advice will save you thousands! Contact www.greenbackcapital.com or ceg@greenbackcapital.com.

Foreign Nationals, Non-Permanent Resident Aliens and Resident Aliens, OH MY!

In the last couple of years, many foreigners have used their wealth to buy high-end residential real estate located in the US. The two obvious reasons: (1) US real estate is considered a safe haven, and (2) they had an advantageous dollar exchange rate. The National Association of Realtors (NAR) put out a report called “2015 Profile of Home Buying Activity of International Clients.” The report said that US real estate remains a relative bargain compared to other global cities favored by the wealthy. For instance, a condo costing $1.6 million in New York would cost more than $4 million in Paris and $2 million in Moscow.

The NAR report also said sales of US residential real estate to overseas buyers between April 2014 and March 2015 reached a record $104 billion. According to the report, the Chinese took the lead as the top foreign buyers of real estate last year. Canada was ranked second, with $11.2 billion, with India following at $7.9 billion. Foreigners favored homes in Los Angeles, San Francisco, Seattle and New York. The top state for overseas real estate buyers was Florida, accounting for 21 percent of all US sales to foreign buyers. California came in second, with 16 percent, followed by Texas with 8 percent and Arizona with 5 percent. The top four states accounted for half of overseas buying. Overseas buyers accounted for only 3 percent of sales in New York State, although the share was much higher for New York City.

The average purchase price for overseas buyers was $499,600, nearly twice the national mean purchase price of $255,600. Foreigners are also paying 26 percent more than they were last year: Most favored the suburbs over the city and most favored single-family detached homes over apartments.

Some 55 percent of overseas buyers paid all-cash, according to the report. In a number of cases some REALTORS® had international clients who did not purchase a US property because they “could not find property,” or “could not obtain financing” and many “other reasons.”

For those “all-cash” buyers, great for you and glad you have a place to park the cabbage. For all my foreign and temporary visitors and friends who may need financing, or want financing, read below for general requirements on the documents needed for you to obtain residential mortgage financing.

Borrowers who are not US citizens must currently reside in the United States to be eligible and fall into one of two classifications: permanent resident alien (PRA), or non-permanent resident alien (NPRA). Non-citizens who do not reside in the US are classified as foreign nationals (FN).

In general, obtaining a loan for a permanent or non-permanent resident alien is not much different from getting a loan for a US citizen in that financial documentation for income, credit and assets is still required. Underwriting may be slightly different.

The classifications are as follows:

FN: The borrower has no Green Card and no visa* or has income from foreign sources.

NPRA: The borrower lives and works in the US and is here on a visa* (of which there are many different types and must be unexpired and valid for at least six months). Does not have a green card. Must have US employment contract and social security card.

PRA: The borrower lives and works in the US and has a Green Card. Usually must have two years US income/tax returns.

*Acceptable Visa types for Fannie and Freddie Mac: A1-A2: Cannot have diplomatic immunity. E1 & E2, G1-G5, H1, TN-NAFTA: Works from Canada and Mexico, here for business purposes. L1: Intra-company transfer, O1: Famous actor, musician, etc. O2: Assistants to famous actor, musician, etc.

Properties are bought as primary residences and second homes, and for investment with differences in guidelines and rates based on occupancy status. For our purposes, we will focus on primary residences. Being a specific niche type of borrower, many foreign borrowers typically fit a portfolio lender’s profile. Portfolio lenders have their own unique guidelines, lend their own money and service their own loans (instead of selling them). The other mortgage products fall into secondary market buyers of mortgage loans, Fannie Mae; Freddie Mac and the major insurer of government loans, FHA.

Some nuances to be aware of:

Portfolio lenders may and the FHA program will accept an EAD (Employment Authorization Document) as an acceptable form of documentation for non-permanent resident aliens. The EAD must be valid within one year of the closing date (no exceptions) and must have a prior history of renewal being granted. If a history of renewal does not exist, information from the BCIS (Bureau of Citizenship and Immigration) must be provided to determine the likelihood of renewal.

Borrowers residing in the US by virtue of refugee or asylum status are automatically eligible to work in the country and must show documentation to support this status if they do not have an EAD card.

Foreign Nationals are not eligible for FHA, Fannie Mae or Freddie Mac type of loans.

Fannie and Freddie both require a green card to show eligibility.

If a borrower’s visa will expire within 6 months of the loan application and he/she is still with the same employer since sponsorship, a copy of the employer’s letter of sponsorship for visa renewal must be provided. If jobs were changed since sponsorship, and the visa expires within 6 months, documentation must be provided showing that an application for extension or permanent residency has been filed.

What kind of financial documentation may be needed?

FN:

Greater down payment required may be anywhere from 25 percent to 40 percent. Credit: No FICO required. International credit reports are acceptable, or credit references from country of origin. Alternative forms of credit may be acceptable such as a letter from an employer, bank or creditor; utility bills etc.

Income: Two years income-verification history. It is not necessary to have US tax returns; tax documents from country of origin are okay. If the country of origin do pay stubs, bank statements and an employment letter on company letterhead explaining compensation.

Assets: Must source seasoned assets in a known verifiable worldwide financial institution; the funds cannot be in an institution that cannot be verified. The main reason for sourcing the income and assets is for OFAC (Office of Foreign Assets Control), which monitors foreign countries, regimes, known terrorists etc. In addition, the borrower’s name, employer and financial institution from the country of origin where the borrower has his/her funds will be run through an OFAC verification engine.

If the income and asset documentation is in a foreign language you may need to get a translator. It might be wise to hire an Accountant/CPA (tax preparer or equivalent) to analyze, interpret, convert and present the information in such a way so the underwriter can easily understand it. That is, have a comprehensive summary and accounting of the borrower’s financial position. However, a language translator may suffice and would probably be less expensive.

All US embassies provide translation services. You are not required to have a social security number or tax identification number (TIN). You will need a passport or other form of valid ID.

Power of attorney is not permitted. The borrower will have to go to an American consulate to sign and have loan documents notarized.

Non-Permanent Resident Aliens:

Standard financial documents are required.

Permanent Resident Alien:

The borrower should have US credit and US assets. The borrower must have a social security number.

What a great country!

By Carl Guzman

Carl Guzman, NMLS# 65291, CPA, is the founder and President of Greenback Capital Mortgage Corp. and a Zillow 5-star lender: http://www.zillow.com/profile/Greenback-Capital/Reviews/?my=y. He is a residential and reverse-mortgage financing expert and a deal maker with over 26 years’ industry experience. Carl and his team will help you get the best mortgage financing for your situation and his advice will save you thousands! www.greenbackcapital.com, ceg@greenbackcapital.com

Everyone's a Winner!

http://jewishlinknj.com/index.php?option=com_content&view=article&id=12054:everyones-a-winner&catid=168:real-estate&Itemid=580

Locking a mortgage rate? What you need to know.

If any of you have ever obtained mortgage financing, and then had your rate increase before closing, you may have wondered why the rate changed. You may have even wondered why the person who quoted you the rate deceived you when they may not have intentionally done so. You see, I always make it a practice of full disclosure and choice. 

In general, rates quoted are what are known as floating rates. Floating rates, are unlocked and unprotected rates subject to market conditions, and are the lowest quoted mortgage rates. When your rate is not locked, you are, in effect, “playing the market”.  That means, if you were able to close in 12-15 days, the rate quoted would be the rate you would get ASSUMING that the market remained stable. 

What is unknown when you lock a rate is: Are you going to go past your rate lock? Have rates moved up?  If yes, you may have to incur extension fees in order to keep your rate. If rates moved lower then you are usually allowed to keep your original locked in rate. 

Practically, if the stars align, it is quite possible to close in 15 days on a purchase or refinance, but typically, especially on a purchase, you may take longer.

Why? 

Simply because:

1. There are so many parties involved who have their own schedules (two attorneys, two real estate brokers, one mortgage company, a seller and you the buyer) 
2. There is the possibility that the inspection will reveal items that you may want to negotiate on (going back and forth eats up time), 
3. Title issues may come up such as inherited seller judgments or collections that need clearance before you can close, 
4. or your own schedule may derail you from closing within the rate lock period.

Locked in rates are slightly higher than floating rates, but you avoid market risk, and, as long as you close within the rate lock period, you know what you are getting from the beginning until closing. 

When you qualify for a mortgage, you have to meet underwriting guidelines which take into consideration a qualifying rate.  If you are a borderline applicant, you may have just squeaked by on your approval. Should rates go up, you may lose your commitment, have to reduce your loan amount, or be forced to "buy down" the rate in order to qualify which can run into thousands of dollars. 

In summary, when you lock the rate, and close in the specified rate lock time, you are protecting your mortgage payment, mortgage commitment qualifying loan amount, and shielding yourself from potential rate increases due to market condition changes and/or Lenders raising their rate to stave off excess mortgage applications.

Note: the industry has now implemented TRID. Before closing on your new loan, the lender must send you a Closing Disclosure (CD) 3 days before you close. You will need to lock your loan at least 3 days before closing. Keep this in mind when you lock your loan because if you wait the day before you close to lock your loan, you will not close the next day, but 3 days later because new disclosures have to be sent and may start the clock again.  You may even jeopardize your rate lock.

I suggest, if you choose to wait to lock your rate, that you do so no later than 5 days before closing or earlier if possible to give yourself a cushion.  

Knowing before owing can save you thousands of dollars.  My philosophy is to always set expectations so that there are no disappointments or surprises - which not only helps when it comes to rate quotes - but in all aspects of life as well.

Let us remember

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 14 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.

Variable or Fixed: What’s Your Mortgage Pleasure?

Sorting through mortgages involves making a lot of critical choices.  One of those choices may be deciding between between a fixed- or variable-interest-rate mortgage financing. Fixed-rate mortgage payments are fixed throughout the life of the loan whereas adjustable rate mortgages a/k/a variable rate mortgages a/k/a ARM’s can have rate and payment changes at certain set intervals.  The adjustable mortgage interest rate is calculated using an index plus a margin, which means payments could move up or down depending on prevailing interest rates. In addition, there are payment caps, annual caps, and lifetime caps. The most common indexes to which the interest on adjustable-rate mortgages is pegged are the 1-Year Constant Maturity Treasury Index, The Cost of Funds Index, and the London Interbank Offered Rate Index. Caps and margins vary.

Fixed-rate mortgages rates and payments remain constant despite the interest-rate climate. They generally have higher initial interest rates than variable-rate mortgages.  In an increasing rate environment, they are a borrower’s choice. Should rates move lower, borrowers with a fixed rate mortgage would have to refinance in order to take advantage of lower rates which may involve closing costs, and additional paper work.

The initial interest rates and payment on ARM’s are often lower than fixed rate products with the rate and payment subject to change (up or down).   ARM’s may allow borrowers to take advantage of falling interest rates without refinancing, and rollover refinancing strategies can be implemented so that the average of the rate over a period of time is cost effective (although never guaranteed).

So what’ll be?  Fixed or adjustable?  Think about the following broad considerations before choosing:

1. How long do you plan to stay in the home? If you plan on living in the home a short time, you may want to consider a variable-rate mortgage. With a shorter time frame, the loan rate will have less time to move up or down and risk is minimized
2. Where are interest rates headed?  If interest rates are historically low, it may make sense to consider a fixed rate. On the other hand, if interest rates are higher than historical averages, it may make sense to consider an ARM. Should rates drop, your payment and rate may also.
3. What are the terms of the ARM? When does the rate and payment adjust?  How frequently can the rate be adjusted? Are there annual and lifetime caps? Is there a limit on how much it can be adjusted in each period?
4. Could you still afford your monthly payment if interest rates were to rise significantly? How would it affect your finances if your payment were to rise to its lifetime limit and stay there for an extended period?

Buying a home is a major commitment. Selecting the most appropriate mortgage for your short and long term goals may make that long-term obligation more manageable.

Finding Motivation at Work

Did you ever stumble into work, Monday morning, in a sleepy kind of groggy state of mind? You sit there thinking about your relaxing weekend with five straight days of the office grind staring you in the face?

Does your boss or manager motivate or inspire you to achieve your personal best, or the opposite? How do you keep your engagement up and your professional goals on track?

Take a look at these tips to stir up the motivation within you:

1. Begin your day with a positive thought. Set one positive goal for the day to motivate you toward success.
2. Get clear on the end goal. Think about why you do what you do.
3. Make learning your goal. Accept that no one is perfect and mistakes are an opportunity for learning. Move away from results-oriented thinking and focus on the overall learning.
4. When you feel better physically, you work better and stay motivated. Exercise regularly, and eat healthy. 
5. Expand your knowledge base by reading new books – books that can help you with new ideas which get your mental gears turning and can spark motivation. 
6. Maintain a positive outlook about your current job. Avoid negative discussions at work, so you remove doubt for even being there.
7. ...Finally… Take pride in your accomplishments. When you are parked for 7+ hours per day at work, it becomes pretty clear that this is an important part of your day and your life? Treat your job, whatever it may be, with pride and witness your motivation & your success soar! Even if what you do is not your ideal job, there is a reason why you are doing it…focus on that reason, and while you are at it, might as well make it a joyful, pleasant experience.  Keep in mind, you always can explore a multitude of options to change your life while being positive in your current situation.

Thoughts from a Mortgage Genius: PENNY-WISE AND DOLLAR FOOLISH JUST DOESN'T MEAN MO...

Thoughts from a Mortgage Genius: PENNY-WISE AND DOLLAR FOOLISH JUST DOESN'T MEAN MO...: Penny-wise and dollar foolish  just doesn't mean money I recently had a long discussion with a friend about having to provide for...

PENNY-WISE AND DOLLAR FOOLISH JUST DOESN'T MEAN MONEY

Penny-wise and dollar foolish 

just doesn't mean money

I recently had a long discussion with a friend about having to provide for our families and the amount of money we need to earn in order to sustain ourselves and provide for our families. The conversation then turned to attending our children's programs in school during working hours.

It took me a long time to be able to distinguish between what's really important and what is secondarily important. I never thought that I would leave work in the middle of the day to be in my preschooler’s graduation into kindergarten.

Yet I do.

I never thought that I would spend the early morning listening to my daughter’s presentation instead of being at work,

yet I go.

I never thought that I would derail my disciplined and organized schedule of production in order to drive my son to school so that he doesn't have to carry a project that he worked so hard on, that might have gotten ruined on the bus,

yet I did. 

I'm not patting myself on the back for doing these things that for right now my kids take for granted and hopefully years from now will appreciate - for I do these things out of love for them.

As a mortgage professional we have to generate deal flow for as they say "we reap what we sow."

It takes a lot of thinking and managing stress in order to mitigate the "making a living - worry" and a conscientious effort to put family in the forefront in terms of our personal and/or business time.  Sometimes we rationalize to ourselves that we have to make money for them and that money is important to buy them what they need.

We know that money is important for their future so we can pay for the school that they may attend, so that we can retire in comfort and not be a burden to our children. I will not deny, that practically speaking I always think about this, rumination is the term, and it is not easy to subjugate those thoughts. I know many times I should be in my office producing so I can pay the bills and sleep at night. Then all of a sudden I get ready to leave the house and my four-year-old turns and says to me "can you come to see me in my play daddy?"

What can I do? My practical thoughts disappear and my unbounding love for my child surfaces and I say to myself "What will he remember - that I closed another mortgage deal or that I was at his play?” (He may remember that I didn't close another mortgage deal if I can't buy him what he wants!).

I am not the Carl Guzman I used to know and love - the analytical careful calculator brain able to make practical intelligent bottom line monetary decisions. I have become dollar foolish so to speak, but in the context of family I have learned it's better than being "penny wise." 

No cause for real panic ... just a possible slight inconvenience

Will the New Mortgage Disclosures Delay My Closing?

The answer is NO for just about everybody.

For mortgage applications submitted on or after August 1, 2015, lenders must give you new, easier-to-use disclosures about your loan three business days before closing.  This gives you time to review the terms of the deal before you get to the closing table.

Many things can change in the days leading up to a closing.  Most changes will not require your lender to give you three more business days to review the new terms before closing.  The new rule allows for ordinary changes that do not alter the basic terms of the deal.

Only THREE changes require a new 3-day review:

1. The APR (annual percentage rate) increases by more than 1/8 of a percent for fixed-rate loans or 1/4 of a percent for adjustable loans. (Lenders have been required to provide a 3-day review for these changes in APR since 2009.)  A decrease in APR will not require a new 3-day review if it is based on changes to interest rate or other fees.
2. A prepayment penalty is added, making it expensive to refinance or sell.
3. The basic loan product changes, such as a switch from a fixed-rate to adjustable interest rate or to a loan with interest-only payments.

NO OTHER changes require a new 3-day review:

There has been much misinformation and mistaken commentary around this point.  Any other changes in the days leading up to closing do not require a new 3-day review, although the lender will still have to provide an updated disclosure.

For example, the following circumstances do not require a new 3-day review:

• Unexpected discoveries on a walk-through such as a broken refrigerator or a missing stove, even if they require seller credits to the buyer.
• Most changes to payments made at closing, including the amount of the real estate commission, taxes and utilities proration, and the amount paid into escrow.
• Typos found at the closing table.

How to Hire the Best Property Manager

How to Hire the Best Property Manager

For all investors this is a good read. I would also like to bring to your attention that if you have at least 5 investor units, and they could be owned in any variety combination 1-4, condo, SFR and in any states not neccessarily in the same state, and would like to free up some cash, please call me. we have a great program that will blanket thos units and allow you to cash out.

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