David 's Blog

Phoenix home buyers looking to take advantage of favorable interest rates, reduced home prices, and a low down payment should consider an FHA loan when buying a new home in which to live.  The Federal Housing Administration (FHA) is a part of the U.S. Department of Housing and Urban Development (HUD).  Since FHA loans are insured by the government, it's easier for a lender to offer you the option of a lower down payment.  FHA home loans allow first time home buyers and current home owners to purchase a home with a 3.5% down payment.  In order to qualify for a FHA loan, you will need to ask yourself the following questions......

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For many years I've attended Sales Mastery, Business Plan or some type of mortgage seminar to continue learning new, innovating ways to build my business.  Many of the top loan officers in our company, and other companies, also attend these events.  It wasn't uncommon for these seminars to have over 3,000 people in attendance.  Unfortunately, there was no Sales Mastery or Business Plan to attend this year.  

The Internet is an amazing tool that we can use to leverage our knowledge, relationships and advertising.  Websites like Twitter, Facebook and Linked In have allowed me the opportunity to connect with some brilliant loan officers in other parts of the country.  I read their blogs, their tweets and look at their status updates on Facebook.  I do what they're doing to help grow my own business.  I write about my own mistakes and also the success that my team has and post those articles in my blog.  I put links on Twitter, Facebook and embed my articles in Linked In.  

In the short time I've been doing this, I've built relationships with many of these people.  Chris Brown helped me get my blog started last year.  Brian Brady gave me a few tips on the phone about writing blogs, which has resulted in about 3-5 leads per week.  I've also received many referrals from loan officers in different states and locally in Phoenix.  I've even been contacted to write articles for print magazines, such as Scotsman Guide.  All of this because of social media.    

The game is changing.  Gone are the days of advertising with flyers and magazines.  Sending out 1,500 mailers to people "hoping" you get a 1% return on your efforts is a losing battle.  The Washington Post just announced yesterday they are shutting down all of their offices around the country except the one in Washington D.C.  If today's loan officer doesn't embrace the new rules within our own business, we will be left behind just like the Post.  During the last 10 years, the media has taught everyone they must get prequalified before even looking at homes.  Today's consumer is turning more toward the Internet and we must learn how to show up in their search results on the first page of Google.  

I'm using this as an invite to learn a new strategy, implementation and execution from the best of the best.  The event is called Mortgage Revolution and is dubbed "a grass-roots movement created by mortgage professionals for mortgage professionals".  I am committed to attending this event January 10-12, 2010 at the Cobb Galleria in Atlanta, GA.  Early-Bird special is $149 until Dec. 1, 2009, then the regular price thereafter is $199. This is a non-profit event and the goal is to raise $250K for charity so that the media has something positive to say about our industry.  To find out more visit their website or shoot me an email.  I hope to see you there.      

Located in the Southwestern part of the United States, Arizona is a state known for its wonderful weather, beautiful scenery and national parks. It is one of the ideal spots for active lifestyles and is easy to see why many potential home buyers are choosing Arizona as their destination of choice. 

The path to home ownership is an exciting time for you and your family, but it is one that may bring additional responsibilities into your life.  Having the assistance of an honest and experienced Arizona mortgage professional can make all the difference during this process. 

Homes that are newly purchased may require additional remodeling or repairs. The FHA 203k loan may be the perfect opportunity to make the necessary repairs for safety and cosmetic upgrades.  There are also other options for VA and FHA loans for "Going Green" on your home mortgage.  Building or remodeling your home with eco-friendly materials can lower utility and water bills, achieve federal tax credits, higher real estate value, purer air quality, reduced waste sent to landfills and conservation of natural resources.

What is Asbestos?

Asbestos is the name given for a group of fibrous minerals that were mined for their qualities as fire resistant, insulation and high durability. Asbestos may still appear in roof shingles, dry wall, attic insulation, popcorn ceilings, joint compounds and electrical wires. It's flame resistant and durable qualities made it an ideal choice for many industries.  Homes built before 1980 may still contain asbestosmaterials. There are now many eco-sustainable options that make the use of asbestos obsolete.

Tips & Important Information on Asbestos

If any asbestos is located in your home, the best thing to do is leave it un-disturbed until a home inspector can determine the best course of action. In many situations, the best action is no action. Asbestos that is disturbed or damaged due to age is known as "friable" asbestos. This is a concern because its toxic fibers can easily circulate and become inhaled.

Although asbestos exposure does not always lead a related illness, long term inhalation of its fibers can cause a rare but severe ailment known as malignant mesothelioma. Asbestos-related illnesses may not appear until 20 to 50 years after exposure, which makes mesothelioma diagnosis even more difficult.

The removal of asbestos must be performed by licensed abatement contractors who are trained in handling dangerous materials. They work under state and federal regulations to ensure no health concerns arise from improper removal.

Arizona "Going Green"

The Arizona Department of Environmental Quality is committed to protecting the public from asbestos-containing materials by educating and assisting with asbestos removal, transport and disposal. The removal of hazardous substances must be performed by professional abatement contractors who are trained in these matters. Eco-friendly options must be considered when the removal is complete.

Implementing green methods of building can have positive environmental, health and economic benefits. These include: Conservation of natural resources, enhance air quality, protect eco systems, energy sustainability, increase property value, improve quality of life, improvement of pulmonary and cardiac health, Reduction of waste.

Environmentally safe alternatives to asbestos include the use of cotton fiber, lycnene and cellulose. There is no need for any products used in construction to be made from asbestos, yet over 3,000 work and home-based materials still contain this toxin.

With growing education and technology in green sustainable energy and building resources, the state of Arizona has taken actions to ensure safety and health is a top priority in this great state. If you are looking for more information on asbestos or mesothelioma please visit www.asbestos.com.

If you're considering remodeling or rehabilitating your home, the FHA 203k program may fit your needs.  If you want more information on the FHA 203k or other rehabilitation loans please contact The Krushinsky Team at 602.695.7575 or david.krushinsky@wjbradley.com.

FREE CONTINUING EDUCATION CLASSES FOR ARIZONA REALTORS

You are invited to attend the continuing education seminar " Answers To Tough Questions About Credit In Today's Market" on Wednesday, January 13th from 2:00 pm - 5:00 pm.  This event is FREE and provides (3) three Accredited General Hours towards your continuing education requirements.
 
David Krushinsky, a Certified Mortgage Planning Specialist, will address those tough questions regarding your clients credit in today's real estate industry.  The following are a few key topics that will be discussed:

   -Is it better for your client to file bankruptcy or to foreclose?
    -What is a short sale and how can it affect your clients credit?
    -What about a Deed-In-Lieu of Foreclosure?
    -Foreclosure vs. Short Sale
    -What should my clients do???
    -Many more items to cover!!!

 
Don't miss out on this opportunity to learn about new and changing information and get your questions answered by a mortgage professional. 

The Seminar will be held at the Foothills Recreation & Aquatic Center 5600 West Union Hills Drive, Glendale, AZ 85308 on Wednesday, January 13th from 2:00pm - 5:00pm.
 
Please RSVP to reserve your seat.  For any questions or to RSVP, please contact David Krushinsky at 623-594-7600 or email david.krushinsky@wjbradley.com 
 
Hope to see you there!
 
Accredited by C. David McVay School - 3412 E. Dunlap Ave., Phoenix, AZ 85028
602-749-2098 Email: dmcvay@cdavidmcvayschool.com ; www.cdavidmcvayschool.com

Should you tell your clients to dispute items on their credit report during the loan process?  The most common response is typically, "Sure, why not?".  If you are advising your clients to dispute credit items, you may be in for a big surprise.

A few months ago, we prequalified a borrower looking to purchase an investment property.  We knew the transaction wasn't going to be easy, but luckily she had come to us before she began looking for a home.  After pulling her credit report,  we discovered her FICO score was low; however, it still fell within the acceptable range to qualify for conventional financing.  After analyzing the credit accounts, it was apparent that a collection account placed on her credit report by a fitness club was driving down her FICO score.  We reviewed the credit report with the borrower and she did not feel responsible for this collection account. Our recommendation was to dispute the account with the credit bureaus, which she did.

Fast forward two months.  She finds the perfect property and her contract is accepted.  We updated all of her information and sent the file to be underwritten.  The underwriter "suspends" the loan and conditions for the following inforamtion: the disputed account on the credit report must not be shown in dispute; or provide documentation the account does not belong to the borrower; or provide Freddie Mac Loan Prospector (LP) Automated Underwriting Findings.  We cross-reference the guidelines and sure enough, the underwriter is correct.  Here is an excerpt from our underwriting guidelines, which refers to Fannie Mae's Desktop Underwriting (DU) policy: 

DU findings may often times note different accounts reported as Disputed. These accounts are not considered in the credit risk assessment provided in the DU feedback and as such, need to be dealt with exactly as noted in the DU findings.

• The lender must verify the accuracy of the trade line(s) by determining if it belongs to the borrower and by confirming the accuracy of the payment history.
• If the trade line does not belong to the borrower, or the reported payment history is inaccurate, no further action is necessary.
• If the trade line does belong to the borrower and the reported payment history is accurate, it must be taken into consideration in the credit risk assessment. A new credit report must be obtained with the trade line no longer reported as disputed and resubmit the loan case file to DU with the new credit report.
• If the disputed trade line is a mortgage that was past due by two or more payments in the last 12 months, or a foreclosure that has been filed within the last 5 years, the loan is ineligible.

Ok, no big deal.... we'll run the loan through Freddie Mac Loan Prospector and obtain LP findings.  The problem is that sometimes LP does not accept loans that DU will accept and vice versa.  LP would not "accept" this loan.  So we immediately contact the borrower to see if she has received any updates from the credit bureaus since disputing this item.  Big surprise, she has not.  We all know how long this process can take.  We explain the situation to her and she unhappily decides to pay the collection company in order to get the loan completed.  We order a re-score from the credit company with the proof provided to us that the collection is paid in full in order to get the account out of dispute status.  We're on our way.

Fast forward 5 business days.  Everyone is eagerly anticipating receipt of the re-score, as this is our last condition before we can obtain a full approval and order closing docs.  I forgot to mention that this transaction was an "approved" short sale and we only had 17 days to close. We receive an update that the credit re-score has been completed.  We pull a new credit report and the account is still showing in dispute????!!?!?  Apparently, TransUnion called the collection company, but no one answered the phone.  The report was never updated by TransUnion.  Meanwhile, the clock is ticking and everyone is trying to find out if we're going to be able to close before the short sale approval expires.  We have no choice but to order a new re-score.  We send in our request and wait another 5 days business days.  The short sale approval has now expired and we're still two weeks away from closing.   

Finally, we receive the second re-score back and everything looks good.  We send all of the updated information into underwriting and the file gets cleared for closing.  Thankfully, the short sale approval gets extended.  The borrower signs papers and every one lives happily ever after.  The moral of the story is when you're purchasing or refinancing your home; be careful when disputing tradelines on your credit report, even if they aren't your accounts.  If you have additional questions, contact David Krushinsky at 602-695-7575 or david.krushinsky@wjbradley.com. 

"So what's my Phoenix home loan rate"?  This is the question asked to loan originators everyday from our clients and prospects.  There is no simple answer and it seems to be getting more complex as the mortgage industry moves toward more risk-based pricing.  Risk-based pricing allows adjustments to par pricing for risk factors such as; FICO scores, loan-to-value percentages, property type (SFR, Condo, 2-4 Units), occupancy (Primary, Vacation or Investment) and mortgage type (Interest Only, Adjustable Rate etc). 

Let's start off with the basic mechanics of fixed mortgage interest rates.  Interest rates are primarily based upon the pricing of Mortgage Backed Securities ("MBS" or "Bonds") issued from Fannie Mae ("FNMA"), Freddie Mac ("FHMLC") and Ginnie Mae ("GNMA").  Think of a Bonds' sales price similar to that of a Stock, it trades up and down during the course of a day.  At the time of writing this article, the FNMA coupon we are tracking is selling for $101.03.  This is down 22 basis points from the previous day's closing price of $100.81.  In simple terms, the consumer would have to pay an additional .22% of their loan amount to have the same rate today that they could have locked in the previous day.

"So... what does all this mean?"

In our example, the client's interest rate could vary from 4.50% - 5.25%.  The mortgage interest rate will depend on how the customer would like to set up their mortgage loan with regard to paying either higher or lower upfront fees.  Clients locking in a rate should consider how long they intend to have this mortgage loan before considering the fees associated with obtaining any rate.  The shorter amount of time you will have the loan, the more it makes sense to pay lower fees and have a higher interest rate.  The longer your time horizon for keeping the loan, the more it makes sense to pay higher upfront fees, also known as buying down the interest rate. 

A client locking in a rate of 4.50% (5.597% APR) today on a 30-year fixed FHA loan should plan on paying all the customary fees with two discount points.  Customary fees would include appraisal, credit report, processing fee, underwriting fee, origination fee, title fees, and recording fees.  That same client could lock in 4.75% (5.747% APR) with 1 discount point, 5.00% (5.896% APR) with no discount points and 5.25% (6.044% APR) without any discount points or origination fee.  An origination and/or discount point is typically 1% of your loan amount.

With so many rates available on a 30-year fixed mortgage, how can a borrower get the best rate? 

First, ask the lender to provide you with a total overall cost analysis.  This should illustrate the proposed savings you will have on the loan options available to you both on a monthly and long-term basis. This analysis should also include total payments, total interest paid, total closing costs and points and balance remaining at a given point in time.  One of the most important metrics to consider is how long you plan on keeping this loan on the home you purchase or refinance when selecting the right mortgage plan.

Second, we recommend working with a professional who watches, articulates and understands the interest rate markets.  If you're a consumer, it's important to understand that interest rates can change daily, even hourly.  So, if you are comparing lender rates and fees - this is a moving target on an hourly basis.  If you are comparing two quotes from different lenders, you may be comparing apples to oranges.  The only way to get a truly accurate comparison is to have the quotes prepared on the exact same day, at the exact same time, with the exact same terms and conditions.  You also must know the length of the lock term (i.e. 15 day, 30 day, 45 day etc.) you are looking to secure, since longer rate locks typically carry slightly higher interest rates.

We provide a daily recommendation to our client's advising them to float or lock their home mortgage interest rate.  In this update, we list the current pricing of the FNMA 30-Year Bond and the previous closing price.  We identify the key current market updates and the daily economic news releases that are influencing interest rates.  We also provide an illustrative picture with our written recommendation, which makes it easily understood.

In conclusion, we feel that having access to valuable information regarding the total overall long-term cost, along with mortgage options that best fit their needs, coupled with market knowledge will allow you to obtain the overall lowest cost mortgage with the best loan rate available. 

For more information on rates, fees and your personal mortgage options, contact The Krushinsky Team at 602-695-7575 or email david.krushinsky@wjbradley.com.