|
REFI NEWS
2
THE REFI
NEWS—ISSUE
2
Your Guide to Home
Mortgage Refinancing
and Credit-Related
Issues
In This
Issue
All Lenders Are Not
Created
Equal
Why Selecting the
Right Lender Can Be As
Important As Selecting
the Right Mortgage
Buyer beware.
You’ve heard that
many times. But nowhere
is it more important to
your financial well
being than when
selecting a lender to
refinance your
mortgage. Your mortgage
will most likely be
your single largest
financial transaction.
But it doesn’t
need to be a painful
experience. Here are
some fundamentals you
should consider when
selecting a company to
provide your
loan:
Mortgage
rates are
determined not
only by your
credit profile
but also by the
lender/broker you
select
Not all
lenders/brokers offer
the same array of
products. A prime
example would be an FHA
(Federal Housing
Administration) loan.
FHA was established to
help low-to-moderate
income borrowers get
mortgages by issuing
federal insurance
against losses to
lenders making FHA
loans. Not all
brokers/lenders are
FHA-approved. If you
have credit challenges
you may still qualify
for an FHA loan and the
lower rates it has to
offer. A non-FHA
broker/ lender will not
be able to pursue this
as an option for you,
and you may pay a
significantly higher
rate.
Beware
of hidden
fees
If a lender/broker is
offering an interest
rate that is
substantially lowerthan
other lenders, there is
usually a reason why.
For example, there may
be a very high
prepayment penalty,
with substantial fees
for paying off any part
of the loan principal
early. Be sure to ask
the right questions
before committing to
any mortgage
lender.
The
bottom line
Do your homework. Look
at more than one
lender/broker and
compare their mortgage
products and services.
Most importantly, make
sure your lender/broker
offers a full array of
products. If you have
unique needs, make sure
they offer products
that are right for you.
If you are a low-to
middle income
homeowner, ask if they
are a direct FHA
lender, and Fannie
Mae/Freddie Mac
approved. Call the
Banking Department and
Better Business Bureau
to confirm they are in
good standing and have
no unresolved
complaints. Taking a
few positive steps will
go a long way in
ensuring a hassle free
refinance
experience.
Private Mortgage
Insurance
What it is, and When
You Can Avoid Paying
For it
In most cases, if you
put less than 20
percent down on a home
mortgage, lenders
require you to pay
Private Mortgage
Insurance (PMI). The
most common
misconception is that
PMI is a mortgage life
insurance policy
whereby the mortgage
would be paid off
should the borrower
die. It is not. PMI
protects lending
institutions from
losses they may incur
should a borrower
default on their loan
by not making
payments.
How much
will PMI add to
my monthly
payment?
PMI premiums are
determined by a number
of factors. For
example, adjustable
rate mortgages
generally have higher
PMI premiums than fixed
rate mortgages. The
total amount of the
loan is a factor, since
PMI is usually
determined as a
percentage of the total
loan. Appraised value
figures in the
determination of your
monthly payment as
well.
Is there
any way to avoid
paying PMI?
Unless you are able to
make a 20% down
payment, you are
generally obligated to
pay PMI. In order to
avoid PMI, some people
choose to get two
mortgages
simultaneously. The
first mortgage is for
80% of the value of the
house. The second could
be from 5% to 20%. In
this case, neither loan
would require PMI. The
downside to this option
is that a second
mortgage usually
carries a much higher
rate; therefore you
should compare both a
single mortgage and a
double mortgage option
to see which one makes
the most financial
sense.
Is PMI
ever removed?
For mortgages signed
on or after July 29,
1999, your PMI must
(with certain
exceptions) be
terminated
automatically when you
reach 22 percent equity
in your home, if your
mortgage payments are
current. The 22 percent
equity figure is based
on the original
property value. You can
also request that your
PMI payments be
cancelled when you
reach 20 percent equity
in your home based on
the appraised property
value, if your mortgage
payments are current
(certain exceptions
apply here as well).
The 20% equity can take
numerous forms –
an upgrade to your
property, or paying
down your principal for
example. The lending
institution may require
you to pay for an
appraisal to establish
the current market
value of the property,
but is a small price to
pay when compared to
the hundreds of dollars
you will save annually.
Removing PMI is one
example of how
important it is for
borrowers to stay on
top of their finances.
When you are confident
you have achieved a 20%
equity level in your
home, do not hesitate
to contact your lender
and ask that your
monthly PMI payment be
removed.
Giving
Back to the
Community
Homestar Direct
recognizes its social
responsibility and has
created a series of
free seminars called
“Mortgage
ABC’s:
Maneuvering through the
Maze.” The
purpose of these
seminars is to educate
people in the areas
where we work and live
about the Mortgage
industry, so that they
can make more informed
decisions when it comes
to the finances of home
ownership. Some of the
topics that we cover
are:
• New Home
Purchase Do’s and
Don’ts
• The
Refinancing Process
• Mortgage
Myths
• Interest Rates
by the
Numbers
There is
nothing more
rewarding than
experiencing
personalized,
world-class
service. Our
unique customer
approach offers a
relationship
based on
commitment,
respect,
integrity, and
trust. It is our
goal to help our
clients achieve
their financial
objectives. Our
fundamental
5-Star
philosophy puts
the customer at
the center of our
dedication to
world class
service.
THE HOMESTAR DIRECT LOAN FROM
METROCITIES
A NEW BREED OF MORTGAGE LOAN
The Advantages of a
Homestar Direct Loan 5-Star
Experience
-
One
point of
contact: You
receive the
benefit of
ONE highly
trained team
consisting of
a loan
officer and
processor
from the
beginning of
the process
to its
completion.
-
Cutting
Edge
Technology:
Automated
underwriting
enables you
to obtain a
quick
approval.
-
1-hour
approvals: We
make mortgage
approval easy
with a fast
review
process.
-
Strong
commitment to
ethical
policies and
procedures:
We practice
what we
preach, and
expect our
staff to
conduct
business in
accordance
with our
strict code
of
ethics.
-
Express
Funding: With
flexible
options such
as Express
Funding,
monies can be
electronically
transferred
at your
direction.
Here’s
what some of our
customers have to
say about the
loan officers who
made their
Homestar Direct
Mortgage a 5-Star
Experience:
“Jonathan
Matthews makes
getting a
mortgage a
simple, easy
process.”
-Catherine Cracolice,
New Milford,
NJ
“Ian
and Kristine were
absolutely top
notch. Light
years ahead of
other companies I
have worked with
on previous
properties. I
will use them and
also highly
recommend
Homestar to
others.”
-Edward Schwartz,
Jersey City,
NJ
“Adam
Isufi took care
of us so well
that my wife
recommended him
to others in the
NYPD. He is an
excellent
representative
and a
gentleman.”
-Victor &
Bernice Soto, New
City, NY
Our Associates
“Make a
Difference”
We
are committed to making
your refinance process
as comfortable as
possible. Our
“Make a
Difference”
initiative recognizes
the achievements of our
loan officers and staff
in going above and
beyond the call of
duty.
David
Huck
Senior Loan
Officer
Fourteen
years on the
servicing side of
the mortgage
industry has made
David Huck one of
our
most experienced
loan officers.
“I
won’t do a
deal that
doesn’t
make good sense
for both our company and the
customer,”
explains David.
“It’s
important that
the mortgage
process be a
positive
experience, and I
do whatever I can
to make that
happen.”
Many of
David’s
customers have
credit or
financial issues
that they are
looking to
remedy. His
background in the
field of mortgage
default gives him
the unique
ability to show
his customers how
to avoid pitfalls
that can often
place them in an
even deeper
financial bind,
and how to take
the right steps
to get back on
the road to
financial
recovery. David
recognizes that
obtaining a
mortgage can be
an intimidating
process for many
people. Gaining
customer
confidence and
being attentive
to their needs
has earned him
hundreds of
satisfied
customers.
How
David Huck has
“Made a
Difference”
for his
customers:
“I had spoken
with a lot of other
companies for our
refinancing needs and
we were turned down
because of our credit
scores. You looked
beyond that and saw us
as individuals, not
just a number. I was at
my wits end with the
high interest rate
mortgage we had and the
bills, which never
seemed to end. With
your help, I feel so
relaxed now, knowing we
were able to lower our
interest rate and pay
off our bills. It feels
like a giant weight has
been lifted off our
shoulders. You always
got back to me no
matter how many times a
day I called you and
never got irritated.
That was important to
me. You really did give
me a FIVE-STAR
EXPERIENCE and I thank
you for
that.”-Marioli
Reyes
ASK
STEVE
I’ve
been hearing a
lot lately about
interest-only
loans. What are
they and how can
I know if they
are right for
me?
An
interest only
mortgage is a
mortgage that
gives you the
flexibility of
making a monthly
interest only
payment for a
fixed period of
time. At the end
of that time, the
monthly payment
increases to
include interest
and principal for
the balance of
the loan term.
Interest-only
mortgages can be
either adjustable
or fixed.
However, most
borrowers take an
adjustable to
maximize their
savings. A
typical
interest-only
mortgage can
reduce the
initial monthly
payment
substantially.
There
are advantages
and disadvantages
to obtaining an
interest-only
loan, and they
are not for
everyone.
Benefits include
the ability to
purchase a home
(that would
otherwise be
beyond your
current means).
Another advantage
is that they
allow the
borrower to make
lower monthly
payments, at
least initially,
and to save or
invest the money
you would have
paid in
principal. In
addition, since
the payments are
interest-only
they are most
likely completely
tax-deductible.
One of the
biggest
disadvantages to
interest-only
loans is that you
are not reducing
the principal
balance of your
loan. With a
standard
amortizing
mortgage, your
principal is
reduced with
every payment.
Make sure you
weigh all the
facts carefully
when deciding
which option best
serves your
needs.
My wife
and I have been talking
about refinancing the
mortgage on our home,
but we’re not
sure whether or not it
makes sense to do so.
When is the right time
to
refinance?
There
really is no hard
and fast rule
that dictates
when the time is
right to
refinance,
because there are
many factors that
motivate someone
to do so. Most
people refinance
for one of the
following
reasons: to cut
costs through
lower interest
rates, to
restructure
finances (for
example
–consolidating
debt or switching
from an
adjustable to a
fixed rate) or to
take additional
cash out (for
home
improvements,
college tuitions,
etc.). If your
motivation is
purely based on
interest rate,
then the best to
time to refinance
is when the
savings justify
the cost.
Remember, there
are closing costs
associated with
refinancing that
will need to be
offset by a
reduced payment
that makes the
refinancing
attractive. Most
lenders utilize a
net tangible
benefit analysis
to determine if
refinancing makes
sense. For
example, if the
cost to refinance
is $5000, your
monthly savings
over the next
four years should
exceed this cost.
If your monthly
savings is $150,
after 48 months
you will have
saved $7,200 so
refinancing makes
financial sense.
If however, your
refinance has a
cash-out
component (debt
consolidation,
home improvement,
etc) your needs
and motivation
may warrant a
higher monthly
payment.
I stopped
working when my
children were born to
devote myself to being
a full time mom. Now
that they are older
I’d like to do
something part time.
Does Homestar Direct
offer any opportunities
for working
moms?
In July
of 2004 Homestar
Direct rolled out
its Mortgage Moms
program. The
Mortgage Moms
program is a
concept to
develop a network
of mortgage loan
originators
comprised
primarily of
former full
timers who have
decided to spend
more time with
their families.
This innovative
“virtual
office”
part-time
position is
directly in line
with Homestar
Directs goal to
attract and
retain a diverse
workforce. We are
very excited and
wish the best of
luck to all our
new Mortgage
Moms! If you are
interested in the
Mortgage Moms
program please
visit our website
at
www.homestardirect.com.
Steven
P. Weiss, Branch
Manager of
the Homestar Direct group pf
Metrocities,
has assisted
customers with
mortgage and
financial issues
for over 20
years. Steve
invites readers
to contact him
with their
mortgage related
questions at
Homestar Direct,
115 West Century
Road, Paramus NJ
07652, or
emailing him at sweiss@homestar.com.
Select questions
will be printed
in future issues
of The Refi
News.
Call Toll Free: (800)
684-8853
www.HomestarDirect.com
Disclaimer:
The content of
this newsletter
is for general
information
purposes only. It
is not intended
as financial or
investment advice
and should not be
construed or
relied on as
such. Before
making any
commitment of a
financial nature
you should seek
advice from a
qualified and
registered
financial or
investment
adviser.
|
