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REFI NEWS
2.3
THE REFI
NEWS—ISSUE
2.3
Your
Guide to Home
Mortgage
Refinancing and
Credit-Related
Issues
In This
Issue
Free Annual Credit
Reports
Nationwide.
Order Yours
Today!
Wouldn’t
it be great if
you could see
your credit
report before you
find out you have
been turned down
for a mortgage,
loan or credit
card? Well now
you
can.
Since
2004, states
throughout the
nation have been
phasing through a
program allowing
you annual access
to your credit
reports at no
charge. As of
September 1, 2005
with the addition
of states in the
northeast, this
privilege now
extends
nationwide. A
result of the
2003 Fair and
Accurate Credit
Transactions Act,
every American
now has the right
to a free copy of
this important
consumer document
every year from
each of the three
major credit
bureaus—Equifax,
Experian and
TransUnion. This
means that once a
year you can
review
information
related to
critical aspects
of your credit,
including loan
payments, credit
cards, address
information and
more, and have
the opportunity
to dispute and
correct
inaccurate
information
before you apply
for any type of
financing. The
reports will not
automatically be
sent out.
Consumers must
request them in
one of three
ways.
How to
Order Your Free
Credit
Reports
While the new annual
credit report act
enables consumers to
view their reports at
no charge, the reports
will not be
automatically sent out.
You must request them
in one of three
ways:
ONLINE
– Go to
www.annualcreditreport.com,
which is the only
authorized source
for consumers to
access their
annual credit
report online for
free.
PHONE – Call
toll free (877)
322-8228.
MAIL – Complete
the form on the back of
the "Annual Credit
Report Request"
brochure, available
from the FTC, and mail
it to: Annual Credit
Report Request Service,
P.O. Box 105281,
Atlanta GA,
30348-5281.
You may
order all three
credit reports at
once, or at
different times
throughout the
year. Be sure to
order from the
centralized
agency. If you go
directly to the
credit reporting
agencies, you
will be charged a
fee unless you
fit another
criteria for a
free report.
These criteria
include: being
denied a loan,
insurance policy
or job based on
your credit
report; you're
applying for
unemployment or
receive public
assistance; or
you currently
reside in a state
that already
offers one or
more annual free
credit
reports.
The
RefiNews urges
all its readers
to take immediate
advantage of this
quick and easy
way to ensure
lenders have the
most accurate
information about
you!
Poll: Many Confused
About Credit Scores
Nearly half of
American consumers do
not realize that a
credit score represents
credit risk, according
to a telephone survey
of 1,013 people
conducted last month
for the Consumer
Federation of America
and Fair Isaac Corp.
Fifty-one percent chose
the correct answer, but
49 percent either
admitted that they did
not know the purpose of
a credit score or said
that a credit score
represents credit
availability, debt
level, or "credit IQ."
The poll also revealed
that 45 percent
incorrectly believe
they can improve their
credit score by making
more money.
Source: American
Banker
(03/16/05)
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To
Top-
Mortgage Rates are
Rising. Are You Fixed
Yet?
After
three years of
steady decreases
and all-time
lows, mortgage
rates have taken
an upturn. Rates
are rising, and
now, according to
Freddie Mac, are
at their highest
levels in six
months. Given
recent events
such as Hurricane
Katrina, the
increase in gas
prices and energy
costs, a rise in
unemployment, and
inflation fears,
it appears this
upward trend is
going to
continue. Those
who refinanced to
fixed rate
mortgages over
the last 12
months are
patting
themselves on the
back for making a
smart financial
decision. But
those who are
holding
adjustable rate
mortgages can
still enjoy the
advantages of a
low-interest
fixed rate
mortgage by
refinancing
today.
My ARM
is Capped –
Why Should I
Care?
Do the math. A fixed
rate mortgage
guarantees no change in
interest rates for the
life of the loan.
Refinancing to a
slightly higher fixed
rate than the current
rate for your ARM may
raise your monthly
payments in the short
term, but if rates
continue to rise, your
monthly payments can
soon be much higher
than today’s
fixed rate. Example:
you currently have an
ARM with an interest
rate of 4.75% that is
fixed for another year,
and then adjusts up to
two percentage points
every year thereafter,
capping at 9.75%. Worst
case scenario, this
means your monthly
payment will stay the
same for the next
twelve months, but
after that can jump to
as much as 6.75% in
2007, 8.75% in 2008,
and then 9.75% in 2009.
Using this same
example, if you were to
refinance to a fixed
rate mortgage at 6.25%
this year, your monthly
payments would be
higher in 2006, but
lower in 2007 and every
year
thereafter.
If
Interest Rates
are Going Up on
Fixed Rate
Mortgages Too,
Won’t I
Just Be Paying
More Regardless
of The Type of
Loan I Have?
As discussed above,
you may end up with a
slight monthly increase
going from an ARM to a
FRM (fixed rate
mortgage), but only in
the short term. Once
you lock in a fixed
rate, it will not
change for the life of
the loan. The same
cannot be said for
ARMs. Consider the
following example:
According to Freddie
Mac, the average fixed
rate for a 30-year
mortgage in October
2004 was 5.82%. The
current average rate
for a 5/1 ARM (fixed
for five years and then
adjusting annually
thereafter) is 5.48% -
a difference of less
than .5%! As interest
rates continue to rise,
it can be expected that
the 5/1 ARM rates in
2006 will surpass the
current fixed rates.
While that may not add
up to much in the short
term, if you are
planning on staying in
your home for another
10 years or more, the
difference can be
substantial. The longer
you wait to ‘get
fixed’, the more
it may end up costing
you in the long
run.
What
About Closing
Costs?
As with any mortgage
loan, there are costs
associated with
refinancing. But
it’s important to
look at the big
picture. If you plan on
staying in your home
more than a couple of
years, these costs can
easily be amortized
over the long term.
Additionally, there are
no surprises –
you know what the
closing costs and
monthly fixed rate will
be. The same cannot be
said for the rising
interest rates of your
current ARM.
Is
Refinancing to a
Fixed Rate Right
For Me?
Fannie Mae suggests
asking yourself the
following prior to
refinancing:
-
How
long do you
plan to
remain in
your home?
How many
years remain
on your
existing
mortgage
loan?
-
What
costs are
involved in
the
refinancing?
-
How
much will you
save in total
interest
costs over
the life of
the loan if
you choose a
shorter term
mortgage?
-
How
much of your
tax advantage
for mortgage
interest
deductions
will you lose
if you choose
a shorter
term
mortgage?
Would you be
better off
choosing a
longer term
loan with
lower
payments, but
making extra
principal
payments now
and then so
that you
achieve the
same result
without being
obligated to
make a higher
payment every
month?
-
What
value do you
place on the
“peace
of
mind”
you might get
from knowing
that your
payment for a
fixed-rate
loan
won’t
change if
interest
rates go
up?
Most
importantly, talk
to a qualified
loan officer,
such as those at
Metrocities.
Working together,
you can determine
the best
refinance plan
for your specific
needs.
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Top-
The Appraisal
Process–What You
Need to
Know
Anytime
you apply for a
mortgage, whether
it is an original
mortgage or a
refinance, your
lender will most
likely require a
new evaluation or
appraisal of the
house to ensure
its current
market value.
While the
appraisal process
is simple, the
results may not
be. A few simple
steps can help to
ensure a
hassle-free
experience. First
of all,
it’s
important to
understand what
the appraisal is
used for. The
lender is using
your property as
collateral for
your loan, and as
such they want to
be certain it is
worth at least
the amount they
are lending you,
so that they are
protected should
you go into
default.
Appraisals should
not be confused
with home
inspections,
which will alert
you to major
defects in the
home that should
be fixed prior to
purchase.
How the
Appraisal Process
Works
Lenders hire licensed
professional appraisers
(at your expense
–you should be
advised of the fee
beforehand), who visit
the house and inventory
the number and size of
the rooms and any
extras, such as a
fireplace, pool, or
garage. They take into
consideration its
overall condition,
especially if it shows
signs of wear (such as
worn carpets) or
neglect (broken
windows, inoperable
appliances), as this
will affect the
home’s value. The
appraiser then compares
the home and property
to other recently sold
homes in the area with
similar features. This
allows them to estimate
the dollar amount that
your home might sell
for.
Your
Property Has
Received a Low
Appraised
Value–What
Now?
Sometimes, a valuation
appraisal comes back
that is lower than
expected. While this
presents a challenge,
it does not necessarily
need to be a deal
breaker. The first
thing to do is to
review the
‘comparables’–the
properties that were
used to evaluate what
yours is worth. Make
certain they are an
accurate reflection of
your property value.
For example, if the
appraiser used values
of recent house sales
two towns over, do
those houses in those
towns have the same
market value as in your
town? Are the houses
the same styles? etc.
Also, make sure the
sales are recent.
Housing values change
constantly. You want to
make sure the appraiser
is getting the most
accurate picture of the
housing market in your
community at the
present time. If this
is a new purchase
mortgage, and the
comparables are found
to be accurate, then
the seller is obviously
asking too much.
Explain the situation
to the seller and see
if you can negotiate a
reduction in the sale
price. If you want it
badly enough, consider
putting more money
down. Or, see about
working out some type
of compromise on both
ends. Most of all,
don’t panic. By
keeping the lines of
communication open and
exploring your options,
you can usually work
towards a satisfactory
resolution.
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Top-
The
Home
Inspection–
A
Valuable Part of the
Home Purchase
Fact-finding
Process
Before
purchasing any
home it is
important to find
out as much as
possible about
its health and
history. One of
the best ways to
do this, in
addition to
speaking with the
current
homeowner, is to
conduct a home
inspection. A
home inspection
is a physical
examination of a
home, conducted
by an objective
expert, usually
just prior to the
home sale. A
standard
inspection
includes a visual
examination of
the home
structure
including walls,
ceilings, floors,
windows, roof and
foundation, as
well as systems
such as plumbing,
heating, air
conditioning, and
electrical.
Inspectors only
report on what is
readily visible.
They do not open
walls, remove
tiling, move
furniture, etc.
Prospective
buyers are
furnished with a
summary report of
findings several
days later.
Houses do not
pass or fail
inspection. A
factual
assessment of a
home’s
overall
condition, it has
nothing to do
with whether or
not the house is
up to code or
properly priced.
These types of
determinations
are made by other
experts during
the course of a
home purchase.
Home inspections
benefit both the
buyer and the
seller by
pointing out the
positive physical
aspects of the
home, as well as
those areas in
the home that
either need
current attention
or will need
attention in the
near future. By
having accurate
information about
a property, both
buyers and
sellers can
better determine
a home’s
true value,
enabling them to
make intelligent
decisions before
signing any
purchase/sale
agreements. It is
sometimes in a
seller’s
best interest to
conduct a home
inspection prior
to putting a
house on the
market,
especially if the
home is older, or
has had some past
damage. The
summary of
findings will
provide an
opportunity to
make repairs that
will make the
home more
desirable to
prospective
buyers, as well
as provide a
higher level of
confidence in the
worth of the
property.
Ten Most
Common Home
Problems
The American Society
of Home Inspectors
(ASHI), has identified
the ten most commonly
found home
problems:
-
Improper
Surface
Grading and
Drainage
-
Improper
Electrical
Wiring
-
Roof
Damage
-
Malfunctioning
Heating
Systems
-
Poor
Overall
Maintenance
-
Structurally
Related
Problems
-
Plumbing
-
Flaws in
Exteriors
(non-structural)
-
Poor
Ventilation
-
Miscellaneous
cosmetic
interior
(non-structural)
Source:
ashi.org
A Brand
New Service
Guarantee...
If after closing a
loan with us you are
not completely
satisfied with our
service, simply write
us a letter within 14
days of closing,
explaining why and we
will pay you $500
– no strings
attached. Yes, our
service is that
good.
Did You
Know…
Over 20% of our business
now comes from repeat
customers and referrals
from satisfied
customers? We take
pride in what we do
– and it
shows!
-Back To
Top-
Our
Associates
“Make a
Difference”
We
are committed to making
your refinance process
as simple 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.
Stuart
Goldstein
Senior Loan
Officer
“I get the
opportunity to go to
work every day doing
something I
love,” says
Senior Loan Officer
Stuart Goldstein.
“I feel really
fortunate, because not
everyone can say
that.” It is this
‘loving what he
does’ attitude
that has made a
difference in the way
Stuart approaches the
loan process with his
customers. He meets his
customers in their
homes, at times that
are convenient for them
– even if it
means setting up a 9pm
appointment! “My
goal is to put my
customers at ease,
making them as
comfortable as
possible,” says
Stuart. “To me,
the loan process is as
much a relationship as
it is a business
transaction.”
In his
two years with
us,
Stuart’s
positive work
ethic has touched
everyone around
him, from his
co-workers to the
countless
customers with
whom he has done
business.
According to
Stuart, loving
what you do is
the only way to
ensure long-term
success. And it
is the reason why
even though he
sets a very high
standard of
excellence, he is
able to
continually
challenge himself
to surpass
it.
How
Stuart Has
“Made a
Difference”
for His
Customers:
“Over the past
10 years I have
purchase 2 homes and
refinanced at least 4
times and I can
honestly say that no
other loan officer has
ever gone to such great
strides to put my
concerns at ease as
Stuart has done. His
customer service skills
are top
notch.”–Joseph
Scannelli, Monroe,
NJ
“Stuart
epitomizes the
very best in loan
officers,
especially in
regards to
truthfulness and
customer
services; he is
certainly a
credit to the
entire organization.”–James
and Myrine Reed,
Laurel, MD
Make a
Difference
Team-Member
Update
In a prior edition of
the Refi News, we
profiled “Make a
Difference” team
member Robert
“Hammer”
Siegler. We’re
pleased to announce
that as a result of his
exceptional
performance, Bob was
promoted from Senior
Loan Officer to Team
Leader in March 2005.
This new position will
allow Bob’s
passion and commitment
to become training
tools that will help
make the loan officers
on his team the very
best they can be.
Congratulations
Bob!
Call
Toll Free: (800)
684-8853
www.HomestarDirect.com
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Top-
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.
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