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REFI NEWS
3.1
THE REFI
NEWS—ISSUE
3.1
Your Guide to Home
Mortgage Refinancing
and Credit-Related
Issues
In This
Issue
New Conventional Loan
Limits Offer
Advantages to a Greater
Number of
Borrowers
New Loan Limits
Address the Rapid
Increase in Housing
Costs
The Office of Federal
Housing Enterprise
Oversight (OFHEO)
announced new limits on
Freddie Mac and Fannie
Mae loans (also known
as ‘conventional
or conforming
loans’).
Effective January 1,
2006, the single-family
conventional home
mortgage limit has been
raised to $417,000.
This is an increase of
over 16 percent from
the $357,650 cap for
2005.
Spiraling
increases in
housing costs
have put
conventional
loans out of
reach for many
borrowers. The
new limits will
now allow many
more applicants
to take advantage
of conventional
loans, which
typically offer
lower interest
rates than their
jumbo loan
counterparts.
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FHA-APPROVED
LENDERS GIVE
BORROWERS GREATER
PURCHASING
FLEXIBILITY
Since 1934, the
Federal Housing
Administration (FHA)
has been helping
low-to-moderate income
families get mortgages,
by providing federal
insurance against
losses to approved
lenders who make FHA
loans. Now that FHA
loan limits have been
raised, a greater
number of families will
become eligible for
these types of loans,
and may want to
consider them as a
conventional loan
alternative. FHA loans
offer several
advantages over
conventional
loans:
-
An
FHA loan
allows you to
buy a house
with as
little as 3
percent down,
instead of
the higher
percentages
required to
secure many
conventional
loans. This
is a great
way for
anyone with
limited down
payment funds
to buy a
home.
-
Up
to 100
percent of
the down
payment can
be given to
the borrower
as a gift
from family
members or
certain
organizations
such as labor
unions or
charities.
-
A
specific FICO
score is not
required for
an FHA loan.
Loan approval
is based on
other
criteria, so
a low FICO
may not be an
issue.
-
Borrowers
can get up to
95% cash out
on an FHA
refinance.
-
Termite,
well, and
septic
inspections
are not
required for
refinancing
an FHA
loan.
With any
loan, it is
important to
engage a
qualified loan
professional in
order to make the
most informed
decision. As an
FHA-approved
lender, Homestar
Direct can work
with you to help
you determine if
an FHA loan is
right for
you.
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HOMEOWNERS
INSURANCE–ARE YOU
COVERED?
In the wake of
Hurricanes Katrina and
Rita many people are
questioning whether
they have the right
insurance to protect
them from catastrophic
loss. Here’s a
quick overview that may
help steer you in the
right
direction.
Deductible
– The part
of the loss or
cost that the
homeowner must
cover before
their insurance
pays in the event
of a loss,
usually $250 to
$1,000. The
higher the
deductible, the
lower the
premium.
Guaranteed replacement
cost policy – One
in which you will be
paid the cost to
rebuild your home in
the event of total
destruction. If your
home is destroyed by
fire and will cost
$500,000 to replace, a
guaranteed replacement
policy will pay
$500,000 even if your
home is only insured
for $400,000.
Actual cost value
– Compensation
based upon the age of
your property. For
example, if your
10-year-old, $4,000
roof is damaged due to
a tree falling, with an
actual cost value
policy you will receive
a payment that is
discounted based upon a
formula that considers
the roof’s age.
The older the house,
the less you will
receive. Although the
premium for an actual
cost value policy is
less than that of a
replacement cost
policy, you risk lower
compensation for a
loss, especially as
your home ages.
Flood insurance
– A
‘specific
cause’ insurance,
for types of losses not
covered by a
traditional homeowners
policy. It only pays to
the policy limit. If
your home is insured
for $350,000 and is
lost to a flood,
$350,000 is the limit
of your reimbursement
even if it will really
cost $400,000 in
repairs or rebuilding.
Flood insurance has
many variables, and
where you live in
relation to water will
affect the type of
policy available. While
we all hate paying our
homeowner’s bill,
it is critical to weigh
the upsides of a low
insurance premium with
the downsides of not
being adequately
protected in case of a
loss. Talk to your
agent and make sure you
are comfortable with
your level of
protection.
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MORTGAGE-“SPEAK”
(MORTGAGE TERMINOLOGY
IN PLAIN
ENGLISH)
-
Adjustment
interval
– The
length of
time between
rate
adjustments
on an
Adjustable
Rate Mortgage
(ARM)
-
Balloon
loans
– Loans
that require
low, fixed
payments over
a set number
of years and
a large
single
payment at
the end of
the
term.
-
Conforming
loans
– Loans
that fall
within dollar
limits and
underwriting
requirements
that are set
by federally
sponsored
agencies
Fannie Mae
and Freddie
Mac. Loans
within this
range
typically
allow
borrowers to
take
advantage of
more
favorable
interest
rates (as
opposed to
higher-rate
Jumbo or
non-conforming
loans).
-
PMI
(Private
Mortgage
Insurance)
–
Private
mortgage
insurance is
a type of
insurance
that helps
protect the
mortgage
company
against
losses due to
foreclosure.
This
protection
allows
mortgage
companies to
accept lower
down payments
than would
normally be
allowed, and
is typically
assessed to
borrowers who
put less than
20% cash down
on the
property they
are buying,
or the loan
is greater
than 80% of
the property
value they
are
refinancing.
-
Prepayment
Penalty
– A
penalty
assessed for
prepaying any
or all of a
mortgage
loan. It is
important to
ask if your
pending loan
has one and
what the
terms
are.
-
Reverse
Mortgage
– A
loan against
your home
that you do
not have to
repay as long
as you live
there.
Borrowers
must be at
least 62
years of age.
Reverse
mortgages are
typically
used by
seniors as a
way of
supplementing
their income
using the
equity in
their home.
The lender
either allows
you to
receive your
mortgage
pay-out as a
monthly
payment, as a
line of
credit, or
pays you a
lump sum. The
loan is
generally
repaid at the
time the
house is
sold, or at
the time of
death of the
last
surviving
borrower
before the
title is
transferred
to his or her
heirs.
-
Term
– The
amount of
time a lender
allows a
borrower to
repay a
loan.
-
Title
insurance – Insurance
protecting the lender and
the buyer against losses
caused by disputed claims
of ownership against your
property. To get a
mortgage, or to refinance,
you also have to buy a
lender’s title insurance
policy to protect your
lender against title
risks.
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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.
Sean
Geddis
Senior Loan
Officer
Although
Sean has been with us just
over a year,
he’s become
quite a presence
in the company,
having already
been inducted
into the
President’s
Club in
recognition of
his outstanding
performance. To
say that Sean
‘goes the
distance’
for his
customers, is not
just an
expression. In
fact, he has been
known to drive
many miles for a
personal
appointment,
which is just how
he likes it.
“I’ll
drive anywhere,
as long as the
deal is going to
get done,”
explains Sean,
“and I
prefer to do
business
face-to-face.”
Sean
attributes much
of this success
to his
interaction with
people.
It’s the
aspect of his job
that he finds
most fulfilling,
and the reason
why he prefers in
person
appointments to
closing a deal
over the phone.
“I try to
instill a certain
level of comfort
in doing business
with both myself and the
company. Knowing
there is a real
person behind the
name helps put my
customers at
ease, and makes
the process go
more smoothly.
It’s
important to me
that they know
who they are
dealing with, and
that they can
reach me any
time.”
How Sean
Has ‘Made a
Difference’
for His
Customers
“Sean is a great
guy. We’ve
refinanced our home
before, and he is the
first person to
actually come over to
our house, sit down
with us over coffee,
and explain everything
in detail. He took us
through the loan
agreement line by line
to make sure all our
questions were answered
before we signed
anything. We
can’t say enough
about how likable and
professional he is. He
really made the process
a pleasant
one.”–
Marie Frees, Lake
Carmel, NY
"In all
the years I have
refinanced my
mortgages, I have
never met anyone
as personable, or
as on top of his
game as Sean. Not
only is he
knowledgeable, he
always returned
my calls and made
me feel like I
was a priority.
I’ve never
had anyone go the
distance like he
did. He made the
process painless
and easy, and I
would highly
recommend him to
anyone at any
time."–
Mary Grzwbowski,
Little Egg
Harbor, New
Jersey
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!
Are
You Fixed
Yet?
In our last issue of
the Refi News, our lead
article reminded
readers to take
advantage of the
opportunity to
refinance from an
adjustable to a fixed
rate mortgage in light
of rising interest
rates. According to
Mortgage News Daily,
refinancing continues
to be strong,
representing over 38
percent of all mortgage
activity. Not
surprisingly, most
applications are for
fixed rate mortgages,
at approximately 72
percent of total
mortgage loan activity.
Are YOU Fixed Yet?
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Top-
SPRINGTIME
SPRUCE
UP
Spring Fever is here!
After a dreary winter,
people can’t wait
to get outside and
start their home
improvement projects.
Whether you are putting
your home on the
market, or just looking
to put a fresh face on
it, here are some easy
and low-cost tips to
increase your
‘curb
appeal’.
Assess
the Winter
Damage: Step
outside to the
curb and take a
good look at the
front of your
home. If you were
seeing it for the
first time, what
would you think?
First impressions
are lasting, and
the front yard is
the first thing a
visitor sees.
Clean Up Your
Landscape: Pick up
branches, leaves,
trash, and anything
else the winter snows
have left behind. Trim
back those perennials
you never got around to
cutting in the fall.
Pull the weeds. Put
down fresh mulch. Curb
weed growth before it
starts by putting a
pre-emergent crabgrass
and dandelion inhibitor
on your lawn. If
possible, plant some
spring flowers such as
pansies to tide you
over until your own
plants start to
emerge.
Wash the Windows:
Clean windows and
screens go a long way
towards improving a
home’s appearance
from the outside. They
also benefit the
interior view by
letting in extra light
and making it look
cleaner. Repair any
broken screens before
flying insects have a
chance to get in
through an open
window.
Clean the Gutters: In
addition to being
unsightly, clogged
gutters from fallen
leaves can cause water
and mold/mildew damage.
If you are not
comfortable doing them
yourself, a
professional can handle
it for you cost
effectively.
Put a Fresh Face on
Your Front Entrance: It
is amazing how a few
simple touches can
transform your front
door from dreary and
worn, to warm and
inviting. Here are a
few
suggestions:
-
Buy
a new
doormat
-
Place a
potted plant
or spring
flowers on
the
doorstep
-
Paint the
front door a
vibrant green
or
red
-
Clean
your
mailbox
-
Put
out a flag or
wind
sock
-
Invest in
New Trash
Cans: Yes,
they are just
for trash,
but in most
instances
they can be
seen from the
curb. Make
sure your
trash and
recyclable
containers
are clean,
and tucked
along the
side of the
house out of
immediate
view.
Obviously, if
it is warranted
and budget allows
it, don’t
delay in booking
that paint job,
fixing the roof
or repairing the
driveway. After
all, your home is
your most solid
investment. Put
it to work for
you by making it
look the best it
can!
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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.
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