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So I just listened to President Obama mention that responsible homeowners will have the ability to refinance with a "small fee" so it doesn't add to the National Debt. So what is this small fee? If you haven't heard , it is called the Guarantee Fee or "G" Fee.

What does this mean? In short it means higher interest rates. How? Because lenders will have to set aside money to send off that will be funneled back to the Treasury. This is how these programs will be funded, and this is how the Payroll Tax Cut extension has been funded as well. So while you may get an extra $40 in your paycheck , if you buy or refinance a home, you will pay more in interest as a result of the currently little known Guarantee Fee. But you will as lenders layer this in to their rates and you see rates slide up.

If you are wanting to see if it makes sense to refinance or are looking to buy a home, apply now

Ray Williams

Branch Manager, Summit Home Mortgage Denver, 303-779-0591 x101

Well here we are amidst the lowest rates in history and the implementation of the Guarantee Fees is taking place. You may be wondering what the heck that is? These are the fees charged by mortgage backed securities providers (Freddie Mac & Fannie Mae). So what does this mean?

You can thank those who created, sponsored, passed, and signed into law the Temporary Payroll Tax Cut Continuation Act of 2011. So while your saving a few bucks a month on social security tax, you are being impacted if you buy or refinance your house. Another reason to research who you vote for this year.

It is charged to protect against credit-related loss including sub-fees to cover internal expenses such as;

• Reporting to investors and the SEC
• Managing and administering the securitized mortgage pools
• Selling MBS to investors

In effect it will change pricing, and thus effect rates. So while the market bears low rates. The implementation of these "G" fees by investors is starting. These investors are the ones who mortgage bankers, and brokers alike use to get funding and servicing of your mortgage.

If you would like to apply for a mortgage , you can here

Talk Soon

Ray Williams, Branch Manager, Summit Home Mortgage

303.779.0591 x101

So as we wrap up the year, who would have thought that we would be sitting where we are with mortgage rates?

I am sure you are wondering what will happen next year? Will it make sense to refinance? Will rates stay low so you can buy a nicer home for the same payment?

Well, based off the analysts in New York I am in contact with, I am expecting that rates will stay low for the first part of the new year. From there we could see things move up closer to 5% again as the year moves to an end. If I were to venture a guess, I would say upper 4% by YE 2012.

Why? We have potentially QE3 going down, it is an election year, the Euro Zone crisis still going on, and all this ties together based on what EU leaders do and the impact it has on inflation here. Inflation is bad for mortgage rates.

If you are thinking of refinancing, think about going from a 30 year fixed to a 20 or 15 year fixed, and if you would like to apply I will call you personally.

Happy New Year!

Ray

If you have had problems with credit, and possibly a bankruptcy or foreclosure due to the economic times we are in. Then you may be like others who after these events, will become a "cash buyer" and not use your credit. At certain levels that is respectable and understandable. But not using credit because of what happened in the past doesn't completely show discipline. How? Well, it doesn't prove how you would manage debt if you had access to credit.

As a rule of thumb, if you had issues and as a result maybe a few older cobwebs on your credit. But say you didn't have any open credit cards that were active and revolving. I can tell you that your FICO score will be between 550-580 every time. If you don't re-establish your credit through opening revolving credit (credit cards) then your score will never pierce the ceiling you need it to , to be able to qualify for a home loan. Sure, lenders will tell you that they can help you with a score in the upper 500's, but enjoy that pain and frustration while they bumble around trying to get you into the house. Also, if they do, what interest rate will you pay? If you knew what the increased cost of interest over the life of that mortgage was, versus working towards a 640 FICO, you might cringe.

The reason I mention all of this , is I sat with someone yesterday who had previously sat with 7 loan officers. None of which mentioned they needed to open credit card accounts to build their score. Talk about wasting time while trying to prepare to qualify to buy a house. The client had really no debt, so with an income of $70K per year, they will easily qualify for a $250,000 house.

Make sure you are working with an experienced lender who also cares.

When you are looking to refinance the first thing you commonly think about is rate. Of course, unless you have an alternative reason for refinancing (i.e life event). So why then would you ever refinance into a rate that is higher than the low rates we hear about?

It all goes back to mechanics of mortgage finance. You may be thinking , Ray, did you lose your mind? Not at all! So first thing to understand is a term called a breakeven. This is how long it takes for your refinance to make sense. For example, if it costs $4,000 and you save $100 a month, then you need to stay in that home for 40 months ($4,000/$100) to make up the cost.

From there , lenders can credit you for these fees. Typically this is done with pricing. So you may end up with a slightly higher rate, but a shorter breakeven. Why? How long ago did you refinance last? Are you thinking of doing it now? Did your current loan "breakeven" yet? These are all things to think about.

I have recently helped multiple families refinance into comfortable new mortgages with nice savings. A handful of them also started with their new balance effectively what the payoff of their existing mortgage was (and no they did not bring a bunch of cash to closing). So their breakeven is close to 0 months. Even if they had to sell in 2 years it  made sense to refinance. Also the reduction in cost of interest means they will pay their balance down faster. 

The conversation gets much more in depth than this, but I would rather not bore you with my geeking out over numbers. Call for details 303.779.0591 x 101

Ray

Hello all,

As a reminder, the City and County of Denver 2009 MCC program ends on December 31, 2011, and there will not be an extension of the program. All MCC CLOSING files must close by Friday, December 16, 2011 in order for borrowers to receive the MCC Certificate. Please note that this date is the deadline for the Close of Escrow package; therefore, MCC applications must submitted earlier than this date. At this time, there is $8.9 million of funds available for borrowers to receive an MCC.

"Ray, thank you for your participation in the Denver MCC program. You have done an outstanding job and have already assisted more than 120 borrowers! We hope you can continue to help more of your first-time homebuyers with this tax credit before the program ends! Please let me know should you have any questions."

To apply for the tax credit before it is gone fill out an application now.
Thank you,

Ray Williams

 You may already know but the FICO 8 credit scoring system has been out for four years already. So then why hasn't your score benefited from this new system when applying for mortgages?

Truth be told, the mortgage industry is not using the FICO 8 system. They are still using the FICO classic model that was built 8 years ago.

The benefits of FICO 8 would help those folks who may have minor dings, or have had an issue once , or years ago. So what it would do is clump folks with credit damage into groups by problem type and compare you to that type of category to see how risky you are. So if you had a couple minor medical collections years ago, and everything else in line, you would probably benefit from this model. However, if you pay everything on time but keep high balances you may suffer a little because you would be compared to those who pay on time and keep their credit card balances low.

Right now the lagging aspect from implementation comes from the banks, and Freddie Mac and Fannie Mae implementing the FICO 8 system. So far only Citi has implemented it for credit cards (not mortgages). With all the problems Fannie Mae and Freddie Mac have had it is no wonder why they have been slow to make the transition. Given all the hoops, legal, compliance paths that would have to be negotiated, I am sure they are slow to want to implement and spend the money at this time.

Overall, it is thought that few would benefit and so maybe the FICO 8 model being considered a saving grace would be far fetched. If you are curious if you qualify for a home loan to buy or refinance in Denver or Colorado

 apply now and we'll be in touch.

Ray Williams

Branch Manager

Summit Home Mortgage Denver

Rates are at all time lows once again. So you probably have been receiving a glutton of calls and letters to refinance your home.

What are some reasons to refinance right now?

1) Change from a 30 year to a 15 year fixed - You could save tens of thousands of dollars in interest by doing this. You may be surprised at how little if any the increase in payment may be with these low rates.

2) Refinance from a fixed to an A.R.M - If you know you aren't going to pay off the loan and are going to sell in the next 5-7 years, why are you in a fixed rate loan? A.R.Ms have protective features to prevent huge spikes even after the fixed period is over. Call to learn  more about this option

3) Refinance out of FHA and into conventional - If you have good credit, and may have 5% equity this should be of serious consideration. Not only can you get out of mortgage insurance but right now you can also drop your rate. The savings here could be huge.

4) Refinance to remodel - You can take out an FHA 203K mortgage and finance in costs of remodeling (kitchens, baths, basements, roofs, additions, structural repairs...) and at all time low rates

5) Complete a VA interest rate reduction loan - This is a great tool for qualified veterans to be able to lower their rate and payment, and at times without an appraisal.

These are only a few of the reasons, but to make sure you make the right decision talk to a lender who will tell you even if it doesn't make sense to refinance. I am doing this quite a bit with my client database right now. Be an armed consumer, and call 303-779-0591 x101

Ray Williams

Branch Manager

Summit Home Mortgage

303-779-0591 x101

Did you know you could be eligible for a tax credit that is a little known and not marketed to consumers? It currently is set to expire at the end of this year, so get the credit before it is gone.

Program Benefit: The 2009 Denver MCC program allows qualifying borrowers to

Program Size: $25,000,000. The remaining amount of funds is $13,130,598 as of 1/25/11.

Program Period: April 22, 2009 through December 31, 2011 as long as allocation is available.

Families of 2 or Fewer: $91,080

Eligible Loans: Terms and interest rate of the mortgage loan are set by the Participating Lender, though must be fixed-rate and not exceed 40 years.

Eligible Loan Area: Mortgage loans under the program may be made to qualifying borrowers in the City and County of Denver.

Cost: $75 non-refundable Borrower Application Fee plus 0.15% of the

Check out this interesting article I found, good food for thought :~ Ray

By Tara-Nicholle Nelson

Most home buyers feel like they are bona fide real estate experts after all the studying up on loans and neighborhoods, online house hunting and open house visiting it takes just to get into contract on a home these days. But for all but the most handy of house hunters, getting into contract and starting the home inspection process only surfaces how little you actually know about the nuts and bolts and brick and mortar of the massive investment you’re about to make: a home!  

So, you hire a home inspector, but it seems like they’re speaking an entirely different language - riddled with terms like “serviceable condition” and “conducive to deterioration” - about your dream home!  Here are 5 questions you can use to decode your home inspector’s findings into knowledge you can use to make smart decisions as a homebuyer - and homeowner.

1.  How bad is it - really?  The best home inspectors are pretty even keeled, emotionally speaking.  They’re not alarmists that blow little things up into big ones, nor do they try to play down the importance of things.  They’re all about the facts.  But sometimes, that straightforwardness makes it hard for you, the home’s buyer, to understand what’s a big deal and what isn’t so much - the information you need to know whether to move forward with the deal, whether to renegotiate and what to plan ahead for.  

I’ve seen things categorized in home inspection reports under “Health and Safety Hazards” that cost less than $100 to fix, like replacing a faucet that has hot and cold reversed.  And I’ve seen one-liners in inspection reports, like “extensive earth-to-wood contact” result, after further inspection, in foundation repair bids pricier than the whole cost of the home!  

In many states, home inspectors are not legally able to provide you with a repair bid, but if you attend the inspection and simply ask them whether or not something they say needs fixing is a big deal, nine times out of ten they will verbally give you the information you need to understand the degree to which the issue is a serious problem (or not).

2.  Who should I have fix that?  I always ask this question of home inspectors, with dual motives.  First, very often, the inspector’s response is - “What do you mean?  You don’t need to pay someone to fix that.  Go down to Home Depot, pick up a ___fill in the blank__, and here’s how you pop it in.  Should cost you $15 - tops.”  And that’s useful information to know - it eliminates the horror of a laundry list of  repairs and maintenance items at the end of an inspection report to know that a number of them are really DIY-type maintenance items.  Even buyers who are really uncomfortable doing these things themselves then feel empowered to either (a) watch a few YouTube vids that show them how it’s done, or (b) hire a handyperson to do these small fixes, knowing they shouldn’t be too terribly costly.

And even on the larger repairs, your home inspector might be able to give you a few referrals to the plumbers, electricians or roofers you’ll need to get bids from during your contingency period, which you may be able to use to negotiate with your home’s seller, and to get the work done after you own the place.  Dropping the inspector’s name might get you an appointment booked with the urgency you need it in order to get your repair bids and estimates in hand before your contingency or objection period expires.

And same goes for any further inspections they recommend - if neither you nor your agent knows a specialist, as the general home inspector for a few referrals.

3.  If this was your house, what would you fix, and when?  Your home inspector’s job is to point out everything, within the scope of the inspection, that might need repair, replacement, maintenance or furthe inspection - or seems like it might be on it’s last leg.  But they also tend to be experienced enough with homes to know that no home is perfect.  Many times, I’ve asked this question about an item the inspector described as “at the end of its serviceable lifetime” and had them say, “I wouldn’t do a thing to it.  Just know that it could break in the next 5 months, or in the next 5 years.  And keep your home warranty in effect, because that should cover it when it does break.”

This question positions your home inspector to help you:

• understand what does and doesn’t need to be repaired,
• prioritize the work you plan to do to your home (and budget or negotiate with the seller accordingly),
• get used to the constant maintenance that is part and parcel of homeownership, and
• understand the importance of having a home warranty plan.

4.  Can you point that out to me? Often, when you attend the home inspection, you’ll be multi-tasking, taking pictures of the interior, measuring for drapes or furniture, even meeting the neighbors, or fielding several inspectors at a time.  Worst case scenario is to get home, open up the inspector’s report and have no clue whatsoever what he or she was referring to when they called out the wax ring that needs replacement or the temperature-pressure release valve that is improperly installed.  

Your best bet is to, at the end of the inspection, while you’re all still in the property, just ask the inspector to take 10 or 15 minutes and walk you through the place, pointing out all the items they’ve noted need repair, maintenance or further inspection.  When you get the report, then, you’ll know what and where the various items belong. (One more best practice is to choose an inspector who takes digital pictures and inserts them into their reports!)

5.  Can you show me how to work that? Many home inspectors are delighted to show you how to operate various mechanical or other systems in your home, and will walk you through the steps of operating everything from your thermostat, to your water heater, to your stove and dishwasher - and especially the emergency shutoffs for your gas, water and electrical utilities.  This one single item is such a time and stress saver it alone is worth the lost income of missing a day of work to attend your inspections.