During great parts of my day I find myself "dispensing" information. I literally visualize myself much like a pharmacist or doctor ... dispensing little pills of information, performing surgery to heal credit, suture finances, resuscitate mortgage processings, and deliver successful closings. I love sharing and dispensing that mortgage information to my clients and referral partners. No doubt about it. But as we all know, it isn't always easy to get patients to "take" their medicine. It's much the same with potential homebuyers many times. They KNOW they have a need for the information being made available. They UNDERSTAND that they should be listening and learning. But still, they don't.  Zillow.com (along with Ipsos, a polling company) recently developed and conducted a survey nationwide to find out ... Just what does the average American adult know about mortgages??? After reading some of the results and answers given within this survey, I think I am the one needing medicine! The Zillow.com survey made it quite clear, there are many misconceptions surrounding mortgages. And many many Americans (some of the percentages documented were staggering) are currently terribly ill-prepared to take-on the responsibility of a mortgage or remain somewhat confused even after they have completed the mortgage process. So ... what to do?? How do I as a mortgage lender correct this dilemma? Try to address this issue? One thing I can do is address some of the issues and topics that I hear most often here. But I also want to address those issues and misconceptions that you, my readers may have. So please ... before I go any further in this post, understand this. Should you not see the questions or topics below that you personally need guidance for and answers to ... CONTACT ME RIGHT AWAY! We'll talk together immediately and I'll get you the information and the answers you need. Here are some of the questions I receive often:  1. True or False: FHA is a loan option for first-time homebuyers only. Answer: FALSE! 2. True or False: Adjustable Rate Mortgages will always adjust into a higher interest rate after the first adjustment period. Answer: FALSE! 3. True of False: Interest Rates for Investment Properties are always 2% higher (or more) than normal residential property rates. Answer: FALSE! Let's take some time to address some of the issues above ... In response to #1 regarding FHA Loans: FHA will insure mortgages originated for a homebuyer who will occupy the residence being lent on. One cannot (as a rule), carry two (2) FHA loans at the same time. There ARE rare exceptions to that rule. Example: I currently have clients who own a home, with conventional loans. They are buying a different primary residence, using an FHA loan with a 3.5% down payment. In response to #2 regarding Adjustable Rate Mortgages: Market Rates determine the direction on interest rates when an Adjustable Rate Mortgage(ARM) comes due. If at that time the rate index is higher than when the loan was originated, the rate will indeed go up. If the rate index is lower, the corresponding new rate for the loan will be lower. It's that simple. Pretty much like what we're seeing at the gas pumps these days. When the market prices/costs are higher for oil, the prices are higher at the gas pumps. When lower, prices drop. Prices can be seen fluctuating on the market during the day ... and that's reflected within minutes or hours at the pumps. When you think of ARMs that way, it's easier to understand what influences the interest rates involved with them. In response to #3 regarding Investment Property Interest Rates: Risk-based pricing is the "norm" for Conventional Financing. A borrower not living in the property itself being mortgaged adds an additional "layer of risk" ... which can be reflected in payment performance. Fannie Mae/Freddie Mac "rate" or assess that additional risk (to non-occupying owners/investors) by increasing the cost of delivering/offering that loan by 2 points, or more. That means:2% of the LOAN AMOUNT, will be added as a COST to the Borrower ... as the Loan Originator will pass on the additional cost to the Borrower. To clarify, that scenario can result in the Borrower getting the same market rate as one who would occupy that same property, but their CLOSING COSTS will most likely differ, as the CLOSING COSTS can then increase by as much as 2% of their loan amount. Remember: The RATE and COSTS of these investment property loans remains negotiable between Borrower and Loan Originator. The above questions and answers only scratch the surface of the mountains of information that could pertain to any mortgage loan. Mortgages have become so personalized in nature that it would be impossible to address all possible questions or topics here. All potential property buyers must understand that it takes time to receive the answers needed to secure the best mortgage financing. That is especially true in the currently challenged housing market and mortgage industry. It willrequire real effort on their part. But given the size of the expenditure being contemplated ... and the possible long-reaching ramifications of the financial decisions being made ... the time and effort are well worth making.  To make sure you are "dispensed" the correct answers and mortgage program for your personal needs, speak with a qualified, experienced, and knowledgeable mortgage lender. I know that I personally look forward to the opportunity to have these discussions with you and to answer your questions. Do not fear calling, texting, writing or emailing me. Education "dispensing" is what I love to do and I'll be happy to hear from you. Invest time and effort in yourself and your future. Learn the important facts of mortgages and home buyingbefore you make a move. Be prepared with the important documents you will need for mortgage application and processing. Don't end-up a poor statistic in an upcoming mortgage survey. You'll be blad that you invested in yourself wisely ... financially healthier and less-stressed in the future. * Contact me now, Gene Mundt at Chicago Bancorp, for answers to your mortgage, credit, and financial questions: Direct: 815.277.4036 Cell/Text: 708.921.6331. Email: gene@chicagobancorp.com, Website: http://www.genemundt.com/. |
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