Pre-approval letters
So you were pre-approved last year for a Michigan Home. That approval letter may not be Worth the paper it is printed on! Banks and Lenders have tightened up lending guidelines. In the last year mortgage lending has completely changed. There is no more 100% loans in Michigan. Even 95% loans are getting tougher. Though the alternative is an FHA loan. With an FHA loan you can get up to 97% of the purchase price and have the seller pay some of the closing costs.
Every week banks and lenders are looking at how to stop their bleeding. How to stop foreclosures. That is why they are tightening up the lending guidelines. Banks do not want to take the risk. Some people that bought homes in the last 5 years can not even refinance because many lenders do not do sub prime loans anymore. They do not have the mortgage programs they had last year, or even 6 months ago. Even a 620 score is not considered very good anymore.
So don't get caught with your pants down. Get your pre-approval today from a qualified lender. If you are thinking of buying a Michigan home give me a call. I will help you get pre-approved, straighten your credit out so you can buy a home of your own. For more on Detroit Real Estate, Michigan Real Estate, Wayne County real Estate, Oakland county real estate go to my website www.RussRavary.com I have lot of great Michigan mortgage information, credit report information, Michigan home buyers tips
Showing posts with label mortgages. Show all posts
Showing posts with label mortgages. Show all posts
Friday, March 14, 2008
Wednesday, January 30, 2008
Fed drops rates again
The Fed drops it rate again, and it had no effect on the Michigan mortgage interest rates today. 30 year Mortgage interest rates are still below 6% but have not dropped dramatically for any length of time. Hopefully in the next month we will see rates slowly creep down. There are a lot of people out there that could use a break to get their adjustable rate mortgages changed into a fixed rate mortgage.
If you have an adjustable rate mortgage you should contact a mortgage person. They can check the value of your Michigan Home to make sure a bank will even loan against the house. Many homes have lost a lot of value making it impossible to refinance. Also the loan officer can put you on a watch list so when the rates do come down that you will be notified. It may make sense for your neighbor to refinance at 5 3/4% where it may not save you any money because you had a lower rate than he did before. You may need it to come down to 5 3/8% before it makes sense to do it. A No-closing cost loan may make sense for you. Email me at info@russravary.com to find out when it would make financial sense for you to refi and to be put on a rate watch list. For more on Michigan mortgages and Michigan homes for sale go to my website www.russravary.com
Have a great day. Russ Ravary
If you have an adjustable rate mortgage you should contact a mortgage person. They can check the value of your Michigan Home to make sure a bank will even loan against the house. Many homes have lost a lot of value making it impossible to refinance. Also the loan officer can put you on a watch list so when the rates do come down that you will be notified. It may make sense for your neighbor to refinance at 5 3/4% where it may not save you any money because you had a lower rate than he did before. You may need it to come down to 5 3/8% before it makes sense to do it. A No-closing cost loan may make sense for you. Email me at info@russravary.com to find out when it would make financial sense for you to refi and to be put on a rate watch list. For more on Michigan mortgages and Michigan homes for sale go to my website www.russravary.com
Have a great day. Russ Ravary
Monday, January 7, 2008
Declining market stigma in Metro Detroit
What a beautiful day in the Metro Detroit.. 60 degrees in January. What a few hours and what a change it will be. That sums up the mortgage market from last year to this year. Banks are taking tremendous beatings on foreclosures. I have seen three homes in the last day that the bank is going to lose over a $100,000 on each one. The banks have tighten the guidelines, charging more if you don't have great credit. Now to get the best rate you have to have a 680 credit score or better.
You can still get approved for a mortgage but an 100% mortgage in Metro Detroit is just about gone. Many banks have identified or categorized Southeastern Michigan real estate as a "declining market" What the banks are saying is that homes in Southeastern Michigan are most likely going to continue to go down in price. To protect themselves most banks now won't lend 100% in Michigan because the house may be worth less in a year.
The bottom line is that buyers are going to need to have a down payment if they want to buy a home. Now is the time to start saving for a down payment whether you are thinking of buying next month or next year. The more you save the better your interest rate will be.
If you want more information on mortgages or buying a home go to my website www.russravary.com You can contact me at info@russravary.com or call me on my cell to help me plan your purchase.
You can still get approved for a mortgage but an 100% mortgage in Metro Detroit is just about gone. Many banks have identified or categorized Southeastern Michigan real estate as a "declining market" What the banks are saying is that homes in Southeastern Michigan are most likely going to continue to go down in price. To protect themselves most banks now won't lend 100% in Michigan because the house may be worth less in a year.
The bottom line is that buyers are going to need to have a down payment if they want to buy a home. Now is the time to start saving for a down payment whether you are thinking of buying next month or next year. The more you save the better your interest rate will be.
If you want more information on mortgages or buying a home go to my website www.russravary.com You can contact me at info@russravary.com or call me on my cell to help me plan your purchase.
Wednesday, April 25, 2007
PMI mortgage insurance
What is PMI and why do you have to have it?
PMI is Private Mortgage Insurance. It is insurance that a lender or bank makes you get when you borrow over 80% of the value of the home. The more you borrow over 80 % the bigger the risk you are. So the bank makes you take insurance out to cover their risk.
The more you borrow the higher the PMI. Different banks determine PMI differently based on the type of loan, the length of the loan, and the percentage of loan as compared to the purchase price of the home. This is called LTV ( loan to value). If you borrow 95% as compared to 85% the PMI is going to be higher on the 95% because you are a bigger risk.
The only way you can get rid of PMI after you get it is to refinance out of it or pay your principal balance down on the loan to 78%. You cannot get an appraisal showing that the value of the home went up. (Even if the amount you owe is only 78% of the market value of the home). The only exception to this is if you did capital improvements to the home such as an addition. Then you have to document the improvements and get an appraisal done. Many times the bank requires you to use their appraiser or an appraiser on their approved list. So you are going to have PMI for at least 5-10 years usually.
So before you get a loan with PMI look at all your options. Some banks and lenders offer a loan with a higher interest rate where the PMI is built into the price. (There is no actual PMI but you are paying a higher interest rate). Or you can split your loan into 2 parts. You can do an 80% loan and then do a 2nd mortgage for the rest.
Let’s say that you want to borrow 95% on a purchase price of a $200,000 home.
You would be borrowing $190,000 total. You would split the loan into an 80% 1st mortgage of $160,000 and a 2nd mortgage of $30,000. You are still borrowing the same amount but split into two loans. The first mortgage is usually at a good rate and the 2nd mortgage is at a slightly higher rate.
When you borrow over 80% of the value of the home (or purchase price). You have three choices.
1) One loan with PMI
2) One loan with a higher rate that basically has the PMI built into the rate
3) Two loans. A first mortgage and then a 2nd mortgage with a slightly higher rate.
PMI is usually not tax deductible but in 2007 it was. It will be up to the law makers on how long it will stay tax deductible.
The bottom line is that you need to have your mortgage person (i.e. Russ Ravary) run the scenarios for all three. The one with the least expensive payment is usually the way you want to go. That is if PMI is still tax deductible, the lengths of the loans are the same, and the rates are fixed. (sometimes the rates on the seconds can be variable, be sure it is a fixed rate)
If you want more information on mortgages go to my website Michigan mortgages www.russravary.com. To to search Michigan homes in the privacy of your home at your convenience go to www.russravary.com
May your work week fly by and your weekend seem to last forever.
Russ Ravary
"your one stop mortgage and real estate specialist"
PMI is Private Mortgage Insurance. It is insurance that a lender or bank makes you get when you borrow over 80% of the value of the home. The more you borrow over 80 % the bigger the risk you are. So the bank makes you take insurance out to cover their risk.
The more you borrow the higher the PMI. Different banks determine PMI differently based on the type of loan, the length of the loan, and the percentage of loan as compared to the purchase price of the home. This is called LTV ( loan to value). If you borrow 95% as compared to 85% the PMI is going to be higher on the 95% because you are a bigger risk.
The only way you can get rid of PMI after you get it is to refinance out of it or pay your principal balance down on the loan to 78%. You cannot get an appraisal showing that the value of the home went up. (Even if the amount you owe is only 78% of the market value of the home). The only exception to this is if you did capital improvements to the home such as an addition. Then you have to document the improvements and get an appraisal done. Many times the bank requires you to use their appraiser or an appraiser on their approved list. So you are going to have PMI for at least 5-10 years usually.
So before you get a loan with PMI look at all your options. Some banks and lenders offer a loan with a higher interest rate where the PMI is built into the price. (There is no actual PMI but you are paying a higher interest rate). Or you can split your loan into 2 parts. You can do an 80% loan and then do a 2nd mortgage for the rest.
Let’s say that you want to borrow 95% on a purchase price of a $200,000 home.
You would be borrowing $190,000 total. You would split the loan into an 80% 1st mortgage of $160,000 and a 2nd mortgage of $30,000. You are still borrowing the same amount but split into two loans. The first mortgage is usually at a good rate and the 2nd mortgage is at a slightly higher rate.
When you borrow over 80% of the value of the home (or purchase price). You have three choices.
1) One loan with PMI
2) One loan with a higher rate that basically has the PMI built into the rate
3) Two loans. A first mortgage and then a 2nd mortgage with a slightly higher rate.
PMI is usually not tax deductible but in 2007 it was. It will be up to the law makers on how long it will stay tax deductible.
The bottom line is that you need to have your mortgage person (i.e. Russ Ravary) run the scenarios for all three. The one with the least expensive payment is usually the way you want to go. That is if PMI is still tax deductible, the lengths of the loans are the same, and the rates are fixed. (sometimes the rates on the seconds can be variable, be sure it is a fixed rate)
If you want more information on mortgages go to my website Michigan mortgages www.russravary.com. To to search Michigan homes in the privacy of your home at your convenience go to www.russravary.com
May your work week fly by and your weekend seem to last forever.
Russ Ravary
"your one stop mortgage and real estate specialist"
Friday, March 9, 2007
What are points? Mortgage Information
If you have good credit, you should never have to pay points!!! The only reason to pay points when you have good credit is to buy discount points to get the rate down. You should know or have a general idea of what rates are. So let's say for example rates are 6% at some of the local banks and mortgage brokers. But you know you are going to stay in the house for a long time, you are a saver, and rates are pretty low. You can buy down the rate by paying 1 or 2 discount points. 1 point usually lowers the rate by a 1/4 of a percent and 2 points usually lowers the rate by 1/2 percent.
A point is one percent of the loan amount. So if your loan was $200,000, 1 point is $2,000 to lower it a 1/4 % from 6 to 5 3/4%. 2 points is $4,000 to buy the rate down 1/2 percent to 5 1/2%. The amount points buy down a rate vary from each bank or mortgage broker so be sure to check with them what the cost of the point and how much it will bring down your rate.
The reason you don't want to buy points usually is because it takes anywhere from 4 to 7 years to re coup the money from buying the points. So if you refinance or sell your house during that period you lose that savings. You just threw that money out the window. Most people refi or move during that period.
Let's continue with that example. A $200,000 30 year fixed loan at 6% will have a payment of $1199.10. If you buy that loan rate down a 1/4% you would have a $200,000 30 year fixed rate at 5 3/4% with a payment of $1167.15 that cost you $2000 to do . A savings of $31.95 a month or $11,502 saving over the life of the loan! If you minus the $2,000 cost for the point then it is $9,502 over the life of the loan. Quite substantial. But only if you stay in the loan.
To figure your breakeven point you take the cost of the point ($2,000) and divide by the savings ($31.95). $2,000 divided by $31.95 = 62.59 months. It would take you about 63 months to break even. So you would have to stay in the loan for 5 years 3 months before it is a benefit to you and you actually start saving money. For more mortgage information go to www.russravary.com May today's troubles disappear quickly for you. Russ Ravary
A point is one percent of the loan amount. So if your loan was $200,000, 1 point is $2,000 to lower it a 1/4 % from 6 to 5 3/4%. 2 points is $4,000 to buy the rate down 1/2 percent to 5 1/2%. The amount points buy down a rate vary from each bank or mortgage broker so be sure to check with them what the cost of the point and how much it will bring down your rate.
The reason you don't want to buy points usually is because it takes anywhere from 4 to 7 years to re coup the money from buying the points. So if you refinance or sell your house during that period you lose that savings. You just threw that money out the window. Most people refi or move during that period.
Let's continue with that example. A $200,000 30 year fixed loan at 6% will have a payment of $1199.10. If you buy that loan rate down a 1/4% you would have a $200,000 30 year fixed rate at 5 3/4% with a payment of $1167.15 that cost you $2000 to do . A savings of $31.95 a month or $11,502 saving over the life of the loan! If you minus the $2,000 cost for the point then it is $9,502 over the life of the loan. Quite substantial. But only if you stay in the loan.
To figure your breakeven point you take the cost of the point ($2,000) and divide by the savings ($31.95). $2,000 divided by $31.95 = 62.59 months. It would take you about 63 months to break even. So you would have to stay in the loan for 5 years 3 months before it is a benefit to you and you actually start saving money. For more mortgage information go to www.russravary.com May today's troubles disappear quickly for you. Russ Ravary
Monday, January 29, 2007
The outlook for 2007
The outlook for 2007 is unpredictable at this time. If somebody tells you that rates are going down in August they are just guessing.
Mortgages are now being sold on Wall Street. They are being bundled up in large groups and being sold as investments. Hedge funds and mutual fund even buy them. So rates are about as unpredictable as the stock market. There are many factors that cause the rates to go up and down. Economic conditions play a large role. How earnings come out, Whether the unemployment numbers are up or down, whether new housing starts are up or down. What economist's predict the inflation rate to be in the future, what the Federal Reserve says. All these things sway the rates daily and sometimes twice a day.
Every day the rates change according to the market. Just because a mortgage person told you the rate was 6% last week does not mean that it is 6% today! I have seen rates change as much as .25% in a day. If you are unsure of whether the rate is going up or down it is wise to lock in the rate.
Many times the broker or lender can switch banks if the rate goes down. Many loan officers won't tell you that because it means a lot more work for them. It also means that you are starting all over again from the beginning. Sometimes you even have to re-sign all the papers. So if you are in a rush or have a time frame you may not be able to get that lower rate because of the time it takes to re do the loan.
When a loan officer does this for you he is going out of his way. ( Who wants to do the extra work for the same pay?) Be sure to thank him.
If you want more information on mortgages go to www.russravary.com
Mortgages are now being sold on Wall Street. They are being bundled up in large groups and being sold as investments. Hedge funds and mutual fund even buy them. So rates are about as unpredictable as the stock market. There are many factors that cause the rates to go up and down. Economic conditions play a large role. How earnings come out, Whether the unemployment numbers are up or down, whether new housing starts are up or down. What economist's predict the inflation rate to be in the future, what the Federal Reserve says. All these things sway the rates daily and sometimes twice a day.
Every day the rates change according to the market. Just because a mortgage person told you the rate was 6% last week does not mean that it is 6% today! I have seen rates change as much as .25% in a day. If you are unsure of whether the rate is going up or down it is wise to lock in the rate.
Many times the broker or lender can switch banks if the rate goes down. Many loan officers won't tell you that because it means a lot more work for them. It also means that you are starting all over again from the beginning. Sometimes you even have to re-sign all the papers. So if you are in a rush or have a time frame you may not be able to get that lower rate because of the time it takes to re do the loan.
When a loan officer does this for you he is going out of his way. ( Who wants to do the extra work for the same pay?) Be sure to thank him.
If you want more information on mortgages go to www.russravary.com
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