New home buyer

Are you a first time home buyer? Do you want to get pre-approved? Don't know if you can qualify for a home.
Lenders look at your credit score ( which means your credit history) How many open lines of credit do you have? Do you have a credit card? A car loan? A student loan? Those all show up on your credit report. Even if you are just an authorized user on somebody Else's credit card it shows up.
If you do not have any of those. Then FHA and some banks use rental history, cell phone bills, car insurance bills, utility bills. So if you are thinking of buying a home get the bills in your name if you are paying them. Be sure to pay by check and not money orders or cash.
Just because you never thought you could get a home, you may be pleasantly surprised. Sometimes it is very easy to get a loan even if you are self employed, just out of college, or don't have much money. I always tell young people to start saving money. It helps when you move into the house and you need to buy something. A safety cushion if something breaks or go wrong. If you think you can afford a certain payment, let say $1000 a month. If you only are paying $700 in rent then put the extra $300 away each month. Can you live comfortably? Save that money for a down payment or a rainy day fund.
Thinking of buying and want to see some listings of what you want. Go to my dream home finder and put in your wants. If you just want to surf the net and check out home listings and photos go to Search Michigan homes free. Or if you have to sell your home first go and find out your home's value. Go to www.russravary.com if you want to get pre-approved today.
Ready for a good burger go to Miller's Bar in Dearborn on Michigan ave just east of Telegraph, or try The Redcoat Tavern in Royal Oak at 3808 Woodward. Or for a brew pub go to Leopold Brothers Brewery in Ann Arbor or Thunder Bay Brewery in Auburn Hills. Have a great day.
Russ Ravary

Second Mortgage Rates

I'm a loan officer at a mortgage broker. We usually can get better deals than a bank can give you. But on second mortgages I tell people to shop the big banks and credit unions. They usually have the best rates and lowest closing costs for second mortgages. When you are shoping for a second mortgage you want to find out what the rate is, is it fixed or variable, is it a home equity line of credit, and how are the closing costs are. Usually you want to go with the lowest closing costs and the lowest rate. Also ask if you can lock the rate later on.
Second mortgage rates usually depend on how much you are borrowing (including the first and second loan amounts) compared to how much you house is worth. If you are only borrowing 70% of what your house is worth the rate will be cheaper than if you were borrowing 90% of what your house is worth. It is a bigger risk for the bank to loan you 90% of the house versus 70% loan. That is why they charge more for the higher risk.
If you want more information on mortgages or would like to apply for a mortgage go www.russravary.com We can help you get pre-approved for a mortgage and start searching for a home. Have a great St. Patricks Day.. May the luck of the Irish be with you all year Russ Ravary

Financial Risk

I had a fellow mortgage person tell me that a deal we did last year was in foreclosure.
The client worked at Ford Motor at one of the plants and got laid off. He had put on an addition. The client didn't know he was going to get laid off that I know of. I feel bad for this guy. I feel bad for his family. I know how tough it is out there. The construction industry is way down, friends of mine are working 1 and 2 days a week if that. The real estate industry is slow with houses being on the market sometimes over a year. Pfizer, GM, Ford, and Chrysler are all downsizing here in Detroit.
The bottom line is before you consolidate debt into a loan, fix the house up, or put an addition tread carefully. Find out what your house is worth. Is your house worth the money to add on or to update at this time? What would happen if you had to sell right now? Could you even sell your house for what it is worth? What would happen if you lost your job could you survive with the added payments?
The economy is Detroit is tough right now. It's time to make the right financial choice's for you and your family. Don't let some smooth talking loan officer talk you into a negative amortization loan unless you have no other choice and you have to lower the payment or loose the house. If you can't survive in these tough times, it buys you some time in the house.
I have seen some financial planners pitch this product to their clients because they make a lot of money off of it. (Some of their clients should have never even been asked, but the financial planner was looking out for himself more that the client) Some of the other names for a negative amortization loan is pick a payment loan, 4 choice loan, smart choice loan. It is a way of giving you 4 choices on which payment to make each month. Unfortunately the cheapest choice is actually adding principal onto your mortgage balance each month. All of us want the cheapest payment right. Unfortunately it becomes a nightmare for the homeowner later on because he owes so much more on the house.
If you hear 1%, or 2% or a rate so low it seems to good to be true. It is. Current rates are higher than 5 1/2 % for a 30 year fixed. (even with points) So if you hear 1, 2, or 3, 4% there is something hidden that they haven't completely told you. If the payment is different from what all the other loan officers are telling you then check into more. Feel free to pick up the phone and call me at (313) 310-9855 or go to my website www.russravary.com and email me about it, if there is a program you don't understand.
So the bottom line of this blog is don't take on any more debt, or update your house if you are worried about your job. Do the simple things like painting or updating the carpeting. Simple less expensive things that will make you feel good about your house yet not cost you a lot. For more mortgage information go to http://www.russravary.com/

Mortgage meltdown

If you have been reading the newspaper or watching Good Morning America this morning. You would have heard about the mortgage meltdown. What does the mortgage meltdown really mean to the average consumer?
Let's start with why it happened. Banks, and lenders began loosening lending guidelines about 6-7 years ago. They made it easier for almost anybody to get a loan. You did not have to show employment sometimes, sometimes you did not have to verify income, and sometimes you did not even need one dime to buy a house. It was easy to get a loan even if you were self-employed, had a recent bankruptcy, or even a prior foreclosure.
The gurus in the back room thought they had figured out the projected default rate. They factored that into the interest rate. So if 10 out of a 1000 people were going to default as they guessed then they charged a little higher rate to everybody. Just like they do with credit cards. The good payers subsidize the losses of the non-payers. That is the way of business.
Well unfortunately the gurus in the back room under figured the losses. So long as the real estate market is going up all was well. The foreclosures are huge right now. Especially Michigan foreclosures, we are near the top of the list. The banks, the lenders, and investment portfolios are taking losses. Yes investment portfolios, mortgages were being bundled up and sold on wall street. They are in various mutual funds and hedge funds now. So those funds are going to lose a little value here and there.
But the major consequence of what is happening is that lenders are going out of business, there is a tightening of loan criteria. No longer can anybody just sign and get a loan. There are less choices and less programs for loan officers. Less choices for consumers. So some people that could have bought a house last year with no money down, may need money or may not even be able to get a loan. Before lenders could sell those loans on wall street, now wall street wants nothing to do with them because of all the losses. It's not profitable.
Less people on Wall Street to sell to, less companies able to stay in business, less choices and fewer easy options for Mortgages for the average consumer.
Interest Rates are going to be higher for non-conforming people. People with bruised credit, self-employed people with no verifiable income, people with no reserves are non-conforming people.
Where the biggest danger is that some of adjustable rate mortgages may rise quickly. Good Morning America was saying that you needed to be in a 30 year fixed rate mortgage if you could be. I think that is a great idea. We are near the low point of mortgage rates. Rates may come down a little but the possibility of them going up is greater.
So if you are thinking of selling to get out from under your mortgage, or just thinking of moving out of state.... you can check your houses value at www.checkmyhousesvalue.com
I always thought people should have a little reserves when they buy a home. What happens if the furnace fails or the roof leaks. Sure it's nice to buy a home, but I would like my clients to be able to afford the home. So they can be in it 5 -10 years down the road and not lose it to foreclosure. If you want more information on mortgages, want a good rate feel free to call me at (313) 310-9855 or go to my website at www.russravary.com May life treat you and your family well today. Russ Ravary

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

Well the stock market has added to Michigan's woes. Many people have been slammed by falling house prices. For many people their homes were their biggest asset. Michigan home values have fallen as much as 20% in some areas. Along with their 401k and mutual funds it has struck people hard.
Now is the time to buckle down and get down to financial basics. Have you gone through your expenses lately? Do you have extra features on the phone such as call waiting, call forwarding, caller id that you could do without? Can you survive on just basic cable? Have you checked prices on your car and home insurance? A friend of mine Bill Tuccini once told me that his dad used to say " take care of the pennies the dollars will take care of themselves".
Cut up the extra credit cards and live within your means. buy what you can afford. Don't use that home equity for nothing. Change it over into a fixed loan. Start paying down your mortgage.
If you are thinking of moving go to http://www.checkmyhousesvalue.comw/ have a great day.

There are millions of Adjustable Rate Mortgages and balloon mortgages that are coming due in the next year or so. Most of my clients are not in that fix. I was always a thirty year fixed or a fifteen year fixed type of guy. I was raised old school in that you pay off the mortgage.

Unfortunately many accountants, stock brokers, and investment people push clients not to pay off their mortgage for tax benefits, and hopefully investments gains. I myself like the security of knowing that my house is paid off and I owe nobody.

Do you know why mortgage people like Adjustable Rate Mortgages besides the low rates for customers? It is not all in the interest of the client. It is in the interest of the bank, or mortgage broker! If you the client gets a 3 year adjustable mortgage then the mortgage person sets himself up for repeat business in 3 years. That means if you do it every 3 years. He could refinance you 10 times and you still would never be paid off!!! Whereas a fixed person is paid off. Sure they paid more in interest but they are paid off. Plus they did not pay closing costs 10 times. 10 X $2000 in closing costs and you still owe money. It is just keeps coming back to the broker. The broker is setting up a retirement plan off of you!!!!

Then there is other problems that come with it. It is happening in Michigan right now. These are things most brokers never told you about. What happens if the value falls and you were close to 80% of the value of your home 3 years ago. Some Home Values in Michigan have plummeted as much as 20% from there highs. The average is 10 -20% in Michigan right now. That means the customer now has to pay PMI, or stay in the adjustable rate mortgage, or sell the house if they can't afford the new payment. Did your broker tell you that! If you want to check your houses value click here. It is not an appraisal but it will give you a general idea of what your house is worth. For more mortgage information, real estate information, Michigan things to do check out my website at http://www.russravary.com/

So the bottom line is that next time you get a mortgage think about the true cost.