Home Affordability Refinance Plan HARP

Some exciting new changes are on the horizon for this government sponsored mortgage refinance plan. While the details are still unclear, it's certain that our government recognizes the importance of helping American Families get their financial houses in order. For a robust economic recovery American Families need help taking advantage of these historically low mortgage interest rates. While I'm not a fan of giving everyone a free lunch or rewarding those who've taken advantage of the system, I see absolutely no reason why a homeowner who is making their payment each and every month, despite the decrease in the value of there home, shouldn't be given this opportunity. The US government is already on the hook for these loans and the probability of default only increases if these homeowners are left to pay higher payments for an extended period of time. The biggest issue facing the success of this plan is the significant loan level pricing adjustments that significantly increase the cost or rate of these refinances. These pricing adjustments should be removed or should decrease for each 6 months or year that the current loan being refinanced has been paid. Giving American families some help can only help solidify our countries future. Keeping the note rate low on these HARP mortgage refinances will put billions of dollars back into the hands of consumers and give them the confidence to start spending again, rather than struggling to pay their mortgage payments.

I am always available to consult anyone with question about any sort of home mortgage financing questions and welcome all calls and e-mails.

Peirce
peirce@peircecook.com
301-919-0030

Mortgage Refinance Boom- Maryland ,Virginia, and DC

Interest rates have truly hit an all time low, but finding the right loan officer and company to work with is essential in ensuring that your mortgage refinance actually reaches closing and is completed in a reasonable amount of time. I've had over 10 years experience helping my clients lower their mortgage interest rates throughout Maryland, Virginia, and DC. The mortgage application process is complicated and requires an immense amout of documentaion so having an experienced loan officer to guide you through the mortgage refinance application process is essential. Getting a low interest rate on your mortgage refinance is important, and so is doing business with an expert who can guide you through each step in the process. Please give me a call at 301-919-0030 or e-mail me at peirce@peircecook.com to experience an unmatched level of service.

Current Challenges Facing the Mortgage Industry and Ideas on How To Start Fixing Them

 

 

Written by: R. Peirce Cook, Jr.

Cell: 301-919-0030

 

 

Challenge

­          FNMA/FMHLC/FHA/VA all provide Government loan programs supported by all US taxpayers, yet qualification is being made difficult for even the most credit worthy consumers because of obscure guidelines.

Solution

­          Attention needs to be focused on reducing current pricing adjustments, creating flexibility for borrowers who barely miss certain criteria, and allowing more flexibility for those who are the most credit worthy.

 

 

 

Challenge

 

­          It appears that no company, agency, or person is analyzing this complex problem and applying new innovative ideas to find solutions. Everyone seems to be looking at the current loan options and trying to cram the same struggling American borrowers into the same old loan programs.

Solution

 

­          Develop FNMA/FMHLC/FHA/VA loan programs with new extended terms and competitive pricing.  Basic loan terms should be extended to 40 years at attractive rates and upside down borrowers should be refinanced as such with new affordable terms. The new terms that extend the loan should come with deed restriction/liens that tie the property and future equity so nobody is receiving a free ride.

 

 

 

 Challenge

­          FNMA/FMHLC/FHA/VA guidelines are so specific that if a consumer is on the cusp and does not fit into one of the predetermined black and white tranches they are denied a loan and provided with no follow-up or other alternative except waiting and going through the process from start to finish all over again.

Solution

­          Allow consumers that are on the cusp of qualification for a loan program to accept a lien on the property so they can complete the refinance – develop predetermined repayment terms and offer this lien/financing at a nominal rate to be paid to the government and deductible on ones tax return. When the property ownership is transferred the lien must be repaid or transferred to the new owner.

 

 

 

Challenge

­          Consumers are not willing to commit to banks/lenders and want to shop around for the best deal and banks and lenders are spending time, energy, and resources to service consumers who are shopping. The media armed with miss information is exacerbating the problem.

Solution

­          If banks are willing to commit and give an approved consumer the desired rate, then the consumer must commit to the transaction by pledging assets with the bank (i.e. purchasing a 3 or 5 year CD with an early withdrawal penalty) which would allow them to qualify for TARP subsidized rates and loan programs.

 

 

Challenge

­          Consumers are confused by the process and there are too many barriers for people to obtain accurate information and most lenders are not well prepared to meet the public's needs.

Solution

­          Mandate that banks and lenders put policies and procedures in place that help consumers get the correct information, and guarantee all fees and costs associated with a transaction completed under the newly established program.

 

Challenge

­          The average consumer has no avenue to get into a traceable and accountable system to receive follow-up once their loan application has been denied by a lender. If you are upside down on your mortgage or falling behind on your payments you are simply out of options.

Solution

­          Create and maintain a National Registry for Mortgage Help, to be overseen by the Government, where people can enter their information and ask to be contacted regarding their specific mortgage situation.  Banks and lenders will participate in the National Registry and be held accountable for consumers with which they do not provide follow-up. This should be a mandate to banks who are receiving TARP funding.

 

Challenge

­          There is no established program or policy requiring people who refinance using Government supported loan programs to make investments in their complete an energy weatherization, to upgrade their home's energy efficiency, tied to the new loan financing.

Solution

Include an energy inspection requirement as part of the appraisal process, and require completion of all energy upgrades financed by a loan before any deed restriction is released.

HELP! My ARM Mortgage Is going to adjust! HOLD ON WAIT, it may not be as bad as you think.

Hello,
Below is a response to one of my best clients adressing his concerns about his current ARM (Adjustable Rate Mortgage) and whether or not he should refinance out of it to a higher 30 year fixed rate mortgage. Unfortunately, like many people across the country, his mortgage balance is roughly equal to the value of his home making it very difficult if not impossible to refinance his mortgage. But that's ok, because the only reason he wanted to refinance his ARM was because of all the negative press in the media about ARM's and how "bad" they are. I don't completely agree and below is why. Let me know what you think.

P.S. This new housing bill could really help borrowers and the real estate market. I'll be posting a bit on that very soon.

TEXT OF RESPONSE

I'm sorry to hear that you are stressed out about the loan on the condo. Unfortunately right now there is absolutely nothing that you can do about it. I'd recommend trying to put it out of your mind for at least the next year and really for two years. Look at it this way you have one year left on the current loan with a nice low interest only payment at 5%. Even when the loan adjusts in a year I don't think the rate is going to go up so much that it's going to be any worse then having a 30 year fixed rate loan on it today. Let me see if I can explain. If you did a 30 year fixed rate loan today your rate would be around 6.5 % with full principal an interest payments versus now you have the ability to pay interest only. If your loan were at the end of the 5 years today and was adjusting based on the current LIBOR index rates it would adjust to around 5.53%. That is a full 1 point lower than the rate you could get on a 30 year fixed rate today. Keep in mind this is on today's rates. I don't think the underlying index will go up very much between now and next year but even if it did go up a full point you would still adjust to the exact same rate that you could get now. Once you adjust you have one full year at that new rate and payment. So you have at least 2 years until you really have to worry about anything. Two years is a long time. More than enough time for the values to increase making it possible for you to refinance if rates make sense or for you to sell. So in short, put it out of your mind, focus on getting it rented and enjoy spending time down there with your family.

I know it's not the ideal situation but trust me it's really not that bad. Even if you could refinance it now to a 30 year fixed but you planned on selling in the next 2-3 years I'm not sure it would make sense because your giving up a 5% rate for a 6.5% rate that you will keep for 2-3 years. Even if you were to adjust next year to say 7.5% (which is unlikely) you would still be exactly the same for the next 2 years when compared to refinancing to 6.5% today. Ok I think you've got the point but the same thing goes for your house. DON'T WORRY about it. You have the same situation with this loan as you do on your condo. Since current rates are around 7% for $575,000 loans you have essentially 7 years of security. Your rate would have to adjust in 2012 to 8.5% and stay there for 3.5 years in order for your average rate over that time period to be equal to 7%. Does that make sense? So you would be indifferent between refinancing to 7% today on a 30 year fixed and keeping your current loan until 2012 and then having it adjust to 8.5% for the next 3.5 years. I don't think that will happen thereby making you better of staying exactly where you are until an opportunity arises that makes you better off, not worse.

Call me if you have any questions about any of this and I'll gladly go over it with you. So the short of it is, put it out of your mind for now, and I'm absolutely certain it will all work out in the end

Getting together re Blogging

Unfortunately I can't make it on Monday but I would certainly like to know how the discussion goes. I've started my own blog since our last meeting and while it's slow going it is something I think can be a valuable form of communication especially for our group. I've often thought of ways it could be useful and have had questions about Green building, green energy and maybe even some opportunities for members of the network.

One thought is to start a blog and allow each member access to posting via e-mail. This could be a good way to keep a record of ideas and contacts and may allow us to further out networking and discussions. As an example of this I'm BCC'ing my blog....  www.wcfinance.blogspot.com ......... with this e-mail and you'll see how it automatically posts to the blog.

So, If I needed to ask for help on ideas and costs for geothermal and solar for a new home I am looking at (which I do, so Chris lets catch up and sorry I haven't been in touch since our lunch meeting, things have been crazy) then you could post your needs, ideas or questions to the blog and other members could respond to you directly. It's little less intrusive than e-mail and gives the greater population a chance to find us and comment as well.

Well enough about that for now, but a quick plug for the mortgage industry. Conforming loan limits have been raised to $729,000 in the DC Metro area so if you have the need for a rate and term refinance on a larger loan amount, the time to do so will be approaching soon. If not for the liquidity problems in the secondary mortgage markets, the problems in the bond insurance market, the threat of recession, and the declining real estate values, this would be a fine time to be a mortgage banker. Actually, lucky for me, it still is great. I'm with Wachovia and we have great portfolio lending products that still allow for stated income loans and give you payment options to boot.

If you, friends, family, or co-workers have a question about anything related to the mortgage industry I am always available.

Thanks and take care,
Peirce

P.S. Chris please give me a call if you have a minute to re-connect about a project I am working on, thanks

Number one mortgage question.........

So Peirce, is it time to refinance? Well the answer to this question
will vary based on your individual goals. One of the best ways to
determine if refinancing is right for you is to gather the specific
terms of your loan and the HUD1 statement that was signed for the loan
you are refinancing. If you simply write the following things on the
top of this document and sen it to me I will give you an honest and
straightforward answer to the above question.

info needed:
1) Type of loan (ie. 30 year fixed, ARM, etc., or you don't know)
2) Current interest rate
3) How many years you will own this home and/or keep this new loan
4) Phone number and e-mail where you can be reached

E-mail the HUD1 with this info to cook@wcfinance.com or fax it to
1-866-403-8217.

--
Sent from Gmail for mobile | mobile.google.com

Interest Rates and Float Down Options

Mortgage Interest rates are steady right now with an ever so slight downward trend. I don't see significant movement in either direction for the foreseable future but I have a foolproof way of allowing you to benefit if they do go lower. It's called a float down and it's something I highly reccomend to everyone doing a rate and term refinance. Here is how it works. You pay a .5% (one half point) of the loan amount, which is 100% refundable at closing regardless of if you float down or not, and this gives you a one time interest rate float down to the current 60 day market interest rates plus .125%. Once your loan is approved and ready to close if the rates have gone down you get a better rate if they go up you keep the original locked in rate and you get you upfront fee back either way. We can increase the opportunity for you to can get a better rate by getting your loan approved for closing as fast as possible so we can sit for a week or two and watch the market with the hopes of catching a down day for rates and executing the float down.

I provide mortgage refinance loans and purchase money mortgages around the entire country but primarily focus on Maryland, Virginia, and Washington, D.C. If you live in Bethesda, Rockville, Gaithersburg or Montgomery County, MD and you need expert advice on financing your home mortgage and would like great interest rates with straight forward honest advice then please give me a call.

Thanks fo reading,
Peirce

Lowest rate and lowest monthly payment

One of my clients recently asked me for a loan with the best interest rate and the lowest monthly payment. Well this is a trick question because those two things are often wrongly associated with each other. Most people want to lower their mortgage payment and they wrongly assume that this equates to the lowest interest rate available. While the interest rate on your mortgage loan is extremely important equally important are the terms under which you are required to pay back your mortgage. One of the most important but often misunderstood and overlooked terms is the amortization term. This determines whether you pay principal and interest, interest only, or maybe even defer interest with negative amortization. This sigle apect, the term of your mortgage loan, is the greatest factor influencing the amount of your monthly payments. So it would make sense to have control over this right? Well there are loans avaiable that give you a choice each month regarding under which term you will pay. Now these loans may come with a slightly higer rate, which is the price you pay for flexibility, but think of the consequences if you run on difficult times. With a standard 30 year fixed rate mortgage for $400,000 at 6.5% you are obligated to make a monthly payment of $2514.65 each and every month regardless of any circumstances that life might toss at you. What if you considered some sound financial advice and looked at a loan that still had a 30 year fixed rate but came with payment options each month. What premium in interest rate would you pay for the option to be allowed to only have to pay $1714.44 a month for that same $400,000 loan? That is over $800 a month lower than the standard 30 year fixed rate. Would you pay an extra .7% or $2800 per year to have this option? If you have doubts about the timing or amount of your future income or want to keep your family safe in the event of a financial emergency then this is a loan program for you to consider. Or maybe you want to invest your money in other places to grow your net worth. These are the types of forward thinking questions you need to ask yourself when considering the type of mortgage loan that is best for you and your family. If you would like an analysis of your unique financial needs please send me an e-mail or drop me a line.

My First Post and reasons why

So I've heard of a blog, I've even read a few and then I met someone who couldn't say enough about the absolute power of this great tool that he uses to communicate with is current, past and future clients even his friends and family. When he started to tell me all the great things his blog allowed him to do I was absolutely stunned because the challenges it helped him overcome were exactly the same challenges that I often see everyday. I thought to myself how could this blog thing be better than a great website or maybe a piece of marketing software but then it hit me. While reading his blog (http://drodio.typepad.com) I realized that this was exactly the tool I had been missing for so many years because it can allow someone to easily put their thoughts and the knowledge they have developed into a usable accessible format. Things like answering the same question over and over again for different clients is something in my business that I do almost everyday so from now on I will post my answers to each client on my blog so that the next time the question comes up I can send them to my blog post instead of spending valuable time answering the same question again and again.

Well I made it a goal for 2008 to start a blog of my own so I'm a few days early. I guess that's better than a few days late. So a new goal will be to grow the content of my blog so that it becomes a usable resource of the thousands of people who surely wish they had honest and expert advice surrounding the mortgage financing of their most valuable asset, their home. Oh and I'll also add some personal Peirce Cook info and thoughts just to keep things interesting.

Thanks for reading,
Peirce