Five Benefits of FHA Loan (VIDEO)
Our very own Branch Manager, Frank Blakeley:
Fee fi fo fum
I’ve noticed several stories about hidden bank fees recently. Here’s one example: “New Bank Fees Flying Under the Radar”
The recent attempt by many big banks to impose monthly fees for using debit cards may have died in a hail of public uproar but, undeterred, many banks are quietly increasing existing fees — and creating new ones.
The news video that goes along with the print story was especially interesting to me. It underscores the importance of getting honest disclosure before making a financial decision.
This new quest for fees means you need to be extra careful in making sure you know what you’re getting yourself into when you choose a bank. It means you need to be careful when you are trying to buy or refinance a home. Brett has recently mentioned one form of this risk–being told that there are rates in the 3′s without being told that a rate that low costs extra. That’s not related to recent bank fee-hunger, but it shows you an example of how this might happen–how consumers are attracted to a deal without being given all the information about costs.
One thing you can see from our testimonials, is that we at American Capital try very hard to make sure you know everything you are getting into. We love to hear our clients say things like
He NEVER misrepresented a thing.
In the initial discussion, the agent clearly explained the pros and cons of the refi
I so appreciated his honesty regarding the timeframe, rates and fees – he NEVER misled me or made promises he couldn’t keep.
We want you to know what to expect and not be surprised by hidden fees or anything else.
Blast from the past: one generation ago!
Here is an article from the Williamson Daily News:
SAYS NOW IS THE TIME TO BUY A HOME
WASHINGTON (UPI) — The Government’s top mortgage money man today said now is the time to buy a home since interest rates have bottomed out from their recorded highs of a year ago and are not likely to drop further.
Preston Martin, chairman of the Federal Loan Home Bank Board said, “Rates don’t look like they will fall much further.”
I stumbled across this story by accident. It has nothing to do with whether or not interest rates are likely to go down further for us. Because this news is from 1971. If you are worried about a rate in the 4s, imagine trying to buy a home back then! The story continues:
Martin, whose agency supervises some 4,500 savings and loan institutions which supply much of the home mortgage money for consumers, said a nationwide survey showed mortage rates are about 7.25% for a house, varying a half-point on either side depending on the section of the country.
A year ago, home mortgage loans carried record interest rates of 8.5% or more.
So only a generation ago people were fortunate to get a fixed rate in the 7s! As a matter of historical knowledge, I was already aware of this, but it still struck me as weird to read an article in which people regard 7% as a really low rate. In fact, it was low; in the early eighties the rate almost doubled!
So if you are worrying about rates in the 4s, this might help give you some perspective. You probably already knew rates had been higher, but the fact seems more significant when you look back in time and read people’s own words about what counted as “the time to buy.”
Being your landlord
If you are considering becoming a first time home buyer in the near or far future, you are getting ready of a great adventure. But let me suggest something else you need to think about doing.
You should become a landlord.
If you are renting now, you probably have a rough idea of what a landlord does. Hopefully you have information based on what you have seen your landlord do for you. Perhaps your ideas are based on what you wish your landlord would do. Either way you can imagine what a landlord does.
For example,
1. A landlord will repair anything that goes wrong in the house.
2. A landlord will act to maintain the house.
3. A landlord will ask tenants if they have noticed anything that needs attention
So when it comes time for you to buy that home, it might be helpful to remember that it is time for you to grow up and be your own landlord. This is not as difficult as you may think because there are many many resources available to help you.
Bob Vila, for example, provides a yearly checklist for homeowners. While many of these issues will probably be taken care of during the home inspection before the transaction, it would be important to continue to monitor the home the next year. Bob Vila is someone I trust to tell me how to do that, but there are many other pages of information on the web–like this one from the “This Old House” show. Search around and see what you find. Don’t forget that Home Depot has a great deal of guidance for projects.
Being your own landlord is not really that difficult. But if you haven’t ever thought about it before, you might end up sleepwalking through your home ownership and have to deal with problems that could have been prevented more cheaply. Once you had to learn about it through buying books or borrowing them from the library. There may be excellent resources out there in traditional media, but today the internet makes it easier than ever to learn how to take care of your home.
Because, once you own your home,
1. You will have to repair anything that goes wrong in the house.
2. You will have to act to maintain the house.
3. You will have to be alert to anything that might need attention.
And it will be so worth it!
Working with real people instead of virtual scammers
One of the most important aspects of winning the right to serve a client is establishing trust. Sometimes, proving one’s trustworthiness is more difficult than it should be. Other times, however, the problem is that people are far too trusting. As a result, they don’t even look for a reputable company that will work with them personally. They simply grab the first “person” they meed on the web and are often ripped off. They suffer as a result, and people who work hard to really benefit their clients never get to help them because these potential clients are diverted by scams.
I didn’t realize how bad this problem was until I saw the recent story in the Wall Street Journal:
Federal Watchdog Targets Mortgage Scams Advertised On Google
WASHINGTON (Dow Jones)–A federal watchdog Wednesday said it shut down 85 alleged online mortgage modification scams promoted via ads on Google Inc.’s (GOOG) web site.
“The first place many homeowners turn for help in lowering their mortgage is the Internet through online search engines, and that’s precisely where they are being taken advantage of and targeted,” said Christy Romero, Deputy Special Inspector General for the Troubled Asset Relief Program.
Romero said the action stems from investigations into mortgage modification schemes where companies had allegedly charged struggling homeowners a fee in exchange for false promises of lowering the homeowner’s mortgage through the government’s Home Affordable Modification Program, or HAMP.
The most common schemes included asking homeowners for an upfront fee and telling them to stop paying their mortgage and to cease all contact with their lender, Romero’s office said.
Google has suspended advertising relationships with more than 500 Internet advertisers and agents associated with the 85 alleged online mortgage fraud schemes, the inspector general said.
Read the rest here.
I understand that sometimes problems are made to look more serious or widespread than they actually are. Bad news sells. But, if there were over 500 internet advertisers involved in these schemes, then they must have been profiting. So there were people out there clicking on the ads and getting ripped off.
Like most businesses, we have to use a website to reach potential customers. The nature of the web being what it is, we will naturally reach a wider number of people than the ones who can use our services here locally. Hopefully, most people already know what I’m about to say, but just in case…
With that much money at stake, if you are buying or refinancing a home, you want to find and work with a real human being who will meet you face to face and shake your hand.
Does that make sense?
Are 30 year fixed rates really under 4%???
Yes and no!
Yes, if you are willing to pay points and fees, you can get a 30 year fixed rate under 4%. It may make sense for you to do so, but I doubt it. Let me explain…
We are living at an interesting time. Rates are at historic lows, but they could easily move lower based on the weakness of Europe and our own economy. So the strategy a lot of people are considering is – right now you CAN get a low-cost / “no cost” loan in the low 4′s. If you have a rate in the high-4′s or above, you should grab it. If rates TRULY drop into the 3′s without paying a fortune for the rate – you can refinance again!
So again, yes, rates are available in the 3′s for highly qualified clients with loans $417,000 and under. But, no, you can’t get the 3′s without a sizeable investment. Whether or not you should make that investment is something you should discuss with a mortgage professional.
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