Category Archives: Mortgage Information

Do Your Homework before Refinancing

Posted on July 10, 2013 | Leave a comment

With ultralow mortgage rates now starting to creep up, some homeowners might be thinking that it’s finally time to refinance.

Despite six weeks of steady increases, fixed rates eased this week and are still below 4 percent. That means borrowers who have higher mortgage rates may still be able to take advantage of savings.

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Refinancing originations nationwide totaled $1.5 trillion last year but are expected to fall this year to $1.1 trillion due to rising mortgage rates, said a projection from mortgage giant Freddie Mac this week.

Figuring out whether to refinance a loan can sometimes be difficult. Several factors should be considered, from length of the existing mortgage to the borrower’s financial goals.

“Make sure you’re not refinancing just because your neighbor is refinancing,” said Todd Pianin, president and founder of Samuel Scott Financial Group, a boutique mortgage company in San Diego.

How do you know if refinancing is the right choice? Here are six questions to ask yourself:

Q:Where am I with my existing loan?

A:Homeowners who refinance can get a new mortgage with longer, shorter or the same terms. Those who have a 30-year fixed mortgage can refinance into a 15-year fixed loan, or vice versa.

Extending the term could result in a lower monthly payment but may result in paying more over time because the payments are stretched out, said Gabe del Rio, chief business officer of Community HousingWorks. The San Diego nonprofit group provides housing counseling.

Shortening the term could result in higher payments each month but it would shave off interest over time.

Also, consumers should figure out how long they’ve been paying their existing mortgage to see how much principal and interest has already been paid, said Pianin, the mortgage broker. A borrower who’s in year 20 of a 30-year fixed loan generally shouldn’t refinance because most of the payments are going toward principal.

Self-Employed Homeowner Gets Better Interest Rate by Waiting

Posted on July 6, 2013 | Leave a comment

Argo was introduced to his clients in the fall of 2012, and they came to him with a specific problem. Due to the changed income classification of the lead borrower at his closely held firm, he was getting declined for financing elsewhere.

Their actual income was clearly more than adequate. But due to changing the compensation plan earlier in the 2012 tax year, many lenders weren’t accepting it.

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After meeting with the borrowers and studying the situation, he understood their income and compensation and how to interpret that to a lender.

Their current rate was almost 6 percent, so their frustration with getting turned down in a 3 percent rate world was understandable.

Their credit scores were fine; the property value was not an issue and considering the increases in San Francisco property prices, this was becoming an ally that would only improve the likelihood for lower interest rates.

Essentially, to be effective and successful for them, he had to push their timing out to a window of perhaps some four or five months away from their initial 2012 consultation.

Argo counseled his clients to wait 3 1/2 months, allowing 2012 to come to an end so they could immediately file their taxes and show the final 2012 income to satisfy the “consistent and ongoing nature” of lending rules for income.

An additional time hurdle taken into account and awaiting them was the IRS’s typical annual slowness in processing Form 4506T.

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Big Drop in Foreclosed Home Seen in San Diego County

Posted on June 20, 2013 | Leave a comment

San Diego County foreclosures have plummeted to a nearly seven-year low, in light of rising home values, the effects of government intervention and new protections for California consumers, said real estate tracker DataQuick on Tuesday.

A total of 175 trustee deeds, which signal a foreclosure, were recorded countywide in May. That’s the lowest level since September 2006, when 172 homes were foreclosed upon and the local housing market began to see troubling declines in prices and sales.

“We’ve pretty much gone back to normalcy in foreclosures,” said Alan Nevin, a housing analyst with the London Group in downtown San Diego.

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The most obvious reason for the foreclosure drop is that notices of default, the first step in the foreclosure process, also have fallen drastically. A total of 642 default notices were filed in May, down 52 percent from a year ago.

That figure tends be sporadic month-to-month, due to sudden hikes or drops in filings from major mortgage servicers, Nevin said. Still, defaults have generally been trending down. May’s total is about 28 percent lower than the one-year average of 887, DataQuick numbers show.

A mix of factors — from an improving housing market to multibillion-dollar mortgage settlements — have played roles in cutting real estate distress throughout the county, said DataQuick analyst Andrew LePage.

The median price for a home sold in May rose past the $400,000 mark, the first time in five-plus years. May also marked the ninth straight month of double-digit annual gains in prices. That has been instrumental in lifting homeowners out of negative equity, especially those on the brink of defaulting on their mortgages, LePage said.

Those market dynamics give more hope to consumers, who now have “far greater incentive to hang on” to their properties, he added.

Troubled homeowners in the past year also have had more access to foreclosure alternatives through government settlements with major banks accused of foreclosure abuses.

Those deals required companies such as Bank of America, Wells Fargo and Chase to provide more homeowner aid. That help has included loan modifications, principal reductions and short sales, deals that let homeowners sell their homes for less than what they owe on their loans.

Disclaimer: for information and entertainment purposes only

Category Archives: Mortgage Information

Do Your Homework before Refinancing

Self-Employed Homeowner Gets Better Interest Rate by Waiting

Big Drop in Foreclosed Home Seen in San Diego County

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