What Your Lender Should be TEACHING YOU!!!!

A majority of the public has very little understanding of the mortgage industry, heck, 70% of Realtors (and a lot of mortgage professionals) I speak with have very little knowledge of the mortgage industry. Even though purchasing a house is the largest financial transaction most of us will ever be a part of and, a mortgage is the largest debt we will ever have there is no LIVE resource to educate the masses.

Yes, you can go online and do research and HUD does have a hot line that can provide general advice, but most sources are general and impersonal or WRONG.

Due to the lack of education sources, your mortgage broker should be providing you with the information you need and want (and what you don't want to hear). Many mortgage brokers often only provide information to their clients that they believe they want or when asked. However, as professionals in a business that is often rarely comprehended beyond the basics, mortgage brokers have a responsibility to educate their customers beyond the scope of "must need" information for their specific loan.

Educating the borrower on program and real estate risks/benefits, how their mortgage fits in with their financial plan, using credit, and how they can become a "better borrower" for lenders should be information discussed with ALL borrowers. Mortgage brokers usually believe borrowers don't want this information unless they ask. The problem is a lot people either don't think about these issues or believe the myths they have heard and don't bother asking because they "know" the answer.

How much do you know? Answer these questions through comments or email.

What are the major factors that determine your credit?

Is it better to have an adjustable rate mortgage or fixed mortgage?

How much money do you need to put down to purchase a house now?

What is a "good" credit score?

What do lenders look at to determine if they will approve your for a loan? How do they determine what interest rate you will receive?

Is it better to payoff your mortgage? Why or why not?

gselters@myprosperityfinancial.com


Prosperity Financial - Your Mortgage Manager and Teacher
Lafayette, Colorado

http://www.colomortgages.com/ http://www.myprosperityfinancial.com/ http://www.3bed2bath.net/

ARMs Making a Come Back???

Over the last 12 months we have seen a decrease in adjustable rate mortgages (ARMs). The main reason for the decrease was that borrowers could obtain a fixed mortgage at the same or a better rate them ARMs. However, ARMs are now offering significant lower interest rates than their fixed counterparts. Currently a 5/1 ARM is averaging about 0.875% lower than a 30 year fixed.

Does the discount on ARM loans mean it they are the best choice at this time? It depends on your situation and goals. If you are planning on staying in your house for more than 5 years it probably doesn't make sense to take the lower rate. On a $200,000 loan you would save almost $110/month if you went with ARM loan, but you would have to refinance your loan to avoid your rate increasing. Therefore, you would save $6,594 over 5 years on your mortgage payment, but would spend $3,500 in closing costs to refinance and would be gambling that you could get a fixed rate as good or better than you could today.

There are also other factors that you would need to consider that may limit your ability to refinance such as; income and liabilities, real estate market, and changes in the mortgage industry. Many people have learned this lesson the hard way in the last 6 months. They were able to save thousands of dollars over a few years, but the real estate market changed or their income decreased and they were unable to refinance.

ARMs are still great options and can save you a lot of money, here are some situations when to consider an ARM:

• You plan on selling within the fixed term on the ARM


• You plan on refinancing or paying off the loan within the fixed term of the ARM


• You know you will be making more money in the next few years and want to purchase a house that will meet your future needs and an ARM will allow you to afford the house and you can refinance to a fixed rate mortgage within the fixed term of the ARM.

Before refinancing or purchasing you should always think about your immediate needs and future goals and plans before deciding on a mortgage program. If you need help with deciding which loan will be best for you please feel free to contact us.

Prosperity Financial - Your Mortgage Manger

Lafayette, Colorado

http://www.3bed2bath.net/ http://www.colomortgages.com/ http://www.myprosperityfinancial.com/

Home Ownership at it's Highest Levels

We have all heard the criticism and negative consequences of the subprime sector and the relaxed guidelines many lenders used to approve loans over the last few years. However, I have not once seen a report on the news regarding the record levels of home ownership. The fact is, that more people own their home now than ever before, about 70% of Americans.

As shown in the cartoon on this blog, lenders can never escape criticism for their underwriting guidelines, they are either too strict or too lenient. Obviously many lenders went a little to far approving high risk loans, but I believe we have once again over reacted and many well deserving people will miss out on home ownership.

Consider this, many experts are stating that 20% of subprime loans are failing or will fail, that would mean that 80% are NOT. Even if their projections are off at worse we are still looking at a 70% success rate, not bad. These are people who otherwise would not have been able to purchase a house or would have lost their house in foreclosure due to a job loss or another life changing event.

I believe if we can approve our financial literacy and regulation in the mortgage industry, we can then afford to take chances on people and avoid the credit disaster we are in now.

Prosperity Financial - Your Mortgage Manager

Lafayette, Colorado

http://www.colomortgages.com/ http://www.myprosperityfinancial.com/ http://www.3bed2bath.net/

Finally, They are Trying to Get it Right

A baby could have foreseen what was going to happen when Colorado implemented their mortgage licensing regulation. In last 12 months there have been a migration of mortgage hacks who could not obtain licensing because of fraud or other past issues to federally charted banks (Chase, Wells Fargo, TCF, Washington Mutal). Not any more.

It appears that State of Colorado is finally trying to look at for the consumers and ignore the lobbyist. In an attempt to help protect consumers (which is what they stated was their reason was from the beginning with mortgage licensing), Colorado will require ALL mortgage originators to be licensed by the state regardless of their employer.

Initially, only mortgage brokers that were not HUD approved were required to be registered/license, and then the state amended the law to require all mortgage brokers to be licensed, but employees of federally and state chartered banks were exempt. However, the Division of Real Estate has determined that EVERYONE who originates loans must be licensed in Colorado.

There is a big obstacle that stands in the way of making this a permanent reality. The Supreme Court has ruled in the past that federally charted banks are governed by the Office of Comptroller and Currency and are not subject to state regulations. However, the vote on the decision was very close (3-5) and, at issue then and now will be, whether federal oversight of federally chartered banks extend to their mortgage subsidiaries and granting them exemption from state regulations.

Let's hope they get this right for consumers, a fraud is a fraud, it doesn't matter if they work as a mortgage broker or Wells Fargo and they should have access to our personal information.

Prosperity Financial, LLC -Your Mortgage Manager
Lafayette, Colorado

http://www.colomortgages.com/ http://www.myprosperityfinancial.com/ http://www.3bed2bath.net/

Why Can't They Report the Full Story?

The Denver Post and Rocky Mountain news both had an article published online from the AP about Denver's foreclosure ranking. The headlines stating Denver is ranked 9th in the nation for foreclosure filing in 2007.

The article has two small paragraphs about the Denver market and then reports on other markets around the nation. However, in the brief mention about the Denver market they fail to mention that foreclosures were down in the 4th quarter compared to the 3rd quarter and from December to November.

The average reader is going to read the article or just the headline and believe that our market is still in shambles, when that is not the case. I understand free press, but shouldn't publications be held to some type of standard to report the full story?


Prosperity Financial, LLC - Your Mortgage Manager

http://www.colomortgages.com/ http://www.myprosperityfinancial.com/ http://www.3bed2bath.net/

Don't They Know What They're Doing????

Congratulations Nancy Pelosi and California home owners!!!!

A revised economic stimulus package has now passed the Senate and House that includes a temporary increase in the conforming loan limit and the upper threshold for FHA loan programs to as much as $729,000. Which will help only homeowners in a few markets around the county, but will raise rates around the country and jeopardize the stability of Fannie and Freddie.

The bill allows Fannie Mae, Freddie Mac, and FHA to purchase and guarantee loans up to 125% of the median home price in any given market for the duration of 2008. Currently, Fannie Mae and Freddie Mac are limited to loans equal to or below $417,000 regardless of location and FHA limits are based on the market (Denver Metro is about $310,000).

Regardless, this will have no impact/help on Colorado home owners, as there will be only a few if any "markets" that will have a median home price great enough to matter. Even if you have a jumbo loan now, unless you live in resort community like Aspen, Vail, or Beaver Creek your "market" most likely won't qualify.

Even though we won't benefit from the increase, we will PAY FOR IT!!! Larger loan amounts carry greater risk for the lenders, especially if they are in markets like California, Florida, Las Vegas that are suffering double digit depreciation. Fannie and Freddie must change (increase)their pricing (rates) in order to account for this additional risk they are taking on.

Another problem with this bill, is Fannie Mae and Freddie Mac are barely surviving with the current conditions in the market. This additional risk they will be adding to their portfolio is not coming at a good time and may be the straw the breaks the camel's back. And if you thinks are bad now, wait to see what happens if one or both companies fails.



Prosperity Financial, LLC - Your Mortgage Manager
Lafayette, Colorado

http://www.myprosperityfinancial.com/ http://www.3bed2bath.net/ http://www.colomortgages.com/


Purchase - Refinance - Cash-Out - Debt Consolidation - Home Equity - Great Rates

Top Foreclosure filings by Zip Code

Realty Trac issued a new report showing the top zip codes for foreclosure filings. The good news, out of the top 100 zip codes Colorado only has one listed, 80013 (Aurora). Colorado once had as many as 10 zip codes listed in the top 50.

A good sign for our market?

Yes, but don't get too excited as Colorado still ranks in the Top 10 in total foreclosure filings and annual foreclosure rate. While we still have a long way to go, Colorado is one of only a handful of states that show a decrease in filings in December 2007 compared to November 2007 amd from the 4th quarter 2007 compared to the 3rd quarter.




We are definetly heading in the right direction and I'm optimistic that 2008 will be a rebound year for the real estate market in Colorado.

Prosperity Financial - Your Mortgage Manger

Lafayette, CO

http://www.colomortgages.net/ http://www.myprosperityfinancial.com/ http://www.3bed2bath.net/

Purchase - Refinance - Cash-Out - Debt Consolidation - Home Equity - Great Rates

The Economy Still Stinks? Let the Sell OFF Begin!

Here we go, investors on wall street just figured out that our economy still has some steep challenges in front of it and the latest Fed rate cuts has not fixed the problem. I always wonder if this can happen again, every time the Fed has cut the rates in the last 6 months we have seen this same pattern.

Good news is we should see mortgage rates drop today and again tomorrow morning.

What Happened to Service?

A friend was telling me a story the other day about the terrible service he received from his cable provider. The customer service agent was rude, unable to fix the problem and even told him that a previous problem was fixed by "magic" and she didn't what else she could do.

When did poor service become the norm?

In an effort to try to save money companies not only outsource factory jobs, but also customer service jobs. There is nothing more frustrating than when some thing doesn't work and you call customer service and you have to struggle to understand the service agent. I know they are probably hard workers and great people, but that doesn't help me fix the problem. I know a few times I have recommended my cell phone provider just becuase the customer service agent speaks English that I can understand??? Not becuase the service was outstanding, but they had customer service I could use.

However, it's not like we deliver great service ourselves. From utility companies to waiters/waitress to retail workers service is typically horrible. I went to a rent a movie last week and it took 30 minutes to check out!!! It wasn't busy (my wife and I were the only people in the store), but the cashier had better things to do than help us and when she did decide to do her job she was incompetent and slow. And her manager sat their and watched it all happen?

I wish I knew what was the source or reason for the lack of service in our society and how to fix it, but I don't have that much time on my hands. So instead of crying, I have decided to celebrate good service on my website and blog and will be creating a working list of "GOOD" service that I have experienced. And I'm not talking about just people/companies providing service (which often passes as good service these days), but actual people/companies that go above and beyond.

If you have any nominations or stories, please feel free to let me know.

Prosperity Financial, LLC - Your Mortgage Manager

Lafayette, CO


Purchase - Refinance - Cash-Out - Home Equity - Debt Consolidation - Great Rates