YES, We Are STILL DOING LOANS!!!!

I've never been so amazed on how many people believe every thing they hear on the news. Almost every person that I have met in the last month are amazed that I'm still doing business in the mortgage industry. They all thought that mortgages were near impossible to obtain at this point and were surprised to hear that I was not filing for unemployment. What about the credit squeeze they heard about on the news?

The facts are, that mortgages are still being approved and funded every day. Yes, the guidelines can be tougher in some places and there are a lot of loans that we can no longer due. However, you don't have to have an 800 credit score or 20% down to be approved for a loan. NOT EVEN CLOSE.

There are still 100% financing options available and you don't necessarily have to have GREAT credit to obtain no money down financing. And, YES, you can still obtain a mortgage loan if you can't verify your income. AND, YES, you can still obtain a mortgage for an investment property.

However, lenders will no longer approved loans with layered risk (multiple risk factors). If you don't have great credit and can't verify your income, good luck finding a loan. Or if you want to purchase an investment property with no money down, have fun trying. There are dozens of programs still available (with good rates) that will lend money to people with a lower credit score or can't verify income or don't want to put money down, but you can't have multiple risk factors.

When we look back in 5-10 years at the mortgage meltdown, I believe layered risk will be one of the biggest lessons learned. A lot of these loans are great programs, but there can't be multiple risk factors involved within these loans.

Greg Selters
Mortgage Manager
Prosperity Financial, LLC
http://www.myprosperityfinancial.com/

Are you Trying to Pay Off Your Mortgage?

I'm still surprised with how many people I talk to on a weekly basis that hold paying off their mortgage as one of their main financial goals. My first question is always why? And I never receive a good response.

While our parents and grandparents worked hard every day to pay off their mortgage, this is not the best use of your money in today's market. I know their is a huge sense of pride to own your house free and clear, but your equity in your house is not making money for you.Also there has been a large marketing campaign recently about a new program in the mortgage industry that will help you pay off your mortgage quicker.

However, if you leverage your equity in the house and invest wisely (and conservatively looking for a 6% return), you would not only be able to pay off your mortgage within 30 years but you would also have hundreds of thousands of dollars in liquid assets.

Your mortgage should be a part of your financial plan that allows you to accomplish your financial goals quicker. For more information on how you can be using your mortgage to help you meet your long term financial goals please call us.

Prosperity Financial - Your Mortgage Manager
Lafayette, CO

www.colomortgages.com www.3bed2bath.net 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/

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.

Fannie and Freddie Not Helping Many Colorado Cities

A few weeks ago Fannie Mae labeled most of the Denver Metro Area cities as declining markets, and it appears Freddie Mac will follow suit. What does this mean to you? Why do you care? How will it affect you?

To begin for those of you who don't know, Freddie and Fannie are the two largest suppliers of mortgage funds in the nation. The designation of a declining market by both companies will make it more difficult and impossible for some to purchase a house. Fannie and Freddie both determine declining markets based on your zip code.

If you are trying to purchase or refinance a house in a declining market both companies will reduce your borrowing power by 5%. The max you will be able to borrower is 95% of the value of the house, and in some cases lower.

This designation will make it extremely difficult for many real estate markets to improve, and it will surely have a negative impact on many markets. For example, let's take the Highlands neighborhood in Denver, this neighborhood has seen some of the highest appreciation in the state over the last 2 years. However, some how this neighborhood has found itself on the declining market list, which means any person trying to purchase a house using a conforming loan will have to put 5% down. They could try an FHA loan, but currently most of the houses in this neighborhood would not meet their guidelines. Due to this new guideline, there are will now be less qualified prospective buyers, lowering the demand for houses in this neighborhood, forcing sellers to lower the price of the house if they want to sale.

The declining market will also make it impossible for many A paper borrowers to refinance their house if they are currently in ARM, which may force people with great credit into foreclosure, reducing the value of the neighborhood further!!!

On the other hand, this may help cities/neighborhoods that avoided the list. For instance a majority of Broomfield is on the declining market list, while neighboring towns to the north (Erie and Lafayette) are not. Prospective buyers looking to purchase in the north part of Broomfield, are now likely to look at houses in Erie or Lafayette if they don't have 5% down or don't want to put 5% down. Good for Erie and Lafayette, not so much for Broomfield.

For more information on the declining markets in Colorado, or to see if you are in a declining market, please email or call me.


Prosperity Financial - Your Mortgage Manager
Lafayette, Colorado

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


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

Purchase Horror Story - Don't Let it Happen to You

A Realtor that I have helped in the past called me today to share a story of one of his clients. His clients, like many savvy mortgage shoppers, went online to shop multiple mortgage companies to find the best rate and program before they started looking at houses. They found a lender that offered them a rate that was almost 0.50% lower than any of the lenders. They found a house they really liked, put in an offer, and every thing was great until the day before closing.

They called the lender to discuss what the final payments, closing costs, and how much money they would need to bring to the closing. What they found out was that their interest rate was almost a full point higher than what they were originally quoted. The lender would not budge on the rate stating that rate changes and they could do not any thing about it. They could not change lenders as the closing was tomorrow and they really wanted the house so they could not back out (if they did back out they most likely would have lost their $3,000 in earnest money). They were forced to close on the mortgage and take the mortgage with the higher rate.

It's tough to say if the mortgage lender was acting fraudulent, and I hate to speculate on what happened, but at the very best, the lender exercised very bad communication. One thing many people don't understand is how often and how big rate fluctuations are in this market. If you obtain a rate quote today and don't close on your house for 60-90 days your rate will more likely be different, however, the lender should communicate any and all changes in rates.

How can you protect yourself from this happening to you? It's pretty easy to avoid this type of situation by following a few simple steps.

1. Do business with some one you trust and was REFERRED TO YOU.
2. Talk to your lender about lock options, you can typically lock your rate for 30 days at no cost and longer if you are willing to pay a little more in closing costs. It may be worth to pay a little more in closing costs if you and your lender believe interest rates are going to increase.
3. If you talked to a lender about rates before you found a house and didn't lock the rate, ask them again what your rate will be once you have a contract on a house.
4. Once you decide to lock your rate ask your lender to fax/email you the lock confirmation. Every lender has the ability to do this and if they say they can't or won't I would find a new lender. A good faith estimate (GFE) is not the same as rate lock, it just an estimate of your rate and closing costs, but things can change (see story above).
5. Ask your lender to email/fax you the closing docs before the loan commitment date on the purchase contract. If you find a problem with the loan before the loan commitment date you are more likely able to extend the contract (and find a new lender) or terminate the contract with out losing your earnest money.

While most mortgage professionals are honest and professional individuals, as in all business, there a few bad apples or people that just don't know what they are doing. Make sure you take every step to protect yourself. If you have any questions, please feel free to call or email me.

Prosperity Financial - Your Mortgage Manager

http://www.colomortgage.com/

http://www.myprosperityfinancial.com/

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