Blogging About Loans: Ruth Vogt, WR Starkey Mortgage (LMB#100023827)

New Good Faith Estimate of Closing Costs

Sometimes the hardest part about having new forms is that, well, it's NEW! It's DIFFERENT! We have to create new scripts to EXPLAIN it so that our clients can UNDERSTAND it. But first... WE have to understand it.

So here are just a few points regarding the new Good Faith Estimate that I hope will help with that.

First, we have to recognize the old Good Faith Estimate was really an estimate focused on how much the BUYER needed to bring to closing and how much they would have to pay monthly.

Now, we have an estimate of closing costs related to the mortgage REGARDLESS of who pays! No credits offsetting, just a disclosure of the expenses. Let's do a simple down and dirty comparison of then vs now to help get my point across.

For the purpose of ease, we'll pretend we have an FHA loan with a sales price of $100,000.00. Here are the other details for my example:

1. The buyer is putting minimum down of 3.5%, or $3,500.
2. Buyer has put $1,000 earnest money down.
3. We'll pretend the total closing costs and prepaids are about $4,000 and the seller is going to pay them.
4. And of course, on an FHA loan we have upfront mortgage insurance of 1.75% off the base loan amount, or about $1,700, which is rolled into the loan.

The old Good Faith Estimate, which was created just for the buyer's information, the amount required for closing would show:

1. Closing costs and prepaids being paid by seller, which would show the credit for the buyer.
2. Mortgage insurance of $1,700 would be added to the mortgage, which would also be credited.
3. Leaving basically the down payment of $3,500, less the earnest money deposit, or $2,500.00

With the new Good Faith Estimate, there are no credits reflected. It is merely a reflection of ALL costs associated with the transaction regardless of who is paying them. Bottom line is going to look like this:

1. Closing costs of up to $4,000
2. Mortgage insurance of $1,700
3. Down payment of $3,500
4. NO CREDITS, so bottom line will be a total of the above, or $9,200.00.

The buyer isn't paying any more or any less. It's simply an explanation of all costs that need to be taken into consideration on that transaction.

Will this leave the buyer confused? Yes, UNLESS we redirect our attention to the residential loan application, known as the 1003! That form does, in fact, give a total monthly payment AND breaks down what amount the buyer will need for closing. Let me show you specifically where to look.

Page 4, Section VII:

Notice the credits given for seller paid fees

Earnest Money 

and MIP financed

Leaving what the Buyer needs for closing

And while we're looking at the 1003, we can also see the estimated TOTAL monthly payment on Page 2 of the application, Section V:

So, just change your scripts!

1. The GOOD FAITH ESTIMATE is a reflection of ALL costs regardless of who pays what.
2. For the total monthly payment and cash required at closing, look at the Residential Loan Application, referred to as the 1003, Sections V and VII.

Remember, your first time homebuyers have never seen the old GFE, so they don't know the difference. Don't dwell on the change, just focus on new scripts to help your buyer best process the information disclosed in the formats we are required by law to use.

Colorado Springs MLS

The real estate market is showing an improvement in Colorado Springs according to the MLS, or Multiple Listing Service. The MLS tracks the time a property is on the market before selling. The time on the market actually gives indication of whether we have a buyer's market or a seller's market. The article below gives current MLS statistics suggesting Colorado Springs properties are selling much faster than they were a year ago.

For additional information on the importance of working with someone that is qualified to accurately interpret MLS statistics, please click: MLS reports.

Mortgage Rate Indicators for Denver

Whether you are thinking about buying or selling your home, it's important to track mortgage rate indicators in order to have some idea which way the interest rates are moving. The mortgage rate indicators aren't ever absolutely "on the mark" with pointing an upward or downward movement. After all, that would take all the fun out of it! Seriously, anyone that suggests they KNOW with certainty what rates are going to do is much smarter than even the experts I've met in the business over the past thirty years. Mortgage rate indicators do just that - give an indication, not a guarantee.

For further discussion on rates, mortgage terms, or loan qualification requirements, please contact me.

Market Comment - Week of January 11th, 2010 Mortgage bond prices rose last week pushing mortgage interest rates lower. The bond market was buoyed by the announcement that US Treasury increased the credit lines of Fannie Mae and Freddie Mac a total of $400 billion. This was a signal to investors that those entities are "too big to fail" as viewed by the Treasury. We saw some weakness Thursday afternoon as retailers reported stronger than expected holiday sales. The employment report Friday was generally bond friendly. For the week interest rates fell by about 1/4 of a discount point. The inflation data Friday will be the most important economic data this week. Signs of stronger than expected inflation would not be good for mortgage interest rates. The Treasury auctions will also dominate trading. Stronger than normal foreign demand could bode well for the overall level of interest rates. Weaker than expected bids would likely result in interest rate increases. Economic Factors Economic Indicator Release Date Time Consensus Estimate Analysis Trade Data Tuesday, Jan. 12, 2010 $34.8 billion deficit Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. 3-year Treasury Note Auction Tuesday, Jan. 12, 2010 None Important. $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates. Fed "Beige Book" Wednesday, Jan 13, 2010 None Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates. 10-year Treasury Note Auction Wednesday, Jan 13, 2010 None Important. $21 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates. Retail Sales Thursday, Jan. 14, 2010 Up 0.4% Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates. 30-year Treasury Bond Auction Thursday, Jan. 14, 2010 None Important. $13 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates. Consumer Price Index Friday, Jan. 15, 2010 Up 0.2%, Core up 0.1% Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. Industrial Production Friday, Jan. 15, 2010 Up 0.6% Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates. Employment Results The December employment report came in relatively bond friendly. Unemployment came in at 10% as expected. However the payrolls component showed job losses of 85,000 compared to the 35,000 losses expected by analysts. The mortgage bond market had a generally positive reaction to the report but improvements in rates were tempered by concerns for some of the revised data from prior months. Revisions to the November figures showed a 4000-job increase as opposed to the original 11,000-job decrease.

WR Starkey Mortgage - A different kind of company...where people come first!

Ruth Vogt Business Development Manager (LMB100023827) 6025 South Quebec, Suite 110 Englewood, CO 80111  Work: 720-489-0712 Fax: 720-489-0273 Other: http://www.dora.state.co.us/real-estate/index.htm  rvogt@wrstarkey.com  www.MyLenderOfChoice.com

The other day my husband (who is in the same business) told me about a new loan application he got from an old acquaintance. I was shocked to hear she had found us after all this time, so I asked him how in the world she found us??? It wasn't just his answer that surprised me, but my initial reaction to his response.

Ready? She had left a message on our home phone recorder! I responded, "REALLY? She left a message on our home phone?"

"Yep, she looked us up in the phone book".

I was quite surprised.

Then laughed at myself! What has happened that I was so surprised that someone would find us using a phone book. Was it really that long ago that we used that as a major lead source?

Hope there are some of you that are laughing WITH me, and not AT me!

Mortgage Rate Indicators for Denver

We all know the law of gravity: what goes up must come down.

But here's the law of interest rates: what goes down will most likely go back up!

If you or your clients are trying to decide when is the right time to lock your interest rates, I suggest you keep a close eye on the mortgage rate indicators. And you don't have to be under contract to lock a rate. Call today for details!

Market Comment - Week of January 4th, 2010 Mortgage bond prices fell last week pushing mortgage interest rates higher. The bond market was choppy most of the week as thin trading conditions magnified movements. We started the week with rates heading higher Monday. Fortunately there was a bit of a rally Tuesday and Wednesday as the Treasury auctions were decent. Those gains were short-lived as the weekly jobless claims figure wasn't as bad as expected. The bond market closed early Thursday and was closed the entire day Friday. For the week interest rates rose by about 1/4 of a discount point. ISM Index data will set the tone for trading this week. The employment report will be the most important release but it doesn't arrive until Friday. This will be the first full week of trading this year. It will be interesting to see how traders react to the recent spike in rates following the various shortened trading sessions. Economic Factors Economic Indicator Release Date Time Consensus Estimate Analysis Construction Spending Monday, Jan. 4, 2010 Down 0.5% Low importance. An indication of economic strength. Weakness may lead to lower rates. ISM Index Monday, Jan. 4, 2010 54.0 Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. Factory Orders Tuesday, Jan. 5, 2010 Up 0.5% Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. ADP Employment Wednesday, Jan. 6, 2010 -75k Important. A measure of employment. A larger than expected decrease in jobs may bring lower rates. Employment Friday, Jan. 8, 2010 Unemp. @ 10%, Payrolls unchanged Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates. The Year Ahead This year begins in a similar fashion to last year. Last year at this time 30 year fixed rate mortgage interest rates were historically low. Most pundits predicted little or no opportunities for additional refinancing. Mortgage interest rates did spike higher from time to time throughout the year but overall the Fed did an excellent job of keeping rates in check. Unfortunately now the Fed's $1.25 trillion mortgage backed securities (MBS) purchasing program is nearing the end and the future remains uncertain. The good news is that 30 year fixed rate mortgages remain low but once again future predictions are all over the board. What will occur in the future, economic recovery or additional weakness will continue to be debated. There is no certainty in predictions. Data can be used to support both sides of the debate. What we can be certain of is the fact that until the economy gains some stability, mortgage interest rates are likely to be volatile. Historically, mortgage interest rates seem to improve slowly. In contrast, when rates increase, it is often fast and furious. One negative day often erases a week of positive improvements. It is possible for mortgage interest rates to push lower considering the Fed still has a few hundred billion dollars of MBS purchasing left. However, we are in unprecedented times. The Fed has clearly signaled they want rates to remain low but also want to exit the market. The Fed isn't the only player in the mortgage bond market and there are many others buying and selling the securities. Remember that the Fed does not directly dictate that mortgage interest rates will be at a certain percentage. Rates are determined by the supply and demand for mortgage-backed securities. The Fed kept rates in check for 2009. The big unknown is how they will exit the market without causing major disturbances this year. While there have been signs of improvement in the housing sector, the last thing we need is higher rates. Without the Fed buying mortgage bonds rates may very well head considerably higher. Now is a great time to take advantage of favorable rates.

WR Starkey Mortgage - A different kind of company...where people come first!

Ruth Vogt Business Development Manager (LMB100023827) 6025 South Quebec, Suite 110 Englewood, CO 80111  Work: 720-489-0712 Fax: 720-489-0273 Other: http://www.dora.state.co.us/real-estate/index.htm  rvogt@wrstarkey.com  www.MyLenderOfChoice.com

Getting ready to sell your home in Castle Rock Colorado

Whew! You've made it through the holidays! Time to take down the decorations and put them away. But where are you going to put them? You've run out of storage space. Matter of fact, you're out of garage space, bedroom space, and every other kind of space! All signs you might be getting ready to sell your home!

Here's an excellent article from an east coast expert on things to do when you are getting ready to sell your home.

BUT the first step is to find a local real estate agent to determine if now really is the right time for you. The agents will then give you personalized tips on getting ready to sell your home.

Call us today for a list of experts in the Castle Rock area.

Ruth Vogt, Business Development Manager (LMB100023827) 720-489-0712 rvogt@wrstarkey.com www.MyLenderOfChoice.com 6025 South Quebec, Suite 110 Centennial, CO 80111
http://www.dora.state.co.us/real-estate/index.htm

I just had to reblog this one. Just as a reminder on why I don't have to add this one to my list this year!

Happy New Year!

Ruth Vogt, Business Development Manager (LMB100023827) 720-489-0712 rvogt@wrstarkey.com www.MyLenderOfChoice.com 6025 South Quebec, Suite 110 Englewood, CO 80111
http://www.dora.state.co.us/real-estate/index.htm

First time home buyer in Castle Rock

If you are a first time home buyer it's important to recognize the additional expenses that come with a home. Here is an excellent post by an expert on the east coast that makes some budgeting suggestions that apply to every first time home buyer. And if you qualified for the first time home buyer tax credit her suggestions on what to do with that money need to be taken seriously. If you are still considering whether or now is the time to be a first time home buyer or not, 2010 brings about many real estate investment opportunities. The first step for a first time home buyer is to be prequalified, which you can do online by clicking here: first time home buyer application. Or call for a no cost, no obligation consultation. We also have a list of qualified real estate specialists that stay current on available first time home buyer properties in our area.

Ruth Vogt, Business Development Manager (LMB100023827) 720-489-0712 rvogt@wrstarkey.com www.MyLenderOfChoice.com 6025 South Quebec, Suite 110 Englewood, CO 80111
http://www.dora.state.co.us/real-estate/index.htm

Remember when you believed all you had to do was ask?

For those of us in sales, could that be something we often forget?

Ask for a referral?

Ask for the appointment?

Ask for the business?

Believe in... YOURSELF!

Are you wishing for a prosperous New Year in 2010? Or believing it?

Something to think about!

Mortgage Rate Indicators for Denver

Below you will see the upcoming weekly events that might be mortgage rate indicators affecting the interest charged for financing the purchase of a residential property. Basically, there are five factors in general that we watch:

1. Stocks
2. News
3. Technical Signs
4. Inflation
5. Treasuries

Market Comment - Week of December 28th, 2009 Mortgage bond prices fell last week pushing mortgage interest rates higher. The bond market took a beating as stocks surged despite mixed data. Existing home sales in November rose a surprising 7.4%. However, revised gross domestic product figures showed the economy only grew 2.2%, which was weaker than the expected 2.8% mark. Personal income and outlays data came in weaker than expected helping a bit. Unfortunately, the thin trading conditions magnified the earlier losses and made it difficult to recover. For the week interest rates rose by about 1 3/8 discount points. The Treasury auctions will take center stage next week. If foreign demand falters we will likely see mortgage interest rates head higher. The bond market will close early Thursday in advance of the New Year's Holiday Friday. The shortened trading week may result in some market volatility coupled with thin trading conditions likely. Economic Factors Economic Indicator Release Date Time Consensus Estimate Analysis 2-year Treasury Note Auction Monday, Dec. 28, 2009 None Important. $44 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates. Consumer Confidence Tuesday, Dec. 29, 2009 49.5 Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates. 5-year Treasury Note Auction Tuesday, Dec. 29, 2009 None Important. $46 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates. 7-year Treasury Note Auction Wednesday, Dec. 30, 2009 None Important. $32 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates. Weekly Jobless Claims Thursday, Dec. 31, 2009 470K Moderately Important. An indication of employment. Higher than expected claims may help rates improve. New Years Day Friday, Jan. 1, 2010 None Important. Thin trading conditions and a shortened trading week could result in significant market volatility. Consumer Confidence Index The Conference Board releases the Consumer Confidence Index on the last Tuesday of every month. The report details the levels of confidence individual households have in the performance of the economy. The data is derived from a survey of 5,000 households nationwide. The survey polls consumer opinions on current business conditions, their jobs, their incomes, and their future spending plans. The consumer confidence index is significant in that it provides a precursor into consumers' willingness to spend in the months ahead. However, many analysts point out that willingness to spend does not always convert to actual expenditures. Despite economic uncertainty, liquidity issues, and housing market weakness, American consumers continue to spend. However, many analysts question whether consumers can continue to buoy the economy, especially amid rising unemployment and continued tight credit. This week's release will be eagerly anticipated. Look for any variation from estimates to cause mortgage interest rate volatility. Signs of eroding consumer confidence could lead to improvements in mortgage interest rates. However, stronger than expected figures could spike rates higher. With mortgage interest rates relatively low, capitalizing on current levels is recommended to protect against future volatility. Remember, mortgage interest rates tend to trend lower slowly, while increases tend to occur quickly. A cautious approach is necessary to protect from future market volatility.

WR Starkey Mortgage - A different kind of company...where people come first!

Ruth Vogt Business Development Manager (LMB100023827) 6025 South Quebec, Suite 110 Englewood, CO 80111  Work: 720-489-0712 Fax: 720-489-0273 Other: http://www.dora.state.co.us/real-estate/index.htm  rvogt@wrstarkey.com  www.MyLenderOfChoice.com