When It Comes To Mortgages, Stick With the People You Know

If you’re buying a home, your Realtor will help find a mortgage. A friend of mine, Attorney Larry Fox of Chester, gives his clients a warning that’s worth repeating: Stick with mortgage lenders who are local and who you know.

There's more to a mortgage than the rate. Pick a broker or bank with a good reputation and people you can actually talk with.

There's more to a mortgage than the rate. Pick a broker or bank with a good reputation and people you can actually talk with.

Larry’s been doing real estate law and managing property closing for 40 years, so he’s experienced in this area. He’s not talking about the on-line presence of well-known and respected banks or mortgage brokers. He’s talking about the fly-by-night brokers who promise you big savings. In the end, he says, they can’t deliver.

“You wind up dealing with two sets of people: broker and the lender,” he told me. “You have no control over the process. They don’t understand the process and you can’t find a real person, it’s all done online. It’s very difficult to negotiate with them and get them closed. In the end, you find they’re no cheaper.”

Every state is different, and Larry points out that these online brokers usually are in another state and don’t understand New Jersey’s laws and rules. For instance, one broker wanted certain forms signed before they’d arrange for the delivery of the check. But in New Jersey, those forms are signed at the closing.

Homebuyers pay for their attorneys or Realtors make the arrangements for the closing, including getting the check there. Using these out-of-state brokers requires more time and aggravation on the attorney’s part.

“The rate’s the rate,” Larry said. “It’s the fees you’ll save on, they say. But the few bucks you save, you’ll lose in time and aggravation.”

 Larry’s advice is the pretty much the same that we give to all of our buyers.

“Do what you can to negotiate with local banks, local brokers…people who have a good relationship with local borrowers,” he suggests. “Don’t be fooled by advertisements of lower fees because it doesn’t work that way.”

Your Realtor can help you find a mortgage with a reputable local bank or broker. In fact, we recommend you prequalify for a mortgage because it lets you know what you can afford and gives you added negotiating strength when you find something you like.

Shopping around for a mortgage is a wise thing to do. But make sure you’re dealing with a bank or a broker with a good reputation for getting you to the closing table with a check in your hand.

If you have questions, or need help finding someone to prequalify you, please give us a call.

The Housing Market Seems Poised for Recovery. Don’t Be Left Behind

Underwater mortgages are no reason to be left behind as home sales go up. You can refinance or sell your home through a short sale or other program.

Underwater mortgages are no reason to be left behind as home sales go up. You can refinance or sell your home through a short sale or other program.

Optimism seems to be seeping back into the housing market. At the Holmquist Team, we are seeing housing prices in the area stabilizing, demand increasing, inventory decreasing and mortgage relief is the talk of the town. Realtors across the nation are reporting similar findings. So even if you’re house loan is “underwater,” it’s not too late for you to get in on this growing spring market.

About a fifth of the homes for sale inLongValleyand a quarter ofMountOlivehomes are being sold through short sales. So if you’re struggling with a mortgage, there are two things you should know.

First, you are in good company.

Second, now’s the time to do something about it.

The statistics are easy to find, and the most important number is how many homes in your neighborhood are in foreclosure or behind in their payments. A Realtor can tell you that while he or she is helping you determine the market value of your home.

The most important information you need, however, is about programs that can get you out from under that oppressive mortgage. If you can avoid foreclosure, you should take those steps.

We’ll be conducting a free workshop at 7 p.m. Monday, March 5 at the Publick House onMain Street inChester to talk about some of those alternatives. Speakers include Kelly Holmquist, leader of the Holmquist Team, part of Keller Williams Towne Square Realty, and Marty Eagan, aMorristown attorney specializing in distressed sales.

They’ll be talking about short sales, where the bank allows you to sell your home for less than you owe on it; the Home Affordable Foreclosure Alternatives program, a federal program that helps you sell short or return your home to the bank in an option called a deed-in-lieu of foreclosure; or other tactics. The idea is to free you from that mortgage you can’t afford while trying to protect your credit rating as much as possible. Doing that usually requires a Realtor, an attorney and a dose of creativity.

Meanwhile, there are some other things you could be doing. Begin your spring cleaning early.  To a buyer, one of the advantages of a short sale over a foreclosure is that the home is usually still occupied and in good condition. So now is a good time to begin cleaning up, fixing up and maybe rolling on a fresh coat of paint.

Now isn’t the time to finish that basement or redo your bathrooms. You probably won’t see any increase in the value of your home. And, besides, as much as you like how that new bathroom looks, the new homeowner might have a different idea.

What’s more important is to put unneeded things away. Stagers – people who get paid to come in and tell you how to make your home look nice – will tell you that the most common problem with a home is clutter. It makes a home feel crowded and dirty. Put things away that don’t need to be out, get rid of the beat up old chair in the corner, no matter how much the dog likes it, and take other steps to make your home shine.

You’ll also need to fix what’s broken. It’s time to call the plumber to deal with the toilet that won’t stop, and have someone come and put that gutter back on the back of the house. A buyer will use such issues to knock big bucks off what he or she will pay.

If you have structural problems with the home, or it desperately needs a new roof or other major maintenance, talk with your Realtor candidly about it. Together, you’ll decide what’s worth fixing and what’s worth letting the new owner fix.

Nobody says you have to sell your home and move out, just because your home is worth less than your mortgage. If you’re working but you have to stretch to keep up with your mortgage, there are programs available to help you lower your payments or lower your interest rates. For instance the Home Affordable Modification Program (HAMP) can lower your monthly mortgage payment to 31 percent of your monthly gross income if you qualify.

The important thing, however, is not to sit quietly and watch everything you’ve worked for disappear, including your credit rating. Now is the time to take action. Give us a call, or check with the Realtor, attorney or financial counselor of your choice. And join us March 5. Make a plan and get out from under that mortgage.

Interest Rates Continue to Fall Creating Opportunities

CHESTER, N.J. (Oct. 13, 2011) — Loan rates hit record lows last week. According to bankrate.com, which is a well-respected chronicle about all things financial, the 30-year fixed-rate mortgage fell to 4.21 percent, although they started back up this week. A year ago it was 4.45 percent and a month ago, it was 4.34 percent.

Rates have never been better on mortgages, but the rate you get will depend on a lot of individual factors: what are you buying, what’s your credit score, how much money are you putting down, what kind of mortgage you are applying for.

My friend Bob Davis, who is a mortgage broker with Black River Mortgage in Chester, says if you’re looking for a 30-year fixed-rate mortgage, you have a high credit score and a 20 percent down payment, you’ll get “about 20 percent.” The rate is less for a 20-year or 15-year mortgages.

“If you have a 20 percent down payment,” he told me, “you’re going to get a good deal.”

So what can you do to take advantage of these low rates?

  • Get yourself prequalified before you start looking for a home. Your Realtor, banker or a mortgage broker like Bob can help you do that. It lets you know what you should be looking for and gives you a lot of negotiating power.
  • Check your own credit scores. You can do it free through government-sponsored Web sites.
  • Work with a Realtor to find a home that fits your needs and lock in a price.
  • While you should definitely shop for the best rate, don’t get frustrated if you can’t find rates as low as those touted in news stories. The rates we’re seeing are incredibly low and there’s so much involved in setting a rate, that you may never see the 3.94 percent the Daily Record mentioned last week.
  • Don’t wait. It’s a long process to get a mortgage and the tiny bit you save or lose won’t make a different. Besides, most experts say mortgages won’t drop much lower.
  • Similarly, if you have a commitment, don’t throw it out for a few tenths of a percent. You have to start the entire process over again, including all of the application fees.

Another impact of low rates is increased buying power and affordability. If you want to be a homeowner but you’re not sure you qualify, call a Realtor and discuss your situation with him or her.

Meanwhile, I just returned from a meeting in Texaswhere Keller Williams agents from around the world talked about what’s working and what’s not in this crazy real estate market. We talked about giving buyers and sellers better service, responding more quickly to your phone calls and emails and using technology to make the home-buying experience easier. New technology, for instance, makes it easier to give a virtual tour of a home that’s for sale. If you’re selling your home, you need all the advantages you can get, and a virtual tour is a good advantage over nearby homes without one.

Talk to your Realtor about interest rates, virtual tours and other developments in buying and selling homes, or call me and I’ll answer your

Interest Rates Hitting Lows Not Seen in a Generation

CHESTER, N.J. (Sept. 16, 2011) — A piece of news announced Thursday should add a bit of excitement to your hunt for a new home this weekend: Interest rates have hit lows not seen since the Ozzie & Harriett looked for a new home in the same neighborhood as the Nelson Family.

Of course, it’s been almost as long since mortgages required as much paperwork as they do today!

Freddie Mac Thursday said rates for a 30-year fixed mortgage averaged 4.09 percent, the lowest since 1950 and 1951. Rates back then went to 4.08 percent for several months. Bankrate.com, a well-respected mortgage news Web site, cited rates that were a bit higher, but still at the lowest level since its weekly survey started 26 years ago.

While the pundits are debating the reasons for the low rates, homebuyers should take advantage of them.  The pundits agree that the current spate of bad economic news is what’s keeping the rates down, and as soon as some positive news hits the market, they’ll go back up.

While mortgage rates seem to move only little bits at a time, those small figures can mean a lot in what you pay. For instance, if you took a mortgage for $250,000 at the 4.08 percent rate cited by Freddie Mac, you’d pay $1,206.55 per month, principle and interest only. If the rates went up to just 4.19 percent – still a great rate – you’d pay $1,221.08. It’s only $14.53 a month more – dinner at a restaurant, maybe – but over the course of the mortgage, you’d pay more than $5,000 more. And that’s enough to change your qualification status.

If you haven’t already done so, talk with your Realtor, banker or mortgage broker about what rates are available to you in this area, and how you can lock in that rate now…

…Which brings us to the other piece of this discussion: The hoops to jump everyone must jump through to get a mortgage. Anybody who’s stuck a toe into the housing market knows that rates may be low, but it’s not as easy getting them as it was just four short years ago (Making mortgages available without any qualifications is one of the ways we got into this mess to begin with). This, again, is a conversation you need to have with your Realtor, banker or mortgage broker. And, again, it’s time for a cold, hard and unemotional assessment of your situation.

There are some things you can do to take advantage of the low rates.

First, check your credit score for inaccuracies. Each of the credit agencies – there are three — are required to show you your score once a year for free. A good place to start is the Annual Credit Report Service, www.annualcreditreport.com.

Second, be realistic about what you can afford. One guideline is that your proposed housing expenses, including monthly mortgage payments plus all monthly debt payments, should not exceed 45 percent of your gross income. Like all such guidelines, it merits some discussion and a look at your situation. Your Realtor has special training, tools and insights to help you figure this out.

Finally, see if you can be pre-approved for a mortgage. Again, your Realtor, banker or mortgage broker can help you with this. Having a mortgage commitment in your pocket takes a lot of the guesswork out of the process. You know what you can afford. And a seller would rather negotiate with someone who has already been approved than someone else who’s willing to pay a higher price, by doesn’t have a mortgage locked in.

By the way, this isn’t the time to buy cars or take on other big expenses. Wait until you close on your home and then do another assessment.

It’s true that the banks have tightened the mortgage criteria, but it’s not as bleak as the folks on television would have you believe. Banks are looking for people to give mortgages to.

It may sound trite, but it’s very true: There’s no better time to buy a home. Take the first steps by talking to us or any other Realtor about what you can afford and what homes are available in that price range.

Who knows? You could be celebrating the winter holidays in a new home!