Wednesday, October 31, 2012

7 Social Benefits of Home Ownership and 6 Social Benefits of Renting

End of Mortgage Interest Deduction Favor Renting Over Homeownership?  Good idea?


Does homeownership result in a more stable family, neighborhood, city, or nation?  Is owning a home a benefit for owners financially, socially, psychologically, or otherwise?  If it is a benefit, to what extent should it be the governments's business to incentivize ownership over renting?   Answers to these three questions would already require a huge, potentially book length subject, to consider.  We will leave it to a later post to contemplate whether the current incentive is an incentive at all, or whether there might be better ways to achieve the goal, should the goal turn out to be a worthy one.


What are the social benefits of homeownership?


Benefits generally cited include:
    ✓    Neighborhood stability
    ✓    Less crime in the neighborhood
    ✓    Pride in ownership results in better maintenance of personal and public property
    ✓    More civic involvement
    ✓    Student of owners do better in school and have fewer behavior problems
    ✓    Forced savings vehicle results in financial stability
    ✓    Excellent financial investment.  Wealthy population better.

The biggest argument against the benefits listed above is that while those results are clearly related to home ownership, they are not necessarily causative.  In other words, it may be that the kind of people who are more likely to own a home are also more likely to be stable, have pride, be more involved, and have kids who do better.  That argument makes sense in that younger, unmarried adults and those with low paying and more transient jobs are more likely to rent.  Those demographic characteristics would seem to also point to the opposite of the virtues noted in the list.

We will address the financial aspect in another post.

What are the social benefits of renting?

As to the societal benefits of renting:
    ✓    More flexible work force - can move more easily
    ✓    More flexible investing population
    ✓    Renters use less resources
    ✓    Time saved on chores can be used for other things
    ✓    Less stress in financially or job related stress situations
    ✓    No risk of capital

The biggest societal issue would seem to be the stability vs flexibility issue.  There is no question that a workforce that rents is much more likely to uproot and move to where the jobs are and to live closer to the job.  There is also reasonably good evidence that owners as a group are "better" citizens.  

Should the US Government incentivize homeownership through mortgage tax policy?

This leaves open the issue of whether the government should be encouraging one over the other.  Maybe we are better off with a workforce that can move to where the jobs are.  Maybe there should be studies to determine if home ownership and the obvious stability that goes with it, has a causative relationship to lower crime and better students.  How do you come down on these issues?  Should government just get out of the way?  Should we study the effects of both more?  Do you believe that owning or renting is significantly better for society?

Also read:

Monday, August 27, 2012

What is a mortgage broker? Best mortgage rates in Los Angeles


Bill Rayman, Los Angeles Mortgage Broker
How can our broker help you get the best mortgage rates in Los Angeles?
A mortgage broker is a company that has relationships with lenders in much the same way that an independent insurance agent does with many different insurance providers. These relationships allow mortgage brokers to receive offers of mortgages at wholesale prices. As a result, brokers can offer lower rates, often the lowest on the market. By going with the lender offering the best rates on a particular day, the mortgage broker helps their clients get more for their money.

The broker may also choose to operate on lower margins or profit than banks and lenders. Good brokers remain up-to-the-minute on on an array of products from their providers. Direct lenders have only a limited number of loan products available.

The broker handles all of the processing of the loan. Since Guaranteed Rate funds most of its own loans, it usually underwrites them as well.
At a traditional bank, the employees work for the bank, not for you. As a result, in difficult situations a direct lender is likely to just turn you down, and leave you on your own to solve the problems. Experienced brokers have a fiduciary responsibility to their client and will work to find a way to meet their needs.


Call me today at (310) 453-4016 or email me at Bill@rate.com

Friday, July 27, 2012

How to Get a Great Mortgage...Approved. #10 of 10

It Ain’t Over Till It’s Over, Says Bill Rayman, Los Angeles Home Loan Broker

Another result of the closer scrutiny from Fannie, Freddie, the FHA and lenders themselves is that all your key financial qualifications are freshly re-examined before the lender issues docs for an approved loan.  They will pull a credit supplement to see if you’ve applied for any new debt.  They re-verify your employment to make sure you’re still working.  They do a nationwide search to see if you own any other property.  They get a transcript from the IRS to confirm that the taxes you supplied are in fact the same you filed.

It is far from unusual for loans to be thrown into limbo or rejected after this final check.  Before you apply for a loan, and particularly once you’ve begun the loan process, make sure to keep your financial ducks in a row.  Do not change jobs.  Do not make any major purchases or sign car leases, student loans or co-sign someone else’s loan.  Do not miss any payments.  And if you have an issue with a creditor, do not file  a dispute with the credit bureaus.


In Conclusion

None of these 10 recommendations for smoothing the process to obtain a loan should discourage you from applying.  Rates are unbelievably low and there are myriad programs available so that many people can qualify that may think otherwise.  Even though almost every loan has its share of problems, my firm has brought more than 95% of our applicants across the finish line.  We are experts at spotting and solving issues.  For more than 20 years, we’ve helped qualified buyers accomplish their dreams and goals.

For a free mortgage loan consultation with absolutely no obligation, call me, Bill Rayman, at 310-295-6213


Thursday, July 26, 2012

Getting Your Interest Rate Locked on Your Mortgage

A California Mortgage Consultant Like Bill Rayman Can Help You Make the Best Possible Decision Regarding the 9th Step in How to Get a Great Mortgage - Rate Locking

Some loans close in less than 30 days.  Others can drag on for 90 days – or more.  During the period between the formal application for the loan and the final closing, rates will invariably change.  Whether they will go up or down is a question each borrower must decide for himself.  This decision is probably the toughest one for any borrower.

The crux of the issue is this.  Because a bank takes a risk that rates will rise after you lock in a low rate, they will charge more – in fee or rate - for locks of longer duration than short ones.  You can choose to lock at any point from the application to the close.  If you believe rates will remain low during the loan process, you’re best off waiting to lock till the end.  If you believe they’ll rise, you benefit by locking early.

Unless and until you lock a rate, you will pay the prevailing market rate at the time of your close.  Some lenders allow a short term lock for free, so be sure to ask for it.  Few lenders will allow locks longer than 60 days, but with interest rates this low, it’s worth considering paying a small fee to secure a low rate early in the process.

Remember: locking is a two-way street.  It protects you from rates rising, and it protects lenders against rates falling.  There are practices lenders enact that prevent people from cancelling locks or renegotiating for lower rates.

For a much more in depth look at locking, check out my video on mortgage rate locking

just one more step to go, and you'll love it.  To make sure you don't forget to check it out, become a subscriber or put us on your RSS or atom feed.

Now with Guaranteed Rate

Call me today at (310) 453-4016 or email me at Bill@rate.com


Wednesday, July 25, 2012

Steps to get a California Mortgage Include Number Eight of Ten:  Paperwork Rules.

Because the details of a loan transaction matter so much, be prepared to provide proof of everything.   The vast majority of loans are sold to Fannie Mae or Freddie Mac.  Their requirements for buying a loan (a Conforming loan means it conforms to Fannie’s and Freddie’s guidelines) are stringent, which puts pressure on the bank to make sure everything is exact and correct.   You will be asked for tax returns, pay stubs, rent receipts, banking information, business financial statements, employment verification, and proving many types of assets.

In a very real way, loans have become impersonal.  The days of a friendly banker giving you the benefit of doubt or bending a rule because you’re a good customer are no more.  In this climate, lenders fear that if they miss a detail, the loan could be unsalable, so they’re thinking down the road.  An issue that could be explained by a borrower personally will not be communicated as the loan moves into the secondary market.  Asking for documentation now assures lenders of recouping their investment later. 

You can cut down on the time required to close a loan by having these types of documents organized well in advance. 

If you have missed the first seven of these ten steps to getting a great and low cost mortgage, just click and scroll down.

Call me today at (310) 453-4016 or email me at Bill@rate.com

Tuesday, July 24, 2012

Ten Steps to How to Get a Great Mortgage Approved: Number 7 - Details Matter

Details Matter, says Los Angeles Mortgage Consultant Bill Rayman. This is the seventh of ten steps to getting a great mortgage approved.

magnifying glass
Lenders granted loans during the go-go years between 1998 and 2007, often with little more documentation than the application.  Today, the pendulum has swung to the opposite side.  Everything is scrutinized.  To be certain that everything is accurate and true, every underwriter checks virtually every piece of information – work that is often double-checked by a 2nd underwriter.

Examples of details they check include:
  • the source of any deposits made to a bank account
  • the reason behind each credit inquiry
  • other proof besides tax returns that a borrower is self-employed
  • every page of an asset statement even if it’s blank
When you use a mortgage broker to help you with your loan, you have someone who is your advocate.  Unlike a banker, it isn't my job to find reasons to turn you down, it is my job to find a way to get you a great mortgage, and get it closed. 

Call me today at (310) 453-4016 or email me at Bill@rate.com

Monday, July 23, 2012

Mortgage Pre-Approval Is Step 6 in How To Get A Mortgage Approved

 Bill Rayman Is A Mortgage Broker in West Los Angeles.  In this Series of Ten Steps to Get A Great Mortgage, Step Six Is to Get Pre-Approved.

Long distance shot of several houses
Sellers increasingly demand to know up front whether a buyer can legitimately get the loan required to make a purchase, and they look to ta lender for authentication of which there are two types. 

One is a Pre-Qualification letter.  This type of letter provides an informal estimate of the loan you can handle.  The lender often sees no documents, just bases the amount on verbal information from the buyer. 

A Pre-Approval letter is more meaningful, and therefore more preferable.  To issue this, a lender generally requires a buyer’s taxes, assets, income proof and credit.  A Pre-Approval letter assures a seller that the buyer meets the guidelines to get the loan needed.

Being able to provide a Pre-Approval letter from a recognized lender or broker from a well-known company makes the seller know you are serious which can help you in a competitive bidding situation.  Cash offers speak the loudest, but a strong Pre-Approved buyer may be chosen over other would-be buyers even if their bids are higher.

If you would like to get pre-approved for a mortgage loan, call today and we will help you through the process.  Loan Rates are at record lows, but you will find that the banks and federal regulations are making it hard to get loans.  We are a bank and a mortgage broker, so we can provide you with the best chance of getting a great loan.

If you have not seen the first five parts of the series, just go to http://www.blog.MortgageHelpLosAngeles.com and scroll down to see all the previous parts.  

You might also find some great direction with regard to more minor details by checking out the forty plus videos on our video channel at http://www.youtube.com/user/BillRaymanMortgages


Call me today at (310) 453-4016 or email me at Bill@rate.com




Saturday, July 21, 2012

How to Get A Mortgage Tip 5 - Selecting a Broker and Banker

5.   How to Shop for the Lender.

Since the market collapse in 2008, many mortgage lenders have been far from eager to write new mortgages.  Also in reaction to the calamity, new restrictions imposed by the government and rules promulgated by banking regulators have made lending standards much more strict.  The result is that you will need to shop harder than ever to get a bank to agree to loan you money on reasonable terms.

Because I only make money by completing transactions, I have a huge incentive to close loans successfully for my clients.  Most helpfully, my firm is a mortgage bank, and more than 80% of the loans I originate are done in-house.  And as a mortgage broker, I have access to many other banks and lenders including those who specialize in jumbo, construction,  commercial, stated income and hard money loans.  In this way I shop for you to find the best possible resources.

When shopping, we look at every aspect of the cost of the loan: the type of loan, interest rate, discount fees, processing costs, and mortgage insurance (as mentioned in #4).  As a direct lender we don’t charge points or application fees, nor charge for many items people consider “nickel and-diming” such as credit reports and tax service.

To learn more about Bill Rayman, see his life story @ http://www.mortgagehelplosangeles.com/Bill.html


Call me today at (310) 453-4016 or email me at Bill@rate.com

Friday, July 20, 2012

How to Get A Mortgage #4 - What Is The Right Type of Loan?

 

California Mortgage Banker Bill Rayman Discusses Mortgage Loan Types and How to Choose What Is the Best Home Loan for You


Example of different mortgage rates on July 20, 2012
Fixed rate mortgages provide the security of knowing your interest rate and payments will never rise.  With rates currently at record lows, most people are deciding that a fixed rate loan is their best option.

Fixed rate mortgages can provide different terms options.  A 15-year fixed term offers a lower interest rate than a 30-year term; however, the longer term will help keep monthly payments lower.  If your budget can handle it, the shorter term and lower rate will save you tens of thousands of dollars over the life of the mortgage.  For example, a $300,000 mortgage at 3.500% for 30 years and monthly payment of $1,347 will cost you $185,000 in interest.  A 15-year term at 3.000% may have a higher payment of $2,071 but total interest for the loan is only $73,000 – a savings of $112,000 in just the first 15 years, roughly $7,500 per year.
 
Adjustable rate mortgages (ARMs)
provide the lowest starting rates which can be fixed for the first five seven of 10 years.  Historically, ARMs offer the least expensive approach over the term of the loan and are an excellent choice if you expect to move within a few years.  Because the rates will change after the fixed period, they are not the right choice if you are not confident of being able to handle larger payments in future years.

 FHA Home Loans and Private Premium Mortgage Insurance (PMI).  For purchases, lenders typically want 20% down payment; any amount less and they can require you to pay additional monthly fees for mortgage insurance (MI) which insures the lender against default.  Whether you don’t have the 20% or choose to use a smaller down payment, MI is a viable, often unappreciated, path.  There are two types of insured loans.  One is from the FHA which lets you move into a home with as little as 3.5% down.  The cost for putting so little of your own money down is an upfront fee to the FHA of 1.75% of the loan amount (you don’t need cash; they will add it to the loan) as well as a monthly fee of 1.25% of the loan for at least 5 years.
Please view our video on FHA Loans for a more in-depth discussion.  http://www.youtube.com/watch?v=EU_PU59RFKA

The other type of insured mortgage is a conventional loan with Private mortgage insurance(PMI).   These require at least 5% down, but there is no upfront fee and typically less than 1.00% per month depending on the borrower’s credit score and down payment percentage.  Another advantage of PMI: it can be cancelled after 2 years when there is 20% equity in the home from any combination of paying down the loan and the home appreciating in value.  Typically insurers require higher FICO scores than the FHA allows.

Call me today at (310) 453-4016 or email me at Bill@rate.com

Thursday, July 19, 2012

Top 10 Tips on How to Get A Great Mortgage...Approved - Advanced Planning

3.  Los Angeles Mortgage Broker Bill Rayman Discusses How to Set Up a Mortgage Plan

This is the third in our series on how to maximize your chances of getting a great mortgage for your new home or a refinance.  The home loan market is very tight right now, so if you are wanting to get a mortgage, there are some wise steps you can take to improve your prospects.  

In number 1 and 2, we discussed the critical importance of proving your income and how your credit score can impact your ability to get a mortgage at all and/or the rates a terms that you will be offered.
Bill Rayman - Mortgage Banker and Broker

3.      Set Up A Plan

Start your planning process by creating a realistic budget to determine how much of a monthly payment you can handle.  There are many excellent free budgeting formats on-line.  If you are considering purchasing your first home, keep in mind that there are many expenses associated with home ownership that you don’t now have with a rental.  Among other items, you need to include in your plan: utilities cost more; repairs and maintenance expenses; furnishings, flooring, and window treatments in and of themselves are huge expenses; gardening and lawn care; appliance purchases; property taxes; and, property insurance.

One of the benefits of home ownership is the tax deductibility of many of its costs.  The interest on your mortgage, property taxes, potentially your mortgage insurance, some part of any HOA dues, and some home expenses can reduce your taxable income.  Besides reaping the savings, this will improve your monthly cash flow. Even though you don’t get the tax relief until you file with the IRS, you can plan to take advantage during the year by adjusting the withholding on your wages or on your estimated tax payments.  Consult with your tax preparer to determine the best way to achieve those savings.

If you need someone to help you with all the steps outlined in this series, or just want to select a mortgage broker who cares enough to make sure your needs are met at every level, call me today at (310) 453-4016 or email me at Bill@rate.com

Wednesday, July 18, 2012

Step 2 in Ten Steps to Getting a Great Mortgage…Approved!

California Mortgage Broker and Mortgage Banker, Bill Rayman, provides ten specific step you can take to get the best possible mortgage rates in California

In our first post of this series, we discussed the impact of your income on getting a mortgage loan approved, and the documentation that is now required.  

2.   Credit Score Improvement

Your credit score can keep you from getting a mortgage and will dramatically impact the rate and other terms of any mortgage you get.  There are many on-line resources for checking a credit score and you can get a free report once every 12 months from each of the three credit reporting companies: Experian, TransUnion and Equifax.  Something to know: not all credit scores are the same.  Lenders use a financial score which can differ significantly from a consumer score (your on-line report) and from scores that other industries utilize.  You may want to call me at 310-295-6213 and I will get you a financial credit score that mortgage lenders rely on.

A credit score under 620 will very likely disqualify you from any standard mortgage.  A credit score above 740 will generally qualify you for the best programs, rates and terms.  In between these two results a great broker can help you to get the best possible deal.  Your credit score can save $1000’s in interest charges over the years.  A single percentage point difference in a $400,000 loan can cost over $87,000 over the life of the loan.

Once you have your credit report, check to see if there are any errors.  Report these to all reporting agencies or directly with the company that issued the incorrect information.  It can 90 days to resolve such issues.

Tip: Don’t close unused credit cards.  Use them.  Credit scores measure financial responsibility.  By borrowing and promptly paying the bill you boost your scores.  But don’t open new cards!  

If these efforts are not enough or if you have substantial problems on your credit reports, you may want to use a professional to help you improve your score.  Many companies who offer these services are more talk than action.  Call me for the name of a trusted credit repair company.  310-295-6213

Ten Steps to Get a Great Mortgage…Approved!

Los Angeles, CA Mortgage Banker and Mortgage Broker Bill Rayman offers tips to get your mortgage approved.

With mortgage rates at historic lows and likely to stay that way for the next few months, you may be thinking that this would be a good time to buy a new home, a vacation home, a residential investment property, or to refinance existing mortgages you hold.  One thing can be said for certain: there has never been a better time to get a mortgage.  That is, if you can get one!  The news is full of reasons why you can’t.

Your frustration at being approved by a lender is shared among professionals in every part of the real estate industry.  Low prices on properties coupled with unbelievably low rates on loans should mean a robust market.  But by some analyses more than 50% of all loan applications are turned down. 

Here is the first of 10 practical steps you can take to optimize your chances for being approved.  Subscribe to this blog to receive automatic updates. 
signed check


1.      Income Clarity
Unlike the heady days of the 2000’s, today you will need to prove your income.  If you are employed, make sure that your employer is showing all income.  If you are receiving any income in the form of cash, gifts, barter or another form that do not show on your W-2, it would be far better to change it and place everything on the payroll.

If you own your own company, you may have some of the same issues as a wage earner.  If you are self-employed or a are a substantial owner of your company, you will need at least two years of history as well as current profit and loss statements.  As with the payroll issue, you will qualify for a better, higher mortgage if you choose to show excellent profits rather than using every possible way to reduce income to reduce your tax bill.   If you believe that your W-2 or business income can be improved with some changes in your methods, you may want to hold off on the mortgage for a few months until these changes are effective and clear.

There are other ways to boost income without altering your actual receipts or taxes.  For example, you might also be able to impute income from assets even though they do not provide actual income.  We can help you assess the potential to show such income on your application.

Call me today at (310) 453-4016 or email me at Bill@rate.com 

Sunday, July 1, 2012

Help for divorce buyout mortgage process in Los Angeles

No one wants to deal with a divorce buyout mortgage, and yet, if you find yourself on the brink of separation or divorce, you are wise to explore your options as far as what to do with your home. For some couples, it makes the most sense to transfer the responsibility of the mortgage to one individual who will retain ownership. This is what is known as a divorce buyout mortgage. If you are looking into the option of a divorce buyout mortgage and you live in the greater Los Angeles area, we can help you understand what to expect from this process so you can make a sound, well-informed decision.

Call me today at (310) 453-4016 or email me at Bill@rate.com

Wednesday, June 27, 2012

Cash-out refinancing

Have you been wondering whether you should refinance your Los Angeles home? Now is a great time for refinancing because of historic low mortgage rates.
Cash-out refinancing is when you refinance your home for more than you presently owe on it. The difference between what you refinance at and what you owe is the amount you take as a cash payment. Cash-out refinancing may allow you to get a better interest rate on your loan, and get money to pay for schooling, making home improvements, paying off debts, or other expenses or investments. It may be more cost effective to use a Home Equity Line of Credit (called a HELOC), a traditional second trust deed, or refinance the primary trust deed. We can help you understand your option and make the best decision for your family.

Monday, June 25, 2012

What is an FHA mortgage loan?

WW2 era FHA poster
WW2 era FHA poster
Bill consults with many clients interested in getting FHA loans in the Los Angeles area. FHA home mortages are loans provided by a private lender, and insured by the Federal Housing Administration. The FHA mortgage rates are often lower than a conventional mortgage loan, and often require a smaller down payment, easier qualification guidelines, and easier access to lenders. For this reason, FHA loans are a good option for people with barriers to accessing conventional mortgage loans. The program began as a response to the recession of the 1930's, and became a self-sustaining government program paid for by buyers through insurance premiums. The program has enabled new buyers to continue buying homes in the current recession from 2008 to 2012.

Call me today at (310) 453-4016 or email me at Bill@rate.com

Saturday, June 23, 2012

Three tips for pre-qualification process

checking boxes in a list

In our last post we introduced the pre-qualification process, which is a first (no strings attached) step in the home buying process. Check out our website for more home buying information, or to check out the latest mortgage rates in Los Angeles.
Here are some tips on how to use pre-qualification to your advantage.
1. Be honest. You do yourself no favors by getting into a loan you are not financially prepared to take on, so be forthright about your credit, income and other circumstances.
2. Find the right lender. Even though the pre-qualification process is noncommittal, you'll still want to know you are with someone who is experienced and credible. The lender who takes you through this process will be responsible for explaining the home buying process to you, so choose someone who is a good communicator.
3. Be prepared. Even though you are not getting a loan right now,  have all your documents ready so that you can get the most accurate information. You may not be required to provide complete documents for everything, but you do well to get a precise estimate from the beginning, so your home buying process starts out right.

Call me today at (310) 453-4016 or email me at Bill@rate.com

Thursday, June 21, 2012

Mortgage broker Los Angeles on What to know about Pre-qualification

As a mortgage consulting business in the Los Angeles area, we spend a lot of time answering questions about the homebuying process to people. We hope this blog will help clarify some of the confusing parts of this process. Today we are talking about mortgage pre-qualification, which is a confusing part of the process for many first-time homebuyers. Sometimes people confuse this with loan pre-approval, but it is actually something different. Mortgage pre-qualification is basically a no-strings-attached estimate of what you can afford in a home. This is how you will get your first ballpark price range. Unlike a loan process, where upon approval you are locked into a deal, pre-qualification is completely free of commitment. You may choose to work with the lender who does your pre-qualification (and they will certainly hope to win your business), but it is by no means an obligation. Pre-qualification is simply a part of the research and preparation that goes into making a smart home buying decision.

Call me today at (310) 453-4016 or email me at Bill@rate.com

Monday, June 18, 2012

History of American Mortgage: part 2- The War Years

Classic photo wartime kiss in front of train

Because we often assist people with  FHA loans Los Angeles, we are doing a series of blog posts about the history of the Federal Housing Administration. In a previous post we talked about the FHA's creation as a response to the Great Depression in the 1930's. In the 1940's the FHA continued to operate as an insuring agency for private lenders, enabling more people to qualify for home loans.
Also in the 1940s, soldiers were returning home from the war and seeking new housing for their families. The new GI Bill of Rights included low-cost mortgages as a benefit for America's servicemembers. The FHA provided low-cost mortgages to thousands of returning veterans in  after WW2, enabling many to buy their first homes.

Call me today at (310) 453-4016 or email me at Bill@rate.com

Wednesday, June 13, 2012

History of American mortgage part 1: Birth of FHA Loans

Old Sears Ad
Ad from Sears Catalog for a common American home kit.
When you look at FHA loans Los Angeles, have you wondered where the Federal Housing Authority came from?
The housing market was not always as complicated as it is today. Before the 1930's, less than half of Americans owned their home. Owning a home was a privilege, and the idea of the American Dream had yet to be born.
Perhaps your grandparents remember a time when houses had to be purchased in one lump sum. Since few people had the ability to save such a large sum of money, most families rented.
Then came the Great Depression, changing the economy drastically, and subsequently the housing market. Many homes were in foreclosure, and the Federal government had to find a way to respond. They responded with the New Deal, radically restructuring the US economy. As part of this, they established the Federal Housing Authority, which insured home loans for banks so that they could make loans with small down payments and monthly mortgage payments. This enabled many Americans to become homeowners for the first time.

Call me today at (310) 453-4016 or email me at Bill@rate.com

Sunday, April 29, 2012

Mortgage Rate Trends in Los Angeles According to Mortage Expert

Both government rules and free markets tend to overreact to crisis, and nowhere has this been more true than the mortgage market meltdown of 2008.  From the freewheeling, no-proof-of-credit-worthiness times we thought we enjoyed in the first decade of this century, we have now cycled into a climate where the mortgage market is tighter than anyone can remember.  It is very unlikely that this tightness will persist.  As demand increases, there will be those lenders who will want to take advantage of better times.

Interest rates are at lows that no one would have predicted, but only because of low demand and Fed intervention.  The Fed is already discussing the timing of when this intervention will end, and any uptick in demand is likely to result in upward pressure on rates.  There is no precedent or imaginable scenario for rates to drop significantly below what they are today.  Could that happen.  Sure, but the odds are way more likely that rates will go up significantly than down at all.


For more on the subject or to discuss how you can lock in the historically low mortage rates in Los Angeles at this time, call Bill Rayman at 310-295-2900 ext 113

Tuesday, February 28, 2012

Interview With Mortgage Pro Bill Rayman Part 6: Refinance Tips

What tips can you provide someone looking to refinance?
Get your credit pulled at the beginning by a mortgage professional. For something so important, it’s astounding how few people actually understand how the bureaus work. Not all credit reports are the same; they vary by industry and by type.
Banks use a Financial credit score, derived from information from the 3 bureaus. Get someone to pull your credit score early and review it. For people who are worried that pulling their credit will lower their score, I tell them, “There’s a kernel of truth in it, and a lot of corn.” It reflects my comment that few know how this vital service works. Pulling credit does not automatically lower your score. The bureaus see who’s pulling it, how often it’s pulled, and what the purpose. Banks and brokers pulling it 10 times in a week will not lower your credit score. The bureaus see that you are shopping for a loan–not asking each company for money.
Knowing what’s on a report is vital to do early. Problems have to be identified and mistakes fixed – a process that can take 2-4 months . Mistakes easily derail a purchase or refinance. I only work with people who let me pull their credit up front.

To See the Entire Interview CLICK HERE

Call me today at (310) 453-4016 or email me at Bill@rate.com
Or, Ask Bill Rayman More Questions at: MortgageHelpLosAngeles.com

Saturday, February 25, 2012

Interview with Mortgage Pro Bill Rayman Part 5:

What do you project will happen with interest rates in the coming year?
The consensus is that through 2012 interest rates will remain relatively flat. They always flutter–they go up and down the way the market goes up and down, but the general consensus says they will remain flat within the year.
If you’re looking to buy a house, frankly I don’t think the interest rate should be something you should make your primary concern. Buying a house is about your lifestyle. Is this where you want to live, where you come home every day? If you tell me you’re not going to buy the home because it’s a quarter point higher on the rate, it seems that maybe having a home isn’t really what you want or are ready for – both of which are fine answers!
I do the math for people and point out that on a $300k loan, the difference on 1/8th point is about $20/month. Maybe your neighbor got 4 1/8 and you were quoted 4 1/4… Sure, in dollar terms it’s measurable, but it’s not the reason to buy or not buy a house. You should be aware of your priorities and react accordingly.
Besides a home being about lifestyle, it is a huge investment. Today’s interest rates are so riotously low – they haven’t been this low in 50 years! – whether you get 4.00% or 4.25% doesn’t detract from the idea that now is a phenomenal time to take advantage of these rates. Sure, I fight to make sure my clients save every penny they can, but in the long term of 5, 10 or 30 years, passing on a home because you might have missed on a fraction of a point in today’s market may be a mis-priority.

To See the Entire Interview CLICK HERE

Call me today at (310) 453-4016 or email me at Bill@rate.com
Or, Ask Bill Rayman More Questions at: MortgageHelpLosAngeles.com

Wednesday, February 22, 2012

Interview with Mortgage Specialist Bill Rayman Part 4: New Fannie Mae Guidelines

What are the new Fannie Mae, FHA, or Freddie Mac guidelines that people should know about?
Understand what Fannie and Freddie are. Most banks do not keep their loans–they sell their loans to the secondary market to recoup cash that they can lend again. Fannie Mae and Freddie Mac represent 80% of the secondary market.
You go to Chase for a loan, they likely will turn around and sell to Fannie and Freddie who set the guidelines for loans. Each bank adds their own overlay on top of those guidelines. For instance, the FHA says they’ll do a loan on a credit score of 620, but good luck getting a loan at Wells Fargo, Chase, or Bank of America with that credit score. Banks are private companies and can choose to say, “No.”
These guidelines are complicated and there are many of them. That is a big reason to work with a professional, whether a banker or mortgage broker. These guidelines with Fannie and Freddie change and keeping up with them is half the challenge.

To See the Entire Interview CLICK HERE

Call me today at (310) 453-4016 or email me at Bill@rate.com
Or, Ask Bill Rayman More Questions at: MortgageHelpLosAngeles.com

Sunday, February 19, 2012

Interview with Mortgage Broker Bill Rayman Part 3: Choosing a Loan Officer

How does someone choose the best loan officer to fit their needs?
First step is do research–look online, go to a bank, talk to a broker. Google “mortgage broker Los Angeles” and you get a list of brokers. Early on, do a little research and talk to a few different people.
The downside to working directly with a bank is that they are not there to help you. The bank employees don’t work for their customers-—they work for the bank. With a bank, if there is a problem and things go awry, it is going to do nothing to help you solve that problem. And in this restrictive lending environment, plenty goes wrong. A broker is only going to get paid if we make a transaction happen. Plus we have a license and a fiduciary responsibility to our clients.
People only think of “rate, rate rate”–it seems to be on everyone’s mind. The problem with rate shopping is that anyone can quote anything anytime. I guarantee I can find someone online who says they can beat any rate I can do, but it doesn’t mean anything. A quote at 1:30 on Wednesday is not a guarantee and could change anytime. Nothing is locked in until you have the applied and the loan registered.
The second reason that rate shopping is bad is that it focuses on the wrong issue. Getting a rate quote is one thing; closing a loan is everything! Because it is so difficult to get a loan you need to know it will close. You better be with someone who knows how to solve problems and get you to the finish line. These days, every loan has problems. If you’re just shopping rate, you risk being short-sighted, and to your detriment. My company is a bank, so intrinsically we have very competitive rates. And because of that price advantage I don’t have to focus on rates and I can spend more time helping people understand the process and loans so they can make informed decisions.
Another issue to be aware of online is that some of the companies to get quotes from are legitimate… some aren’t. The person shopping online has no idea who is and who isn’t. I have a list of anecdotes the length of my arm of people who went online to find a rate, but when they went to close, mistakes happened. The loan originator wants a higher rate or more points added. People making a purchase are completely over a barrel. They can’t pull out of a transaction because they’ll be at risk of either losing their deposit or losing the home. On a refinance, it might be worth the gamble but on a purchase I think it highly unwise.

I did not realize that about shopping for interest rates at a bank…

Go talk to a Wells Fargo manager–he’s got one thing on his mind. How does he or she get promoted? The answer is: by making money for the bank. It’s a zero sum game. If the bank makes money, it’s coming out of your pocket. At the end of the day, he works for the bank.

To See the Entire Interview CLICK HERE

Call me today at (310) 453-4016 or email me at Bill@rate.com
Or, Ask Bill Rayman More Questions at: MortgageHelpLosAngeles.com
 

Thursday, February 16, 2012

Interview with Mortgage Specialist Part 2: New Loan Programs

What are some new loan programs that people should be aware of?

One of the best programs is the FHA, which is the only government program that really works. It’s designed for people who are either just starting out, don’t have a lot of job history, might not have a lot of money, or who might have tarnished credit. The FHA will work with that, and by providing insurance against a borrower defaulting, lenders readily make FHA loans. Essentially the FHA is an insurance company where you, the borrower, pay them an insurance premium fee to insure the loan against default.
As much as I like the FHA, I can get a better deal for many borrowers without going through FHA. I can accomplish the same thing with lenders either with less costly private mortgage insurance or by getting the lender to pay for the insurance. The costs are dramatically less.

How much less are we talking about?
The FHA charges 1% of the loan amount upfront and 1.15% of loan amount for 5 years. I can do comparable programs with no insurance, or insurance that is about 1/3 of the cost of the FHA.
Personally I don’t believe there are legitimate first time home buyer incentives offered by banks. My experience is that banks who offer it typically mark up the rate then discount it so that it’s a false savings. Logically, what bank would want to give a first time home buyer an incentive over someone with a history of home ownership?

To See the Entire Interview CLICK HERE

Call me today at (310) 453-4016 or email me at Bill@rate.com
Or, Ask Bill Rayman More Questions at: MortgageHelpLosAngeles.com

Monday, February 13, 2012

Interview with Mortgage Broker Bill Rayman Part 1: Meeting with a Loan Officer

How can someone seeking a loan best prepare for a meeting with a loan officer? What are the items on a checklist of must have’s?

With some exceptions, every lender is looking at 4 criteria for doing a loan: 1) Collateral (the value of the home); 2) your credit – (somewhat simply the credit score, but mostly looking at overall credit history to see your level of responsibility, i.e. Do you pay your bills on time?); 3 Assets; and 4) Debt to income ratio.
Debit to income ratio is the banks’ way of determining that your cash flow is sufficient to pay them back. Ultimately, this is what the bank is concerned about because it is in essence the primary bank function: They lend you money and want you to pay them back on a regular basis. They aren’t looking to foreclosure; they don’t want more properties in their portfolio.
Demonstrating income is critical and is usually done with tax returns. If you’re owner or part owner of a company, they want to look at corporate tax returns. Wage earners are treated more leniently than a self-employed person. For the most part, I don’t know any lender who would let you be self-employed for less than 24 months.

To See the Entire Interview CLICK HERE

Call me today at (310) 453-4016 or email me at Bill@rate.com
Or, Ask Bill Rayman More Questions at: MortgageHelpLosAngeles.com

Tuesday, January 24, 2012

How to Get the Best Mortgage Rates: LA Mortgage Broker Bill Rayman Gives Tips

First, make sure you are comparing current mortgage rates for the same type of mortgage. Mortgage rates and closing costs can change significantly from one day to another, so if you are comparing offers from multiple lenders it must be done on the same day. For example, if you are shopping mortgage rates and have a quote for a 30 year fixed at 5.75%, only compare it to other 30 year fixed quotes at 5.75%.

Next, compare the total of all points and lender fees for each mortgage (from section 800 to 813 on the Good Faith Estimate), that is the price of the mortgage. The lender with the lowest cost has the best mortgage rates.

If you are refinancing, you will also need to review the cost of title insurance, closing/attorney, and appraisal. Some large national companies have negotiated excellent rates for these services on your behalf. The company with the lowest combination of points, fees and third party costs for the same rate and product has the best mortgage rates.

Things to Watch Out For


APR is not always accurate, so it should not be used. To get the best mortgage rates, compare current mortgage rates and closing costs.

Good Faith Estimates are just estimates. Many brokers and lenders will give you a low ball estimate, and then after you have paid for your appraisal, they will inform you that the mortgage rate or closing cost have gone up. Look for lenders that guarantee their closing costs up front.

There is nothing wrong with No/Zero Closing Cost Loans. Just be aware that you will be looking at higher mortgage rates in exchange or if you are refinancing, the closing costs could be included in your principal.

Paying higher points and fees will result in lower mortgage rates. For example, at 7% you may have zero points and fees, while at 6% you may have points and fees of $3000. To get the best mortgage rates, you must estimate how long you will have the mortgage. Also, make sure you are comparing current mortgage rates when doing your comparison.