From the Southside Landlord Compact:
Subject: SouthSide Landlord Compact Meeting
DATE: December 20th, 2007
TIME: 11:30 AM - 1:00 PM
PLACE: Old Country Buffet Restaurant
4902 S. 74th Street
Peter Kazaks, a member of the SouthSide Landlord Compact and board member of theApartment Association of Southeast Wisconsin, is a highly respected officer at KLM Mortgage Group who will share his knowledge on consumer credit and answer as many of our questions as time permits.
Monday, December 17, 2007
Tuesday, December 04, 2007
Conforming Loan Limits Stay The Same
The Office of Federal Housing Enterprise Oversight (OFHEO) recently announced that the conforming loan limit for single-family mortgages purchased by Fannie Mae and Freddie Mac in 200 would remain at the 2007 level of $417,000. What does this mean? For most of the U.S., if a mortgage is for more than $417k, it is considered a jumbo mortgage and the interest rate may be higher than on a conforming Fannie Mae mortgage.
Thursday, November 29, 2007
FHA
Exciting news! Here at KLM Mortgage Group we have been approved by FHA! This means that I now have some new loan tools in my arsenal. FHA insures mortgages for some folks who don't qualify for Fannie Mae loans. In the last few years the "sub prime" market has been the most convenient source of mortgages for borrowers who don't qualify for Fannie Mae loans, but with the recent fallout in the sub prime market it has gotten much more difficult for borrowers with credit problems and not much cash in the bank to get a mortgage. FHA provides a great opportunity for these borrowers.
Some highlights of FHA insured mortgages:
Some highlights of FHA insured mortgages:
- No minimum credit score
- Reserves (cash in the bank after closing) are not required
- No prepayment penalties
I'm excited to be able to offer FHA loans for people who previously would have benefitted from the now almost extinct sub prime products. Please call me if you would like to learn more!
Wednesday, November 07, 2007
Fannie Mae Makes Some Changes!
In response to the rising delinquency rates and the losses they cause to lenders, Fannie Mae announced yesterday that there will be new pricing adjustments for borrowers with a 679 or lower credit score, and for loans where the total loan to value is over 90%.
What does this mean to borrowers? The current underwriting system allow borrowers who are overall very strong (good income, plenty of assets, good equity in the house) but who have less than perfect credit to obtain the best rates available. Under the new structure, credit scores will have a direct impact on rate, and only borrowers with a 680 or better middle credit score will qualify for the best rates.
For the last year I've been talking about how credit is becoming more and more important. Now Fannie Mae has put it in black and white and it will start impacting borrowers in January for mortgages closing starting March 1, 2008.
On top of the increased importance of credit scores, there are pricing changes in the works for transactions where there is subordinate financing, for example a second mortgage or home equity line of credit. For the last few years there have been great mortgage products available which allow borrowers to get the best possible rate on an 80% first mortgage regardless of whether or not there is a second mortgage behind it, even up to 95% total loan to value. While the guidelines are a bit too complex to summarize here, the gist of it is that for most borrowers, if the down payment is less than 10%, there may be a slight increase in rate for the first mortgage.
In spite of all the doom and gloom in the headlines lately it is still a good time to buy a home. It will still be after the new guidelines go into place, but credit and down payment are becoming more and more important.
As always, feel free to call or e-mail with questions--or even leave a comment here on my blog!
What does this mean to borrowers? The current underwriting system allow borrowers who are overall very strong (good income, plenty of assets, good equity in the house) but who have less than perfect credit to obtain the best rates available. Under the new structure, credit scores will have a direct impact on rate, and only borrowers with a 680 or better middle credit score will qualify for the best rates.
For the last year I've been talking about how credit is becoming more and more important. Now Fannie Mae has put it in black and white and it will start impacting borrowers in January for mortgages closing starting March 1, 2008.
On top of the increased importance of credit scores, there are pricing changes in the works for transactions where there is subordinate financing, for example a second mortgage or home equity line of credit. For the last few years there have been great mortgage products available which allow borrowers to get the best possible rate on an 80% first mortgage regardless of whether or not there is a second mortgage behind it, even up to 95% total loan to value. While the guidelines are a bit too complex to summarize here, the gist of it is that for most borrowers, if the down payment is less than 10%, there may be a slight increase in rate for the first mortgage.
In spite of all the doom and gloom in the headlines lately it is still a good time to buy a home. It will still be after the new guidelines go into place, but credit and down payment are becoming more and more important.
As always, feel free to call or e-mail with questions--or even leave a comment here on my blog!
Friday, October 26, 2007
Trick Or Treat Times
I'm looking forward to passing out candy on Sunday! As usual, I'll dress up to do it, this year probably as a cowboy with a fantastic Wrangler rodeo shirt and jeans, boots, hat and belt buckle making for a pretty complete outfit.
What are you doing for a costume--for yourself or your kids? Feel free to leave a comment to this post with what you are doing!
Here are the trick or treat times for Milwaukee county:
Bayside: 2:30-5:30 p.m.
Brown Deer: 1-4 p.m.
Cudahy: 2-4 p.m.
Fox Point: 1-4 p.m.
Franklin: 4-7 p.m.
Glendale: 1-4 p.m.
Greendale: 1-4 p.m.
Greenfield: 4-7 p.m.
Hales Corners: 4-7 p.m.
Milwaukee: 1-4 p.m.
Oak Creek: 4-6 p.m.
River Hills: 1-4 p.m.
St. Francis: 4-7 p.m.
Shorewood: 3-5 p.m.
South Milwaukee: 2-4 p.m.
Wauwatosa: 1-4 p.m.
West Allis: 1-3 p.m.
West Milwaukee: 1-3 p.m.
Whitefish Bay: 4-6 p.m.
What are you doing for a costume--for yourself or your kids? Feel free to leave a comment to this post with what you are doing!
Here are the trick or treat times for Milwaukee county:
Bayside: 2:30-5:30 p.m.
Brown Deer: 1-4 p.m.
Cudahy: 2-4 p.m.
Fox Point: 1-4 p.m.
Franklin: 4-7 p.m.
Glendale: 1-4 p.m.
Greendale: 1-4 p.m.
Greenfield: 4-7 p.m.
Hales Corners: 4-7 p.m.
Milwaukee: 1-4 p.m.
Oak Creek: 4-6 p.m.
River Hills: 1-4 p.m.
St. Francis: 4-7 p.m.
Shorewood: 3-5 p.m.
South Milwaukee: 2-4 p.m.
Wauwatosa: 1-4 p.m.
West Allis: 1-3 p.m.
West Milwaukee: 1-3 p.m.
Whitefish Bay: 4-6 p.m.
Friday, October 12, 2007
A Note On Lenders
In the past week I have had two clients ask me how many lenders I work with. It seems that many people think that a mortgage broker who works with a ton of lenders is more qualified to help them than a broker who only works with a couple. While access to the right loan products is very important for me to effectively help you, my client, it is even more important that I know the products and underwriting guidelines and have a deep relationship with the lender who will ultimately be funding the mortgage.
I do have access to many, many lenders. However, I have deep relationships with just a few. Because of this, I have the ability to call my account executive or an underwriter directly--and even drive to their office to meet with them face to face. When you work with a True Mortgage Professional, you benefit not only from your relationship with that person, but also from the business relationships that professional has built over years of working with the same partners who all contribute to a smooth transaction.
The better question would be, "tell me about the relationship you have with the lender which you plan to use for my mortgage." After all, isn't your mortgage the one which is really important?
I do have access to many, many lenders. However, I have deep relationships with just a few. Because of this, I have the ability to call my account executive or an underwriter directly--and even drive to their office to meet with them face to face. When you work with a True Mortgage Professional, you benefit not only from your relationship with that person, but also from the business relationships that professional has built over years of working with the same partners who all contribute to a smooth transaction.
The better question would be, "tell me about the relationship you have with the lender which you plan to use for my mortgage." After all, isn't your mortgage the one which is really important?
Thursday, September 27, 2007
Giveaways!
"Who Else Wants an Opportunity to Win All Sorts of Prizes Just for Being a Valued Member of the KLM Mortgage Group Family?"
Here at KLM headquarters we all decided that it was time to start having some fun. The best part about it is YOU are going to receive all the benefits! Starting in September 2007 we will be giving away prizes each and every month as our way of showing our appreciation for all of your loyalty and support over the years. Prizes will include Starbuck's gift cards, Apple iPods, Local Area Restaurant Gift Certificates, including Joey Buona's and much much more. There will be two giveaways each month. The first will be a general drawing that all of you will be entered into just by being a valued KLM family member. The second drawing will be specifically for anyone who has a birthday in that month. Unfortunately, over the years some of our information for birthdays did not come with us. This is where you can help us so you can have a chance to win. Just enter your information below so we can update our records and make sure you get entered into all of the drawings you are eligible for.
Wednesday, September 19, 2007
Wisconsin Foreclosures
According to the latest statistics, there are three times as many foreclosures currently going on in Wisconsin as there were this time last year. This is a direct result of rate adjustments on the massive number of subprime mortgages placed in the last five years. If you or someone you know has a subprime mortgage and an upcoming rate adjustment is going to make it hard for you to make your payments, there are options. FHA has recently announced a new program which allows favorable refinance options for people who may not be able to afford their mortgage payment due to a rate adjustment.
Call me today to learn more at: 414.453.7620
Read more about the latest foreclosure statistics in this Business Journal article.
Call me today to learn more at: 414.453.7620
Read more about the latest foreclosure statistics in this Business Journal article.
Tuesday, August 28, 2007
Organize Your Life!
Many of my clients are experiencing an important life event--buying their first home, vacation home, or investment property, or downsizing to a condo after adult children have moved on. I don't know how many times I've heard a client say, "I just don't know how I'm ever going to get all my stuff organized for this move!"
Fortunately there is help available! Whether you are moving or just need some advice on how to best organize your kitchen, office, basement or garage, I suggest you check out Organized Transformations. They even offer a FREE 30 minute consultation. Take a look at their web site and give them a call. You will be glad you did!
Fortunately there is help available! Whether you are moving or just need some advice on how to best organize your kitchen, office, basement or garage, I suggest you check out Organized Transformations. They even offer a FREE 30 minute consultation. Take a look at their web site and give them a call. You will be glad you did!
Wednesday, August 15, 2007
Emergency Mortgage Market Update
Current State of Mortgage Financing...What's Going On?
Anyone watching or reading the financial news over the last few weeks has seen a lot of angst over the state of the mortgage industry. In fact, one of the larger lenders in the US, American Home Mortgage, was forced to shut down operations recently. But why? What is happening, what does all this mean to you and most importantly... what should you be doing do right now to make sure you are protected?
Here's the scoop.
Over the past several years, many loans were made to homeowners with somewhat non-traditional or "non-conforming" situations, be it a poor credit history, inability to document income, or any number of factors that do not fit within the traditional "box" for home loans. These loans are often called "Sub-Prime", or "Alt-A", meaning that they were somewhat riskier in nature than A credit, prime, or traditional loans. Another type of "non-conforming" home loan is one where the credit and income might be perfectly fine, but the loan amount is higher than $417K, which is the current maximum loan that can be done using pools of money from mortgage giants Fannie Mae (FNMA) and Freddie Mac (FHLMC). If the loan amount is more than $417k, it can certainly be done - it's called a "jumbo loan" - but the end money comes from private institutions, not from the large government sponsored entities of Fannie and Freddie.
Most non-conforming loan product rates popped significantly higher recently. Here's what happened.
Companies making Subprime or Alt-A loans will charge a premium for taking on these loans, because they know that traditionally, they might have a higher rate of default and delinquent payments within that risky pool. But lately, default and foreclosure has been on the rise - partly due to the fact that with credit tightening and a soft real estate market, many troubled homeowners are unable to refinance or sell in order to get out of trouble. So now, these lenders are demanding a much higher "risk premium" for taking on these pools of loans, as they see the rates of default are climbing higher.
But since institutions are purchasing pools of these loans from the lenders, sometimes months after the borrower has actually closed at a given rate, the increase to the risk premium means that the institutions buying these pools of loans are willing to pay less, and in this case less than the principle amount of the loans. Multiply that times thousands upon thousands of loans...and you have millions upon millions of dollars in loss for the company trying to sell the pool at a much lower price than they were expecting. This is called a "liquidity crisis", and is exactly what happened to American Home Mortgage, they simply got caught holding too many "hot potato" loans, forced to sell them at massive losses...and eventually they had to make the decision to close the doors and stop the bleeding.
Further, even when a lender is able to take some losses, they may be subject to a "margin call". This means that as their losses and risk premiums increase, the value of their loan portfolio decreases. As the value decreases, the credit lines that are secured by those portfolios begin to issue margin calls as the value of the asset that they are secured on is now diminished. This is exactly like margin calls in the Stock market. If you have a loan against a Stock that is losing value, you will get a "margin call" and need to pay down the loan, as the underlying Stock is losing too much value to be considered adequate collateral any longer. So for the big lenders, as their portfolio is losing value due to increased risk premiums and losses...the margin calls start coming in, and they are required to pay down their balances. In turn, this means that they have less availability to fund their new loans, which then exacerbates the problem.
In response to seeing this situation play out in the demise of American Home Mortgage, lenders of other non-conforming loan products increased their interest rates dramatically almost overnight to be better prepared - and likely over-prepared - for increased risk premiums down the road. Even though loans above $417K are not presently suffering from increased delinquencies like the Subprime and Alt-A loans are, these rates popped higher as well, because they are being purchased by smaller private entities that can't afford to take on any margin of risk.
What happens next? The major damage is probably already done, and the present situation will likely settle out over the coming year. Lenders will stop pulling products off the shelf, and the rates on products that have moved so significantly higher now should trend lower down the road as delinquency rates stabilize.
But here are a few important things YOU should do right now:
ONE: Even if you are not presently in the market for a home loan of any type, make sure that your credit standing is as solid as possible. Many people in the market for a home loan didn't expect they would have a need, and didn't plan in advance to ensure their credit would qualify them for the best possible financing. With no immediate need for a home loan, time is on your side... why don't we take a few minutes together and just make sure you are prepared, should a need arise down the road? Call or email me right away.
TWO: If you are in the market for a home loan, or know someone who is - understand that now is the time to be working with a real qualified professional who can keep you informed of changes in the market and get your loan funded quickly. Now is NOT the time to be playing the risky game of trying to scour the entire nation to find someone who promises to save you a paltry amount on costs, or deliver a rate that seems too good to be true.
Your home and your financing are just too important, and times have changed. I am here to help and advise during these volatile times - and would welcome calls from you, your friends, family, neighbors or coworkers.
Regards,Peter
Anyone watching or reading the financial news over the last few weeks has seen a lot of angst over the state of the mortgage industry. In fact, one of the larger lenders in the US, American Home Mortgage, was forced to shut down operations recently. But why? What is happening, what does all this mean to you and most importantly... what should you be doing do right now to make sure you are protected?
Here's the scoop.
Over the past several years, many loans were made to homeowners with somewhat non-traditional or "non-conforming" situations, be it a poor credit history, inability to document income, or any number of factors that do not fit within the traditional "box" for home loans. These loans are often called "Sub-Prime", or "Alt-A", meaning that they were somewhat riskier in nature than A credit, prime, or traditional loans. Another type of "non-conforming" home loan is one where the credit and income might be perfectly fine, but the loan amount is higher than $417K, which is the current maximum loan that can be done using pools of money from mortgage giants Fannie Mae (FNMA) and Freddie Mac (FHLMC). If the loan amount is more than $417k, it can certainly be done - it's called a "jumbo loan" - but the end money comes from private institutions, not from the large government sponsored entities of Fannie and Freddie.
Most non-conforming loan product rates popped significantly higher recently. Here's what happened.
Companies making Subprime or Alt-A loans will charge a premium for taking on these loans, because they know that traditionally, they might have a higher rate of default and delinquent payments within that risky pool. But lately, default and foreclosure has been on the rise - partly due to the fact that with credit tightening and a soft real estate market, many troubled homeowners are unable to refinance or sell in order to get out of trouble. So now, these lenders are demanding a much higher "risk premium" for taking on these pools of loans, as they see the rates of default are climbing higher.
But since institutions are purchasing pools of these loans from the lenders, sometimes months after the borrower has actually closed at a given rate, the increase to the risk premium means that the institutions buying these pools of loans are willing to pay less, and in this case less than the principle amount of the loans. Multiply that times thousands upon thousands of loans...and you have millions upon millions of dollars in loss for the company trying to sell the pool at a much lower price than they were expecting. This is called a "liquidity crisis", and is exactly what happened to American Home Mortgage, they simply got caught holding too many "hot potato" loans, forced to sell them at massive losses...and eventually they had to make the decision to close the doors and stop the bleeding.
Further, even when a lender is able to take some losses, they may be subject to a "margin call". This means that as their losses and risk premiums increase, the value of their loan portfolio decreases. As the value decreases, the credit lines that are secured by those portfolios begin to issue margin calls as the value of the asset that they are secured on is now diminished. This is exactly like margin calls in the Stock market. If you have a loan against a Stock that is losing value, you will get a "margin call" and need to pay down the loan, as the underlying Stock is losing too much value to be considered adequate collateral any longer. So for the big lenders, as their portfolio is losing value due to increased risk premiums and losses...the margin calls start coming in, and they are required to pay down their balances. In turn, this means that they have less availability to fund their new loans, which then exacerbates the problem.
In response to seeing this situation play out in the demise of American Home Mortgage, lenders of other non-conforming loan products increased their interest rates dramatically almost overnight to be better prepared - and likely over-prepared - for increased risk premiums down the road. Even though loans above $417K are not presently suffering from increased delinquencies like the Subprime and Alt-A loans are, these rates popped higher as well, because they are being purchased by smaller private entities that can't afford to take on any margin of risk.
What happens next? The major damage is probably already done, and the present situation will likely settle out over the coming year. Lenders will stop pulling products off the shelf, and the rates on products that have moved so significantly higher now should trend lower down the road as delinquency rates stabilize.
But here are a few important things YOU should do right now:
ONE: Even if you are not presently in the market for a home loan of any type, make sure that your credit standing is as solid as possible. Many people in the market for a home loan didn't expect they would have a need, and didn't plan in advance to ensure their credit would qualify them for the best possible financing. With no immediate need for a home loan, time is on your side... why don't we take a few minutes together and just make sure you are prepared, should a need arise down the road? Call or email me right away.
TWO: If you are in the market for a home loan, or know someone who is - understand that now is the time to be working with a real qualified professional who can keep you informed of changes in the market and get your loan funded quickly. Now is NOT the time to be playing the risky game of trying to scour the entire nation to find someone who promises to save you a paltry amount on costs, or deliver a rate that seems too good to be true.
Your home and your financing are just too important, and times have changed. I am here to help and advise during these volatile times - and would welcome calls from you, your friends, family, neighbors or coworkers.
Regards,Peter
Tuesday, August 14, 2007
What Is Going On?
The news seems to be dominated with stories about issues in the mortgage market these days. Foreclosures are up, subprime loans are more difficult to qualify for, and 100% financing requires more documentation and better credit.
What does this mean to you? It depends. In the last two weeks I have been working to stay on top of underwriting changes being announced by lenders. For home buyers with good credit and a down payment there is really no change in the mortgage products available. For clients with good credit and no down payment, we need to consider a single loan with mortgage insurance for two reasons--first, it may provide a lower monthly payment and income tax scenario, and second, if there is no accepted offer on a new home the loan products available may change between now and when you find your home. I try to cover all the possibilities early in the process so that there are no surprises.
Every borrower is different. If you would like to learn more about how the changing mortgage marketplace may affect you, call me today at 414.807.7277.
What does this mean to you? It depends. In the last two weeks I have been working to stay on top of underwriting changes being announced by lenders. For home buyers with good credit and a down payment there is really no change in the mortgage products available. For clients with good credit and no down payment, we need to consider a single loan with mortgage insurance for two reasons--first, it may provide a lower monthly payment and income tax scenario, and second, if there is no accepted offer on a new home the loan products available may change between now and when you find your home. I try to cover all the possibilities early in the process so that there are no surprises.
Every borrower is different. If you would like to learn more about how the changing mortgage marketplace may affect you, call me today at 414.807.7277.
Friday, July 20, 2007
Market Update
While the last two months have been a wild ride in the mortgage market the last week has been relatively stable. Rates on 30 year fixed mortgages are currently hovering in the 6.75%-6.875% range with no points. While a run in the stock market like the one experienced this week (the Dow closed at a record high) typically leads to a drop in the bond market and accordingly a rise in mortgage rates, we held steady based on the fact that economic indicators this week had only a minor impact on the bond market. While it may seem that rates are higher than they have been lately, 30 year fixed rates are still a little bit better than they were a year ago.
Today the stock market is slipping due to poor earnings reports for Google and Caterpillar and that means money is flowing into the bond market. Could it mean mortgage rates will improve in the next few days? Maybe!
As always, feel free to e-mail me at peter@mortgagemke.com or call 414.807.7277 if I can be of assistance to you.
Peter
Today the stock market is slipping due to poor earnings reports for Google and Caterpillar and that means money is flowing into the bond market. Could it mean mortgage rates will improve in the next few days? Maybe!
As always, feel free to e-mail me at peter@mortgagemke.com or call 414.807.7277 if I can be of assistance to you.
Peter
Monday, June 11, 2007
Market Instability
There has been lots of turmoil in the mortgage market over the last month, and the continued slide of mortgage bonds means the trend of higher interest rates will likely continue.
Last Thursday's drop in the bond market was the largest single day loss in over three years. Friday we saw a reaction to this with a bit of a bounce but this morning we are right back on the downward curve. There are some important economic reports coming out later this week with information on the status of our retail and manufacturing sectors. Even if we receive good news here on the home front international economics will make it tough for the market to find stability.
This puts a bit of pressure on people who have adjustable rate mortgages (ARM) coming up on an adjustment as 30 year fixed rates have gone up a bit. Nonetheless, it may still be the right move to refinance out of an ARM to ensure that 12 months down the road the rate on an ARM doesn't have the chance to get even worse. Remember, once you are my client, when rates improve enough, I will pay the majority of your closing costs!
Last Thursday's drop in the bond market was the largest single day loss in over three years. Friday we saw a reaction to this with a bit of a bounce but this morning we are right back on the downward curve. There are some important economic reports coming out later this week with information on the status of our retail and manufacturing sectors. Even if we receive good news here on the home front international economics will make it tough for the market to find stability.
This puts a bit of pressure on people who have adjustable rate mortgages (ARM) coming up on an adjustment as 30 year fixed rates have gone up a bit. Nonetheless, it may still be the right move to refinance out of an ARM to ensure that 12 months down the road the rate on an ARM doesn't have the chance to get even worse. Remember, once you are my client, when rates improve enough, I will pay the majority of your closing costs!
Friday, May 25, 2007
Have You Bought Firewood Recently?
The emerald ash borer, an invasive insect, may have made its way to Wisconsin. This insect kills Ash trees by eating the outer layer of wood under the bark. If you have bought firewood recently, there is a chance that it is harboring this insect, and you should read more HERE.
Tuesday, May 15, 2007
KLM Fore! Kids is Coming Up!
The second annual KLM Fore! Kids charity golf outing to benefit Children's Hospital of Wisconsin is coming up on June 22! Join me for an afternoon and evening of golf, fun, and fundraising for a great cause. We will be enjoying a shotgun start for this scramble format golf outing. Call or e-mail me today at 414.453.7620 or peter at klmmortgagegroup.com for info or visit our web site: http://www.klmmortgagegroup.com/golfouting
Monday, April 16, 2007
It's Almost Time...
To put away the shovels? I sure hope so! But, what I really meant to write about is April 17. Are your taxes filed? Did you get a refund? Are you aware of the tax benefits of owning rental properties? Landlording is not for everyone, but for those of us who work hard at it, it is financially rewarding. I have owned rental properties for over five years and serve on the board of directors for the Apartment Association of Southeastern Wisconsin. Call me today at 414.453.7620 to learn more about buying your first rental property!
Peter
Peter
Monday, March 26, 2007
Don't Be A Statistic!
A recent study predicts that 13% of the adjustable rate mortgages originated between 2004 and 2006 will result in foreclosure. That is pretty scary! If you have an adjustable rate mortgage, I'd like to offer you a FREE mortgage review. This entails meeting with me to review your mortgage documents, and a thorough review of the details of your mortgage, including a discussion of WHEN your rate will adjust, HOW MUCH it will adjust, and how this will change your PAYMENT. From there, we will consider when and if it would be appropriate to refinance your mortgage to make sure you don't get caught in a payment you can't afford.
Contact me by Friday, March 30 to take advantage of my Free Mortgage Review offer!
peter@mortgageMKE.com or 414.453.7620
Contact me by Friday, March 30 to take advantage of my Free Mortgage Review offer!
peter@mortgageMKE.com or 414.453.7620
Monday, March 05, 2007
Credit Scoring in Layman's Terms
The first thing I do when I meet with a new client is go through their credit report line by line. Here is the basics you need to know to make sure you have good credit!
There are five factors in credit scoring:
Types of credit: 10% A mix of credit is a good thing, but not very important in the grand scheme of things. Revolving credit (credit cards and retail credit cards) are fine if managed well. I recommend avoiding retail cards if possible. Better to have a few universally accepted credit cards than a bunch of retail cards to keep track of.
New credit: 10% Are you shopping for credit? If so, you represent a greater lending risk. Opening new credit cards shows that you plan on spending money soon. Not a good risk factor to a mortgage lender. Do not open new credit cards if you are buying a home or car soon, as it can have a direct impact on the loan product/rate you qualify for. It is acknowledged that shopping for a home loan or car loan may be important, and accordingly multiple credit pulls for a mortgage within a 14 day period count as one pull. Same goes for auto lending.
Length of credit history: 15% Generally speaking, the longer you have been using credit, the better your score can be. This factor considers both a.) the single oldest current account you have, and b.) the average age of your accounts. Think of it this way: The longer you have been using credit, the more chances you have had to prove yourself as responsible, or conversely, the more chances you have had to screw it up.
Amount owed: 30% Are you maxing out your credit cards? If so, you are a risky lending prospect. Do you have balances on a whole bunch of accounts? Same deal. A balance on an installment loan (cars, student loans) or a mortgage is fine. However, the best kind of revolving credit is old, currently open, and has a zero balance. If you do have a balance, try to keep it below 1/3 of the available amount.
Payment history: 35% Have you been on time with your payments? Three elements: Recency, frequency, and severity. In other words, how long has it been since you made a late payment, how often have you been late, and how late have you been? Late payments do have a significant impact on your score, but the longer it's been since your latest oops, the less impact it has on you.
As always, feel free to contact me with any questions at: Peter@MortgageMKE.com
There are five factors in credit scoring:
Types of credit: 10% A mix of credit is a good thing, but not very important in the grand scheme of things. Revolving credit (credit cards and retail credit cards) are fine if managed well. I recommend avoiding retail cards if possible. Better to have a few universally accepted credit cards than a bunch of retail cards to keep track of.
New credit: 10% Are you shopping for credit? If so, you represent a greater lending risk. Opening new credit cards shows that you plan on spending money soon. Not a good risk factor to a mortgage lender. Do not open new credit cards if you are buying a home or car soon, as it can have a direct impact on the loan product/rate you qualify for. It is acknowledged that shopping for a home loan or car loan may be important, and accordingly multiple credit pulls for a mortgage within a 14 day period count as one pull. Same goes for auto lending.
Length of credit history: 15% Generally speaking, the longer you have been using credit, the better your score can be. This factor considers both a.) the single oldest current account you have, and b.) the average age of your accounts. Think of it this way: The longer you have been using credit, the more chances you have had to prove yourself as responsible, or conversely, the more chances you have had to screw it up.
Amount owed: 30% Are you maxing out your credit cards? If so, you are a risky lending prospect. Do you have balances on a whole bunch of accounts? Same deal. A balance on an installment loan (cars, student loans) or a mortgage is fine. However, the best kind of revolving credit is old, currently open, and has a zero balance. If you do have a balance, try to keep it below 1/3 of the available amount.
Payment history: 35% Have you been on time with your payments? Three elements: Recency, frequency, and severity. In other words, how long has it been since you made a late payment, how often have you been late, and how late have you been? Late payments do have a significant impact on your score, but the longer it's been since your latest oops, the less impact it has on you.
As always, feel free to contact me with any questions at: Peter@MortgageMKE.com
Tuesday, February 13, 2007
Do You Know What Is On Your Credit Report?
The first thing I do when I meet with a new client is go through their credit report line by line. All of the information it contains is important. Your credit score is the most important piece of information in determining whether or not you qualify for the best mortgage financing available.
If you plan on buying or refinancing your home in the next 12 months, contact me today to learn how you can save thousands on mortgage interest! I'll share the credit scoring secrets I have learned by being an industry insider!
Call Peter at: 414.453.7620
E-Mail Peter at: peter@mortgageMKE.com
If you plan on buying or refinancing your home in the next 12 months, contact me today to learn how you can save thousands on mortgage interest! I'll share the credit scoring secrets I have learned by being an industry insider!
Call Peter at: 414.453.7620
E-Mail Peter at: peter@mortgageMKE.com
Mortgage Insurance Is Now Tax Deductible
As of January 1, 2007, private mortgage insurance (PMI) is deductible on your Federal tax return so long as your income is less than $100k. For people who are already paying PMI this is a great deal! For new clients it warrants a discussion.
Over the last few years there has been a clear advantage to avoiding PMI by limiting the amount of a first mortgage to 80% of the value of a home. We have accomplished this by placing two loans--a first for 80% and a second for anywhere between 5% and 20% of the value of the home, depending on how much cash a buyer has available to bring to closing. The advantage of doing so is twofold: lower monthly payment, and a higher tax deduction--mortgage interest is tax deductible, and PMI was not.
Now that PMI is tax deductible, it will be a better option than two loans for some borrowers. Because the monthly cost of PMI will vary based on credit score, amount of down payment, and type of property, for many borrowers a two loan package will still be the better option. However, is some cases, PMI will be the more cost effective option month after month--not to mention saving up to a few hundred dollars in closing costs by only closing one loan instead of two.
If you are in the market for a new home or a refinance, contact me to learn more about which option is best for you. If you are working with someone else and they haven't at least discussed this with you they are not a True Mortgage Professional. My job is to give you the information you need to make an educated decision. This includes discussing all of your options and empowering you to make a decision.
Call me today at: 414.453.7620
Over the last few years there has been a clear advantage to avoiding PMI by limiting the amount of a first mortgage to 80% of the value of a home. We have accomplished this by placing two loans--a first for 80% and a second for anywhere between 5% and 20% of the value of the home, depending on how much cash a buyer has available to bring to closing. The advantage of doing so is twofold: lower monthly payment, and a higher tax deduction--mortgage interest is tax deductible, and PMI was not.
Now that PMI is tax deductible, it will be a better option than two loans for some borrowers. Because the monthly cost of PMI will vary based on credit score, amount of down payment, and type of property, for many borrowers a two loan package will still be the better option. However, is some cases, PMI will be the more cost effective option month after month--not to mention saving up to a few hundred dollars in closing costs by only closing one loan instead of two.
If you are in the market for a new home or a refinance, contact me to learn more about which option is best for you. If you are working with someone else and they haven't at least discussed this with you they are not a True Mortgage Professional. My job is to give you the information you need to make an educated decision. This includes discussing all of your options and empowering you to make a decision.
Call me today at: 414.453.7620
Wednesday, January 17, 2007
Young Women Buying More Homes Than Young Men!
Interesting stat from the The National Association of Realtors (NAR):
"[Y]oung women in the 25-34-age bracket bought 1.76 million homes in the
period from July 2005 to June 2006, accounting for 22 percent of the market.
That's up from 14 percent a decade ago. The number of single men buying
homes stayed flat at 9 percent during the same period. "
"[Y]oung women in the 25-34-age bracket bought 1.76 million homes in the
period from July 2005 to June 2006, accounting for 22 percent of the market.
That's up from 14 percent a decade ago. The number of single men buying
homes stayed flat at 9 percent during the same period. "
I have certainly seen this to be true in my business.
Read more in a Realty Times article here.
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