The New Year – A New Plan or Just Insanity?

A new year brings a fresh start to both individuals and businesses. The first few weeks are generally spent solidifying goals and business plans formulated in late December, often consisting of achievement-oriented targets.  But sadly, far too many of these noble resolutions fail to be met.

Why?

As the saying goes, “people don’t plan to fail, they fail to plan.” Many people develop an overarching vision to transform their lives through education, career advancement, increased income or the perennial desire to lose weight.

The failure comes from a lack of planning to reach these goals.

As a loan originator, I could try to increase personal production by 30 percent. If I provided $10,000,000 in volume last year, that works out to $13,000,000 in 2012. So it’s time to roll up my sleeves and get to work. Sounds simple, right?

Not so fast …

What I am going to change to reach that goal?  If I work just as hard as last year, should I expect to make it?

Absolutely not.  As the saying goes, “the definition of insanity is doing the same thing twice and expecting different results.”

Thus, I need to develop a new plan, a step-by-step roadmap with a clear process-oriented understanding.  It’s not rocket science, but it must be applied to give you a fighting chance to reach your objective.

Unless you follow this basic principle, you will end up in the same place as last year, and you will fulfill the classic definition of insanity.

Here’s to a successful 2012 in all you do!

 

Guaranteed Home Mortgage is a Direct Lender licensed by the PA Dept. of Banking

Dan Ranck

Guaranteed Home Mortgage Company, Inc.

5513   Main Street East   Petersburg,PA 17520

Telephone 717-271-2400

Toll-Free 1-888-566-1795

Fax 1-888-275-8495

www.MyLancasterLender.com

dranck@ghmc.com

NMLS # 140989

“Gifting” Isn’t Just For The Holidays

This time of year, everyone seems focused on giving or receiving gifts.  In mortgage world, “gifting” occurs all year long.

When it comes to gifting for a home purchase, there are many more details to unwrap beyond a simple ribbon and paper.

First-time home buyers may find challenges in coming up with down payment money and closing costs.  Many of them may turn to relatives and fiends for a little help.

Although there are some mortgage programs available which require little or no money to buy a home, buyers can still expect to front some cash when making a home purchase.

Gifting is a process when homebuyers receive a cash gift for the purpose of purchasing a home with no expectations of repayment.  Generally speaking, a buyer cannot borrow funds for the down payment or closings costs associated with purchasing a home.

When using a gift as a down payment, it’s important that proper documentation is provided.  The process is called, “sourced and seasoned.”  This simply means that proof of where the funds came from will be required as well as proof the funds were gifted to the buyer and deposited in their bank account in a reasonable time period prior to the settlement date.  The gifting party will also need to sign a legal document stating the funds were given as a gift and that there is no expectation of repayment.

As a home buyer, it is important to disclose to your mortgage lender early in the process if any funds associated with your purchase transaction will be gifted.  As a mortgage professional, you may want to ask your client if any funds will be gifted.

Gifting is a great tool to help buyers who may be short of funds to become homeowners.  The key to utilizing this resource is full disclosure.  Any attempt to no disclose funds that are gifted could constitute mortgage fraud and may be punishable by law.

Following the proper guidelines for gifting can benefit home buyers during the holiday season and all year long.

Happy Holidays!

Have more questions?  Call me!

Guaranteed Home Mortgage is a Direct Lender licensed by the PA Dept. of Banking

 

Dan Ranck

Guaranteed Home Mortgage Company, Inc.

5513   Main Street

East   Petersburg,PA17520

Telephone 717-271-2400

Toll-Free 1-888-566-1795

Fax 1-888-275-8495

www.MyLancasterLender.com

dranck@ghmc.com

NMLS # 140989

Debt Has No Holiday

Thanksgiving, the unofficial start of the holiday season, is a few short weeks away.

Between Thanksgiving and December 31^st, most people become very time sensitive, and the response, “after the holidays,” is used to postpone many commitments.

I suppose some things can be delayed until after the holidays – painting the bathroom, cleaning out the basement and even starting that new diet.

What about refinancing your mortgage?  Answer: ABSOLUTELY NOT!

Waiting several weeks to paint your bathroom probably won’t impact you for the rest of your life, but a delay in a decision to move forward with a mortgage refinance can haunt you for the next 30 years.

Let’s run some numbers. If you currently finance a $200,000 mortgage balance at a 6% interest rate, your monthly payment is more than $1,200 per month.  Taking advantage of a current interest rate of 4.5% could reduce your payment by $185 per month.  A two-month delay in refinancing (until after the holidays) would require you to make two additional mortgage payments at a cost of about $2,400.  Even worse, if interest rates rise to a level comparable to your current rate of 6%, you would have missed out on a monthly savings of $185 – costing you as much as $60,000 over the next 30 years.

Most homeowners choose to refinance their mortgage for financial relief – either to lessen their monthly cash outlay with a lower interest rate or to eliminate debt with a consolidation loan.  Either way, it’s about eliminating or reducing debt, and debt has no holiday.

The time commitment to refinance a mortgage is minimal from a consumer perspective – most of the work is done by a mortgage professional,
so call one today, and you just may be able to get your refinance completed “before the holidays.”

Have more questions?

Call me!

Guaranteed Home Mortgage is a Direct Lender licensed by the PA Dept. of Banking

Dan Ranck

Guaranteed Home Mortgage Company, Inc.

5513 Main Street

East Petersburg, PA 17520

Telephone 717-271-2400

Toll-Free 1-888-566-1795

Fax 1-888-275-8495

www.MyLancasterLender.com

dranck@ghmc.com

NMLS # 140989

Fixed or Adjustable?

When borrowers are looking to refinance their current mortgage or even purchase a home, it’s important to consider all options.  With current 30-year fixed interest rates invthe 4% range, an adjustable rate mortgage can carry a rate in the high 2% to low 3% range.

So what’s the difference and what more do you need to know?

A “fixed” interest rate is just that – fixed – meaning it doesn’t change throughout the term of the loan. Fixed is considered a safe choice because the principal and interestvportion of the mortgage payment will remain unchanged through the entire term of the loan.  Although interest rates vary depending on market conditions, these loans do carry a higher interest rate than an adjustable rate mortgage.

An adjustable rate mortgage – also known as an ARM, can often offer an interest rate up to 2% less than a fixed rate mortgage.  With the rate reduction comes risk.  Borrowers who choose an ARM should have a full understanding of what risk is involved and that depending on market conditions, their principal & interest payment may increase in the future.  Although the rate can change, they generally remained fixed for a minimum period of time anywhere from 3-7 years depending on the program chosen. When deciding on an ARM, there are several disclosures that a borrower must sign indicating they fully understand that their payment may increase.

Depending on individual circumstances, an ARM can be a favorable choice for a borrower because of the lower interest rate.  If a borrower is in a “starter home” and plans on moving to another home in a few years, they can benefit from an adjustable mortgage by paying less interest and an opportunity to build equity faster.

A current homeowner looking for payment relief may find a benefit in an ARM as well.  With a current interest rate of 6%, there would be a payment reduction with a refinance into a new 30 year at a rate of 4.25%; however the payment reduction would be even greater with an adjustable mortgage and a rate of 2.75%.

Speak to a licensed mortgage originator – they can help you decide which type of program best fits your needs.  All programs are subject to qualification and not all borrowers will qualify.

Have more questions?

Call me!

Guaranteed Home Mortgage is a Direct Lender licensed by the PA Dept. of Banking

Dan Ranck

Guaranteed Home Mortgage Company, Inc.

5513 Main Street

East Petersburg, PA 17520

Telephone 717-271-2400

Toll-Free 1-888-566-1795

Fax 1-888-275-8495

www.MyLancasterLender.com

dranck@ghmc.com

NMLS # 140989

Getting Away With It

They are everywhere – new home communities with builders
offering great incentives – below market interest rates, purchase discounts,
$20,000 worth of upgrades, $5,000 towards closing costs, etc., etc., etc.

However, these incentives usually include a fine-print
requirement to utilize the builder’s preferred mortgage lender and Settlement
Company. A “one-stop shop” may sound ideal to a buyer, but it may not provide
the most cost-effective method for purchasing a home.

These builders may also be breaking the law. The Real Estate
Settlement Procedures Act (RESPA), a consumer protection statute first passed
in 1974, was designed to protect consumers from kickbacks and referral fees
when shopping for mortgages and settlement services.

So, builders who require a buyer to use their preferred
service providers to obtain specific benefits seem to be violating RESPA. So
how are they getting away with it? No one really knows.

In my opinion, buyers considering home communities with
qualified incentives should first find their own real estate agent with strong
negotiation skills. The agent may be able to fight for you to receive the same
benefits while choosing your own mortgage lender and Settlement Company.

Additionally, avoid visiting these new home communities and
signing in with the agent on duty. The sign-in form often contains legal
verbiage requiring you to use that agent for buyer representation as well.
Although dual agency, a single agent representing both the buyer and seller,
can be legal, it’s like going into a courtroom with the same attorney for the
prosecution and defense.

Forewarned is forearmed. With the knowledge above, you can
outmaneuver builders attempting unfair purchase practices and even borderline
RESPA violations.

Have more questions?

Call me!

Guaranteed Home Mortgage is a Direct Lender licensed by the PA Dept. of Banking

 

Dan Ranck

Guaranteed Home Mortgage Company, Inc.

5513 Main Street

East Petersburg, PA 17520

Telephone 717-271-2400

Toll-Free 1-888-566-1795

Fax 1-888-275-8495

www.MyLancasterLender.com

dranck@ghmc.com

NMLS # 140989

Proceed With Caution

The Internet has become a powerful tool for homebuyers. Type in “[your city & state] homes for sale” in Google, and the list of website resources verges on the infinite.

This information overload can become quite confusing to a buyer.

With tons of real estate websites out there, how do you winnow them down? Proceed with caution because many of these sites contain hidden agendas.

If you go to a random site, begin searching for homes and find one you like, you may be required to click on a button to “get more info.” After you
register with your name and email, expecting to see an address or more pictures of the home, wham, a screen appears with a cryptic message, “Thank you for your interest. A real estate professional will contact you shortly.”

What just happened? Well, you took the bait, and your name and email address are now being disseminated on the Internet superhighway. What’s next? Your inbox will be filled with message from real estate agents, mortgage
lenders and a variety of other individuals who purchased your contact information as a lead.

Many of these websites provide nothing more than a marketing portal to collect and sell consumers’ records to a lot more people than just real estate agents.

Using the Internet for research can help buyers compare prices and determine availability; however, a real estate agent offers much more. Real estate agents use a secure service called MLS for a complete profile of homes for sale within
any given region. This service protects your contact information from distribution on the open market.

If you do decide to take matters into your own hands, proceed with caution and keep your contact information confidential. Take notes on attractive properties and share the information with a real estate agent who will provide you with a more complete picture.

Have more questions?

Call me!

Guaranteed Home Mortgage is a Direct Lender licensed by the PA Dept. of Banking

Dan Ranck

Guaranteed Home Mortgage Company, Inc.

5513 Main Street

East Petersburg, PA 17520

Telephone 717-271-2400

Toll-Free 1-888-566-1795

Fax 1-888-275-8495

www.DanRanck.com

dranck@ghmc.com

NMLS # 140989

Six Myths About Short Sales

A short sale can provide a great solution for homeowners who must sell
and owe more on their homes than they are worth. Unfortunately, myths about
short sales abound, and you must understand the facts before proceeding.

Myth #1: The Bank Would Rather Foreclose than Bother with a Short Sale

Banks prefer to avoid foreclosures because the process is costly. If a
person is qualified for a short sale, the deal most likely would be considered.
Some of the qualifications for a short sale include financial hardship and
over-equity situations.

Myth #2: You Must Be Behind on Your Mortgage to Negotiate a Short Sale

Not necessarily the case. If you meet any of the criteria mentioned
above, a short sale may provide your best option. Avoid waiting until you fall
behind on your mortgage because that could create additional complications.

Myth #3: There is Not Enough Time to Negotiate a Short Sale Before My
Foreclosure

This fallacy probably hurts homeowners the most. Foreclosure is a process,
and there is often time to achieve a better outcome.

Myth #4: Listing My Home as a Short Sale is an Embarrassment

In today’s challenging real estate market, about 15-to-20 percent of
American homeowners are underwater. Taking remedial action is nothing to be
embarrassed about.

Myth #5: Short Sales are Impossible and Never Get Approved

Although short sales do require a process, they are often feasible.

Myth #6: Buyers are Not Interested in Short Sale Properties

Many agents have buyers who are only interested in foreclosure and
short-sale properties, often just to get a bargain.

You can learn more about Short Sale Myths and realities by
consulting with mortgage and real estate professionals for expert advice,
whether you’re a buyer or a seller.

 

Have more questions?

Call me!

Guaranteed Home Mortgage is a Direct Lender licensed by the
PA Dept. of Banking

Dan Ranck

Guaranteed Home Mortgage Company, Inc.

5513 Main Street

East Petersburg, PA 17520

Telephone 717-271-2400

Toll-Free 1-888-566-1795

Fax 1-888-275-8495

www.MyLancasterLender.com

dranck@ghmc.com

NMLS # 140989

FHA….Up, Up, but not yet Away

FHA mortgages have been powering the home-buying market with about 56% of mortgages for home purchases in 2010, up from a mere 6% back in 2007.  Many borrowers are flocking to FHA financing due to the lower down-payment requirements of only 3.5%.

Because of this increase, the FHA’s capital reserves must be boosted as well, and that means higher costs for the borrower.

Effective April 2011, monthly mortgage insurance premium (MIP) increased approximately 28% for all new FHA loans. On a $200,000 loan, this equates to about $42 per month or just a little more than $500 per year.

Does this all sound familiar?  It should. Just eight months ago, the monthly MIP increased a whopping 64%.  In September 2010, a $200,000 FHA mortgage would have corresponded to a monthly MIP of about $92.00, compared to the approximate $192.00 with the current monthly MIP cost.  That’s a whopping 108% increase!

While the FHA is generally preferred for many homebuyers, borrowers with higher credit scores should consider conventional financing.  With a 10% down-payment on a conventional mortgage of $200,000, the monthly private mortgage insurance (PMI) would cost about $103 per month, a savings of more than $1,000 per year compared to the FHA. Additionally, the conventional mortgage avoids an up-front MIP of 1% from the FHA – another $2,000 savings.

With these constant changes in mortgage programs, you should consult with an experienced loan originator to compare different options and help select the best program for you. The right choice six months ago may not be the best today.

 

Have more questions?
Call me!

 

Guaranteed Home Mortgage is a Direct Lender licensed by the PA Dept. of Banking

Dan Ranck

Guaranteed Home Mortgage Company, Inc.

5513 Main Street

East Petersburg, PA 17520

Telephone 717-271-2400

Toll-Free 1-888-566-1795

Fax 1-888-275-8495

www.MyLancasterLender.com

dranck@ghmc.com

NMLS # 140989

One-Stop Shop – Yes or No?

Big retailers are emerging to become one-stop shops for many consumer needs. The stand-alone department and grocery stores, auto service centers and more can now be found under one roof.

There is something to be said for the convenience of getting your car serviced while you’re shopping for groceries or new shoes for the kids, but when it comes to mortgage services, the one-stop shop may leave something to be desired.

Currently, many larger real estate offices offer their own in-house lender for homebuyers. Shuffling down the hall to meet with a lender may seem convenient, but it violates RESPA to force a borrower to use a specific mortgage lender, especially when one-stop shop firms offer preferential recognition to agents consistently using their services. Of course, referring a client to an in-house lender is allowed as long as recommendations to other ones are provided as well.

You should consider factors other than just convenience when deciding what lender to use for your mortgage transaction including cost, interest rates and fees. In many cases, independent mortgage lenders may be more competitively priced since they work with various real estate agents. Intangibles such as personality, level of service and efficiency should be evaluated as well.

If you are looking for referrals for a mortgage lender, and your real estate agent is pushing an in-house source, you may want to think about finding another agent, as well as beginning your own search, since it would seem the focus on the one-stop shop is superseding your best interests.

Have more questions?  Call me!

Guaranteed Home Mortgage is a Direct Lender licensed by the PA Dept. of Banking

Dan Ranck

Guaranteed Home Mortgage Company, Inc.

5513 Main Street

East Petersburg,PA17520

Telephone 717-271-2400

Toll-Free 1-888-566-1795

Fax 1-888-275-8495

www.DanRanck.com

dranck@ghmc.com

NMLS # 140989

Short Sales – A “Short” Story

A former client emailed the following question:

“If a homeowner sells for $125,000, and the amount owed is $135,000, does the monthly mortgage bill go down, or does it remain the same until the full amount is paid?”

Wow, where to begin?

The nebulous world of short sales is filled with unanswered questions. Ultimately, the lack of a standard set of rules or guidelines makes every situation different. And that leaves many people without a clue, especially those with “underwater” homes who need to sell.

So regarding the email above, I responded by noting all liens/mortgages on the property must be satisfied and released before it can be sold. In that particular situation, the correct answer is none of the above. 

When a property is sold for less than the amount owed, it’s called a short sale. A short sale is generally negotiated with the current mortgage holder before a property can be sold. The terms of a short sale can vary in many ways. 

Sometimes, the bank holding the current mortgage will simply agree to accept a lesser amount and forgive the difference. However, the bank will first consider the current market value of the home, the mortgage balance and any fees or commissions in the sales transaction.

In other short sales, the seller may bridge the gap between the sales price and the mortgage balance though a lump-sum settlement or an ongoing payment plan. Once again, the bank and the seller must agree to all terms.

In today’s real estate market, short sales are occurring more frequently. The process requires an understanding of the options and their impact upon all parties. In some cases, sellers may benefit from hiring an attorney to protect their rights.

Have more questions?  Call me!

Guaranteed Home Mortgage is a Direct Lender licensed by the PA Dept. of Banking

Dan Ranck

Guaranteed Home Mortgage Company, Inc.

5513 Main Street

East Petersburg,PA17520

Telephone 717-271-2400

Toll-Free 1-888-566-1795

Fax 1-888-275-8495

www.DanRanck.com

dranck@ghmc.com

NMLS # 140989