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27
APR
2017

The Right Score: Special Real Estate Report

Score Models Vary

Score Models Vary

When is your “credit score” irrelevant in buying a house or refinancing a home loan? A new federal legal settlement with a major credit bureau has the answer: The only score that matters is the one your lender uses to evaluate you, not some random score you got on a website. All the others you might buy or see — there are dozens of them hawked on the Internet — may be interesting, but they won’t affect the interest rates you’re quoted, the fees you’re charged or whether your application gets approved or rejected.

The new legal settlement from the Consumer Financial Protection Bureau alleges that Experian, one of the big three credit reporting bureaus, “deceptively marketed credit scores to consumers by misrepresenting” them as “the same” as what their lender would use in determining whether and on what terms to offer them a loan. Experian’s promotions appeared on third-party websites, banner and display ads, direct mailings and sites such as AnnualCreditReport.com.

Which brings us back to home loans. If you’re like many home buyers and owners, you’ve seen online pitches and ordered your scores, often free. They may have come with tie-ins to credit card offers or credit monitoring and identity theft protection services. One site may have said your score is 788, ranking you as “excellent” on their scale. Then you apply to a lender for a preapproval and get the sobering news: Your middle FICO score — lenders usually pull scores from all three bureaus — is a 716, and that’s what we’ve got to use to price your loan. The score is okay, but it’s 85 points below where you thought you were, and below the cutoff point for the best interest rates and terms.

The FICO score your lender pulls for your application may not be the same as the score your credit card company might be sending you every month online. Or, perplexingly, it might even be different from the FICO score you get on MyFICO.com. That’s because FICO has introduced multiple models over the years, each with what the company describes as consumer-friendly improvements. The latest is FICO 9. The most widely used is FICO 8. The bottom line? Never depend on generic scores available online as part of your home financing planning process.

Source: Ken Harney, The Nation’s Housing

Want to know your right score?  Contact us and we will run a mortgage credit report for you.

26
APR
2017

McLean Mortgage Corporation Ranked #6 on “The List” in the Washington Business Journal

Washington Business Journal

The Washington Business Journal has released the 2016 ranking of leading home mortgage lenders serving Washington, DC. This list ranks all residential mortgage lenders by loan volume within the Washington, DC metropolitan area.

McLean Mortgage Corporation was ranked #6 on “The List” with a home loan volume just shy of $1.7 Billion. “This speaks volumes about what we have been able to accomplish in the nine years we’ve been in business,” commented company CEO Pat Peavley. “Our people and our culture will continue to be our guiding light as we move to grow and expand our footprint helping more and more people realize the American dream of home ownership.” Peavley also thanked all employees for their hard work and dedication in his announcement to the company.

 

ashington Business Journal

25
APR
2017

Changes in Loan Ownership

Changes in Loan Ownership

Changes in Loan Ownership

Nicki Long’s questions were simple and straightforward:

“Who owns my loan?” the single woman asked. “Why is it such a big secret when you try to find out?”

Mortgage banking is no longer the simple business it was 20 years ago – even eight years ago. Your monthly mortgage payment could be going to a foreign investor, a huge pension fund or the local bank vault depending on whether the original lender has sold your mortgage.

To complicate matters, your loan has a servicing component – billing, preparation of coupon books, statements – that is often sold separately. There also are lenders who sell the loan and retain the servicing.

In Long’s case, her loan was sold in the secondary mortgage market and its servicing rights were sold several times. Add in bank mergers and buyouts and her loan trail becomes a dizzying maze of new names and addresses.

Many of the agencies servicing her loan had no idea what institution, or fund, actually held the loan itself.

If you call your lender, don’t be surprised to discover you’ve reached the company that only “services” your loan. Sometimes the servicer knows the holder of the loan and will not tell you. But the information is public record and should be recorded. Go to the tax assessor’s website or visit the office at the county courthouse. Locate your home by its tax number and then check “Beneficiary” followed by “Assigned To.”

The loan, or at least its servicing, will be listed under one of those headings.

Some lenders say they attempt to explain to the borrower at closing that the loan and servicing could be sold, but the message is not sinking in.

Borrowers still expect to deal with the lender whose name is at the top of their loan paperwork. Changing hands can create confusion and anxiety, especially when the servicing is sold separately.

The chief argument against allowing lenders to sell loan-servicing contracts is that some lenders would go broke without the servicing fees. If this is true, the mortgage banking industry should go out of its way to inform borrowers they could be dealing with an unfamiliar – and most likely out-of-state – lender when they sign for a loan.

What is this servicing worth to a lender? On a $100,000 loan, the servicing contract can be worth about $450. When a group of contracts is sold, large amounts of money can change hands.

Not all lenders sell their mortgage loans. Commercial banks, savings and loans, credit unions and other institutions that keep home loans are called “portfolio” lenders.

Most lenders are now non-portfolio lenders. They sell mortgages to the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corp. (Freddie Mac). These agencies package mortgages and then sell shares in the packages (similar to mutual funds) to individual investors or big financial institutions. The pooling of these mortgages can be compared to a mutual fund with big and small players buying shares.

There is nothing wrong with selling home loans in the secondary market. It is a very efficient way of creating more mortgage money. But once individual loans reach these huge conduits, they are nearly impossible to find. And ultimately, it makes little difference to the borrower who owns the loan.

The one exception is if the borrower wants to refinance the loan, or modify the interest rate, which is a booming business at the moment.

Portfolio lenders are often able to change the terms of a loan at a reduced fee because it is still in their possession. But even this is not always the case because portfolio lenders might sell a particular loan into the secondary market to earn money for a special need.

When a loan is sold in the secondary market, the original lender releases control and usually any flexibility to change the terms of the loan.

So be prepared. If you are refinancing or buying a home, ask your lender if the loan and/or its servicing will be sold. The loan probably will be, but you should know if the servicing will change.

That way, you won’t be surprised when you are asked to send your checks to a different place.

Source: The Spokesman Review

24
APR
2017

They Are Back: The Weekly Market Update

Funding Deadline

Funding Deadline

Congress is back in session. Not that we are 100% sure that anyone missed them, but certainly there is some unfinished business on the table. For the past few weeks, international news has dominated the markets. Syria, Afghanistan, North Korea and Russia have led this domination, and certainly these world conflicts have influenced the markets — including stocks, bonds, energy prices and the price of gold.

This is not to say that domestic issues have fallen off the map, but when Congress is not in town, there will not be news of legislative progress or failures in the headlines. Now that Congress is back, there will be issues that need to be addressed on the domestic side, in addition to Congressional activity on international issues. One domestic issue hits this very week. This Friday, the stopgap funding bill for the operation of the Federal Government expires. Could we see a government shutdown?

Most political analysts predict that a shutdown will not take place. However, it is normal for the agreement to come at the last possible hour. And international issues may complicate the agreement with budget requests in place to increase defense spending with a lack of immediate corresponding cuts in domestic programs. While these issues are usually resolved before the government is shut down for anything but a minimal length of time, there is the potential for fireworks and saber-rattling. And if the government does shut down for a few days, could next week’s meeting of the Federal Reserve Board’s Open Market Committee be delayed? Always an interesting time in Washington.

The Weekly Market Update

Rates on 30-year fixed loans fell below the 4.0% mark this past week for the first time this year. For the week ending April 20, Freddie Mac announced that 30-year fixed rates fell to 3.97% from 4.08% the week before. The average for 15-year loans decreased to 3.23%, and the average for five-year adjustables moved down to 3.10%. A year ago, 30-year fixed rates averaged 3.59%.

Attributed to Sean Becketti, chief economist, Freddie Mac — “The rate on 30-year loans fell 11 basis points this week to 3.97%, dropping below the psychologically-important 4.0% level for the first time since November. Weak economic data and growing international tensions are driving investors out of riskier sectors and into Treasury securities. This shift in investment sentiment has propelled rates lower.”

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

20
APR
2017

Keys To Choosing a Lender: Special Real Estate Report

Keys To Choosing a Lender

Many Do Not Call Back

J.D. Power has found that 21 percent of homebuyers regret their choice of a lender. That in itself is regrettable. But this significant minority might have been able to avoid many of their issues if they had been more careful in picking who they worked with for financing in the first place. Whether dealing with a loan officer who works for a lender that actually funds its own loans, or a broker who works for himself and deals with more than one lender, you should expect him to be responsive, according to the Consumer Financial Protection Bureau, the federal watchdog agency that grew out of the recent financial crisis. Being responsive is a key trait.

But according to a recent survey of some 800 companies by Insellerate, a provider of support services for the marketing and sale of home loans, it took an average of 12 hours for loan officers to answer a client’s query. But that’s just among those who responded. A whopping 57 percent never responded at all, the survey found. And 60 percent of those who did respond failed to follow up with a second call. You also should be provided with a clear analysis of the different loan options that are available, along with an understanding of how they impact you financially, both initially and over time. Even more importantly, you should expect that the choices be explained in a way you can understand.

Choosing a home loan is possibly the biggest financial decision you will ever make, so if you ask for a simple explanation and you don’t get it, ask again and again until you are certain you understand. It’s also wise to make sure what you choose is suitable to your lifestyle and financial picture. Many loan officers qualify people for the biggest loan they can afford. But while there’s nothing wrong with that, you may not be comfortable forking over that amount every month. On the flip side, if you fail to send a piece of requested information, you should expect the officer to hound you for it, or at least be persistent in asking for exactly what the underwriters need to approve your loan.

Source: The Housing Scene, Lou Sichelman

Note: These findings emphasize the importance of working with an expert mortgage advisor and a reputable company to help you with one of the most important financial decisions you will be making. 

19
APR
2017

Getting Married? Time to Pop the Second Big Question

Fall Real Estate Season Begins

Getting Married? Time to Pop the Second Big Question

We all know about popping the big question. If you are planning your wedding, it means you have moved past that stage.  There are a multitude of details to consider when planning a wedding and setting up a new life.  And there is nothing more important than the second big question:

Should we purchase or rent our first home?

The truth is that many who are getting married are already homeowners and thus there are variations to this question.  In this article we will start with the most basic of questions – renting vs. owning — and then move to additional housing questions that newlyweds face.

Purchasing or renting?  There is no doubt that most couples aspire to own a home in the long run. Home ownership is considered the American Dream because it brings so many advantages to the table.  Here are just some of the economic and social advantages of owning.

  • Economic Advantages. Owning has always been the number one way to build wealth in America.  The Federal Reserve Board has estimated that home owners have over ten times the average net worth of renters.  Why?  For one, all of your rent payment goes into the pocket of your landlord, while part of your mortgage payment goes to pay off what you owe, which enables you to build equity every month.  A home also will typically go up in value over time and provide a tax deduction and inflation protection, while rent does not provide ownership of any asset nor any tax deduction.
  • Social Advantages. Owning provides security for your family, as you don’t have a landlord who can tell you to move and the stability means that you are part of a community which provides lasting relationships.  Neighborhoods of owners tend to be safer and provide better lifestyles to raise a family.  Plus, you have the freedom of choice with regards to improving your property and this can mean anything from a swing set in the backyard to painting a nursery for your first child.

Seeing the advantages, does this mean that everyone should go out and purchase a home right after the wedding or even beforehand? While many do make this decision, it does not mean that home ownership is right for everyone.  Here are a few more questions you must ask yourself before you can determine if purchasing a home should be a first step in your new life:

  • Are you staying local? If you think you might be moving out of town in the near future, then homeownership probably does not make sense because owning is a long-term proposition.
  • How are your finances? Are you starting married life with a lot of debt and a low credit score. It will make much more sense for you to pare down your debt first before you move to purchase a home.
  • Do you have savings? Savings is not only important for a down payment. Cash reserves are very important for emergencies as well.  Down payment requirements can vary significantly. For example, if one of you is active military or a veteran, you likely can take advantage of the VA’s no down payment mortgage option.  There are many other options which exist to lower the down payment required and working with a lender before you start house hunting makes all the sense in the world in this regard.

Speaking of the down payment, it is not unusual for some who are getting married to cut back the cost of their weddings and/or honeymoons and use more of their cash gifts to help them move closer to being able to purchase a home.

What if one of us (or both) already own a home?

Especially with many couples getting married later in life, it is more likely for one or both of the newlyweds to own a home. In this case, the renting question typically gets thrown out the window and other questions might arise.  For example, if one spouse is renting and the other owns, then one would expect that both would move into the house owned by that spouse.  On the other hand, what if both own a home?

  • The newlyweds could move into one home and sell the other. Which house is kept might be determined by location, lifestyle and finances, such as how much equity is in the home.
  • The newlyweds could move into one home and rent out the other. This action might be an option if the home you chose not to live in has no equity. As the renter pays your mortgage over time, you will be gaining equity in the long-run.
  • The newlyweds could sell both home and trade up for a larger home. If children are expected in the near future, purchasing a larger home may be the right choice.

Again, there are a multitude of factors to consider with regard to all of these choices. This is why it makes sense, not only for newlyweds to have a wedding advisor, but also a financial advisor, real estate expert and mortgage advisor on their team.

18
APR
2017

Planning for a Successful Relocation

Planning for a Successful Relocation

Planning for a Successful Relocation

Relocating is always a stressful time for individuals and families. Change is always difficult and it is important to understand that planning can help minimize the stress and interruption of a geographic relocation. There is not one, but many choices you will face and the more educated you are regarding the options and more organized you can be in assessing the information, the smoother the transition will be.

The first goal of any relocation would be to align yourself with experts. Those helping you must not only be experts in their field, but they also should be experts at helping relocatees. Not everyone is equipped to help you from afar. It takes patience, anticipation, technology and knowledge to be qualified as an expert in this area.

Again, there are a multitude of decisions you will have to make which cover an even larger multitude of options. Here are just some of the questions you should be considering…

Will you be renting or purchasing in the new area? This is the most important question you will answer and the answer will in many ways affect the other questions and answers that you will face. Here are other questions which arise from the answer to this question. Within this article, we will assume your goal is to purchase; however, if you are renting some of the same concerns will apply.

  • Do you own a home in your present area and are you going to sell or rent that home?
  • Will you have eligibility for any special financing such as VA as a veteran or active military?
  • What is your time frame for purchasing? For example, perhaps you must sell your present home first.
  • Have you been fully approved by a lender for your new purchase? A pre-approval is defined as a review by a qualified underwriter, not a loan officer opinion letter. The lender will fully vet your cash assets, credit situation and income so you can narrow down your financial choices with regard to your new home. Nothing wastes more time than looking at houses for which you may not qualify. And a full pre-approval will give you negotiating power with regard to the home you will be trying to purchase.
  • Exactly where will you be working? You must assess what kind of housing is available in that immediate area. The proximity from your job to your home may affect everything from the cost of housing to the type of traffic you will face.

What kind of hours will you be working? This might affect whether or not you can rely on public transportation to get to and from work and how far from your job you should consider living.

What is your timeframe for moving? Are you moving quickly or planning ahead for a move sometime in the future? Of course, it always helps to have more time because this gives you more time to explore your options and make better decisions, but in today’s world, sometimes you can’t plan ahead with changes in jobs.

What type of housing do you prefer? Most buyers — especially those with families — would prefer a single family home with a yard. However, in some areas the cost of housing may preclude your first preference, unless you are willing to undertake a longer commute. All decisions come with trade-offs, but it is important to start with your ideals and work from there. Within your choice, there will be several sub-choices as well– from size of the lot to how many bedrooms you need for your family. Do you need a garage and how many cars should it be able to accommodate?

Do you have children, what ages are they and do any of them have special needs? Some school systems are better than others in general and certainly some are better at providing support for children with special needs. What other facilities are important–such as athletics or religious institutions?

Do you have time for a house hunting trip before you relocate? If so, how much time will you be able to allocate? This will allow you to meet with local professionals and your Realtor can plan your activities, including what homes you will be able to see in person as well as areas you can tour.

Do you have access to on-line video technology? This will help if your real estate professional has the ability to help you tour properties “remotely.” This is a great time-saving factor if you don’t have time for a visit or the visit more productive because you can narrow down choices.

Has your real estate and/or mortgage professional put together a relocation package? A package which covers information on the market area and conditions, schools, vendors and more will be very helpful in the planning process.

In general, we would like to quote an important adage–Success is not an Accident. The proper planning of a move will make all the difference in the world with regard to making the move more successful. Selecting the right professionals to help you will be the most important first step.

17
APR
2017

World Events Dominate: The Weekly Market Update

World Events Dominate: The Weekly Market Update

A Stark Reminder

Actually, we have had a few stark reminders recently. The most recent was the escalation of our engagement in Syria and another, a show of force near the Korean peninsula. Since the election, much of America’s attention has been focused upon domestic issues such as the health care bill, a nomination to the Supreme Court, budgets and more. But now we are reminded that the world is connected. Connected not only in our fight against terrorism, but also the economics. From Brexit, to a devastating tsunami on the other side of the world, we have been constantly reminded as to how events in one part of the world can affect our part of the world — both good and bad.

Some of these reminders reside on our domestic side as well. Not long after the first attempt at “re-reforming health care reform,” we now face a late April showdown which could result in a shutdown of the Federal government. While we are not predicting that this necessarily will happen, it is a reminder of the way Washington works — contentiously and slowly. This is especially true when major changes are proposed.

How does this affect us? We have talked about the surge of confidence that America has experienced in the past several months. It would be natural for this confidence to wane somewhat, as the processes move forward slowly. While this may slow down economic growth a tad, it also gives us the benefit of slowing down the rise in interest rates that market analysts have been predicting. Lower rates would help boost the economy and hopefully offset the cooling off of enthusiasm. While we can’t predict the path of rates or the economy, it does not hurt to gain some perspective as to the possibilities, especially when we get hit with news of world and domestic events.

The Weekly Market Update

Rates fell slightly to their lowest levels of the year last week. For the week ending April 13, Freddie Mac announced that 30-year fixed rates fell to 4.08% from 4.10% the week before. The average for 15-year loans decreased to 3.34%, and the average for five-year adjustables moved down slightly to 3.18%. A year ago, 30-year fixed rates averaged 3.58%.

Attributed to Sean Becketti, chief economist, Freddie Mac — “Following a weak March jobs report, the 10-year Treasury yield dropped about 5 basis points. The rate on 30-year fixed loans fell 2 basis points to 4.08 percent. Not only did the average decline for the fourth consecutive week in our survey, it also fell to a new 2017 low.”

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

13
APR
2017

Homeowners Using Their Equity: Special Real Estate Report

Homeowners Using Their Equity

Remodeling In Favor

Homeowners are opening their favorite piggy bank again — their homes. As home values rise faster than expected, that increased homeowner wealth suddenly seems more enticing. It’s showing up in big remodeling growth. Ever since the financial crisis at the end of the last decade, homeowners have been extremely conservative with their home equity. Even those who had money in their homes kept it there. Now, as millions of borrowers come up from underwater on their home loans and many more see their home values jump sizeably on paper, borrowing more is back in favor.

Home equity lines of credit, known as HELOCs and often serving as second loans, allow homeowners to pull cash out of their homes when they need it. HELOC volume is now up 21 percent in the past two years, to the highest level since 2008, according to Moody’s. It is still nowhere near its housing boom level, when many people treated their homes like ATMs, but the trajectory is definitely pointing higher. Borrowers are also putting smaller down payments on home loans now, starting with less home equity either to save cash or because they can’t afford anything more. To put it in perspective, before the last housing boom, the median down payment was just over 7 percent. It then dropped to 3 percent during the height of the boom, as lenders offered all kinds of “creative” loan products that required little to no down payment. After the crash, down payments rose back above 7 percent again during the recovery. At the end of 2016, the median down payment had fallen to 6 percent, according to ATTOM Data Solutions, and it appears to be headed lower, as lenders offer more low down-payment products.

Homeowners are clearly leaning toward more leverage, but they are doing so in a far different environment than in 2006. Underwriting is stricter, especially for home equity loans, and borrowers must prove their ability to repay loans, including all financial documentation. Home equity continues to rise steadily, according to the Federal Reserve Board, and it is still rising faster than borrowers are withdrawing it.

Source: CNBC

Interested in using your equity to remodel, payoff debt or for investment purposes? Contact Us.

12
APR
2017

Presenting A Lead To A Partner

Presenting A Lead To A Partner

Presenting A Lead To A Partner

Many sales trainers will tell you that the key to obtaining more referrals is asking for the business. Absolutely false. If it were true, why have trainers been beating this into our heads for years and most of us still are not comfortable asking? The key to getting more referrals is putting ourselves in the position to ask. When we place ourselves in the right position, the business transaction will take place naturally. If it feels uncomfortable or is forced–it is not right.

Of course, an important question follows: How do you put yourself in a position to ask? This is a fairly complex issue and involves everything from market positioning to the delivery of great customer service. In this article, we will address only one positioning technique–the delivery of value to a business-to-business partner. Why do we start with this particular activity? Because there is no one area that demonstrates so effectively that asking is a finely tuned skill and not merely walking around and pleading.

Specifically, what we are referring to here is delivering a lead to someone who can deliver many leads to us. The law of reciprocity dictates that we deliver value to those who are delivering value to us. Within the real estate industry–it would not be unusual for real estate agents, loan officers, settlement companies, insurance agents, financial planners and even CPAs to “trade” prospects. The question is–how do you do such and achieve the most value in return? Have you ever delivered a lead to a partner (or a potential partner)–and never received anything in return? Here are some very important considerations–

First, make sure that this lead is not a one-shot deal. You must make lead generation an overall part of your business plan. Otherwise, your partner will not see you as a long-term valuable resource. They are more likely to see the gesture as a one-time windfall and look elsewhere for long-term value.

Secondly, target the right people. While it is always right to reward a present partner that delivers value to you on a regular basis, you must recognize that your business plan will sometimes require that you use your resources to develop or solidify new business relationships. Unfortunately, we usually select those WE want to service. The sales process is not about us–it is about the needs of whom we are serving. We must select based upon–

Lack of relationship interference. If they cannot use us in the long-run because of their established relationships–they are not the best recipient of our value.

Loyalty. How loyal are they to their partners and/or vendors? If they are not loyal to their present partners, what makes you think they will be loyal to you? In some respects, this aspect is a tough balancing act with the first point because those who are loyal are more likely to have relationship interference.

How are they going to treat your customer? Can they deliver great service? Your name is going to be on the line here (and hopefully again and again). Do not leave the results to chance.

Are they ethical? This aspect covers everything from them doing what they say they will do, to staying on the right side of the law.

Next, you must make sure you deliver the prospect in the right way. What we are talking about here is a business deal. Asking for the business is more than a question. It is a business negotiation. Make sure they know exactly what is expected and when. They must be in total agreement as to what they are to deliver.

Finally, you must follow-up with a vengeance. A key to success in sales is diligent follow-up and there is no area within sales in which this adage will prove to be more true than in this situation. If you do not follow-up appropriately, you are opening the door to such statements as “I haven’t had anyone to send.” If they did not have the business to allocate, why would you have selected them to utilize one of your most precious resources? You must show them that you are serious with regard to making sure they hold up their end of the business proposition. The longer you go without follow-up the less chance you have of collecting your reward.

You have heard this before–success is not an accident. Neither is failure. What we are talking about here is planning for success. Your precious resources could lead to very valuable relation-ships that will help you succeed. Or you could wind up wasting the chance. Which will it be?