Second Mortgages- Are they still the write thing to do?

Over the last 4 years second mortgage rates have been so low that they were actually lower then the Mortgage Insurance alternative. Currently the prime rate which affects the Home Equity Line of Credit (HELOC) rates which a lot of people have (myself included) is 8.25%. Now depending on the margin you have on this HELOC could mean your rate can be between 7.75% - any where above. If you were one of the lucky ones and got a Prime MINUS rate. Then you are sitting around the 7.75% rate.

Over the last 6 months to a year we have switched gears to fixed rate seconds. Now in the last blog we were talking about the changes in the industry. The second mortgage rates are also changing. The second mortgage’s are also starting to have problems with people making the payments. They are starting to raise the rates up so high that people just won’t take them.

For Example - I had given a quote to someone at a rate of 9.75% second (this was a 100% loan - always a little higher) was kicking the competiton’s butt and then as of March 9th - that second mortgage program is not allowed for 100% financing and the next loan that allows 100% is a rate of 15%. I then went back to my 100% one loan program and the overall payment with mortgage insurance saved this gentlemen - $200 a month over the popular 80/20 loan we have all known to love.
If you are someone who has been pre-approved in the last 3 months and were looking at 100% financing - Please double check with your mortgage professional and have them double check that you are still in the best program combination to suite your needs.

If any one wants to get a second opinion please do not hesitate to reach out to me for some friendly advice… www.todayslendingrates.com

Have a great weekend!

I want to put this out to the any one that has a question about financing? I would like to make this blog about what you have questions on?

For instance - couple hot topics in the market right now:

- The NEGATIVE AMORTIZATION loan... Option Arm
- What are rates going to do? Keep going up?
- How can I fix my credit in under 30 days and be corrected?
- How can I buy my first investment property with little to no money out of pocket?
- Can I close a loan in 7 business days? Yes- Ask me how.

Please tell me what your questions are...


My email address is jphillips@cmslending.com

My direct # at my office is 856-504-8608 or just respond right to the blog.

Mortgage Secrets For The Self-Employed And High-Net-Worth Individuals

Greetings From Jeremiah Phillips,
The word count for this e-newsletter is: 615; Approximate time to read: About 5.5 - 6.0 minutes.

Obtaining a mortgage with good terms from a lender can be a headache for the self-employed, the wealthy, public officials, and others requiring financial confidentiality. In addition, bankers and other lenders tend to overestimate the risk of loans to self- employed people--even doctors and lawyers.

Usually they require that you provide a large amount of private financial information, and the issue won't be just the size of the payment, but the volume of paperwork and your privacy. Suppose you are a well- known businessman, actor or politician and the local newspapers are fixated on your private life. Can you trust the clerks at the usual mortgage operation, especially if it's based in your own home town?

There are two possibilities of loans to protect your privacy and make the borrowing process much easier: "No Income Verification Mortgage Loan" and the "No Documentation Required Loan." Within these two loans, there are several hundred different ways of structuring a mortgage loan interest rates and repayment terms.

Possibility #1: The "No Income Verification" Mortgage Loan
The easiest and most popular way for self-employed borrowers to qualify for a mortgage is through the "Stated Income" or "No Income Verification" mortgage loan. Such loans are usually made available through mortgage loan brokers and usually not through traditional banks.

You do not have to prove income to pay back a mortgage loan as long as you have good credit and the down payment or equity is at least 10% of the value of the property. Best of all, the interest rates on these loans might be even lower than traditional full-documentation loans. This is because the borrowers' character and collateral measurements are usually very high. You simply must be able to claim enough income to qualify for the loan and show enough collateral to complete the transaction and still have some money left over in the bank.

The nice part is you don’t need to provide any pay stubs, 1099's, W-2's, personal or business tax returns or financial statements. Granted, there may be a slight increase to the interest rate if you're not strong enough in the character and collateral departments. But the loan application process is so easy that sometimes even salaried borrowers use no income verification loans.

Possibility #2: The "No Documentation Required" Loan

The next level of reduced-paperwork mortgage loans is the "No-Doc" program or "No Documentation Required" loan programs. It's great for those needing confidentiality.

You do not need to prove your income or liquid assets as long as your credit history is excellent and there is at least a 10% down-payment or equity position in the property. These loans are most popular among borrowers whom want to disclose as little as possible about their financial situation.

On this type of loan there is also a modest increase in the loans interest rate to offset the lenders increased risk in making a loan without documentation to support it.

Possibility #3: The "Don't Ask, Don't Tell" Mortgage Loan
There are other mortgage loan programs available that even mitigate the character requirements. These loans typically require the borrower to have at least a 35% down payment or equity position in a property to qualify for the loan.

Such loans are used almost exclusively by people whom have no documentation or credit to show or simply require the highest level of personal privacy. These loans are very popular in the Washington, DC, area among foreign nationals.

In any case, regardless of what a borrower's situation is, there is almost always a way of accommodating the need for privacy.

Finding The Right Home Loan Has Never Been Easier!

Greetings From Jeremiah Phillips,

The word count for this e-newsletter is: 615; Approximate time to read: About 5.5 - 6.0 minutes.

Moving into a larger home is an exciting time for a family. However, there are common mistakes homebuyers make when selling their existing home.

We’ve summarized six of the most common mistakes homeowners make when moving to a larger home.

1. Not Getting Pre-Approved For A Mortgage
Pre-approval is a very simple process that many homeowners fail to take advantage of when going through this mortgage process. While it doesn't cost or obligate you to anything with the mortgage company, pre-approval gives you a significant advantage when you put an offer on a home because you know exactly how much house you can afford. With a pre-approved mortgage, your offer will be viewed far more favorably by a seller.

2. Not Seeing Things For What They Really Are

Typically the bigger the house the more expensive the house will be to buy and the more it will cost to maintain. It is important that you look at the cost of the home and the monthly cost of upkeep. Find an agent that profiles a buyer to a house-hunting service. This will take you’re your guesswork away and put you in the right home that you can afford. This type of program will match your house criteria with all available homes.

3. Not Thinking About Curb Appeal When Selling Your Home
If you want to get the best price for your home, there will some real basic things to do to enhance its curb appeal. These basic fix-ups don't necessarily have to be expensive. It's very important that these improvements be made before you put your home on the market. If cash is tight, investigate an equity loan to pay back at closing. Ideas range from washing your home, cutting your lawn to a fresh coat of paint.

4. Not Selling Your Home First

In the majority of cases, it’s best to sell your house before you buy another one. By taking this tactic, you will not find yourself at a disadvantage with a potential buyer and feeling pressured to accept any low-ball offer because of a purchase deadline. If you do get a tempting offer on your home but haven't made significant headway on finding your next home, you might want to put in a contingency clause in the sales contract which gives you a reasonable time to find a new home. If the market is slow, another option might be to rent your home and put it on the market at a later date.

5. Avoid The Real Estate Catch-22 Game

One of your biggest dilemmas will be deciding which to do first: buy or sell. There are some real estate firms who will offer a guaranteed sale/trade-up program to solve this problem by guaranteeing the sale of your present home and before you take possession of your next one. If you find a home you want to buy and have not sold your current home, the firm will buy your home so you can make your move on your time frame and with fewer hassles.

6. Failing To Coordinate The Sale And Purchase

With two major transactions going on, it’s important for you to get everyone on the same page. From your real estate agents, appraisers, lawyers, loan officers, title company representatives, home inspectors or pest inspectors. With this many people, the percentage of a mix-up and or miscommunication goes up dramatically. To avoid a financial nightmare of this process, lean on your agent for their advice. If a realtor is good at what they do, they should be able to navigate these waters with little or no speed bumps.

Finding The Right Home Loan Has Never Been Easier!

The average homeowner doesn’t need spend a penny on Private Mortgage Insurance. Sometimes PMI will make sense if it's the difference between a good deal and none, but normally it won't.

What Is PMI?

PMI is an insurance policy required by most lenders when you are putting less than 20% down on a home purchase. Some loans programs even require more than 20% equity before waving the requirement for mortgage insurance.

This insurance pays out to a lender in case you default on your mortgage loan payments and the lender has to foreclose. The policy does NOT protect you if you lose your job or can not make payments on your mortgage for some reason. However, even though you are not protected by the policy, you are the one paying for it; and unlike mortgage interest expense it is not tax deductible.

What PMI Will Really Cost You As A Borrower?

On average, mortgage insurance costs about $60 per month per $100,000 of loan amount. A $200,000 mortgage that equals $1,440 per year and you get NO tax deduction for it. More importantly, you also have lost the opportunity to use this money somewhere else. If you structure your mortgage so that you do not have to pay PMI and instead invest just the first 5 years worth of monthly payment savings into your retirement account, over the course of 30 years this money would grow to over $160,000. And this lost opportunity cost of $160,000 plus dollars is the real cost of paying mortgage insurance.

How To Avoid Paying PMI On Your Next Mortgage.

The following methods for avoiding having to pay mortgage insurance can be used whether you are buying a new property or refinancing an existing property. The two most popular methods are:

1) The 80/10/10 or 80/15/5 approach, which stands for an 80% First mortgage, a 10% 2nd mortgage, and 10% or 5% down payment or equity in the property. This is the best method in our opinion and the one we use most often. Since PMI only applies to first trusts or primary mortgages, we structure a first trust to be no greater than 80% of the value of the property, and we then couple that with a second trust for the remaining moneys that are needed. Thereby achieving the total dollar amount needed to make the loan but also waving the need for PMI by keeping the first trust at 80% Loan To Value.

2) Find a lender that will allow you to finance the PMI into your mortgage interest rate. Some lenders will do this and others will not. The idea is simple though. You agree to accept a slightly increased interest rate typically a ¼% increase in your rate and the lender then pays the PMI for you. The advantage of this method is that the money you would have paid in Private Mortgage Insurance is now a part of your interest payment against your loan and is now tax deductible.

Finally, there are many different ways of saving money on our monthly mortgage obligations as well as our other liabilities. This concept of viewing liabilities as part of our overall financial plan is important not only to help us save money but critical for us to be able to achieve financial security.

Finding The Right Home Loan Has Never Been Easier!

How To Avoid Paying Private Mortgage Insurance

What PMI Is?
PMI is an insurance policy required by most lenders when you are putting less than 20% down on a home purchase. Some loans programs even require more than 20% equity before waving the requirement for mortgage insurance.
This insurance pays out to a lender in case you default on your mortgage loan payments and the lender has to foreclose. The policy does NOT protect you if you lose your job or you don’t have enough cash to make your mortgage payment. However, even though you are not protected by the policy, you are the one paying for it; and unlike mortgage interest expense it is not tax deductible.

The Real Cost of PMI To A Borrower.
On average, mortgage insurance costs about $60 per month per $100,000 of loan amount. A $200,000 mortgage that equals $1,440 per year and you get NO tax deduction for it. More importantly, you also have lost the opportunity to use this money somewhere else. If you structure your mortgage so that you do not have to pay PMI and instead invest just the first 5 years worth of monthly payment savings into your retirement account, over the course of 30 years this money would grow to over $160,000. And this lost opportunity cost of $160,000 plus dollars is the real cost of paying mortgage insurance.

How To Avoid Paying PMI On Your Mortgage.
The following methods for avoiding having to pay mortgage insurance can be used whether you are buying a new property or refinancing an existing property. The two most popular methods are:

1) The 80/10/10 or 80/15/5 approach, which stands for an 80% First mortgage, a 10% 2nd mortgage, and 10% or 5% down payment or equity in the property. This is the best method in our opinion and the one we use most often. Since PMI only applies to first trusts or primary mortgages, we structure a first trust to be no greater than 80% of the value of the property, and we then couple that with a second trust for the remaining moneys that are needed. Thereby achieving the total dollar amount needed to make the loan but also waving the need for PMI by keeping the first trust at 80% Loan To Value.

2) Find a lender that will allow you to finance the PMI into your mortgage interest rate. Some lenders will do this and others will not. The idea is simple though. You agree to accept a slightly increased interest rate typically a ¼% increase in your rate and the lender then pays the PMI for you. The advantage of this method is that the money you would have paid in Private Mortgage Insurance is now a part of your interest payment against your loan and is now tax deductible.
Finally, there are many different ways of saving money on our monthly mortgage obligations as well as our other liabilities. This concept of viewing liabilities as part of our overall financial plan is important not only to help you save money, but critical for you to achieve financial security.

5 Tips You Must Know Before Getting A Mortgage

In a recent Industry survey it was revealed there are 5 common mistakes most homebuyers make in mortgage shopping that can have a significant impact on the outcome of your negotiations. If handled correctly, these issues could result in a mortgage that will cost you a lot less over a shorter period of time.

Before you commit to mortgage, consider these 5 mortgage tips. And if you do, you can make your mortgage payments work much harder for you.
Tip #1) Get pre-approved for a mortgage before you go looking for a home.

Pre-approval is easy, and can give you complete peace-of-mind when shopping for your home. In fact, you can usually get a written pre-approval at no cost or obligation, and it can all be done quite easily over-the-phone.

Tip #2) Commit to a monthly dollar amount that works for you.

When you discuss your mortgage options with your lender, you’ll not only find out what level you qualify for, but also the monthly dollar amount of the mortgage. Your situation may give you a pre- approval amount that is higher (or lower) than the amount of money you would want to pay out each month. By determine the monthly amount, you won’t waste time looking at homes that are not in your price range.

Tip #3) You should think about your long-term goals to determine the type of mortgage that works best for you.

There are a number of questions you should be asking yourself before committing to any mortgage. Questions like: How long will we own this home? What direction are the interest rates going and how quickly? Is your income expected to change in the near term? The answers to these and other questions will help you determine the most appropriate mortgage.

Tip #4) Make sure you understand what prepayment privileges are and what type of payment frequency options you have.

As we both know, the more frequent payments you make, weekly or biweekly, can literally shave years off your mortgage. Simply by structuring the payments, so that they are paid more frequently, will significantly lessen the amount of interest you will be charged.

For the same reason, authorized pre-payment of a certain percentage of your mortgage, or an increase in the amount you pay monthly, will have a major impact on the number of years you will have to pay and could shorten your payment term considerably.

These two payment options can cut years off your mortgage, and save you thousands of dollars in interest. However, not every mortgage has these prepayment privileges built in.

Tip #5) Ask if your mortgage is both portable and/or assumable.

A portable mortgage (is not always available in every state) is one that you can carry with you when you buy your next home and allows you to avoid paying any discharge penalties. This means that you will not have to go through the entire mortgage process again unless you are making a move up to a much more expensive home.

On the other hand, an assumable mortgage is one that the buyer for your home can take-over when you move to your next home. This can be a very powerful tool at the negotiating table making it much easier and more desirable for a buyer to buy your home, and again saves you any discharge penalties.