Cari DeCandia's Blog

Local Lender Achieves Status for Professionalism in Mortgage Industry

Cari DeCandia — Thu, 16 Jul 2009 08:39:23 -0700

Raleigh, North Carolina-07/15/2009-DNJ Mortgage today announced that Cari DeCandia has earned the Lending Integrity Seal of Approval from the National Association of Mortgage Brokers (NAMB). The new seal recognizes individual brokers and loan officers who meet the industry's highest standards for knowledge, professionalism, ethics and integrity.

"I am proud to bestow this symbol of excellence on Cari DeCandia", said George Hanzimanolis, President of the National Association of Mortgage Brokers. "By earning this recognition, Cari has demonstrated a strong commitment to achieving the highest ethical standards in the mortgage business."

In order to display the Lending Integrity Seal, a broker or loan officer must:

*Pass a national criminal background check.

*Possess a state license or registration.

*Submit three business references (new members only)

*Attend professional education, including ethics training.

* Live up to NAMB's Code of Ethics and Standards of Best Business Practices

*Pledge to abide by NAMB's formal ethics grievance review process.

When a loan officer or broker displays the Seal, it means they have voluntarily met the only national standards for mortgage originators, established by the National Association of Mortgage Brokers.

The Lending Integrity Seal of Approval is transforming the mortgage industry," Hanzimanolis said. "We believe it will soon become to the mortgage industry what the Good Housekeeping Seal of Approval is to the makers of consumer products.

For more information on the Lending Integrity Seal of Approval, visit www.lendingintegrity.org.

The National Association of Mortgage Brokers is the voice of the mortgage broker industry with more than 25,000 members in all 50 states and the District of Columbia. NAMB provides education, certification and government affairs representation for the mortgage broker industry, which originates over 50% of all residential loans in the United States.

Contact Information:
Cari DeCandia
DNJ Mortgage
1350 Sunday Drive, Ste. 109
Raleigh NC 27607
Cari@dnjmortgage.com
www.lenderforlife.net

How to pay off your mortgage without making extra payments using a 2-1 Buydown

Cari DeCandia — Thu, 21 Aug 2008 21:06:18 -0700

Please read the blog titled "What is a temporary buydown and why is it beneficial?" to get a better understanding of the buydown product prior to reading this entry.

With DNJ Mortgage's temporary buydown products, we are prepaying the difference in interest between the note rate and the interest rate the first two years. That prepaid interest is held in an escrow account by the lender. Each month that you make a payment, the difference in interest for that month is deducted from the escrow account. Since the goal with this product is principal reduction, you want to make as few payments as the lender allows and then refinance. Typically the number of months varies from 4-6.

When we redo the loan, the amount that is left in the escrow account is applied as a credit towards your payoff. This is a direct principal reduction credit.

Here is a real analysis that I had put together for a customer of mine. This should illustrate the power of this program.

Proposed Mortgage Structure (30 yr fixed with two year temporary buydown):

1st mortgage loan amount: $417,000

Interest rate for first year: 5.25%

Monthly payment: $2302.69

Monthly savings from current loan payment: $231.05

How it works:

With this program, we (DNJ Mortgage) are prepaying the difference in interest for the first two years between the note rate of 7.25% and the buydown rates. The first year the buydown rate is 5.25% and the second year, the rate is 6.25%. The total amount of interest we would be prepaying is $9829.44 and this amount is held in escrow by the bank.

Each month a payment is made, the difference between the payment at 5.25% and the 7.25% note rate is deducted from the escrow account. The amount deducted each month is $541.99. Since the ultimate goal with this program is the principal reduction, we would want the least amount deducted from the escrow account as possible. The bank requires that 4 payments be made which would leave you a total of $7661.48 if you were to refinance after the 4th payment. You would receive a credit on your payoff of $7661.48 which is applied directly to principal. That combined with your monthly savings would give you a total savings of $8585.68 for 4 months. We can redo this every 4-6 months to have the greatest principal reduction and lowering your effective interest rate tremendously.

Your total principal reduction in 4 months if you maintain your existing loan is $1633.66. In comparison, with this loan your total principal reduction would be $9587.48.

As you can see with this example, there is a tremendous amount of principal reduction in 4 short months. It would've taken this customer 27 months to pay down their principal this amount. This program drops your effective interest rate tremendously due to the interest savings over the course of the loan.

I understand that some of you might look at the 7.25% note rate and be fearful of that or consider it a greater risk. As I explained in my initial blog on the buydown program, we can use this program as a hedge against higher rates because the initial rate on this program is about 1% below market rate. Also, you are only in the program a short period (4-6 months). If we see rates starting to trend one way or another, we can get into a lower fixed rate when you refinance. Also, if you desired, you could use all or a portion of the credit towards a permanent buydown and get a fixed product below market for the entire term.

For more information on DNJ Mortgage, visit www.lenderforlife.net.

What is a temporary buydown and why is it beneficial?

Cari DeCandia — Thu, 21 Aug 2008 21:01:52 -0700

There are two types of buydown programs: temporary and permanent.

A permanent buydown is where the borrower or seller pays discount points to the lender to have a lower interest rate for the term of the loan. Often a permanent buydown does not make financial sense due to the amount of time needed in that loan to recoup the costs of the buydown.

A temporary buydown is where the borrower, seller, or lender pre-pays interest for the first one to three years in order to have a lower interest rate. The most common types of temporary buydowns are:

3-2-1 buydown
2-1 buydown
1-0 buydown

With a 3-2-1 buydown...if your note rate is 6.5%, for the first year your interest rate would be 3.5%, 4.5% the second year, 5.5% the third year and 6.5% years four through thirty.

With a 2-1 buydown...if your note rate if 6.5%, for the first year your interest rate would be 4.5%, 5.5% the second year and 6.5% for the remaining years in the term.

With a 1-0 buydown...if your note rate is 6.5%, you would have an interest rate of 5.5% for the first year and 6.5% years two through thirty.

Temporary buydowns have been most commonly used by sellers/ builders that are trying to entice buyers with lower than market interest rates for the first few years resulting in a lower monthly mortgage payment.

Why temporary buydowns and the "No Closing Cost Loan" are perfect together?

If your loan amount is greater than $200,000, DNJ Mortgage has the ability to use the commission the bank pays us for originating the loan to pay for the buydown cost as well as closing costs. This gives our customers a better than market interest rate at no cost to them. We can continue to refinance at no cost using a buydown program to maintain the lower than market interest rate.

Example:

Customer has a current loan amount of $250,000 with an interest rate of 6.625% on a 30 yr fixed. Current monthly payment is $1600.78.

Based on current market conditions we are able to offer them a no closing cost rate of 6.5% with a one year buydown. This gives them an interest rate of 5.5% for the first year and then the loan converts to a 30 yr fixed at 6.5% after the first year. By refinancing at no cost, they received an interest savings of $2500 in just one year. At the end of the year, they have three options:

Keep the loan and maintain the 6.5% interest rate.
Refinance again with no closing costs into another one year buydown.
Refinance with no closing costs into a different loan product (ARM, 15 yr fixed, etc).

As you can see, using the no closing cost loan along with a temporary buydown provides are customers with several benefits including:

Lower than market interest rate at no cost them resulting in lower monthly payments.
Increased interest savings
A hedge against higher interest rates during periods of economic strength.

For more information on DNJ Mortgage, visit my website at www.lenderforlife.net.