David Winfrey's Blog

Tips in a slower market

David Winfrey — Mon, 29 Oct 2007 16:55:43 -0700

Special Report Series
Focus on a Slower Market: Tips for Staying in the Game

Market downturns call for innovative strategies and fresh ideas to keep your business surviving and even thriving when the numbers of leads and closings drop. In our new, two-part series, we'll explore ways for you to stay profitable in today's slower real estate climate.

Part 1: Stand Out From the Competition

When the industry slows and the amount of new business diminishes, how can you ensure you stay ahead and keep a bigger share of the local market pie? One way is to check out the competition - and use that insight to beef up your competitive advantage. Here are a few tips to help you scrutinize who's out there and how you compare.

Identify your main competitors. When pinpointing your direct competitors, think small. Narrow down your top competitors to the ones most like you in terms of type of clients and areas served, size of office team and estimated annual sales.¹

Gather competitors' marketing materials. The most essential items to collect are copies of print ads, Web site pages, property and billboard signage, and brochures. If possible, find samples of e-mail communications, as well.

Determine competitors' market positioning. Study those marketing materials (especially branding taglines and top-of-page headlines and paragraphs) to pinpoint your competitors' positioning strategies. In other words, for each competitor, can you find a consistent theme, message or key benefit conveyed across all marketing channels? Examples of positioning include someone specializing in urban property, luxury homes or top-notch customer service. You may find that not all of your competitors are clearly positioned.

Re-evaluate your own positioning. Where does your business fall on the competitor map? Is your business clearly distinct from your competitors? Often real estate professionals fall into what marketing experts label "me-too marketing" - marketing that doesn't stake out a unique position or set their business apart from the competition. How are you different from the others? And are you communicating that differentiation?

Boost your competitive advantage with Countrywide. With all the recent news about the mortgage industry, your clients may need more reassurance than usual as they move through the home-buying process. Working with Countrywide offers you and your clients a trusted home-lending resource - one that's been helping customers for nearly 40 years and is ranked as America's #1 home loan lender.² Plus, Countrywide looks to increase operational efficiencies through the migration of its core residential lending business under the strength of Countrywide Bank. So now more than ever, putting the strength and reputation of Countrywide on your side helps you say to your customers, "I am dedicated to providing you with the best service available in the marketplace, including access to a wide range of home-financing options" - which, of course, can mean increased closings for you.

Back it all up. Of course, it's possible to choose from many different types of marketing positions that might allow you to stand out from the crowd. But remember, if you can't back up those promises with real-life action and conviction, your strategy will fall flat.

Making Sense Of Your Closing Costs

David Winfrey — Mon, 29 Oct 2007 16:07:07 -0700

Making Sense of Your Closing Costs

When you go to a lender to get and idea of what to expect for closing costs it can seem a little overwhelming. Below is a break down to help you understand your good faith estimate a little better.

Interest rate discount points are fees paid up front to the lender in exchange for a lower interest rate on a mortgage loan. Paying points lowers your mortgage rate because the lender is getting a prepaid portion of the interest rather than collecting it in the payments across the term of the loan. Points can be paid by the buyer/borrower or seller, or split between the two. A single point is equal to 1 percent of the loan amount. Who pays the points depends on what is negotiated in the purchase contract and what is allowable under the terms of the mortgage loan.

The loan origination fee, which can also be called a broker origination fee or broker fee, is a person's payment to their broker and the broker's company for their time in coordinating the home loan. The fee varies from 1 to 2 percent of the loan amount. Your broker will usually charge a processing fee in addition, which covers the overhead of preparing and processing the loan documents. At Countrywide Home Loans we do not charge you an origination fee because you are coming directly to Countrywide for the home loan.

Escrow fees are paid to a third party organization, usually a title company, which handles the funds exchanged throughout the transaction.

Lender fees usually include courier, document preparation, underwriting, and wire transfer fees. The amount listed on the good faith estimate for these fees usually won't vary. Tax service fees are also charged by lenders to cover the costs involved in tax related processes. Some third party services may include appraisals and credit reports. Both services are paid for at closing. The fee for the credit report doesn't usually vary from the good faith estimate, but the appraisal companies may charge different rates.

Title company fees will cover the cost of title insurance for both the buyer and the lender. It is customary for the seller to pay for their portion of the title insurance. The cost ranges from 0.3 percent to 0.6 percent of the value of the home.

Prepaid closing costs and escrows are costs you pay to yourself. This includes items such as prepaid interest, property taxes and hazard insurance. This money goes to the buyer's escrow account to be used on their behalf to meet tax and insurance obligations. The total amount of fees and prepaid items required, plus the down payment and minus seller contributions comes down to the total cash required for closing. A reputable lender will be able to provide a good faith estimate that is very close to the amount of the final settlement.

David Winfrey

Countrywide Home Loans

Home Loan Consultant

541-383-2093 x.229 Office

866-890-0278 x.229 Toll Free

What is really in a rate selection??

David Winfrey — Thu, 25 Oct 2007 17:40:04 -0700

What is really in a rate selection??

Most people feel the lower the rate, the better deal I received! The truth is that selecting an Interest Rate should be an "Economical Decision and NOT an Emotional Decision" When determining an interest rate for your loan you should consider some compensating factors such as:

How long will I keep this loan? This question alone should change your thought process about the rate selection for your loan. The truth is that the lower rate may not always be the best and most economical decision for you!

For example, suppose a borrower could get a $400,000 loan at 6.50% with no origination fee or discount points. The payment would be $2528.27. Instead, however, the borrower chooses an alternative rate - 6.25% - and pays a 1% discount point for a total of $4000.00 in extra closing costs. The payment drops to $2462.87, a monthly savings of $65.40. It takes about 61 months for the monthly savings to offset the increased closing costs. Beginning in the 62nd month, the borrower will realize an actual savings of $65.40 a month. However, if the loan is paid prior to the 62nd month via refinancing, by selling the property or payment in full, the borrower has spent money unnecessarily.

In addition to those facts, the 6.25% rate has a lower APR (Annual Percentage Rate) tied to it. Using the APR as your sole determinant in choosing your rate could be a mistake. When comparing an APR you must again evaluate how long you will have this loan. Some borrowers will use discount points to help offset taxes paid in an annual year: As most discount points are deductible in the year paid (see your tax advisor for further information) so they can reduce your tax liability in the current year and help provide lower mortgage payments over the term of the loan.

Many times the selection of a lower interest rate is driven more by the amount of the mortgage payment the borrower can afford (or qualify for) rather than the economic value of this decision.

A conscientious Loan Officer who works for a reputable company and that has the ability to offer the most up to date loan programs is an invaluable resource for any home buyer. Ensure the Loan Officer you select has both the ability and the desire to provide you with the most competent service and current information available to fit your specific situation.

For a no-cost no-obligation discussion, please feel free to contact me at 541-383-2093 or toll free at 866-890-0278 ext 229. If email is more your style I can easily be contacted this way as well at "David_Winfrey@countrywide.com"

Expect Excellence

David Winfrey

"Turning Realty into Reality"

FAQ on Reverse Mortgages

David Winfrey — Thu, 25 Oct 2007 14:39:12 -0700

Home Equity Conversion Mortgage (HECM) reverse mortgages

A Home Equity Conversion Mortgage (HECM) is a federally insured reverse mortgage. Ninety-five percent of all reverse mortgages are HECMs. The Federal Housing Administration (FHA) sets limits on how much a HECM reverse mortgage lender may lend you-based on your age, your home's value and location-and what your total loan costs will be. HECM loans give you a wide choice in how you may receive the cash from the reverse mortgage. HECM loans generally provide the larger loan advances than other reverse mortgages. An exception is Financial Freedom's Cash Account Plan reverse mortgage which may offer cash advance opportunities significantly higher than other reverse mortgage products.

Home Equity Conversion Mortgage (HECM) Frequently Asked Questions

Q. Since federally-insured HECM loans are regulated by the U.S. government, are all HECM loans the same?
A. Yes and no. All HECM lenders must follow HUD rules and many of the loan costs, including the interest rates, will be the same no matter which reverse mortgage lender you choose.

Q. What are the eligibility requirements for a HECM loan?
A. You, and any other current owners of your home, must be aged 62 or older. The home must be your primary residence. It may be either a single-family residence in a 1- to 4-unit dwelling, a condominium, or part of a planned unit development (PUD). Though some manufactured housing is eligible, most cooperatives and most mobile homes are not. The home must be at least one year old and meet HUD's minimum property standards*. Finally, you must agree to discuss the program with a counselor from a HUD-approved counseling agency.

Q. Does the location of our home also affect the size of a HECM loan?
A. Yes. The size of a HECM loan depends on the maximum lending limit, which varies by county and is adjusted annually. For 2005, the FHA loan limit varies from a low of $172,632 (for rural areas) to a high of $312,895 (for high-cost metropolitan areas

Q. Are there any advantages by taking my HECM loan as a line of credit?
A. Yes. That's because a HECM line of credit continues to grow over time, increasing the amount of cash available to you until you withdraw all of it. That is possible because the remaining balance in your line of credit grows by the same total rate that is charged on your loan balance.

Consider this example. Say you have a HECM line of credit of $150,000 and you withdraw $25,000. The remaining line of credit would be $125,000. If your next withdrawal is a year later you would have more than $125,000 available to you. Here's how it works to your advantage: if the total loan rate is, for instance, 6%, your available credit line would be 6% higher than it was a year earlier. Instead of having $125,000 available you would have $132,500 in your line of credit (6% of $125,000 = $7,500). In this example, you would have an extra $7,500 available to you in year two of your reverse mortgage. A nice added bonus.

Q. How are the interest rates computed for a HECM reverse mortgage?
A. The HECM rates are based on the variable T-Bill (U.S. Treasury bills) interest rate plus margin. It is adjusted either monthly or annually.

Q. Are HECM loans available throughout the U.S.?
A. HECM loans are available in all 50 states, the District of Columbia, and Puerto Rico. (HECM credit line options are available in all states except Texas.)

Fannie Mae Home Keeper® Reverse Mortgage

A Home Keeper® reverse mortgage is Fannie Mae's conventional market alternative to the Home Equity Conversion Mortgage (HECM). It is a government-sponsored enterprise program and works like a HECM loan in many ways. However, a Home Keeper® reverse mortgage addresses a few needs that are not met by HECM loans, such as individuals with higher property values, condominium owners, and seniors wishing to use a reverse mortgage to purchase a new home.

Fannie Mae Home Keeper® Reverse Mortgage: Frequently Asked Questions

Q. What types of homes are eligible for a Fannie Mae Home Keeper® reverse mortgage?
A. Home types eligible for Home Keeper reverse mortgages include single-family homes, condominiums, and units in qualified planned unit developments.

Q. How do Home Keeper reverse mortgage loan limits compare to those of HECM loans?
A. Home Keeper reverse mortgages can be larger than HECMs because Fannie Mae's maximum lending limit - $359,650 for 2005 - is larger than the highest locally applied FHA mortgage limit.

Q. In what ways may I receive money from a Home Keeper reverse mortgage?
A. You may choose to receive money from a Home Keeper reverse mortgage in the same way you may receive funds from a HECM loan: as fixed monthly payments for life (i.e., for as long as the borrower occupies the home as his/her principal residence; as a line of credit with no growth; or a combination of monthly payments and line of credit).

Q. How are the interest rates computed for a Home Keeper reverse mortgage?
A. The HECM rates are based on the variable CD (Certificate of Deposit) interest rate plus margin and is adjusted monthly.

The current (2005) lending limit with a Home Keeper® reverse mortgage is $359,650.

Financial Freedom Cash Account Plan

Financial Freedom's proprietary Cash Account Plan is a reverse mortgage-with a choice of three options-that has been designed specifically to meet the needs of senior homeowners with substantial home equity. No other reverse mortgage lender offers a jumbo loan product comparable to the Cash Account Plan and its three options.

Financial Freedom Cash Account Plan reverse mortgages have virtually no limit on home value or the amount of the loan. As a result, the amount of money available to the homeowner may be substantially greater with a Cash Account Plan reverse mortgage than with other options.

Currently there are three Cash Account Plan options: the Standard Option, the Zero Point Option, and the Simply Zero Option which eliminates up-front fees. With all Cash Account Plan reverse mortgage options, there is a lifetime interest rate cap of 6% over the initial annual percentage rate (six-month LIBOR [index] + 5% [margin]); this rate is reset semiannually. A servicing fee is automatically financed on the account each month; there is no such fee in Illinois and Maryland.

In addition, there is no equity or appreciation sharing and no maturity fee.

Available for all Cash Account Options, Equity Choice Feature allows the borrower to limit the loan obligation to a stated percentage of the full market value of the home resulting in the amount of the loan or line of credit being less than the amount for which the borrower otherwise qualifies. Borrowers may choose to protect a minimum of 10% and a maximum of 50% of their home equity. This permits greater flexibility assuring a percentage of equity remaining to benefit the borrower or heirs upon loan maturity.

Financial Freedom Cash Account Plan: Frequently Asked Questions

Q. What is the Cash Account Plan Standard Option?
A. The Cash Account Plan Standard Option reverse mortgage offers borrowers an open-ended revolving line of credit. The unused line of credit grows by 5% per year on the pledged value.
The origination fee on these reverse mortgages is a scaled percentage of the home's value up to a maximum of 2%.
The minimum draw at closing is $500.

Q. What is the Cash Account Plan Zero Point Option?
A. There is no origination fee on Zero Point Option reverse mortgages. As for closing costs, the actual third party costs may not exceed $3,500 (excluding state or local taxes, if any).

The Cash Account Plan Zero Point Option reverse mortgage requires borrowers to draw at least 75% of the maximum available at the time of closing. The minimum amount of any draw after closing is $500. The unused line of credit grows by 5% per year on the pledged value.

There is no prepayment penalty. A partial prepayment is not allowed on the minimum draw at closing for the first five years. A full prepayment, however, is permitted.

Q. What is the Cash Account Plan Simply Zero Option?
A. The Cash Account Plan's Simply Zero Option has no origination fee and no closing costs (excluding state or local taxes, if any).

The required draw at closing is 100% of the amount available.There is no prepayment penalty. A partial prepayment is not allowed on the minimum draw at closing for the first five years. A full prepayment, however, is permitted.

Q. What is the Equity Choice feature? How will it benefit me?
A. Equity Choice is a value-added feature that is available on all three Cash Account Plan options.

It allows the borrower to limit the loan obligation to a stated percentage of the full-market value of the home. This means the amount of the loan or the line of credit can be less than the amount for which borrower otherwise qualifies.

Equity Choice enables borrowers to protect a minimum of 10% and a maximum of 50% of their home equity. It also provides greater flexibility, assuring the borrower that a percentage of equity will remain, benefiting the borrower or heirs when the loan matures.

Q. What kinds of homes are eligible for the Cash Account Plan reverse mortgages?
A. The following home types are eligible for Cash Account Plan reverse mortgage:

•· Single-family detached homes,1 to 4 rental unit (one must be owner occupied)

•· Manufactured homes (must be built after June 1976)

•· Condominiums

•· Planned Unit Developments (PUDs)