Tom 's Blog

Repeal the Community Reinvest Act Now!

2008-09-30T15:26:59Z

Do not look for the real truth behind the credit crisis we now find ourselves in from the liberal media. However, a good place to start your research is to investigate the Community Reinvestment Act (CRA) which compels banks to make loans to low-income borrowers or those banks could possibly face financial penalties or see their business plans for mergers and expansions blocked.

The Community Reinvestment Act encouraged mortgage lending through two government sponsored enterprises (GSE’s), Fannie Mae and Freddie Mac. Both or which are now under government control.

In an article written by Steven A. Holmes dated September 30, 1999 in the New York Times titled, Fannie Mae Eases Credit To Aid Mortgage Lending, talks about easing credit requirements.

Full article link below:

http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&&scp=1&sq=Fannie%20Mae%20Eases%20Credit&st=cse

In the middle of the article check out what Peter Wallison had to say, “If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”

That was back in 1999 and look where we are today.

As early as 2004 Republicans have been concerned about this issue and tried to reign in Fannie Mae and Freddie Mac. However Democrats such as Barney Frank, Gregory Meeks and Maxine Waters said there was no problem with either one of these two entities which we now know today is/was a lie. Congress was told disaster loomed but the Democrats sat back and did nothing.

The Community Reinvestment Act became a quota based system rather than a processed based system intended to change lending behavior. In the credit evaluation process if you ignore the income, net worth and credit history and analyze only acceptance rates in lower income communities you are going to see lower approval numbers. Now if you force banks to lend, as the Community Reinvestment Act has done, banks must then extend credit to those that should not have been approved in the first place thus creating an additional burden on the community it is intended to help.

We should repeal the Community Reinvestment Act. Meeting the needs of communities is best left for those within the community without government interference.

In 2008, we are now looking at a $700 billion bailout program that could have been averted had the Democrats not failed to act back in 2004. As a taxpayer, a business owner and a father I am angry that I have to possibly pass this burden on to my kids in the form of higher taxes. We are a much smarter nation than this. When government comes in to play there is no end to how much of our hard earned money they can waste.

For further information on new home purchases, the sale of your existing home, for sale by owner, refinances or the Money Merge Account please visit Midwest Mortgage Solutions of Missouri, at: http://www.midwestmortgageresource.com or http://www.mwmortgagesolutions.com

This article is brought to you by Tom Wurdack and Midwest Mortgage Solutions of Missouri. Tom Wurdack is a licensed mortgage broker in the state of Missouri, with over 10 years experience in the real estate industry. He is best known for his ability to place his clients in the perfect mortgage solution. Feel free to contact him at tom@mwmortgagesolutions.com.

Money Merge Account - Real Life Account

2008-09-12T16:12:03Z

As a licensed mortgage professional I can tell you that when I was approached with the Money Merge Account software from United First Financial I too was skeptical. After spending countless hours researching and doing my due diligence and speaking with a CPA friend of mine as well as a financial planner, I was assured that the product could deliver as advertised.

While there are many naysayers on the internet writing about this program in their blogs, the proof is in the numbers and the numbers do not lie. I will save over $185,000 in interest savings by using software that cost me $3500 and be debt-free in 15.7 years as opposed to 30 years. Tell me where the scam in that is! I was not sold on the product on the basis of lies. I was not told that I could not do this on my own in some fashion. I was presented with a product that the value outweighed the cost factor. Furthermore, I do not care that the software is sold by independent agents. What I do care about is my bottom line and how the product affects my family and me.

There are many products out there that help Americans dream of home ownership become a reality. This product happens to be aligned with my short and long term financial goals. Each individual will have to decide if this program works for them.

I am sure you will be hearing more about this product in the future and would advise you to investigate the matter in depth. Read the blogs but do not accept one person's opinion as facts. Check the company out by logging onto the Better Business Bureau. Do your due diligence, I did mine. Here's to living debt free in 15.7 years.

Credit Crunch or Media Creation

2008-06-09T18:38:12Z

As a mortgage professional I find it frustrating that the national media is constantly bombarding us with reports regarding the credit crunch as it pertains to home mortgages. Here in the Midwest, it is true lenders have tightened their standards but for the most part if you have a job history and decent credit there are a wide variety of loans available to you.

It sure has been a bumpy ride these past few months in the mortgage industry and the national media has taken every opportunity to report on the credit crunch crisis. However, here in the Midwest we need to sit back and remember we are not the East or the West Coast. While we enjoyed years of escalating home valuations and relaxed lender guidelines, we are now facing the responsibility that home ownership brings with it. Those who took risks and gambled on home prices to keep rising and incomes to steadily increase are now feeling the pressure. Do not be one of the statistics. Instead, take control and develop a mortgage solution that helps you increase your net worth.

With my clients, I always stress the importance of comfortable affordability. Simply put, you need to have an affordable mortgage which allows you to meet all of your financial obligations as well as the ability to be able to put money aside (at least $500) each month into savings. If you can not make that happen then you really need to reevaluate the situation. Stop gambling with your mortgage investment and take a good, hard, honest look at your financial situation and make decisions based on the facts of your unique situation rather than emotions. Those who make decisions based on emotions set themselves up for failure.

With that being said what if I were to tell you that 102% financing is still available to you? What if I told you that you could have a mid-credit score as low as 550 and still be eligible for 102% financing? You would say that I was crazy. But the fact of the matter is, in Missouri, the impact of the credit crunch crisis is not as severe as it is on the coast. With sensible underwriting and full documentation for new home purchases, this loan program available right now.

If you are sitting on the fence and waiting for the housing market to turn you may find that you waited too long. Home mortgage rates are at record lows right now and more than likely will rise. Home prices are low and sellers are willing to negotiate since homes have been on the market for so long. Take advantage of this great opportunity but keep in mind the comfortable affordability factor that I spoke about earlier.

For further information on new home purchases, the sale of your existing home, for sale by owner or refinances please visit Midwest Mortgage Solutions of Missouri, at: http://www.midwestmortgageresource.com or http://www.mwmortgagesolutions.com

The High Cost of Poor Credit

2008-05-15T14:20:10Z

With lenders reverting back to more traditional type of lending and underwriting guidelines becoming stricter, now more than ever your credit score is becoming increasingly more important.

Your credit scores are becoming increasingly more important in a wide variety of areas. Credit card companies can increase your interest rate and insurance companies can increase the premiums they charge due to plunging credit scores. More importantly, it may have a greater impact on whether or not you have the ability to obtain financing for a new home or refinancing your existing home.

A credit score of 720 on a scale of 300-850 FICO scale is considered good and 620-680 FICO score is considered mediocre. As lenders and other financial institutions revert back to more traditional lending practices, your credit score is taking on a more important role than ever before. In order to show you an example of what I mean please take a look at the following example:

Single Family Residential Purchase

Primary Residence

Conventional 30 Year Fixed

Full Document

Sales Price $200,000

Loan Amount $160,000

80% Loan To Value

Debt-To-Income 41%

With a credit score of 625 your interest rate would be 7.0% and your monthly payment excluding taxes and insurances would be $1064.48

With a credit score of 720 your interest rate would be 6.0% and your monthly payment excluding taxes and insurances would be $959.28

The difference per month is $105.20

The difference per year is $1262.40

As you can see from the above example your credit score has a direct impact in how much of your hard earned money you are keeping in your pocket. Furthermore, underwriting guidelines are limiting the availability of mortgage insurance if you intend to borrow more than 80% of the loan-to-value of your home with credit scores less than 660.

Now more than ever, it is extremely important to know what your credit scores are and how to go about increasing your credit scores if you fall below 720. Prior to researching mortgage lenders do a little research on your own and find out what is on your credit report and pay the extra money to see your credit scores. It could save you thousands of dollars over the course of mortgage loan.

How to Choose the Perfect Mortgage Broker

2008-05-12T15:25:16Z

I would be remiss in writing an article about how to choose the perfect mortgage broker without first discussing rates. The first question most people ask when shopping for a mortgage is what are your rates. Rates are very personal. A great deal of information is needed in order to quote factual rates. Loan-to-value, debt-to-income, credit scores are just a few of the many factors that will affect the rate available to you. Furthermore, looking at advertised rates in the paper, internet and rates advertised on the radio are designed for one thing and that is to get you to call. So what are you supposed to look for when choosing a mortgage broker?

1) Be Suspicious

When a person calls our office or goes to our website I know that first and foremost they are interested in what our rates are. But as previously mentioned rates are a very personal matter. There are a wide variety of types of loans all with different rates and one size does not fit all. Asking what your rates are is a loaded question. Do you want the rate that is available to you, or do you want a rate that you want to hear? Obviously, you want the rate that is available to you. However, if the mortgage broker immediately starts to quote rates be suspicious. He is just trying to move you further along into the sales process.

2) Be Prepared

A great mortgage broker is going to take the time to find out exactly what your needs are by asking questions. So be prepared in advance.

A) Knowing your credit scores is a must. There are numerous websites available to you to run your credit and do yourself a favor. Pay the extra fee to get a tri-merged credit report with your credit score. Doing this prior to shopping for a loan has a few advantages: incorrect items can dealt with prior to a broker pulling credit and multiple credit reports will not need to be pulled by various brokers keeping you in control of the process.

B) Know your gross monthly income. If you are married, know your combined gross monthly income. That is your pre-taxable monthly income.

C) Have an idea what your front and back end ratios are.

Your front end ratio indicates the percentage of income that goes toward housing costs, which for renters is the rent amount and for homeowners it is your principal, interest, taxes and insurance amount. Also included in that number could be your mortgage insurance premium when applicable and homeowners association dues.

Your back end ratio indicates the percentage of income that goes towards paying all recurring debt payments including those in the front end ratio as well as other debts such as credit card debts, car loans, student loans etc. You can find these debts itemized on the credit report.

A good rule of thumb is that your front end ratio should not exceed 28% of your gross monthly income and your back end ration should not exceed 36% of your gross monthly income.

3) Be Honest

Honesty is a two way street. Do not over inflate your income or credit score because sooner or later it is going to catch up with you and the information you provide has a direct effect on the rates available to you. Conversely, demand that your broker be honest with you. It is only through open and honest discussions that you will get the best mortgage solution that fits your needs. Quoting ridiculously low rates in order to get you further along in the sales process is a sure sign of trouble down the road.

4) Do Not Be Fooled

Do not fall victim to the bait-and-switch advertising tactics you are bombarded with everyday. I realize that it is all around you. On my way to work I hear the same mortgage advertisement each day and I wonder if this guy has a conscious. Obviously, it must be effective but his tactics are questionable and I would rather take the high road. Having an insiders knowledge and the fact that taking advantage of the situation is not a way to run a business nor build a long list of satisfied clients who come back time and time again and refer friends and family and that is what I consider successful.

I hope these few tips will help your next home loan be the perfect mortgage solution for you. It is my philosophy not only to get you the best rate at the lowest cost in the marketplace but to help you understand the process along the way. Only then will you be able to protect yourself from the sharks in the water.

The Perfect Mortgage Solution: 3 Steps to Success

2008-02-21T15:53:54Z

The Perfect Mortgage Solution: 3 Steps to Success

Obtaining the perfect mortgage solution is only possible if you take your emotions out of the equation. Whether you are buying a new home or refinancing your existing home, there are certain steps you can take in order to achieve the best rate at the lowest cost. First and foremost, you need to be honest with yourself. Make financial decisions based on the facts of your individual situation. As the recent mortgage debacle has proven, too many borrowers placed themselves at risk and set themselves up for failure. Granted, the relaxed underwriting standards contributed to the problem, but the bottom line is ultimately you are responsible for your financial well being. With that being said, there are certain steps you can take right now to put yourself in the best possible position in order to obtain the perfect mortgage solution.

Step #1: Get a copy of your credit report.

If you are thinking of buying a new home or refinancing your existing home get a copy of your credit report right now. You can do this on-line at any number of sites or you can contact any mortgage broker or lender and they can run one for you. If you get yours on-line pay the extra cost to see your credit score. The average credit score in Missouri is 683. Your credit score is one major factor that is going to affect your rate. Look your credit report over very carefully. If there are any incorrect entries or any suspicious activities highlight the item or items. Towards the end of the report you will find instructions on how to dispute any items within the report. Take action immediately and be very thorough. Keep accurate notes and copies of all correspondence. Also note it takes time to clear inaccuracies. Be patient and be persistent.

Step #2: Get Pre-Approved

The next step you need to take is to get Pre-Approved. The Pre-Approval process will let you know exactly how much home you can afford. Just because you are approved for a loan amount of $300,000 does not mean you have to go out a buy a $300,000 home. On the contrary, we recommend you take a more conservative approach and stress comfortable affordability. By that I mean you need to look at your overall financial picture and your short and long term financial goals. Be able to pay your mortgage, bills, and credit cards and have money left over every month to put into savings. At least have two months in reserves so that in emergency you could pay all your bills with no problem. By the way, the pre-approval process should be free.

Step #3: Educate Yourself

For most of us our homes are our largest investment so take the time to understand the various types of loans available and the ramifications of each. If you spend less time researching your mortgage than you do a car purchase or that flat screen HDTV, you are setting yourself up for failure and frankly, the consequences of a failed mortgage permeate throughout other aspects of your life. I see it far too often and if there is one piece of wisdom you will take from this, is that your long term financial success may very well depend on your mortgage. Once you have a basic understanding ask questions. If your broker or lender does not explain each concern to your liking simply find a different broker or lender that will provide you the answers to your questions.

These are only three steps you can take right now but don't procrastinate. Get your financial house in order today. You will be glad you did and your mortgage will not seem like a huge debt to be paid down every month but an investment to be proud of for years to come.