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Mortgage by Randy
monthly update to our clients, colleagues, family & friends
By: Randy Mitchelson, January 2012
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In Issue 46 We Touch On:
Will Low Rates To Continue?
Get Your Free Credit Grade
Housing Pendulum Is Swinging
Welcome to 2012! For most people, the New Year represents optimism, new beginnings and an easy line in the sand to brush the old under the rug and usher in a new set of goals and priorities. Resolutions are made. Some are broken. Regardless of where your mindset is at always remember that life is short. Life is unpredictable. We sometimes let life control our actions instead of the other way around. It's easy to do with jobs, kids, drama, etc. You can't always control that. Look beyond what you can't control and focus on what you can. So do the things you really want to do - the things that make you happy. That's living.
The current newsletter and all prior newsletters are archived at the Mortgage by Randy blog. Bookmark it and share with your friends and family. You can make your own comments and feedback as well. Time for the news…
Mortgage Market: Despite Historically Low Rates To Continue
The Federal Reserve announced that it expects to keep interest rates "extraordinarily low" for a period up to 18 months longer than the mid-2013 previously in place. While 2011 was the worst year for new home sales since records were kept (1963), inventory levels are at record lows (157,000 units built and ready for sale, about 6.1 months worth at the present rate of absorption). This is a healthier supply number and will begin to goose new construction.
Personal Credit: Get Your Free Credit Report Card Today
If you have been reading the credit score tips we publish you know that there's no such thing as a free credit score. However, you can get a free credit grade. Visit credit.com and just like in school, you can receive a letter grade for your credit profile. It only takes about 90 seconds to enter the information needed such as your date of birth, address and social security number. This process has no affect on your credit score and is 100% secure.
The letter grade represents an approximate range for your credit score. For example, a credit grade of A means that your FICO credit score is somewhere between 750 - 850. Credit.com provides this credit score information solely for your educational use, and without charge. The "grades," A through F, assigned by Credit.com to the credit score ranges identified as part of this Credit Report Card reflect Credit.com's attempt to provide you with a means of comparing different credit score ranges.
Submit Your Credit Score Questions
Have you been given credit score advice that you are not sure about or read an article that has conflicting credit score information from what you believe to be true? I am here to help. Submit your question and I will be happy to respond. For more free and easy to read credit score tips visit the DailyDollar and click on the Credit Score and Credit Monitoring sections.
Economy & Financial Insights: The Real Estate Pendulum Is Swinging
Net absorption rates in the US turned positive during 2011 for all major property types, according to CBRE Econometrics. This trend is expected to continue in 2012 and then accelerate in 2013. The absorption rate is the percentage of housing units expected to be rented or purchased over a period of time.
Net absorption rates usually follow employment growth. An exception came during the recent downturn when each property type outperformed relative to the levels of job losses suffered during 2008 and 2009. Given the positive net absorption across property types and almost no new construction, occupancy rates, or the number of occupied units at a given time, began to improve in the third quarter.
This means that the supply and demand equation has shifted. There are still good housing deals to be found out there but it is harder and harder to find them. Also, remember that real estate is local. These figures are national and do not reflect absorption in markets hit harder by the housing bust than others.
Question of the Month: I Am Not Underwater But Have Little Equity. Can I Refinance Into 4% Rate?
Anytime you can refinance down by 100 basis points (1%) or more and you plan on staying in your property for five or more years, it is worth paying the associated closing costs. If you can successfully refinance, it makes sense. If no lender will touch it, then take matters into your own hands. Get aggressive about principal paydown – throw all your extra cash at the 2nd mortgage first (which is usually at a higher interest rate) and wipe it out. Then tackle the first mortgage. Based on comments from the Federal Reserve, you have at least 12-24 month window left to lock in at about 4% if you can get into the right LTV fast enough.
Giving Back: Introducing Singer-Song Writer Jon Michaels, Latest Featured Angel Artist
Jon Michaels of South Carolina has been chosen as the Michelle's Angel's Foundation's Featured Angel Artist - Winter 2012. You can hear Jon's unique sound on the MAF website's jukebox where several tracks are available for your listening pleasure. A profile about Jon and his selection is posted on the MAF's website homepage. Please join me in congratulating Jon on his support of the MAF and his gift of music to those who quietly suffer. You can write Jon at: jon@jonmichaelsmusic.com.
Note: The MAF would like to encourage you to refer your musician and song-writer friends to MAF while suggesting they join the ranks of the Michelle's Angels Foundation Angel Artists. Please do what you can to strengthen our team of caring Angel Artists.
Need volunteers? Do you have a fundraising event upcoming? Do you have a personal web site where you are raising donations for your cause? Submit the information to randy@mortgagebyrandy.com by the 5th day of each month and we will do our best to include your information in the next issue.
Since I am still authoring personal finance newsletters for our fans, you may have figured out that I did not get signed to a rookie contract at New York Yankees Fantasy Camp. Nevertheless, I had a fantastic experience both on the field and off. If you haven't had a chance to see pictures or video yet, you can click over to my YouTube page or Facebook photos page. One of my teammates on the Pinstripes blogged about our weeklong experience which you can read at PeterGreenberg.com. I can't wait to be able to do something like that again. Who wants to go with me?
Randy
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Mortgage by Randy newsletter, Copyright 2008-2012 Randy Mitchelson. All Rights Reserved.
Randy Mitchelson is a licensed mortgage professional. All material presented herein is believed to be reliable but we cannot attest to its accuracy. All material represents the opinions of Randy Mitchelson. Recommendations may change and readers are urged to check with their financial advisors before making any decisions. Opinions expressed in these reports may change without prior notice. Mitchelson can be reached at 239-851-6738.
______________________________________________________________________________________________
You have permission to publish this article electronically or in print as long as the following is included:
Randy Mitchelson is a business professional, entrepreneur and author with almost 20 years experience in financial services. Mitchelson has served in leadership roles for Fortune 500 firms Bank of America, KeyBank and CIBC.
As a licensed mortgage professional and member of National Association of Mortgage Brokers, Mitchelson educates both individuals and groups about credit scoring by conducting personalized credit report reviews, action plans and one on one consultations. He is author of the free monthly newsletter, Mortgage by Randy.
He is owner of Estero, Florida based National Web Leads, LLC, (NWL) an internet marketing and lead generation services company. NWL drives new customer acquisition through email, web display, social media, keyword search strategies, mobile devices and more.
NWL distributes customers' marketing campaigns via NWL's network of publishing partners. Clients include payday lenders, auto loan lenders, educational institutions, legal services, health and beauty product distributors and more. Lead generation companies utilize end-to-end lead generation software solutions provided by NWL's technology affiliate company Applied Cognetics.
NWL operates te DailyDollar™. U.S. News and World Report names NWL's DailyDollar to its list of 8 Savvy Personal Financial Podcasts.
Mitchelson earned his BS and MBA at Rensselaer Polytechnic Institute in Troy, NY. He is a founding member of the Southwest Florida Regional Technology Partnership Inc. and Vice President for the Michelle’s Angels Foundation Inc. He is married to Susan, a Pharmacy Supervisor in the Lee Memorial Health System in Fort Myers, Florida.
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Mortgage by Randy
monthly update to our clients, colleagues, family & friends
By: Randy Mitchelson, December 2011
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In Issue 45 We Touch On:
Rates Dip To Historic Lows
Jobs Report Dirty Secrets
Bad Credit Score Advice
This year end issue of Mortgage by Randy arrives with great uncertainty in our world. As we enter a heated political battle season to determine President Obama's rival for the White House, we face huge economic challenges at home thanks to years of out of control spending. This is compounded by risk of debt default throughout Europe. In addition, our military focus is shifting from Iraq and now there is a power change in North Korea. Uncertainty is the enemy of investors. I write these things not to be a downer during our holiday season, but remind you to remain prepared for a roller coaster style environment in the forseeable future. We can't control most world events but we can control our personal financial affairs, so as you think about your goals for 2012 and beyond, plan accordingly.
The current newsletter and all prior newsletters are archived at the Mortgage by Randy blog. Bookmark it and share with your friends and family. You can make your own comments and feedback as well. Time for the news…
Mortgage Market: Despite Historically Low Rates, Housing Recovery Remains Slow
Mortgage rates hit an approximate 60 year low last week according to HSH Associates. Conforming 30-year fixed rates were at 4.05% (assuming .31 points). This multi-month trend is being fueled by uncertainty with Eurozone measures to address their debt crisis. Despite the grim U.S. economic report card, investors continue to flock to the dollar and this demand, coupled with easing inflation, is suppressing our interest rates.
Unfortunately, the historically low rates are not sparking a housing recovery. Homeowners that qualify for a refinance have already done so. Meanwhile, underwater homeowners continue the frustrating battle of getting relief from either their lender or one of the government's underutilized mortgage relief programs like HAMP and HARP. Around 1 in 12 mortgages in the U.S. are delinquent and only a fraction of them have received loan modifications.
On the purchase side, higher credit underwriting standards remain an impediment to home sales. In addition, private mortgage insurers are not that willing to do business with homebuyers bringing small down payments to the table. Unless you get a mortgage through FHA which offers low downpayment options, traditional lenders want to see 20% downpayment from borrowers.
Personal Credit: Incorrect Information About Credit Scores That I Found In An Article
If you do not understand exactly what affects your credit score, you cannot possibly build an accurate action plan to improve it. To my dismay, there are several myths that many people believe about their credit score. Recently, I came across two incorrect "facts" in print in an article published by a mass mailer advertisement magazine similar to the Penny Saver. It wasn't the official Penny Saver so my apologies to the folks there but it's the best analogy I can give you.
Wrong Credit Score Info I Found In Print You Must See
The article, entitled, "The Complicated World Of Credit Scores" attempts to talk about how lenders use different credit scores for different types of purchases. Although 80% of the article is accurate, it makes me angry to think how many innocent people now go forward in life believing the 20% of the information that's just plain wrong. I can't control what gets published about credit scores by other media channels and I can't reach out to all the people who read the wrong information, but I can control what I write in this newsletter and ensure that you, my friends, get the accurate facts.
How Inquiries Affect Your Credit Score
Here is what the article explained about credit inquiries:
"If you refinance your home at a lower interest rate, inquiries could show up on your report. Inquiries lower a score."
The first part of that is correct - whenever you apply for a loan or credit card, an inquiry will show up on your credit report. However, credit inquiries are unlikely to lower your credit score and in the rare event that they do it would only be a small number of points (less than five points for most people).
The rare situation that causes inquiries to lower your credit score is if you chronically apply for credit at many places many times each month. Having a huge number of inquiries indicates that that you might be desperate and going around town applying for credit anywhere you can.
The credit bureaus have their credit score formula set-up to allow consumers to shop around for credit. For example, if you are seeking a car loan and visit 5 auto dealers over the weekend and each dealer pulls your credit report, the credit score formula treats that scenario as one single credit pull, not five. This way you are not penalized for shopping around for the best deal.
How Long Late Payments Show On Your Credit Report
Here is what the article explained about late payments:
"Late payments show up on your score for a couple of years, but paying down a high balance has an immediately beneficial impact."
The second part of the statement above regarding the pay down of high balances is true. However, the statement that "late payments show up on your credit score for a couple of years" is inaccurate. First of all, nothing "shows up" on your credit score. A credit score is a three digit number. That's it. Your credit score is separate from your credit report. More importantly, late payments will remain on your credit report for at least 7 years. As information on your credit report ages past the two year mark it has less and less impact on your credit score calculation. But it's still there.
Submit Your Credit Score Questions
Have you been given credit score advice that you are not sure about or read an article that has conflicting credit score information from what you believe to be true? I am here to help. Submit your question and I will be happy to respond.
Economy & Financial Insights: Latest Jobs Report: A Wolf In Sheep's Clothing
Don't get too excited about the "positive" jobs reports that President Obama has been sprinting to the microphone to brag about.There is more to the story and after reading this you will join the lucky few who understand the gamesmanship with jobs data that goes on in Washington D.C.
First, always remember that our economy must create at least 150,000 jobs per month just to keep up with our natural population growth (That doesn't touch the jobs deficit that has been created). Of late, our economy has been adding 114,000 jobs per month (which is what the politicians have been getting excited about). You don't need to be a statistician to understand what that means.
Second, did we really create those 114,000 jobs each month for the past six months? Here is another hair raising fact. The brilliant statisticians have decided that anyone who has not looked for a job in the last four weeks is no longer defined as unemployed. This makes the number of people looking for a job magically decline and that's why you see our national unemployment rate now below 9%. In reality, the government has moved about 10 million people into the category of not looking for a job since the recession hit in 2007. In addition, millions of people who are working part-time right now because they can't find full-time work are also being omitted from the unemployment picture.
Looking past the smoke and mirrors, the U.S. unemployment rate is really 11-12% at best. Counting unemployment the way it is now done enables the Administration to publish numbers that look better than they are in reality on Main Street. The next time you hear a politician mention how our economy is creating jobs remember these dirty secrets so you can take those stats with a grain of salt.
Question of the Month: My House Is Underwater. Should I Write a Big Check To Refinance?
You are in good company. Many of us are underwater. If your lender services your loan (not Fannie Mae), then HARP doesn’t apply here. HARP is only for loans serviced by Fannie Mae or FreddieMac. If you aren’t 100% sure who is servicing your loan you can do a loan # lookup on efanniemae.com
If your loan is serviced by your lender see if they have a program that allows for a high LTV (above 100%).
It is a simple break even analysis to decide if and when to invest in a refinance. Ask yourself how long you plan to own the property. If the answer is many years or indefinite future, then a refinance is good move if you can lock into a 30-year fixed at 4%. On the other hand, if there’s a chance you’d sell the property within 5 years I would not bother.
Giving Back: Only A Few Days Remain To Make 2011 Qualified Donations
If you are looking for last minute ways to lower your 2011 bill from the tax man, consider making donations to qualified charities before December 31. Major non-profits such as Red Cross, Boys and Girls Clubs and Salvation Army run effective, well-known programs and are happy to accept your cash donations. If you seek to contribute to something more personal to you, consider supporting the organizations that I helped found - both 501c3 non-profits that accept convenient and secure online donations - Michelle's Angels Foundation and Larry Mitchelson Scholarship Foundation. Both grass-roots organizations operate exclusively on volunteer staff which keeps overhead expenses at a minimum so your donations go straight into the unique programs offered by these two foundations.
Need volunteers? Do you have a fundraising event upcoming? Do you have a personal web site where you are raising donations for your cause? Submit the information to randy@mortgagebyrandy.com by the 5th day of each month and we will do our best to include your information in the next issue.
The new year will be busy out of the gate. My team is headed to Las Vegas for an internet marketing tradeshow in early Janaury. After that, I get to experience the pride of wearing Yankee pinstripes at a week long Fantasy Camp in Tampa. We will play 9 games including a dream game against the team of former Yankees including Bucky Dent, David Wells, Luis Tiant, Mickey Rivers, Chris Chambliss, Orlando 'El Duque' Hernandez and many others. Keep a watch on my Facebook page for pictures and updates and you can also follow the New York Yankees Fantasy Camp Facebook page for daily pictures between January 16-22.
Best wishes for a safe, healthy and happy holiday season!
Randy
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Mortgage by Randy newsletter, Copyright 2008-2012 Randy Mitchelson. All Rights Reserved.
Randy Mitchelson is a licensed mortgage professional. All material presented herein is believed to be reliable but we cannot attest to its accuracy. All material represents the opinions of Randy Mitchelson. Recommendations may change and readers are urged to check with their financial advisors before making any decisions. Opinions expressed in these reports may change without prior notice. Mitchelson can be reached at 239-851-6738.
______________________________________________________________________________________________
You have permission to publish this article electronically or in print as long as the following is included:
Randy Mitchelson is a business professional, entrepreneur and author with almost 20 years experience in financial services. Mitchelson has served in leadership roles for Fortune 500 firms Bank of America, KeyBank and CIBC.
As a licensed mortgage professional and member of National Association of Mortgage Brokers, Mitchelson educates both individuals and groups about credit scoring by conducting personalized credit report reviews, action plans and one on one consultations. He is author of the free monthly newsletter, Mortgage by Randy.
He is owner of Estero, Florida based National Web Leads, LLC, (NWL) an internet marketing and lead generation services company. NWL drives new customer acquisition through email, web display, social media, keyword search strategies, mobile devices and more.
NWL distributes customers' marketing campaigns via NWL's network of publishing partners. Clients include payday lenders, auto loan lenders, educational institutions, legal services, health and beauty product distributors and more. Lead generation companies utilize end-to-end lead generation software solutions provided by NWL's technology affiliate company Applied Cognetics.
NWL operates te DailyDollar™. U.S. News and World Report names NWL's DailyDollar to its list of the 8 Most Savvy Personal Financial Podcasts.
Mitchelson earned his BS and MBA at Rensselaer Polytechnic Institute in Troy, NY. He is a founding member of the Southwest Florida Regional Technology Partnership Inc. and Vice President for the Michelle’s Angels Foundation Inc. He is married to Susan, a Pharmacy Supervisor in the Lee Memorial Health System in Fort Myers, Florida.
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Mortgage by Randy
monthly update to our clients, colleagues, family & friends
By: Randy Mitchelson, November 2011
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In Issue 44 We Touch On:
Mortgage Rejected Over $14
New HARP Rules
Black Friday Boom
It is not easy being a licensed mortgage originator in 2011. These past several years have brought severe regulatory change to the industry, public misperception and widespread penalties to all thanks to the bad intent of the few. Even broker compensation has been redefined to the point where mortgage brokers themselves have a hard time understanding how to calculate and document their own commission. In Florida alone the number of licensed mortgage originators like me has shrunk from about 90,000 at the peak of the real estate boom to less than 10,000 now.
Those of us truly committed to helping others navigate the mortgage process will be working harder and for less pay. But, since there is less competition, we hope to make up for it in volume. Just like you need to have a good lawyer, a good accountant and/or tax professional and a good doctor in your life, you also need a trusted adviser for when the time comes that you need financing for the purchase or refinance of property. Stay tuned for upcoming announcements about the launch of our new mortgage company.
The current newsletter and all prior newsletters are archived at the Mortgage by Randy blog. Bookmark it and share with your friends and family. You can make your own comments and feedback as well. Time for the news…
Mortgage Market: New HARP Rules Help Underwater But Non-Delinquent Homeowners
Last month, we wrote about the latest effort by our govenrment to provide relief to underwater homeowners with loans serviced by Fannie Mae or Freddie Mac. One of the shortfalls of the previous government relief programs was finding solutions for homeowners who aren’t delinquent, but unable to refinance at a more sustainable interest rate due to being ‘underwater’ on their mortgage. Details of the latest version of the Home Affordable Refinance Program (HARP) were sketchy at the time of the October announcement. Here are some highlights:
-The Loan-to Value (LTV) cap has been lifted so if your mortgage is severly underwater, even above 125%, there is hope.
-The standard borrower waiting period following a bankruptcy or foreclosure is being waived.
-Pricing adjustments on loans have been reduced, capped and in some cases, eliminated to make the refinance less costly.
-Lenders can waive requirements such as getting a new appraisal and eligibility criteria such as debt to income ratio, income and asset documentation and credit history.
Although these details are documented, it will take time for the program to become operational. In fact, I have already read customer comments that they have contacted their lender about this new program and they are being turned away. The official start date is December 1 but in reality it will be February before everyone has their ducks in a row. This enhanced HARP will expire December 31, 2013. For more information visit www.MakingHomeAffordable.gov.
Personal Credit: How $14 Can Get Your Mortgage Application Rejected
I have written before about how important it is to inspect your credit regularly. In this day and age when identity theft has been the number one crime for nine or more years in a row (I've lost count), real-time credit monitoring is the best solution. But if you don't want to shell out the $4 - $5 per month for it, then at least inspect one of your three credit bureau reports for free every four months on a rotating basis. And here's a good example of why....
I read a Wall St. Journal article recently about how the mortgage pendulum has swung too far in the opposite direction to the point where lenders are so scared of doing a loan that might go bad it seems they are seizing on any tiny detail to reject a loan application. For example, the article cited an instance where a borrower with a really high credit score, very little debt and plenty of equity in their property was seeking a mortgage refinance. Slam dunk, right? Not so fast. The lender became fixated on a $14 missed payment to a credit company way back in 2001! The lender insisted that the $14 be paid although no one knew where to send it. This is the type of non-sense you can expect if you neglect to inspect and pay attention to the details on your credit report.
Economy & Financial Insights: Best Black Friday Ever
In the November 25 DailyDollar post I wrote, "Black Friday shopping results are predicted to be strong this year despite the slow job growth in the United States. After several years of severe recession, consumers are fed up with being frugal and want to go out and spend." The results were not just strong, but record breaking. $52 billion was spent over the Black Friday weekend - the highest ever.
Our thanks go out to Fox Business for including some of my advice in a recent piece about holiday shopping.
If you missed it, click here to check it out.
I hope that this spending is cash based and not a return to blind euphoria of swiping credit cards in hopes that paying off the balances down the road will be feasible. U.S. consumers have done a splendid job reducing their credit card debt over the last few years and it would be a shame for that trend to stop especially in light of the rampant government spending that puts all of us in jeopardy.
Question of the Month: Are You Paying Too Much Property Tax?
A 2011 report from The National Association of Home Builders revealed that U.S. homeowners experienced about a 20% property tax increase between 2005 and 2009 with the median annual tax bill rising from $1,614 to $1,917. Most of us know the hard way that property values have plummeted in most markets, as much as 50% in hard hit areas of Florida, California, Nevada, Arizona and elsewhere. You may be paying taxes based on the price of your property during the boom times. Local governments dealing with tight budgets and limited staffing can take up to three years to make property tax adjustments. If your assessment is out of line with your value, you may appeal to your local property appraiser. The key to winning an appeal is to be prepared with facts, not emotion. Look at online public real estate records to compare your assessment to other similar homes in your neighborhood. Not every appeal may be successful but if you are, that savings can be used to pay down debt or boost your rainy day savings fund.
Giving Back: Be Smart About Responding To Holiday Charity Appeals
Tis the season when charities launch fundraising campaigns to appeal to our holiday sense of giving. Although this is a worthy thing to do, please be cautious. Remember that there are bad guys out there who prey on consumers this time of year. I don't think we need to be afraid of the Salvation Army bell ringers, but if your telephone rings and there's a charity calling your best bet is to say that you gave at the office. Some charities have very innocent sounding names that sound like thy are about cancer research or supporting families of fallen soldiers, police or firemen. There are legit charities that do these things, but how do you really know who is who?
Check out watchdog websites such as www.give.org and www.charitynavigator.org to research names of organizations before you write that check. Remember, even the shady charities are perfectly legal - but what you don't know is how much they spend on their mission vs. how much they spend on administrative costs like salaries. A good charity allocates 80 cents or more of every dollar to their mission. The shady ones do just the opposite. They spend 80 cents of each dollar on their paychecks and what's left over might go toward something useful.
Need volunteers? Do you have a fundraising event upcoming? Do you have a personal web site where you are raising donations for your cause? Submit the information to randy@mortgagebyrandy.com by the 5th day of each month and we will do our best to include your information in the next issue.
The holidays are upon us friends. We hope that you get to spend some quality time with family, enjoy good health and experience some magic moments this season. Here in Florida we are thankful for many things. Among these are an uneventful hurricane season which has allowed the property insurance industry to build strength for another year. On a personal note we are thankful to have more family relocating near us which is making holidays a lot more fun.
Randy
______________________________________________________________________________________________
Mortgage by Randy newsletter, Copyright 2008-2011 Randy Mitchelson. All Rights Reserved.
Randy Mitchelson is a licensed mortgage professional. All material presented herein is believed to be reliable but we cannot attest to its accuracy. All material represents the opinions of Randy Mitchelson. Recommendations may change and readers are urged to check with their financial advisors before making any decisions. Opinions expressed in these reports may change without prior notice. Mitchelson can be reached at 239-851-6738.
______________________________________________________________________________________________
You have permission to publish this article electronically or in print as long as the following is included:
Randy Mitchelson is a business professional, entrepreneur and author with almost 20 years experience in financial services. Mitchelson has served in leadership roles for Fortune 500 firms Bank of America, KeyBank and CIBC.
As a licensed mortgage professional and member of National Association of Mortgage Brokers, Mitchelson educates both individuals and groups about credit scoring by conducting personalized credit report reviews, action plans and one on one consultations. He is author of the free monthly newsletter, Mortgage by Randy.
He is owner of Estero, Florida based National Web Leads, LLC, (NWL) an internet marketing and lead generation services company. NWL drives new customer acquisition through email, web display, social media, keyword search strategies, mobile devices and more.
NWL distributes customers' marketing campaigns via NWL's network of publishing partners. Clients include payday lenders, auto loan lenders, educational institutions, legal services, health and beauty product distributors and more. Lead generation companies utilize end-to-end lead generation software solutions provided by NWL's technology affiliate company Applied Cognetics.
NWL operates te DailyDollar™. U.S. News and World Report names NWL's DailyDollar to its list of the 8 Most Savvy Personal Financial Podcasts.
Mitchelson earned his BS and MBA at Rensselaer Polytechnic Institute in Troy, NY. He is a founding member of the Southwest Florida Regional Technology Partnership Inc. and Vice President for the Michelle’s Angels Foundation Inc. He is married to Susan, a Pharmacy Supervisor in the Lee Memorial Health System in Fort Myers, Florida.
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Mortgage by Randy
monthly update to our clients, colleagues, family & friends
By: Randy Mitchelson, October 2011
====================================================================================
In Issue 43 We Touch On:
Federal Reserve: "Not My Job"
CSV Code Benefits
Free Song Download
For those of you struggling with a big mortgage payment and are underwater, there's more government intervention on the way. The Home Affordable Refinance Program (HARP) will soon be available for borrowers more deeply underwater, with fewer fees, less documentation and hopefully greater success. Will it work better than the old program? While hard details won't come for a few weeks yet, there is a chance that a greater level of success can be expected. Stay tuned...
The current newsletter and all prior newsletters are archived at the Mortgage by Randy blog. Bookmark it and share with your friends and family. You can make your own comments and feedback as well. Time for the news…
Mortgage Market: Federal Reserve Board's Response To Disclosure Conflicts: "Not My Job"
Earlier this month I attended an enlightening (and manadatory) mortgage continuing education course. We were fortunate to have as our instructor Joe Falk who I have learned to have high respect for since earning a mortgage license in 2005. The short story is Joe Falk has served in practically every major leadership role in the mortgage industry and represents all of us at the table when government officials hold meetings affecting the mortgage industry.
One of the most significant things we learned in class is that the government is once again changing the main disclosures in an attempt to simplify them for consumers. Mind you, this was already done once recently. For example, the all important Good Faith Estimate went from 1 page to 3 pages. That's called simplification in government terms. Worse, the Federal Reserve Board and HUD enacted mortgage disclosure rules for the Good Faith Estimate and the Truth In Lending disclosure that conflict with each other. When asked to reconcile the conflicts, the government authorities basically replied, "not my job".
Now, a mandated effort is underway by the brand new financial regulatory body created by the Obama Administration called the Consumer Financial Protection Bureau (CFPB) to unify the GFE and TILA into one form. The two current forms have overlapping information and can be confusing to consumers. They also needlessly drive up costs and the regulatory burden on lenders. This is what we call job security for government workers. If you would like to review the proposed formats for the unified disclosure and comment on them, visit cfpb.gov.
Personal Credit: What Are The Benefits Of The CSV Code On Your Credit Card?
The CSV Code (Card Security Value) is a three or four digit number that is unique to your credit or debit card. If you are hesitant to do shopping on the Internet for fear of having your credit card information stolen, you might feel a little better once you understand this important security feature.
There are several purposes that the CSV code serves for your identity protection. Understanding security features of credit cards will help you protect your identity and prevent your credit score from getting ruined by a criminal. Check out the following benefits of the CSV code on your credit card:
a) Single Location For CSV Code
Since the code does not appear anywhere else (like your monthly credit card statements), it is practically impossible for a crook to steal your identity via credit card number unless they have physical possession of your card. Be aware that the terms CSV, CSC, CVV, CCV are interchangeable - they are all describing the same sequence of identity protection digits printed on your card.
b) Proof Of Credit Card Possession
The security code is close to 100% proof that a credit card is in your possession when ordering something on the phone or Internet. The fraud that occurred through these two channels was out of control since there was no human intervention to physically see the shopper or credit card. The CSV code changed that for the better. Even if a thief was able to get an imprint of the front of your card they would still be hard pressed to use it on the phone or Internet without also knowing the security code on the back.
c) Printed, Not Raised
Notice that the CSV number (which is on the back for most credit cards and on the front for American Express cards) is not raised, it is printed. This way, if your card is swiped using one of the old manual swipers that uses the paper carbon copy forms, even if a crook gets their hands on the carbon and gets your credit card number, they still will not have the CSV. As you can see this little code can provide a strong layer of identity protection.
d) Doublecheck Authorized Signature
As we mentioned, for most credit (and debit) cards, the CSV code is on the back and is usually printed at the very far right of your signature line. This is not the case for American Express, but most people have Visa or MasterCard even if they also carry an AmEx card. Think about this back location. It forces a store clerk or restaurant server to flip your card over to get the CSV code and that process makes sure that they check for your signature too.
If you ever visit a website where you want to order a product and the credit card form does not ask you to enter the CSV code, then you might want to think twice before proceeding. The same applies to telephone orders. Online merchants that do not have an up to date credit card order from are denying you the identity protection benefits of the CSV code on your credit card.
Economy & Financial Insights: Shaky Economic Ground As Jobs Picture Remains Sour
The economic news of recent weeks has been mixed at best. Risk of debt default by several European countries continues to affect confidence among investors. Meanwhile, job creation still is not happening and until it does, we will be stuck in this rut. The uncertainty about the costs associated with nationalized healthcare combined with the threat of huge tax increases to pay for healthcare plus our growing national debt is preventing businesses from adding to their payroll. Worse, with all the unemployed people out there, businesses have little need to offer wage increases despite the rising cost of living. If you don't like your wage, don't worry, there are 8 people outside your door who will be happy to fill your shoes.
I recently published an article targeted at prospective workers entitled Little Hiring Expected By Small Business. Although we can't control whether businesses hire or not, we can focus controlling things such as our preparedness to outshine the competition for jobs when more businesses start looking for talent. This includes researching fast growing careers if you are unhappy with your current job situation. It also means improving your resume and practicing your interview skills. Investing in these things now will pay dividends later.
Question of the Month: How Do We Do A Modification On Our Home Loan When We Are Recieving Grief Due To His Ex-Wife's Address?
Divorce is never pretty, especially when it involves real estate and mortgage loans. This reader's question doesn't provide all the facts needed for a pinpoint answer. For example, what "grief" exactly are they experiencing? In general when there is information on your credit report that is not accurate, the best place to start is to send a Credit Dispute Letter to each credit bureau via registered mail. Use the letter template in our Library and personalize it to yor situation.
Giving Back: Veteran's Day Salute - BECAUSE OF THE BRAVE Available For Free Download
The Michelle's Angels Foundation (MAF) continues to break new ground with its free services. MAF Music Director, singer-songwriter Ken Harrell and Identical Entertainment today announce the patriotic song “Because of the Brave” has been made available for free download at the organization’s website, www.MichellesAngels.com effective October 18, 2011. The musical tribute to American’s heroes is being made possible as part of MAF’s 2011 Veteran’s Day Celebration and Salute which will continue through November 30th. Harrell’s country ballad music and lyrics are a moving tribute to Veterans and all of our men and women in uniform. “We all live in the land of the free . . . because of the brave.”
Nashville singer-songwriter, Ken Harrell serves as Michelle’s Angels Foundation musical director and is one of the nonprofit’s featured Angel Artists. “Because of the Brave” took on a life of its own as Harrell and Senior Pastor Kenny Hagin of Grace Church in Port St. Lucie, Florida wrote the lyrics and music after one of their ministry services. “My prayer is that one day the world will hear it,” said Harrell.
“As Veteran’s Day 2011 arrives, there’s no better time for our organization to show our support of our military and help make Ken Harrell’s prayer come true,” said Herb Knoll MAF president. “Michelle’s Angels Foundation’s mission is to provide love, hope and compassion to people facing any one of life’s illnesses or challenges, including those who serve in uniform -- then and now. We encourage people to tell their friends about this very special song and reach out to Veterans and active-duty military personnel with the information on where to download ‘Because of the Brave’ for free.”
To download “Because of the Brave” go to the MAF website. Find “Because of the Brave” in the “FREE Music Downloads.” Right click and select “Save link as” to download to your computer. In addition, Harrell has said he is willing to travel the world to perform his tribute to America’s defenders. While there is no fee required for any booked live performance, reimbursement for travel will be required.
Need volunteers? Do you have a fundraising event upcoming? Do you have a personal web site where you are raising donations for your cause? Submit the information to randy@mortgagebyrandy.com by the 5th day of each month and we will do our best to include your information in the next issue.
The snow has started to fall which will motivate the snowbirds to head south. Looking forward to another busy holiday season with our family in Florida, but not before another trip to NYC for a tradeshow next week. Black Friday is only a few weeks away so start paying attention to coupons, discount codes and daily deals to save money on your holiday shopping. We continue to add new sources of coupons and discounts codes at DailyDollarCoupons.com so bookmark us with your other favorite shopping discount sites.
Randy
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Mortgage by Randy newsletter, Copyright 2008-2011 Randy Mitchelson. All Rights Reserved.
Randy Mitchelson is a licensed mortgage professional. All material presented herein is believed to be reliable but we cannot attest to its accuracy. All material represents the opinions of Randy Mitchelson. Recommendations may change and readers are urged to check with their financial advisors before making any decisions. Opinions expressed in these reports may change without prior notice. Mitchelson can be reached at 239-851-6738.
______________________________________________________________________________________________
You have permission to publish this article electronically or in print as long as the following is included:
Randy Mitchelson, of Estero, Florida, is a business professional, entrepreneur and author with over 15 years experience in financial services. Mitchelson has served in leadership roles for Global & Fortune 500 firms like Bank of America, KeyBank and CIBC.
As a member of National Association of Mortgage Brokers, Randy has earned the Lending Integrity Seal of Approval. He educates both individuals and groups about credit scoring by conducting personalized credit report reviews, action plans and one on one consultations. He is author of the free monthly newsletter, Mortgage by Randy as well as the Daily Dollar newsletter. A licensed mortgage professional, Mitchelson also founded Trinity Home Financing, LLC.
He is owner of Estero, Florida based National Web Leads, LLC, an internet lead generation service matching consumers with lenders for auto, cash advance and other financial products. Through its network of partners, National Web Leads delivers innovative Web 2.0 performance marketing solutions to advertisers and affiliate marketers.
Mitchelson earned his BS and MBA at Rensselaer Polytechnic Institute in Troy, NY. He is a founding member of the Southwest Florida Regional Technology Partnership Inc. and Vice President for the Michelle’s Angels Foundation Inc. He is married to Susan, a Pharmacy Supervisor in the Lee Memorial Health System in Fort Myers, Florida.
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Mortgage by Randy
monthly update to our clients, colleagues, family & friends
By: Randy Mitchelson, September 2011
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In Issue 42 We Touch On:
Does Your Bank Owe You Money?
Fake Emails From FDIC
Downside Of Low Interest Rates
I finally pulled myself away from watching the live feed of the Occupy Wall St. protest that is now entering Day 11 in Manhattan to write this month's newsletter. Not that the protest is interesting because from what I have seen it is more like a craft fair with disorganized and confusing messaging about why they are all hanging out instead of applying god 'ol American work ethic to earn a living and improve their lives. I guess for the protesters it is more fun to sit around while the weather is still warm and complain about the government and the banks and being underemployed.
We have added 3 part-time staff in 2011 and have job openings for more talent while other companies are freezing hiring and wages. So here's my offer - if you think you are underemployed and have what it takes to contribute to our organization and an aptitude to figure things out without a lot of hand holding, then get in touch with me and we'll talk.
The current newsletter and all prior newsletters are archived at the Mortgage by Randy blog. Bookmark it and share with your friends and family. You can make your own comments and feedback as well. Time for the news…
Mortgage Market: Big Bank Lawsuit Settlements May Mean Money For You
When the last mortgage meltdown happened in 1999, I was in the middle of it and learned that it takes up to five years to unwind the mess through the legal system. It happened all over again in 2008 so it does not surprise me that as we enter year four since the collapse we are still seeing major legal fallout. It could pay (literally) for your to pay a little attention to what is happening.
Bank of America is embroiled in multiple mortgage lawsuits. They recently settled one that involves cash payments being sent to affected home equity line of credit customers dating back as far as 2005. If you missed out on the money grab, don't worry, there is more to come.
Another example that it is not too late for affects Wells Fargo mortgage customers. Wells Fargo has been fined $85 million for misleading home borrowers. The bank was ordered to identify and compensate some borrowers who took out subprime, cash-out refinancing mortgages from January 2004 to June 2008. Wells Fargo Financial employees steered potential prime borrowers into more costly subprime loans and separately falsified income information in mortgage applications. The Federal Reserve said a preliminary estimate of the compensation is $1,000 to $20,000 for at least 3,700 borrowers and possibly over 10,000.
Actions such as these usually trigger a mass mailing to affected customers who have the right to optin or opt-out of the settlement. If you do not receive a mailing but believe you should be included in the group of affected customers, contact Wells Fargo's attorney via registered mail: Douglas R. Edwards, Esq. 301 S. College Street, Charlotte, NC 28202-6000.
Personal Credit: Identity Theft Alert Concerning Fake Emails From FDIC
Pay attention to this identity theft alert about fake emails from the FDIC (Federal Deposit Insurance Corporation). Please share this information with family and friends any way you can including Facebook and Twitter. The FDIC recently announced that it has received numerous reports of fraudulent emails that have the appearance of being from the FDIC, but are criminal attempts at identity theft.
Common Traits Of Fake Emails From the FDIC
The fake e-mails from the FDIC are official looking. However, they have some common traits that you can easily detect. Here are some examples of what to watch for so that you can protect yourself from identity theft:
1) Fake emails from the FDIC are sent from addresses such as:
"no.reply@fdic.gov"
"alert@fdic.gov""subscriptions@fdic.gov"
or even the email address of a specific employee (probably not a real person) such as "hgrene@fdic.gov" which is an attempt to make the fake email from the FDIC look more personalized since it is from a specific employee. Don't be fooled.
2) The fake emails from the FDIC have a subject line that read: "FDIC Notification." or something similar.
3) The fake emails from the FDIC are addressed to "Dear customer" or "Dear Business Owner," or "Dear Business Customer." Other variations likely exist.
4) The body of the fake emails from the FDIC include alarming statements designed to create an emotional response from you and a sense of urgency to take action. Here is an example,
"Your account ACH and Wire transactions have been temporarily suspended for security reasons due to the expiration of your security version. To download and install the newest installations read the document(pdf) attached below. As soon as it is set up, your transaction abilities will be fully restored."
Also, make note that some fake emails from the FDIC state, "We have important news regarding your bank," or another variation such as "We have important news regarding your financial institution."
5) The fake emails from the FDIC typically conclude with,
"Best regards,
Online security department
Federal Deposit Insurance Corporation."
The emails look very official and legitimate. They sometimes display the FDIC logo as well. Just remember that the FDIC would never contact you out of the blue in this manner.
6) The fake emails from the FDIC may include an attachment named "FDIC_document.zip."
The emails and attachments are fraudulent and were not sent by the FDIC. Recipients should consider the intent as an attempt to collect personal or confidential information, or to load malicious software onto end users' computers. Recipients should NOT open the attachment.
Variations Of Fake Emails From the FDIC
In addition to the specific characteristics described above, consumers must be aware that other subject lines and variations to the emails will occur over time. The bottom line is that the FDIC does not directly contact consumers in this manner nor does the FDIC request personal financial information from consumers. Please share this identity theft alert about fake emails from the FDIC with others so we can help prevent another victim of identity theft.
Economy & Financial Insights: Historic Interest Rates Good For Mortgages Bad For Pensions
Interest rates continue to fall and have entered all-time low territory. So why is there is no jubilation and lines of people at the banks trying to buy homes or refinance existing loans? Despite the cheap money, it is still challenging for many homeowners who are underwater on their existing loans and who may have other credit blemishes due to job loss, job change or inconsistent income. Certainly, there are some people who are able to take advantage of the cheap money but not the massive numbers that we saw in boom years long past.
There is a scary flip side to the interest rate environment. Pension funds which rely heavily on bonds and other interest rate based securities to generate sufficient invest returns to pay retirees are suddenly not making enough to cover their obligations. Compound that with retirees trying to living off their life savings which barely generates 1% and you can begin to see the potential epidemic. The longer we endure this type of interest rate environment, the wider the funding gap of pension plans. This will put pressure on stocks if companies they are forced to close pension gaps with current earnings.When you add the additional factors of a massive Baby Boomer generation that is retiring right now and the longer life expectancies of Americans due to better health care, you can see how there are several layers creating a perfect storm of massive pension underfundings.
Question of the Month: How Can I Get A Mortgage With A Prior Bankruptcy?
Bankruptcy became an unfortunate option for many people as a result of the financial crisis the U.S. suffered the past three years. For those that still want to take advantage of lower home prices despite their credit issues, there is still hope. If you are in a chapter 13 or chapter 7 bankruptcy, how hard will it be to get a FHA mortgage?
FHA Mortgage Rules - Chapter 13 Bankruptcy
FHA will consider appoving a borrower who is still paying on a Chapter 13 Bankruptcy if those payments have been satisfactorily made and verified for a period of one year. The court trustee's written approval will also be needed in order to proceed with the loan. The borrower will have to give a full explanation of the bankruptcy with the loan application and must also have re-established good credit, qualify financially and have good job stability.
FHA Mortgage Rules - Chapter 7 Bankruptcy
At least two years must have elapsed since the discharge date of the borrower and / or spouse's Chapter 7 Bankruptcy, according to FHA guidelines. This is not to be confused with the bankruptcy filing date. A full explanation about what caused the bankruptcy will be required with the loan application. In order to qualify for an FHA loan, the borrower must qualify financially, have re-established good credit, and have a stable job.
Giving Back: College Ain't Cheap. Rally The Family To Generate Rebates From Normal Shopping
We have shared information about Upromise in previous newsletters and there is a new way to earn money to fund your Upromise account. As a refresher, Upromise helps students and family start planning and saving for college, with tools, resources and the ability to receive money back in a college savings account when shopping smartly. Upromise President David Rochon said. “Half a billion dollars earned through Upromise represents tuition and fees for 76,000 students to attend a public university and a tremendous start.”
Starting in September, Upromise has partnered with e-rewards. I have been a member of e-rewards for years which pays you money to take online surveys and now you can funnel those earnings into your Upromise account. The program now has about 40,000 retailers, gas stations and restaurants as partners, as well as hundreds of online retail shopping sites. When members spend money at participating retailers, a portion of what they spend is credited to a college savings account.
Need volunteers? Do you have a fundraising event upcoming? Do you have a personal web site where you are raising donations for your cause? Submit the information to randy@mortgagebyrandy.com by the 5th day of each month and we will do our best to include your information in the next issue.
Life continues its twists and turns. Although we are behind schedule in relaunching our new mortgage company, there are compensating factors that make it ok. First, the success of our DailyDollar newsletter continues and we were just named in U.S. News and World Report as one of the Top 8 Most Savvy Personal Finance Podcasts. Subscribe to the DailyDollar on iTunes and see for yourself! I will be in Miami next week for more continuing education under the new national mortgage licensing requirements and then to Troy, New York in late October for reunion at Rensselaer. Let's Go Yankees!
Randy
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Mortgage by Randy newsletter, Copyright 2008-2011 Randy Mitchelson. All Rights Reserved.
Randy Mitchelson is a licensed mortgage professional. All material presented herein is believed to be reliable but we cannot attest to its accuracy. All material represents the opinions of Randy Mitchelson. Recommendations may change and readers are urged to check with their financial advisors before making any decisions. Opinions expressed in these reports may change without prior notice. Mitchelson can be reached at 239-851-6738.
______________________________________________________________________________________________
You have permission to publish this article electronically or in print as long as the following is included:
Randy Mitchelson, of Estero, Florida, is a business professional, entrepreneur and author with over 15 years experience in financial services. Mitchelson has served in leadership roles for Global & Fortune 500 firms like Bank of America, KeyBank and CIBC.
As a member of National Association of Mortgage Brokers, Randy has earned the Lending Integrity Seal of Approval. He educates both individuals and groups about credit scoring by conducting personalized credit report reviews, action plans and one on one consultations. He is author of the free monthly newsletter, Mortgage by Randy as well as the Daily Dollar newsletter. A licensed mortgage professional, Mitchelson also founded Trinity Home Financing, LLC.
He is owner of Estero, Florida based National Web Leads, LLC, an internet lead generation service matching consumers with lenders for auto, cash advance and other financial products. Through its network of partners, National Web Leads delivers innovative Web 2.0 performance marketing solutions to advertisers and affiliate marketers.
Mitchelson earned his BS and MBA at Rensselaer Polytechnic Institute in Troy, NY. He is a founding member and Treasurer of the Southwest Florida Regional Technology Partnership Inc. and Vice President for the Michelle’s Angels Foundation Inc. He is married to Susan, a Pharmacy Supervisor in the Lee Memorial Health System in Fort Myers, Florida.
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Mortgage by Randy
monthly update to our clients, colleagues, family & friends
By: Randy Mitchelson, August 2011
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In Issue 41 We Touch On:
Refinances: Double Edge Sword
Think Twice Before Buying Credit Scores
Hurricane Irene Scams
This short and sweet newsletter comes to you from Upstate New York. After a couple of weeks of travel the road trip is winding down. After experiencing an earthquake and a hurricane within one week in New York, it's time to saddle up and return to the peaceful paradise of the Southwest Florida gulf coast. The soft landing I look forward to when my head hits my own pillow is not being shared by our economy and mortgage market. Read on to learn about the ongoing challenges we face as we struggle through this long term sluggish economic period.
The current newsletter and all prior newsletters are archived at the Mortgage by Randy blog. Bookmark it and share with your friends and family. You can make your own comments and feedback as well. Time for the news…
Mortgage Market: Historically Low Interest Rates Not Accessible By All Homeowners
Despite historically low interest rates, mortgage refinancings remain hard to come by for homeowners.The underwriting and pricing standards that are set by Fannie Mae and Freddie Mac and adopted by the banks make it very difficult for struggling homeowners to take advantage of this favorable interest rate environment. Some experts claim that the root cause of this situation is greed. The investors that own the mortgage securities are enjoying above-market returns on the older mortgages and to allow for a wave of prepayments via refinancing would wreak havoc on the banking and mortgage investment community. In other words, Fannie and Freddie may be manipulating their pricing requirements to block homeowners from qualifying for a refinance - something that is in direct conflict with the Obama Administration's public goal of helping as many struggling homeowners as possible.
This week's HSH Survey explained the situation well, "Refinancing is truly a two-edged sword, beneficial to homeowners but problematic for investors. The a process of trading in an old, high interest rate mortgage for a shiny new one with a lower interest rate can be a boon to the consumer but a bane of the investor, since the increase in cash flow for one means a decrease in cash flow for the other. In the present environment, many homeowners are current on their old high-rate loans but cannot refinance due to a loss of income, or equity, or a credit rating which now falls below market norms. So far, programs to address some of the borrowers -- Making Home Affordable's HARP and FHA's Short-Refi program -- have fallen woefully short of goals of helping millions of borrowers, and the administration is studying ways to get more people into the program. That potential intervention has spooked investors in mortgages, especially those holding high-yielding older mortgage securities, which are the most likely to be refinanced. This stepping away from the market is starting to push up interest rates up little bit, or at least serving to keep them from declining further."
On the purchase side, the historically low interest rate environment is opening doors to homeownership for more people. Even folks with some credit challenges still have hope of qualifying via an FHA Loan which places heavier emphasis on employment, monthly income and debts. For those who are unable to get approved for any mortgage from a bank still have the option of purchasing with a hard money loan. In some cases, a 30% downpayment and a 50% debt to income ratio is all it takes to qualify for a single family home mortgage.
Personal Credit: Think Twice Before Purchasing Your Credit Score
Supposedly, curiosity killed the cat and although curiosity about your credit score won't kill you, think twice before shelling out the money to purchase it. First of all, remember that there are three major credit bureaus and each one has its own credit score for you. Lenders typically take the average of the three scores (or sometimes the middle score) to base their lending decision on. Purchasing your credit score from each of the three credit reporting agencies will cost about $30. Let's say you do that. Now what? What use are those scores to you? A lender will still charge you for a credit report when you apply for a mortgage. The score that you purchase is not the same score that a lender gets when they pull your credit. Your score represents a single point in time. It becomes outdated with every passing day. If you pay your bills on time, then chances are you have a pretty good score - sleep well knowing that. Spending your hard earned money to purchase your score adds very little value to yor life. One more thing....those free credit score advertisements on television are not real - they require enrollment in credit monitoring service which entails a monthly fee. I am all for credit monitoring - it has saved me more than once, but don't get sucked in to the free credit score bait and switch. Instead, shop around for the best credit monitoring service that meets your needs. Try your bank first and compare their service to what is available from the three credit bureaus, Equifax, Experian and TransUnion. Monthly pricing ranges from $5 to $30 depending upon the bells and whistles that are included in the service.
Economy & Financial Insights: Hurricane Irene Not Exactly The Stimulant We Wanted
An unexpected event has caused the back to school shopping season to be severly interrupted and its name is Hurricane Irene. Although not on the scale of Hurricane Katrina, Irene has caused billions of dollars in damage and lost revenue which cannot be recovered. Another impact is on household savings. Prior to the storm, people were spending every last dollar to purchase batteries, water, bread, generators and other supplies. Many people relied upon credit to cover these expenses. Additionally, people impacted by the storm face clean-up and repair expenses and down the road, higher insurance costs as flood maps get revised and insurance companies raise rates to recoup losses from claims. Higher insurance prices are another sign of inflation which is already on the rise and we are at the mercy of the Federal Reserve to try to keep it under control. Remember, they want inflation because it keeps more paper money in circulation and devalues our debt at the same time. It is a balancing act out of our control and we can only hope to avoid the hyperinflation that our parents and grandparents faced in the late 1970s and early 1980s.
Question of the Month: I Am 75 Years Old - Will The Bank Give Me A Mortgae?
Age is just a number and when it comes to mortgages, you need not worry about it. If you qualify for a mortgage based on your income, debts and credit score, then you will be off to the races regardless of age. In some cases, homebuyers who are seniors have the ability to pay cash for a new home but prefer not to burn such a huge chunk of cash. In this scenario, consider paying cash for a new home and after the transaction is complete, apply for a home equity line of credit. There are several advantages from this. First, cash buyers almost always have a leg up against competitors for the same property. A cash buyer is attractive to a seller since there's no mortgage application to worry about. This speeds up a sales transaction dramatically. Second, a home equity line of credit is much less expensive to set-up than a traditional purchase mortgage. In fact, many banks offer home equity lines of credit at no cost. Third, a home equity line of credit gives you control over if and when you tap into that cash source. Unless you need to draw upon your line of credit you do not need to pay any interest. It is a back-up source of cash in case you need it and is basically a pay as you go tool.
Giving Back: Beware Of Hurricane Irene Relief Scams
It is sad that reminders like this one have to be published, especially after a natural disaster that affects so many families. There are bad people in this world who are expert at separating you from your hard earned money through scams that are built upon the gut wrenching emotion caused by a tragic event - in this case Hurricane Irene. If you receive an unsolicited telephone call, email or regular mail from a charity that you have not heard of that is helping Hurricane Irene victims, do your homework before making a donation. You can always trust the Red Cross or Salvation Army with your money. However, lesser known charities -that inevitably have very trusting names - deserve your suspicions. Always ask for information to be mailed to you so that you can make a decision about donating after you have had the chance to check on the charity. Use websites such as Give.org and Charity Navigator to research charities.
Need volunteers? Do you have a fundraising event upcoming? Do you have a personal web site where you are raising donations for your cause? Submit the information to randy@mortgagebyrandy.com by the 5th day of each month and we will do our best to include your information in the next issue.
Thank you to everyone for the out pouring of birthday wishes this month. It was a milestone birthday and the sting was definitely lessened by all the love. No matter what your age, it is important to have goals and as you accomplish them, to set your mind to new ones. Goals may even become outdated or unimportant as life moves on causing you to reprioritize what is important. Family and health are two of the biggest things that seem to affect what we hold to be most precious. I might not have understood that in 1995, but time and experience has gifted me that wisdom.
Randy
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Mortgage by Randy newsletter, Copyright 2008-2011 Randy Mitchelson. All Rights Reserved.
Randy Mitchelson is a licensed mortgage professional. All material presented herein is believed to be reliable but we cannot attest to its accuracy. All material represents the opinions of Randy Mitchelson. Recommendations may change and readers are urged to check with their financial advisors before making any decisions. Opinions expressed in these reports may change without prior notice. Mitchelson can be reached at 239-851-6738.
______________________________________________________________________________________________
You have permission to publish this article electronically or in print as long as the following is included:
Randy Mitchelson, of Estero, Florida, is a business professional, entrepreneur and author with over 15 years experience in financial services. Mitchelson has served in leadership roles for Global & Fortune 500 firms like Bank of America, KeyBank and CIBC.
As a member of National Association of Mortgage Brokers, Randy has earned the Lending Integrity Seal of Approval. He educates both individuals and groups about credit scoring by conducting personalized credit report reviews, action plans and one on one consultations. He is author of the free monthly newsletter, Mortgage by Randy as well as the Daily Dollar newsletter. A licensed mortgage professional, Mitchelson also founded Trinity Home Financing, LLC.
He is owner of Estero, Florida based National Web Leads, LLC, an internet lead generation service matching consumers with lenders for auto, cash advance and other financial products. Through its network of partners, National Web Leads delivers innovative Web 2.0 performance marketing solutions to advertisers and affiliate marketers.
Mitchelson earned his BS and MBA at Rensselaer Polytechnic Institute in Troy, NY. He is a founding member and Treasurer of the Southwest Florida Regional Technology Partnership Inc. and Vice President for the Michelle’s Angels Foundation Inc. He is married to Susan, a Pharmacy Supervisor in the Lee Memorial Health System in Fort Myers, Florida.
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Just wrapped 5 days of back to back online advertising tradeshows in New York City. First was Affiliate Summit and then LeadsCon immediately thereafter, both at the Hilton in midtown Manhattan. If you attended one or both of these Performance Marketing shows I would like to hear from you and get your feedback on what the highlights and lowlights were.
As the mortgage industry begins to come back to life under the new rules of engagement set forth by federal and state regulators, the online marketing industry represents a low-cost, highly efficient means of acquiring new loan applicants. If you are a multi state lender and have not yet experienced the power of cost-per-action (CPA) marketing, you should schedule a brief consultation with National Web Leads to learn more.
Your media buys in print, radio and television are expensive, difficult to report and track and are near impossible to change once in production (without spending a lot more money). Performance marketing takes that uncertainty away. Instead, this smart strategy is your fixed-cost marketing solution to drive new customer acquisition.
If you or a client are struggling with debt, here are 5 things to know about bankruptcy and how it may affect your future:
1. It’s more common than you think. In 2009, more than 1 million people filed for bankruptcy.
2. It may save your house. Bankruptcy’s automatic stay is designed to stop foreclosure, even if the process has already started. Plus, Chapter 13 bankruptcy is designed to resolve back debt from your mortgage. Few other programs can do this.
3. You do not need to study for the means test. The means test is not an exam, and it is not designed to keep most people from filing. It’s simply a qualifier to keep people from abusing the system. Don’t let the test intimidate you, as a lawyer may answer questions and help you determine whether you pass.
4. It can stop wage garnishment. If a creditor is taking money from your paycheck or bank account, the automatic stay may put a quick end to this practice while you use bankruptcy to clear your debts.
5. All types of people file. Many filers are employed, and statistics show that people with advanced college degrees are filing in larger numbers.
Free Bankruptcy Case Evaluations
You can get a free bankruptcy case evaluation by calling (877) 683-5154.
Taking care of these five simple tasks before you meet with a bankruptcy lawyer for the first time may help you get the answers you need. Gathering this information ahead of time can help you make a clear, informed decision about the best way to clear your debt. If you are not comfortable completing a free bankruptcy case evaluation form online, you have the option of using your phone to call toll free 877-683-5154.
1. Prioritize Your Needs
The best course of action may depend on what you need the most. Is your top priority stopping foreclosure? Do you need to clear your debt quickly? Make a list of your top goals. Then you are better prepared to discuss your situation with a professional and devise a plan to meet your goals. DailyDollar readers and their families can get a free bankruptcy case evaluation by clicking over to the bankruptcy.me website.
2. Gather Bills, Letters From Creditors, Proof Of Debts
The types and amount of debt you have may dictate which type of bankruptcy is best for you. For example, if you only have debt from credit cards and medical bills then a single Chapter 7 case may completely clear all your debt. Storing your financial documents is easier when you follow the best way to organize your documents.
3. Outline Income Sources
Your income will help determine which type of bankruptcy is best for you. With proper papers, a bankruptcy lawyer may quickly be able to tell you if you qualify for Chapter 7 bankruptcy. Your income is documented by your most recent tax return and the W-2 and any other annual earnings statements you have. Your most recent pay stubs are helpful too.
4. Make A List Of Valuable Property
Bankruptcy is designed to protect your property – including homes, land, cars, boats, jewelry, work tools and more. The laws covering protections can be complex and vary in every state. Get information about the value of your property so you can ensure it is completely safe. To get an estimate of the value of your possessions, use free appraisal estimators such as zillow.com for real estate and Kelley Blue Book for vehicles. You can also find your receipts for items to show what you originally paid for them.
5. Think About Your Future
Knowing where you would like to be after you clear your debt may help you choose the best path to get there. Bankruptcy offers several options, but your lawyer may also offer advice on other types of debt relief and home protection. Knowing what you want will help you find a method best suited to your needs.
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Mortgage by Randy
monthly update to our clients, colleagues, family & friends
By: Randy Mitchelson, July 2011
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In Issue 40 We Touch On:
Forgivable Mortgage Program
How To Calculate Your Debt Score
Is An FHA Loan For You?
It has been a bummer of a day as I write this. The U.S. failed to deliver at both the British Open and the World Cup but life goes on. Mother nature had her hand in both outcomes (arguably). The Japanese soccer team was carrying the burden of their country's tragedy earlier this year that resulted in so much death and destruction and uncertainty. The elements in England during The Open may have bothered the fair weather Americans but played into the hands of the native champion. In the mortgage world a storm brewing as the uncertainty about interest rates increases. How we manage our national debt in the near term will contribute to what happens with interest rates. In addition, real estate prices for single family homes are rising as the massive inventory and backlog of foreclosures is being worked through. The storm of higher home prices and higher interest rates is coming - how far off it is remains an unknown.
The current newsletter and all prior newsletters are archived at the Mortgage by Randy blog. Bookmark it and share with your friends and family. You can make your own comments and feedback as well. Time for the news…
Mortgage Market: Free Reliable Foreclosure Avoidance Assistance & Forgivable Loans
The Homeownership Preservation Foundation (HPF) is a nonprofit group that helps financially challenged homeowners navigate their budget problems and, whenever possible, help them to avoid mortgage foreclosure - and they do it free of charge. HPF is an independent organization but is closely affiliated with major government agencies like the Department of Treasury and Department of Housing and Urban Development (HUD), and quasi-government organizations like Fannie Mae and Freddie Mac. Free, confidential consultations are available by calling HPF at 888-995-HOPE.
Forgivable Loan Program
Homeowners with significant income reduction due to involuntary unemployment, underemployment or medical condition are eligible for the HUD Forgivable Loan Program. Up until July 22, 2011, homeowners can contact HPF at 888-995-HOPE to begin their application process. Emergency Homeowners Loan Program (EHLP). EHLP is a zero-interest forgivable bridge loan program of up to $50,000 to be used to cover mortgage payments for 24 months. This program is for principal residences only. For homeowners that stay in their home for five years after receiving the EHLP loan funds, the debt is forgiven and does not have to be paid back to the government.
Personal Credit: Learn How To Calculate Your Debt Score
You probably have an idea of what your credit score is, but did you know that you can also find out your debt score? It's good to know both because they measure different things. Credit scores inform a lender of the predictability that you will repay a debt. You can't have a great credit score without having a history of responsibly managing debt. But how do you know what a healthy amount of debt is? That's where your debt score comes in.
Is Your Debt Level Healthy?
Your debt score will tell you if you have an unhealthy amount of debt given your age, income and other factors. Your credit score can't tell you if you should take on a new debt, but your debt score can. Visit oweing.com to calculate your free debt score and learn how much of your income is allocated to debt. You want your debt score to be as close to zero as possible.
Are You In A High Income Growth Job?
An important part of whether someone can manage a debt is their income. Our incomes change over time. Workers in high income growth industries will be in a better position to manage their debt than those that work in jobs with low income growth. For example, between 2002 and 2008 workers in a healthcare practitioner field experienced average income growth of 26%. Over the same timeframe, people with jobs in personal care and service saw incomes rise only half of that (13%).
Economy & Financial Insights: Pay Now Or Pay Later
What is the answer to the debt ceiling conundrum that our elected officials are playing political football with? The answer is it just doesn't matter. Would you like to experience financial pain now or later? Either way there will be pain. The "rip the band-aid off quickly" crowd wants to take our medicine now with acceleration of higher interest rates, increased taxes and reduced government spending. On the other hand, the "kick the can down the road" crowd wants to raise the debt ceiling, continue borrowing to fund deficit spending, and preserve tax cuts.
The fact is there is no good answer. The time for answers was years ago. Now the consequences of bad behavior must be managed and the argument is about how best to navigate those rough waters. If there is a silver lining to be found, it is in Europe where several countries are much worse off financially than the United States. The mass of confusion surrounding the debt crisis in Greece and other countries continues to make the U.S. Dollar a safe haven despite our own debt problems at home.
Compromise always rules the day in Washington D.C. and the debt ceiling hurdle will ultimately get resolved with a little bipartisan give and take that reduces government spending over the next decade, allows for continued deficit spending, albeit at a decelerating pace and the tax matter will probably be punted until after the next election. No one wants the inevitable need for tax increases on their voting record until after the next Presidential election.
Question of the Month: Do You Recommend An FHA Loan?
I receive calls regularly from people who have good jobs, steady income, but for one reason or another, their credit score is low. It may be due to a nasty divorce. Or maybe there was a previous job loss which caused late payments. Most lenders don’t care why the score is low – it is what it is.
But there is still an option to get a mortgage without seeking private money sources. An FHA loan is a mortgage loan fully insured through the Federal Housing Administration (FHA) and issued by FHA-approved lenders. FHA insures lenders against losses that may result in the event of a borrower default. Advantages of an FHA loan are:
-Low down payment.
-Lower cost.
-Easy credit qualifying.
-Straightforward mortgage terms.
Mortgages For Credit Scores 580 And Below
Let’s focus on the easy credit qualifying part. At one time, credit scores were irrelevant but they’ve tightened up slightly since 2010. If your credit score is above 580 and you have good income and little other debt, you may qualify for a program with a minimal down payment – 3.5%. If your score is below 580 you may still get approved, but the down payment minimum jumps to 10%.
Special Consideration For First Time Homebuyers
FHA is more concerned with your monthly income and debts. FHA especially likes to help first time homebuyers. When adding up your monthly debts, do not include your monthly expenses such as cell phone and utility bills. Rather, debts include any loans like car loans and student loans as well as your credit card debt. An acceptable ratio of monthly debt payments to monthly gross income is something below 43%, but sometimes exceptions can be granted.
Example Of Calculating How Big A Loan You Can Afford From Your Debt Ratio
If you had a car loan payment of $290 per month, a student loan payment of $100 per month and you pay $100 per month toward credit card debt, your total monthly debt is $490.
If you gross $3,000 per month from work your debt ratio is $490 divided by $3,000 or 16.3%. Given that the maximum debt ratio for an FHA mortgage is 43%, you can estimate what you can afford in a mortgage payment (remember to include estimates for taxes and insurance).
In this example, 43% of $3,000 is $1,290. Since you already owe $490 per month you have $800 left. Taxes and insurance on a small home will run at least $200 per month so that leaves $600 for principal and interest. At a 5.00% interest rate on a 30 year fixed loan, you could do a loan of $110,000 and have a principal and interest payment of $591.
Giving Back: Michelle' Angels Unveiled To Florida Public Relations Professionals
The Earlier this month I had the opportunity to introduce the Michelle's Angels Foundation to dozens of professionals at the Southwest Florida chapter of the Florida Public Relations Association. The theme of their meeting was "Professional Philanthropy-Giving Of Your Time" and I want to thank the FPRA for allowing me to share the exciting free services available from Michelle's Angels, including a hint that a Michelle's Angels Hope Concert is in the works for Florida within the next 6-8 months. Listen to the free, inspirational musical tracks at michellesangels.com and if you have a friend or loved one facing an illness or other challenge, please add them to the free Online Global Prayer List.
Need volunteers? Do you have a fundraising event upcoming? Do you have a personal web site where you are raising donations for your cause? Submit the information to randy@mortgagebyrandy.com by the 5th day of each month and we will do our best to include your information in the next issue.
The summer is flying by. By the time the next Mortgage By Randy newsletter is published I will be celebrating a big birthday and packing for a 2 week trip in New York for two tradeshows and some important family visits. Despite the intolerable workload I am forcing the issue with balancing life and work as I get reacquainted with my bat and glove and I'm also learning a little rugby. Work hard, play hard seems to fit for us, so until next time...
Randy
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Mortgage by Randy newsletter, Copyright 2008-2011 Randy Mitchelson. All Rights Reserved.
Randy Mitchelson is a licensed mortgage professional. All material presented herein is believed to be reliable but we cannot attest to its accuracy. All material represents the opinions of Randy Mitchelson. Recommendations may change and readers are urged to check with their financial advisors before making any decisions. Opinions expressed in these reports may change without prior notice. Mitchelson can be reached at 239-851-6738.
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You have permission to publish this article electronically or in print as long as the following is included:
Randy Mitchelson, of Estero, Florida, is a business professional, entrepreneur and author with over 15 years experience in financial services. Mitchelson has served in leadership roles for Global & Fortune 500 firms like Bank of America, KeyBank and CIBC.
As a member of National Association of Mortgage Brokers, Randy has earned the Lending Integrity Seal of Approval. He educates both individuals and groups about credit scoring by conducting personalized credit report reviews, action plans and one on one consultations. He is author of the free monthly newsletter, Mortgage by Randy as well as the Daily Dollar newsletter. A licensed mortgage professional, Mitchelson also founded Trinity Home Financing, LLC.
He is owner of Estero, Florida based National Web Leads, LLC, an internet lead generation service matching consumers with lenders for auto, cash advance and other financial products. Through its network of partners, National Web Leads delivers innovative Web 2.0 performance marketing solutions to advertisers and affiliate marketers.
Mitchelson earned his BS and MBA at Rensselaer Polytechnic Institute in Troy, NY. He is a founding member and Treasurer of the Southwest Florida Regional Technology Partnership Inc. and Vice President for the Michelle’s Angels Foundation Inc. He is married to Susan, a Pharmacy Supervisor in the Lee Memorial Health System in Fort Myers, Florida.
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Randy Mitchelson
Estero,
FL
More about me…
Randy Mitchelson, Licensed Mortgage Professional
Address: Estero, FL, 33928
Office Phone: (239) 851-6738
Cell Phone: (239) 851-6738
Email Me
Mortgage by Randy personal finance newsletter is sent monthly.
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