Brent Sute - Henger Rast Mortgage

10 Things That Make Your Mortgage Affordable and SUSTAINABLE

Brent Sute, LWC (Henger Rast Mortgage) — Sat, 04 Jul 2009 12:05:53 -0500

One of the biggest lessons we've collectively learned over the past three years is the importance of having a mortgage that is not only affordable, but sustainable, as well. (By the way, my friend Julie Miller started the consumer advocacy group Lenders Who Care - www.LendersWhoCare.org - based on this principle during the height of the real estate boom.) What exactly is affordable and sustainable? An affordable and sustainable mortgage is simply one that allows you to make your monthly mortgage payments while reaching your other financial goals and objectives.

An affordable and sustainable mortgage does several things:

1) Has a payment that fits into the home buyer's budget.

2) Leaves room for the abililty to save income on a monthly basis.

3) Has a payment that is low enough for the consumer to stay out of non-preferred debt, including credit cards and installment loans, many which have very high rates of interest.

4) The consumer should be able to afford the loan only considering their BASE income, and not overtime, commissions (unless they are 100% commission based), bonuses, tax refunds, or any other income that has the likelihood of decreasing, varying greatly, or going away altogether.

5) If the homeowner has deferred student loan debt, they should consider these payments, even if they will not be a factor for more than a year, into their affordablilty analysis.

6) If your spouse currently works, but is thinkng about cutting back or staying at home on a permanent basis, this should factor into your monthly payment objectives when considering your mortgage.

7) A sustainable mortgage program should NEVER have a pre-payment penalty.

8) A sustainable mortgage should NOT have a "teaser" payment. So many people that are in trouble with their mortgage now were lured into low payments that simply were not realistic over the long haul. Many of these loans were "option ARM's" in which the monthly payment that was due was actually less than the interest that was acruing. While this type of loan was affordable in the first few months, when the loan began to "recast" and the payment increased to make up for the negative amortization, these loans quickly became unaffordable and therefore not sustainable.

9) Interest-only loans were very popular over the past several years. These loans, while suitable for some self-employed or commission-only consumers, were not the best choice for many home-buyers who were only looking for a low payment. At some point in every interest-only loan, the payment adjusts in order to get the loan paid off on time, in most cases 30 years. That means after 3, 5, or 7 years, the payments go up, sometimes dramatically.

10) ARM's....An adjustable rate mortgage, if managed correctly, can be a valuable tool because the rate on an ARM is almost always lower than the rate offered by it's fixed rate cousin. However, if a home buyer spends the payment savings, as opposed to saving it or applying it towards principal, the ARM mortgage plan at some point in time becomes unsustainable.

Remember: there is a difference, sometimes a HUGE difference, in what you can qualify for and what you can actually AFFORD relative to your mortgage. Many mortgage loan originators simply look at getting you QUALIFIED for a loan and do not offer advice based on what is best for your overall long-term financial health. Be sure to be working with a mortgage planning professional who offers advice that will allow you to not only qualify for a loan, but obtain a loan that is affordable AND sustainable.

"Why the $8,000 First Time Home Buyer Tax Credit Helps ALL Home Owners"

Brent Sute, LWC (Henger Rast Mortgage) — Sun, 31 May 2009 21:15:13 -0500

"Why the $8,000 First Time Home Buyer Tax Credit Helps ALL Home Owners"

By Brent Sute

Most Americans are not happy about the current state of affairs in our economy OR the fact that our government is getting bigger and bigger. The fact that our Federal government is having to basically print money and take large stakes in the American companies to prevent our economy from falling deeper into trouble would have been unimaginable only a couple of years ago. However, the $8,000 tax credit for first time home buyers is a positive step to restoring our beleaguered housing market and will hopefully spark our economy from deep recession.

Housing led our economy into the current funk and it will help lead the economy out of recession. Even though the $8,000 tax credit is only available for consumers buying their first home (or consumers who have not owned a home in the past 3 years), all home buyers and other consumers will benefit. The current excessive inventory of houses will be eased by the fact new buyers are coming on to the market. Also, current home owners who would like to move to a larger home, or simply have to move because of relocation, now have more buyers that are interested in purchasing their home. Also, many of the foreclosures that are contributing to the excessive inventory in most markets are well suited for first time home buyers who will be receiving the tax credit.

Furthermore, the $8,000 tax credit is available to home owners once they buy a home. Recipients are not allowed to use the $8,000 towards their minimum contribution of 3.5% on a FHA loan. Therefore, a couple of weeks after closing consumers now have the much needed funds to go out and buy furniture, lawn mowers, carpet, and other accessories for their new home. This is absolutely a good thing for local businesses, home improvement centers, and people who offer repair and renovation services.

While the $8,000 is great for improving a newly purchased home, I am advising most of my clients to save a good portion of the money for cash reserves and to pay off high interest credit card debt. This approach will create more healthy financial households which lead in turn to a long term healthier group of consumers.

We have a long way to go before our economy fully recovers from the current down turn. However, the $8,000 tax credit is one thing the government is doing right to help the American economic situation.

Mortgage Rates Shoot Up Today

Brent Sute, LWC (Henger Rast Mortgage) — Wed, 27 May 2009 19:02:04 -0500

What Happened? Today was one of those days we hate to see coming. Actually, there is a sliver of good news in reasons behind today's market move. The 30 Year FNMA 4.0% bond was down 206 basis points today. This is a huge move to the negative and caused mortgage rates to sky rocket throughout the day. Usually, when there is such a strong move one way or the other, the market tends to overreact and come back the other direction shortly thereafter. However, at this point, the damage has been done to our mortgage rates and we'll have to wait and see what happens in the coming days. Perspective To put things in perspective, the average 30 year fixed rate mortgage, according to Freddie Mac, last week was 4.82%. That is about where rates started out this morning. Right now, the best 30 year fixed rate loan with 1% origination and no discount points and a 750 credit score is 5.375%, a one day increase of .5% in rate. This morning, Alabama Housing Finance Authority's Step Up rate was 5.0%. It ended the day at 5.625%. Why? Why the dramatic increase? A few reasons, including: 1) Bill Gross from PIMCO, the largest bond insurer, questioned the AAA credit rating of the U.S.; 2) Credit Suisse said that the Fed may be slowing down their purchase of mortgage bonds; 3) Better than expected Consumer Confidence yesterday; 4) A slightly better Existing Home Sales Report today. These factors, along with the notion that inflation could be a problem if the economy turns around, sent the bond traders into a selling frenzy. So, What Next? Anyone who has been pre-approved over the past couple of months should re-evaluate their loan approval if the rate in which they were qualified was under 5.5%. A .5% difference in rate could be the difference in an approval or a decline in today's underwriting environment. Secondly, I'd recommend buyers that are looking at purchasing right now evaluate the market carefully to see if we are going to see any improvement in rates. NOBODY knows right now whether or not rates will come back down, stay the same, or go higher. The next couple of days will be key to knowing which direction the market decides to head. I'm usually advising my clients to lock ASAP and take a good rate while you can get it. I'll probably take a day or two to see what the coming trend may be before advising my clients to wait to lock or go ahead and cut their losses while they can. Third, what happened today is exactly what we've been telling clients may happen at any time. People that were waiting for rates to fall below 4.5% before they locked are going to be very disappointed. Rates never were going below 4.5% and we will look back one day and remember this period where rates were in the 4's for an extended period of time. If you have clients or friends who are waiting to buy a home based on rates falling a quarter percent, please remind them that they are gambling and that rates are just as likely to go up .5% as they are to drop another .25%. The lesson: don't be greedy and take a great rate while you can get it. We may be looking at a situation where someone could have locked at 4.875%, but wanted to wait for 4.5%, and ended up with 5.5%.

$8,000 Tax Credit Soon To Be Accessible at Closing???

Brent Sute, LWC (Henger Rast Mortgage) — Wed, 13 May 2009 10:02:43 -0500

HUD Secretary Donovan appeared at a NAR function yesterday, and this is an exact excerpt of his remarks:

"We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a downpayment. So FHA will permit trusted FHA-approved lenders and HUD-approved nonprofits, as well as state and local governmental entities to "monetize" the tax credit through short-term bridge loans. We think the policy is a real win for everyone, ensuring that borrowers can tap into the numerous organizations that are already part of the FHA network to receive this additional benefit. FHA will be publishing the details shortly."

What does this mean? It means that HUD is puttting the finishing touches on allowing home buyers to access the $8,000 tax credit for their down payment at closing. This will allow more people to access housing, decrease inventory of existing homes, and allow the economy to possibly rebound quicker.

As I receive more information regarding the tax credit, I will pass it on.

Henger Rast

Brent Sute, LWC (Henger Rast Mortgage) — Wed, 06 May 2009 11:50:10 -0500

It is my pleasure to now serve my clients from Henger Rast Mortgage in Tuscaloosa. Henger Rast is an exciting place to work and I am very glad to be here. We have access to the country's best investors and offer our clients a variety of mortgage plans including FHA, Conventional, Jumbo, Alabama Housing bond programs, and USDA loans. Please do not hesitate to contact me for more information.

2009's Mortgage Environment - Changes, Challenges, and Opportunities

Brent Sute, LWC (Henger Rast Mortgage) — Wed, 04 Mar 2009 06:35:40 -0600

Some of the issues I've come across in the first two months of 2009 relative to obtaining mortgages:

1. 80% of the loans I am currently originating are FHA loans.

2. Soon, you will likely need a 620 credit score to qualify for a mortgage, including FHA. (Note: many lenders have already implemented the 620 minimum credit score; New South is not yet one of them.)

Also, underwriters are becoming more and more subjective when it comes to interpreting guidelines and manually reviewing credit. Expect underwriters to ask for documentation they wouldn't have before, perhaps delayed underwriting decisions, and sometimes a bumpy road to closing. With that said, originators and processors are still adjusting to what the underwriters are requiring and we will be able to help our clients manage the process better over time.

3. 70% of my new clients are first time home buyers - the $8,000 FTHB tax credit is certainly helping generate new homeowners.

4. Refinancing can be very challenging in this market; mostly because of appraisal concerns. Even in Alabama, where we lead the country in home appreciation in 2008, we are seeing it difficult to get appraisal values where consumers need them in order to refinance.

5. It is very difficult to predict what mortgage rates are going to do day-to-day, week-to-week, or month-to-month. In years past, it was easier to predict the range in which rates would move based on technical factors, inflation, etc.

6. PMI companies have gone crazy. Any loan with a debt to income ratio over 45% is being turned down by the PMI companies. If you have a 780 credit score and 83% LTV, but a 48% debt to income ratio, you probably can not obtain PMI on your conventional loan. If your debt ratio is under 45% and you qualify for PMI on your conventional loan, your annual rate may be more tan 1.0% of the loan amount.

7. The Alabama Housing Finance Authority's Step Up program is still the best thing going in my opinion. They still have down payment assistance for FHA loans (3% of the sales price; FHA requires 3.5% down), their rates are good (currently 5.5%), you do not have to be a first time home buyer to qualify, and your total household income must be under $97,000.

8. It is still my opinion that first time home buyers should put as little down as possible, unless they have access to lots of money. My reasoning: the MOST important factor in creating financial security is the accumulation of a reserve savings account. If a buyer uses all of their available money for a down payment and leaves nothing back for reserves, what's going to happen if they lose their job? Don't spend your reserves on a down payment if you don't have to. If you do put something down, only do so if you will have enough money in reserves to last several months of payments. To put things in perspective, a 3.5% down payment ($3,500) will only save a borrower about $25 per month on a $100,000 loan. On the other hand, the $3,500 would be enough to make a consumer's mortgage payments for nearly 6 months!

9. I believe the $8,000 tax credit is great for first time buyers because it allows them to pay off debts, accumulate savings reserves, and eliminates the need to use credit cards to buy furniture, home furnishings, and yard supplies after closing. This simply means, if managed correctly, the first time home buyer can live in their new home with a peace of mind that they will be able to afford and sustain their lifestyle.

10. Don't become paralyzed by the news. Understand what is going on, but don't see things worse than they are. Only be concerned with the things you can control, prepare for risks, but don't worry about the things in which you have no control. Also, now is the time to ACT on opportunities that will not be available forever. America will recover and will be better off in the future. There will likely be no other time in our lifetimes where we will see opportunities presented as we have right now. Relative to housing, we have lots of good inventory to choose from, home values that have come down (can you say "on sale?"), sellers that are willing to work with reasonable buyers, tax incentives for first-time buyers, and rates that are within 1/2% of the all time lows.

My 1st Mortgage: New Blog

Brent Sute, LWC (Henger Rast Mortgage) — Sun, 22 Feb 2009 21:14:54 -0600

Please be sure to check out my new blog that is focused exclusively on first time home buyers:

http://my1stmortgage.blogspot.com/

President Obama Lays Out Plans for Restoring Housing Markets

Brent Sute, LWC (Henger Rast Mortgage) — Wed, 18 Feb 2009 12:02:36 -0600

President Obama just completed a speech given in Mesa, AZ in which he highlighted the specifics of his plans for helping the U.S. housing markets recover.

He laid out a 5-point plan that included the following aspects:

Help 4-5 million American homeowners who are upside down on their mortgage (their loan balance is higher than their market value of their home) refinance with Fannie Mae and Freddie Mac. Cost to taxpayers will be zero.
Sub-prime lenders to modify terms of loans. Only 12% of mortgages are sub-prime loans, but over 50% of the foreclosures are from sub-prime products. The government is setting forth clear guidelines in which these modifications must be handled. The lenders must reduce the mortgage payments down to no more than 31% of the borrower's income. An estimated 3-4 million home owners may be affected.
Ensure liquidity and take mortgage rates low my continuing to buy mortgage bonds secured by Fannie Mae and Freddie Mac. Also, help shore up the liquidity of state housing finance authorities.
Help families avoid foreclosure by reducing balances to market values on primary residence homes.
$2 billion in grants for local neighborhood efforts in fighting foreclosures.

I was impressed by the President's effort to clearly and specifically explain how he plans to tackle this huge problem. I also liked the fact that he ended by saying that lenders, bankers, and consumers must act more responsibly in the future in order for us to avoid encountering these types of problems again.

Now, what the President said sounds good and hopefully will be successful. The question remains, can they pull it off, execute the plan, while still ensuring our future and the future of following generations. Only time will tell.

HBAA and AHFA Propose to Jump Start Housing in Alabama

Brent Sute, LWC (Henger Rast Mortgage) — Tue, 17 Feb 2009 17:38:59 -0600

Click on the following link for information on a proposed program that would dramatically help Alabama home owners and sellers:

http://www.hbaa.org/builders/homepage_articles.php?articleid=859&menu=

First Time Home Buyer Tax Credit FAQ

Brent Sute, LWC (Henger Rast Mortgage) — Tue, 17 Feb 2009 17:34:52 -0600

Click on the following link to learn more about the new First Time Home Buyer Tax Credit:

http://www.federalhousingtaxcredit.com/2009/faq.php#9

Please note that in order for the tax credit to be accessed by prospective Alabama home owners when they PURCHASE a home (not afterwards), the Alabama Housing Finance Authority would need to have the blessing of the state legislature. It is unknown at this time whether or not this will happen.

Economic Stimulus Plan Benefits the Housing and Mortgage Industries

Brent Sute, LWC (Henger Rast Mortgage) — Tue, 17 Feb 2009 17:21:48 -0600

Economic Stimulus Plan Benefits the Housing and Mortgage Industries

Revised February 17, 2009

Just signed and sealed...a $787 Billion Stimulus Plan made up of tax cuts and spending programs aims at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II.

Home owners and potential homebuyers stand to gain from key provisions in this stimulus plan. Here is what we know as of today...

Tax Credit for Homebuyers

First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction - a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

Additional Housing-Related Provisions

Tax Incentives to Spur Energy Savings and Green Jobs - This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings - This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing-This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance-This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

More Help for Homeowners in the Future

Another thing to keep an eye on in the coming weeks is President Obama's plan to help struggling borrowers before they are faced with a default on their mortgage.

According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.

While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That's because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.

The Economic Stimulus Plan is huge, and impacts a number of industries. I've highlighted some of the major provisions that may impact you now and in the future.

As always, if you have any questions or would like to discuss how this may specifically impact you, I'd be happy to sit down with you. Just call or email me to set up an appointment.

Economic Stimulus Plan (Compromised Bill) Breaking News

Brent Sute, LWC (Henger Rast Mortgage) — Fri, 13 Feb 2009 14:05:12 -0600

MEMORANDUM

DATE: February 13, 2009

TO: NAHB Members

FROM: Joe Robson

2009NAHB Chairman

RE: Economic Stimulus Update

House and Senate conferees completed work on final elements of the stimulus legislation early this morning. I would like to provide you with a brief overview of what is in the final legislative package, particularly as it relates to the housing community.

House and Senate conferees have agreed upon a compromise stimulus package at a total cost of $789 billion. The House is scheduled to vote on the package today and the Senate will follow suit shortly thereafter, with the expectation that the legislation will reach President Barack Obama's desk by Monday, Feb. 16.

There are several provisions in the overall stimulus package that will be beneficial for many of our members - and help stimulate demand for housing.

Chief among these is an $8,000 home buyer tax credit for new home buyers. While we are disappointed and would have preferred a more enhanced tax credit like the Senate version, the conferees did retain some key elements from the Senate and made other modifications that are beneficial to home buyers and home builders. For qualified home purchases in 2009, the legislation:

· Stipulates that the $8,000 tax credit does not have to be repaid, unlike the tax credit passed last summer;

· Keeps the tax credit refundable, or claimable regardless of tax liability;

· Extends the sunset date from July 1, 2009 until Dec. 1, 2009 so that consumers can utilize it during the critical summer and fall buying months;

· Allows tax credit home buyers to participate in the mortgage revenue bond program; and

· Permits state housing finance agencies to help buyers at closing by advancing the credit amount as a loan using tax-exempt bond proceeds.

While much of the industry's focus was on the home buyer tax credit, there are several other important components in the legislation that will help small businesses and bolster the housing market. H.R. 1, the American Recovery and Reinvestment Act of 2009, will:

· Help home borrowers in high-cost markets by extending the 2008 FHA, Fannie Mae and Freddie Mac loan limits of $729,750 through the end of this year;

· Temporarily allow exchange of Low-Income Housing Tax Credit allocating authority for tax-exempt grants and appropriates $2 billion in HOME funding for affordable housing projects;

· Provide up to a 10-year deferral of tax due to business debt restructuring;

· Expand the net operating loss carry back period from two years to five years for small businesses (businesses with average gross receipts of no more than $15 million over the prior 3 years) for losses arising in tax year 2008;

· Extend the 25C existing home remodeler credit through the end of 2010, increase the credit rate from 10 percent to 30 percent, raise the lifetime cap from $500 to $1,500, and expand the set of qualifying property;

· Provide an Alternative Minimum Tax patch for tax year 2009;

· Increase bonus depreciation and Section 179 small business expensing for business investment in 2009;

· Increase New Markets Tax Credit allocating authority for 2008 and 2009; and

· Delay for one year the start of the 3 percent government contractor withholding requirement (from 2011 to 2012).

Once the bill is signed into law, NAHB will be reaching out to you and your locals to provide information and marketing tools to make home buyers aware of the tax credit and to help builders utilize other aspects of the legislation in order to maintain and/or grow their businesses. (Attached at the bottom of this memo is a file that contains key provisions of the American Recovery and Reinvestment Act of 2009.)

Keep in mind this stimulus legislation is just a first step and we know it is far from perfect. Rest assured, NAHB will leave no stone unturned until the housing market gets back on track. In the days, weeks and months ahead, NAHB plans to work closely with the Congress and the Administration on a host of issues to achieve these aims. Our primary focus will be on efforts to:

· End the credit crunch, particularly as it relates to acquisition, land development and home construction lending;

· Mitigate foreclosures; and

· Further reduce mortgage interest rates to stimulate home buying.

We will make every effort to keep you informed through your local association, Nation's Building News (NBN), and other communications vehicles over the coming days and weeks.

Alabama Foreclosure Task Force

Brent Sute, LWC (Henger Rast Mortgage) — Tue, 10 Feb 2009 23:27:48 -0600

For Alabama homeowners facing possible foreclosure:

http://www.alabar.org/publications/articles/Nov08/foreclosure-crisis.pdf

Great Resource for the Economic Stimulus Plan

Brent Sute, LWC (Henger Rast Mortgage) — Tue, 10 Feb 2009 23:18:38 -0600

Check out: www.financialstability.gov/

I found the "Fact Sheet" especially helpful.

Inside Story: False Illusions and What You Need to Know About Mortgage Rates

Brent Sute, LWC (Henger Rast Mortgage) — Wed, 04 Feb 2009 10:04:44 -0600

Inside Story: False Illusions and What You Need to Know

Follow up post to my article entitled "Don't Wait to Lock Your Record Rate" on 1/29/09

(Distributed with the express permission of Sue Woodard and Barry Habib from Mortgage Market Guide)

The Fed's been at it again, offering words that sound encouraging at first blush, confirming that their buying program of Mortgage Backed Securities is in full swing and will continue as needed. Of course, the media will pick this up and offer their own interpretation, saying "Good news, the Fed's words on continuing their purchasing program mean that rates will continue to drop lower, and remain low into the summer..." But is this really what that means? Not so.

Here's the truth.

Yes, the Fed has been buying Mortgage Bonds, but if you look at what they are purchasing, they are buying a lot of FNMA 30-yr 5.5% and 5.0% Bonds...which won't have much of an impact on present interest rates. Why? First, see the Fed's purchases for yourself by hitting this link: Direct Link to View Fed Mortgage Bond Buying - http://www.newyorkfed.org/markets/mbs/index.html.

So why is the Fed buying these Bonds? Well if you think about it, it's very smart of the Fed...and maybe even a little sneaky...because 5.5% Bonds actually represent outstanding mortgages with rates of 6 - 6.50%, which are precisely the loans being refinanced at today's great interest rates.

Stay with me here...

With rates at present low levels, many of the mortgages in these FNMA 5.5% pools being bought up by the Fed will be refinanced and paid, thus giving the Fed a quick recoup on some of their investment. And this is likely a big reason why the Fed said they could continue this purchasing program beyond June, if necessary. Bottom line, the Fed buying these higher rate coupons will not necessarily help rates to move lower, as their actions do not impact the loans being originated at today's low rates.

Here's the most important part.

Sometimes I talk to clients who are in a situation where it makes sense to refinance right now, and save $250 per month for example. But when they hear the media throwing around teases of lower rates ahead, they decide to hold off on making the decision to save the $250 per month right now, in the hopes of gaining another $30 per month in additional savings with a lower rate than where we stand presently. Now clearly, rates could turn higher, and this window of opportunity could pass them by entirely.

The clincher is this:

Even if those clients ultimately are correct in timing the market, and eventually grab that lower rate and save another $30 per month - think of what they have lost by waiting. While they delayed, they lost the savings they could have gained by taking action sooner - or in the example used, $250 - for every single month they waited. So even if they got lucky and obtained the rate they were looking for, it could take years to make up what they lost by waiting.

I don't want anyone to miss an opportunity by either waiting, or not understanding what is at stake. Let's talk further on this - call or email me and let's discuss what this might mean for you.

If It Sounds Too Good To Be True....

Brent Sute, LWC (Henger Rast Mortgage) — Tue, 03 Feb 2009 18:24:58 -0600

Many of our clients are getting mail from different mortgage companies offering "special deals" for loans. What happens is as soon as a mortgage lender pulls your credit, the credit bureaus sell your inquiry to mailing lists that are distributed to direct solicitation companies who then call or write you about refinancing with them. Coincidence, huh?

100% of the time I have looked at the direct mail solicitation, it has been deceptive advertising a bait and switch scam, or simply not as advertised when the client called to take advantage.

For instance:

A client and friend of mine dropped off a piece of mail he received from a lender in Ohio, I advertised an "effective" rate of 3.35%. Now, since the rates at the time were in the low to mid 5's, I knew this had to be a scam. Sure enough, the "effective rate" was nothing more than a creative calculation. Basically, they were advertising a loan at an above market rate that was set up on a bi-weekly loan program. Well, the bi-weekly loan program is nothing more than a way to make one extra payment per year, thus reducing the interest expense over the life of the loan. They took the actual interest and acted like it was paid over 30 years to come up with the "effective" rate. Sounded good, but come on, nobody can offer rates in the low 3's for a 30 year fixed mortgage. If it sounds too good to be true, it probably is.

Another client that I was already doing a refinance for called about a month ago and read me a letter he received from his current loan servicer. Well, it advertised a "low cost" refinance. It advertised a flat fee of $1,500 or so. The rate was the same rate I was offering my friend, so I recommended he call to research it further and told him if his current lender could offer the same rate for less cost than me then go ahead and go with them. About an hour later he called back very upset saying that they told him the flat fee was simply just the origination fee and there were other fees involved that made the deal not so special. Once again, if it's too good to be true, it probably is.

About an hour ago I spoke with a title agent who recommended a relative to refinance with us. I offered a very fair rate and low costs to the client, but he chose to go with a loan broker out of Texas. I have nothing against Texas loan brokers, I am friends with several. However, this particular one totally messed up the application and my title agent friend is very upset with the broker. As I said, if it's too good to be true, it probably is.

Finally, a few minutes ago I received a call from a repeat client that received a piece of mail from a lender about refinancing. They advertised 4.75%. This is simply another case of a "quoted rate" and a "real rate." Lenders can LEGALLY quote ANY rate they wish on any given day. All they have to do is put a disclaimer at the end of the ad saying that "rates are subject to change." Guess what? do you really believe that lender who receive their business through direct solicitations are going to quote market rates or give advice that matters to customers? No way! There is no way today at 5:00 a lender can quote 4.75% without any discount points. Just isn't happening. Finally, if it's too good to be true, it probably is.

There are 26 variables that go into setting an actual mortgage rate. Some of these items include credit score, LTV, debt ratio, # of days locked, purchase, refinance, cash out refinance, loan type, discount fees, origination fees, property type, PMI, and others. Oh yea, rates have been changing on average twice per day over the past 6 months. If ANYONE quotes a rate, that is all it is. Don't expect to get that rate. Ask for a RATE LOCK GUARANTEE in WRITING along with a good faith estimate of closing costs to make sure the rate you are being quoted is not offset by higher than normal closing costs. (Why do you think they call it "discount fees?"

The key is only deal with a mortgage professional that you know well, or one whom comes HIGHLY recommended by someone you trust.

I will post next about how to properly shop for a mortgage.

Balance

Brent Sute, LWC (Henger Rast Mortgage) — Sat, 31 Jan 2009 07:56:33 -0600

Work hard, play hard. I firmly believe that the key to a happy and healthy life is balance. It is crucial to know what is important to you and make sure that you pay attention to EVERYTHING in your life. At times, it is ok to be out of balance, but only for a short period of time. This is necessary when you have pressing needs at work, a family crisis or opportunity, etc.

A great tool for leading a balanced life is to do a "Life Plan". Like a business plan, a life plan simply allows you to put on paper the 5, 6, or 7 things that are most important to you in your life. Then, you basically build your schedule around activities promoting each and every one of your important areas.

For example, here are my areas I value most:

God
Marriage
Fatherhood
Health
Extended Family
Friends
Career

All 7 of these things are VERY important and none should be ignored. If I focus on career and friends and ignore family, health, and my spiritual relationship with God, things will not be good for very long.

Here is how my weekend will be balanced: Early Saturday morning family time; work half a day; call my mom; eat healthy; spend some time talking with Kellie (my wife); spend time with friends watching the Super Bowl; take the boys to a Bama basketball game; pray, and go to church on Sunday.

Someone said that balance is overrated. I say let them live out of balance for a few years and see how things go.

Thank God for Clients

Brent Sute, LWC (Henger Rast Mortgage) — Fri, 30 Jan 2009 18:33:13 -0600

God is good. He provides clients that need homes and mortgages to us lenders and other real estate professionals. For that, I am thankful.

My production partner Katina and I were talking today about how much we love our careers. The reason we love what we do is because we are able to help people in a real way achieve their dreams of owning a home affordably. I know that sounds corny, but it is the truth.

I just got off the phone with several clients that closed on their loans today. Every one was grateful and very happy. All of the hard work, market fluctuations, underwriting issues, credit scores, and everyting else that goes into what we do somehow doesn't matter in the end. What matters, is connecting with people, giving your best, always doing the right thing, and being thankful. That is all.

Starting now, I will be more thankful, will focus on quality and not quantity, and enjoy the company of my clients who are also now my friends.

To all of my clients and referral partners: THANK YOU!

"Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who does not change like shifting shadows." James 1:17

Vision and Action

Brent Sute, LWC (Henger Rast Mortgage) — Thu, 29 Jan 2009 20:45:00 -0600

"Vision without action is a daydream. Action without vision is a nightmare." - Japanese Proverb

"Don't Let Your Dreams Be Dreams." - Jack Johnson Song "Dreams be Dreams"

Don't Wait Until It's Too Late to Lock Your Record Rate!

Brent Sute, LWC (Henger Rast Mortgage) — Mon, 26 Jan 2009 21:04:46 -0600

Let's face it, everyone wants to get the best deal out there. We want to get that house at the bargain basement price, we want to buy the car after making the car dealer say "mercy", and we all want the VERY lowest possible rates on our mortgage. For the past 5 years, with the exception of a few brief moments, mortgage rates have generally been in the high 5's to high 6's. When rates went down into the 4's a couple of weeks ago, many people jumped on the opportunity to get an unprecendented rate on their home loan. However, there were probably just as many people who waited and decided not to lock in hopes of scoring an even lower than record rate on their loan. More than one person asked me if rates were going below 4.5%.

A few weeks ago, in his annual market review and prediction article, Barry Habib of Mortgage Market Guide mentioned that rates for 2009 would range from 4.5% to 5.5%. As I write this post, rates are generally 5%-5.25%, up from 4.5%-4.75% two weeks ago. I've got a whole list of clients waiting for rates to hit 4.5% again before they lock. My feeling is that they may not get the 4.5% they are looking for, but they very possibly will be able to get an opportunity to lock in the upper 4's in the coming weeks.

For a number of reasons, these rates will not stay at these ultra-low levels for an extended period of time. Some of the reasons include:

1) Inflation. Inflation is the arch-enemy of bonds, including mortgage-backed securities. While there is no apparent inflation in today's economy, the busy driving season and the influx of cash by the government will likely cause inflationary pressures heading into the summer months. Even the hint of inflation will be enough to eat away at the price of bonds, sending home loan rates upward.

2) Lender Volume Levels. Virtually every lender in the country cut staffing levels this past fall. Couple that with mortgage applications that are up nearly 400% and you have a situation where it is nearly impossible to keep up with the demand. In order to slow down the demand on their systems, lenders are artificially charging mortgage rates higher than the market would normally permit. If mortgage rates are generally 4.75%, and a lender can charge 5% and be at full capacity, they are going to charge the higher rate.

3) Less Competition The mortgage industry is definitely in a transitional period. In 2009 you will see less and less mortgage brokers and indirect lenders in favor of direct retail mortgage banks. The government regulators are encouraging more and more lenders to eliminate wholesale mortgage operations in lieu of direct lending. This in and of itself will cause rates to be slightly higher as mortgage lenders try to keep up with demand and strains on the system as mentioned in #2 by charging slightly higher rates.

4) Risk-Based Pricing Fannie Mae and Freddie Mac are now very much involved with pricing that is tied to borrower's credit scores. A client with a 650 credit score is now looking at a rate 1/2% higher now than they would have gotten a year ago. In fact, any borrower with less than a 720 credit score is penalized with higher rates on conventional loans. Also, PMI companies are MUCH more restrictive with the loans they are insuring and charging premiums that are higher than ever. If this trend continues, it will become more and more expensive for borrowers to obtain financing at good rates.

5) Federal Government Buying Bonds - The federal government is the main reason we are seeing rates as low as 4.5% in the recent cycle because they are buying up to $500 Billion in mortgage bonds. When the federal government STOPS buying mortgage-backed securities, we will see mortgage rates automatically increase. How much of an increase, we don't know.

NOTE: The Fed is actually now buying 5.0% and 5.5% mortgage bonds. Lenders are currently mostly lending 4.5% mortgage bonds. Therefore, the Fed's buying campaign is not affecting our rates in a positive manner anyway.

6) The Market The mortgage rates are at record levels. NOTHING stays at record levels forever. When housing and the economy regain momentum (and they will), you will see rates much higher than they are currently. This is simply a market principle.

In an earlier blog post, I showed the savings of refinancing a loan to from 6.5% to 5%. The payment savings and interest saved over time is mind boggling. The bottom line is this:

If you are likely going to stay in your home for another 5 years or more, it will make sense for you to refinance if you can lower your interest rate by at least 1%.

If you are going to stay in your home 3-5 years, it MIGHT make sense to refinance if you can lower your rate by at least 1.5%.

If you are going to be in your home less than 3 years, you will likely not have time to recover the closing costs it takes to refinance.

Don't let a perfect rate get in the way of great rate. I assure you, there will be consumers around the country who will be stuck paying a rate over 6% who could have gotten 5%, but wanted 4.25%. Take your profits when you can get them; lock in within a 1/4% of the all time low rates; and count the thousands of dollars you will save over the life of your loan.

For More Information, Check Out This Week's Mortgage Market Guide Newsletter:

MMG Weekly

Eight Tips for Landing a Mortgage

Brent Sute, LWC (Henger Rast Mortgage) — Mon, 26 Jan 2009 19:59:08 -0600

The following is a great story written by Christopher Palmeri that appeared on BusinessWeek.com on January 23, 2009

Eight Tips for Landing a Mortgage

Sure, home loan rates are lower than they've been in 30 years. But now you need to navigate a maze of credit standards and conditions

By Christopher Palmeri

Link to Story:

http://www.businessweek.com/lifestyle/content/jan2009/bw20090122_458508.htm

6.5% vs. 5.0%....What's the Real Difference?

Brent Sute, LWC (Henger Rast Mortgage) — Sat, 24 Jan 2009 10:35:45 -0600

Have you ever wondered the difference in payment and interest savings between a rate of 6.5% and 5%? Here you go:

As you can see, the savings is significant: $152 per month payment difference, $23,782 interest savings over 10 years, and over 8 years off your mortgage if you continue to pay the 6.5% payment with the 5% rate.

Many consumers will miss out on a tremendous amount of savings trying to time the bottom of the rates and get the "perfect rate". If you are over 6%, don't hold out for 4.5% if you can get 5% currently. It's just not worth the risk.

Financial Planning Steps for 2009 and Beyond

Brent Sute, LWC (Henger Rast Mortgage) — Thu, 22 Jan 2009 21:01:18 -0600

Do you want to secure and sound financial future and reach all of your future goals? Here are the four steps:

1) Cash Reserves - The MOST IMPORTANT step is to accumulate some savings. The over 2 million Americans who lost their jobs in the past year that will be able to make it without perhaps filing bankruptcy are the ones who have the safety net of a cash reserve account. You never know when something might happen and your income will disappear, whether it is a job loss or disability. Also, you never know when you may have an unexpected purchase or expense such as auto repairs, unexpected medical bills not covered by insurance, or when you may need to help an elderly parent. Ideally, you want six months salary socked away somewhere safe and accessible. However, any amount is better than nothing.

2) Pay off Non-Preferred Debt - Non-preferred debt is any debt that is not tax-deductible or carries a high interest rate. Credit cards sap the life out of a financial plan. Pay your cards off each month and use them in the event of an emergency and to help your credit scores. When you pay your cards off, be sure to keep them open with as high of a credit limit as possible, and use them sparingly (one small purchase per month) for maximum points on your credit report.

3) Save and Pay Cash For Purchases - Try to get to the point where you are paying cash for Christmas, birthdays, vacations, and if possible, automobiles. Also, put away as much as possible for retirement, especially if your company matches your 401k contributions. This, of course, requires you to live within your means.

4) Pay off Your Mortgage - Once you have accomplished the above goals, focus on reaching your mortgage freedom point. This is the point in time where your mortgage is paid in full OR you have enough liquid savings set aside to pay it off if you choose. I personally prefer the second alternative since it allows consumers to keep control of their funds through liquidity, preserves tax benefits, and allows you to earn a rate of return.

Note: Imagine the thousands of Americans who have focused on pre-paying their mortgage or getting a 15 year mortgage over the past few years. Many of these consumers believed they were doing the right thing by sending in extra funds to their lender. Well, when some of these Americans lost their job, the bank still wanted their monthly payments. Since some of these well-meaning, proactive, and responsible consumers skipped steps 1, 2, and 3 and went straight to step 4, they lost their homes or are facing foreclosure in the very near future.

Remember these four steps: cash savings/no credit cards/live within your means by paying cash/reach your mortgage freedom point and you will have peace of mind and a very bright financial future.

"You Can Skin a Sheep Once, Or Sheer It For a Lifetime"

Brent Sute, LWC (Henger Rast Mortgage) — Wed, 04 Jul 2007 14:22:34 -0500

"You Can Skin a Sheep Once, Or Sheer It For a Lifetime" - Jim McMahan

I love that quote from my mentor and mortgage industry leader Jim McMahan. He is so right. We can "sell" our clients on the program that could generate us the most commission and make lots of money on the transaction. Or....a better way would be to take a consultative approach and just focus on doing what is right for the client, EVEN IF IT MEANS WE DO NOT MAKE THE SALE. The latter approach will ALWAYS significantly outperform the former over a career. If you do what is right for your clients, regardless of your commission, you will build enormous trust, create an annuity business with repeat sales, and receive an exponential amount of referrals over a lifetime.

For more information on Jim McMahan, check out his website: www.certifiedscripts.com.

America's Savings Rate (Or Lack Thereof)

Brent Sute, LWC (Henger Rast Mortgage) — Mon, 02 Jul 2007 00:17:30 -0500

As you can see, Americans are spending more than they are making! This has never happened before, but is now a trend that has been in place since 2005.

What is frightening about our lack of savings is we will be facing a huge problem at retirement if things don't change. 3/4 of Americans age 55-64 have less than $56,000 saved for retirement. They can't live off of that considering the average social security benefits are less than $1,000 per month.

97% of Americans with children do not have a college savings plan.

65% of Americans live paycheck to paycheck.

As mortgage professionals and mortgage planners, we have a great opportunity to help our clients structure their mortgage in a way that will allow them to actually save their income for the things they want in the future. We should be asking them questions in an effort to help raise awareness and to assist them in ways to increase their personal savings rate. This will not only allow them to obtain their new home, but will allow them to build wealth for them and their families over time.

(Chart courtesy of Dave Savage- The Mortgage Coach - www.themortgagecoach.com. Statistics courtesy of Sue Woodard and Barry Habib - The Mortgage Market Guide - www.mortgagemarketguide.com)