Here is a very short and sweet article on what you need to know before applying for your first mortgage, which no doubt will go along with purchasing your first home. This will give you a little taste - for much more detailed information and great advice, check out http://www.homemortgagetruths.com!

Applying for Your First Home Mortgage? What You Need to Know
by: Jay Moncliff

Applying for your first home mortgage at first might seem like an easy process simply because people buy and sell homes every day. However, buying a home is not like buying a new bike, and applying for a home mortgage can be a long and drawn out process requiring a lot of patience and fortitude. However, if you know what to expect up front the home mortgage process will be much easier and a lot less stressful.

The following home mortgage tips will help you figure out how to best go about the home mortgage loan process for your situation.

Home Mortgage tip #1 Interest Rates

Before applying for your first home mortgage loan you will want to shop around and see what average home mortgage loan rates are. Shopping for home mortgage rates online is a timesaver and frequently have lower rates as well. Your home mortgage rate will affect how much money you have to pay back over the term of the loan, so the lower the better.

Home Mortgage Tip #2 Fixed or Variable Interest Rate

When it comes to your home mortgage loan there are more options than just a loan you pay back over a set amount of years. You can choose different home mortgage interest rates that work best for your current and future situations. So, before you apply for a home mortgage loan do some research on variable and fixed interest rates to find what will work best for you.

Home Mortgage Tip #3 Down Payment

When applying for a home mortgage loan for the first time you might not be aware of the general down payment you will be required to make. Many times a home mortgage loan requires between 10 and 20% of the price of the home, but if you have good credit sometimes you can make a lower down payment and still get a good deal on your home mortgage. This depends on the home mortgage lender, so shop around.

Here's an interesting article on whether it's worth it to refinance or not. The author makes some good points and definitely brings up some items for consideration, though he does tend to be a little pessimistic.

Is Home Mortgage Refinancing Really Worth It?
by: Steve Shannon

Is it really worth it? Excellent question... since the refinancing process can take upwards of 2-3 months to complete, plus the expenses and hassles of refinancing may outweigh the benefits.

Not everyone should refinance just because rates are lower. The general rule of thumb is to consider refinancing if rates are at least 2% lower than your current rate. This is considered a safe margin.

Also, consider these things...

Are you planning to sell the house at any time? If so, how far into the future? It may not be beneficial to refinance now. Many people who are "in the know" say that it takes 3 years to fully realize the savings from refinancing; considering in all of the costs of refinancing.

Will you have to pay a penalty for closing the current loan? This may be substantial enough to change your mind about refinancing.

Do you have an Adjustable Rate Mortgage? You may want to lock your loan in at the lower rate if you are fairly sure the rates will rarely, if ever, get this low again.

Do you want "Cash Out" to pay other debts, etc.? Keep in mind that if you ask for "cash out refinancing" that the amount of your loan is usually limited to 80% of your home's value. Of course, all things being different, you should check with your lender to see what exceptions may apply. If you need cash, but the straight refinancing option isn't equitable, you might want to consider getting a Home Equity Line Of Credit. This lets you borrow against the equity in your home with a credit account, checking account and/or direct payment.

Is your loan owned by Fannie Mae or Freddie Mac and if so, do you have at least 5% equity in your home? The higher the Loan-To-Value (LTV) number the better for you. Most lenders expect you to have at least 10% equity in your home to qualify. 10% equity in your home gives you have a Loan-To-Value (LTV) of 90%. However, if your loan is owned by Fannie Mae or Freddie Mac, your LTV could be 95% - meaning you only need to have 5% equity in your home to qualify. Contact the company where your mortgage payments are sent and ask them about your LTV.

Because each situation is unique, there are several more things to consider. Spend a little bit of serious time researching this topic until you are satisfied with the quality of answers you have found in regard to your own situation.

The wrong decision could... well, hurt. The right decision could end up saving you quite a nice little nest egg.

Today I want to talk a little bit about home equity lines of credit (HELOCs), and then I'll give you an article with even more information. HELOCs are becoming increasingly popular these days, especially since people still spend more money than they make but they don't want to touch the low first mortgages they locked in a year or two ago. HELOCs definitely have some advantages, but you have to be careful too.

The really scary part about HELOCs is that they're generally fully adjustable. This means your rate is not locked at all, and your payment could potentially change every month. As if that's not bad enough, HELOC interest rates are generally tied to the Prime Rate. This is bad because the Prime Rate is directly tied to the Fed Funds Rate, which is being raised nearly every two months by the Fed Open Market Committee (FOMC), and its chairman Alan Greenspan. This means that unlike most mortgage indexes, the Prime Rate is not determined by the market, it's determined by the government.

So in a nutshell, be very careful before deciding to open a HELOC. If your interest rate is tied to the Prime Rate, realize that it can go up at any time and is not tied to the markets, so it can be very volatile. For further explanation or questions, please feel free to shoot me an email at carey@januaryfinancial.com!


A Home Equity Loan - What You Should Know?

Copyright © 2005 Dean Shainin

Asking yourself, “Is a home equity loan right for me?” is the first and most important step to take.

Home equity loans have become so popular today because of increasing home values. A home owner can access money for consolidating debt, home improvements, a new car, education or starting a new business.

Emotions can take the place of logic when considering a home equity loan.

It’s a good idea to sit down and take your time before signing up. Educating yourself will benefit you in the long run.

A home equity loan is like having a second mortgage on your home. Suppose your home is worth $200,000, and you have a mortgage against it at $150,000, you will have $50,000 of equity available. Home equity loans allow you to borrow up to 80%, and sometimes more in certain situations, of your homes value. In this situation you could borrow $80,000 as a home equity loan and still have only borrowed 80%.

This is why it is so important to take a good look at your situation before making a decision. You can see how easy it could be to get carried away with a home equity loan.

The second step should be to get an idea of what your home is worth in today’s real estate market. You can look at what others in your area have sold their home for. A realtor can help you with getting an idea of your homes fair market value. Be sure to get a few quotes because some realtors may be interested in inflating your home value in hopes of earning your business.

When you have an approximate figure, you can get an idea of how much equity you have in your home. At this point you should have an estimate of how much money you need to borrow. It’s best if you can avoid borrowing up to the full 80% of your homes value.

This is where some home owners get carried away with their emotions and logic goes out the window. It can be so easy to say, I have $60,000 available and I really only need $40,000 for remodeling my kitchen and bathrooms. Why not borrow $50,000 so I can go on my dream vacation. It’s important to remember that the more you borrow, the higher your payments will be. This is simple logic. But, emotions can take over and you can end up having a tough time paying back the home equity loan, with the risk of losing your home.

The third step is to figure out what type of home equity loan you want. In today’s market, there are two popular types of home equity loans. A line of credit and a closed end loan.

With a line of credit, it is just like having a credit card with a large credit limit. Depending upon the bank, you may be required to make minimum monthly payments. Others may only have you make payments if you’re at your credit limit. If you have had problems with high credit limits in the past, this may not be a good idea. It’s best to have discipline with a line of credit and big credit limits.

Having a closed end loan is just like your standard home mortgage loan. You borrow the money for a set period of time and make monthly payments until the loan has been paid off.

The fourth step is to figure out how long you want to borrow the money. This is where mortgage calculators can help you. It’s easy to find them online and helps you to avoid having to talk to a loan broker before you are ready. Try different time frames to see what you can and can not afford. Be sure to decide if you’re going to take a line of credit or a closed end loan before you put in your figures. This is an important step to see how much you can afford repaying on a home equity loan. It’s best again to use logic, not emotion in regards to how much you can afford to repay.

The fifth step after choosing the home equity loan you want, is to find a good bank or lender. Shopping online can save you valuable time. Banks and lenders are very competitive for your business online. You can use this to your advantage and save money on fees. Be sure to look over the fine print of your home equity loan contract before signing anything. Read everything, and if you have a questions be sure to have them answered first. Be very clear on everything and take your time.

A home equity loan is a great way to help you take care of things you would like done or feel you need. If done properly , a home equity loan can be a valuable resource. Educate yourself to find out what is best for your situation. Try not to compare your situation to someone else. Only you know what is best for you. Home equity loans can be a big windfall or a big headache. It really depends upon you taking the time to research your options and choosing the right loan.

About the Author:
Dean Shainin is a consultant specializing in home equity loan strategies, refinance and consumer home loan information. Grab a copy of "The Ten Dirty Little Secrets Of Mortgage Financing" at: http://www.homemortgageloantips.com

Article source: ArticleWorld.net Free Articles

Credit is, in my opinion, the single most important part of a person's financial picture these days. Excellent credit allows you entry to many great things, where poor credit can hold you back regardless of your income or net worth. Here's a great article on protecting your credit and information on paying bills that might surprise you.

When paying bills can hurt your credit

Now that you've decided to clean up your act, use caution: Settling some old debts can harm your credit score. Here's how to do the right thing the right way

Borrowers who try to pay off old delinquencies, charge-offs and collection accounts often learn the hard way: Sometimes, doing the right thing does the wrong thing to your credit. Thanks to the sometimes bizarre quirks of credit scoring, state statutes of limitations and the federal Fair Credit Reporting Act, consumers can’t necessarily assume that paying off old debts will improve their financial situation or make them a better risk in lenders’ eyes. Add in the tactics of some unethical collection agencies, and you have a real quagmire. "It seems so easy, but it’s not," sighs Steve Rhode, a private money counselor and co-founder of the Rockville, Md., credit-crisis counseling firm MyVesta.org.

Here are just some of the problems that can arise:

• If a creditor has already charged off an account and sent it to collections, paying may not help your credit score and might hurt it.
• Arranging a payment plan or even inquiring about an old debt can restart the statute of limitations in some states, allowing creditors to sue you.
• Simply contacting a creditor about a past-due account can revive its interest in trying to collect, leading to harassment and hardball tactics.
• Unethical collection agencies may promise to upgrade how your debt appears on your credit report in exchange for payment -- then not follow through or make matters worse by making the debt seem more recent than it is.

Jim and Andrea have heard some of the horror stories, and they’re nervous. The two, both 31, want to pay off the $33,000 they owe to various collection agencies and creditors, including the Internal Revenue Service (IRS). Since accumulating the debt, they’ve landed better jobs and moved to a cheaper area in Pennsylvania, freeing up an extra $800 a month to pay off bills.
"Our dream is to buy a house," Jim wrote me in an email. "We are both committed to getting out of debt, but we want to do this the correct way."
It’s not going to be easy, credit experts agree.
To understand why, you need to understand some of the practices of the credit industry, such as:

How delinquencies and charge-offs are handled

A lender will generally write off an account as a bad debt within six months after it becomes delinquent -- in other words, six months after the borrower stops paying. The write off is reported to the credit bureaus as a "charge off." Some people incorrectly believe that a charge-off means they no longer have to pay their debt. But "charge off" is basically just an accounting term, notes debt expert Gerri Detweiler, author of "The Ultimate Credit Handbook" (2003, Plume). It doesn’t relieve you of the legal or ethical obligation to pay the loan, and the lender or a collector can still come after you. Usually, a lender will turn the charged-off account over to its collections department or a collection agency, and you’ll have two entries for the same account on your credit report: one from the original creditor showing the account’s status as charged off and another from the collection agency showing the account’s status as in collections.
(If you have more than two entries for the same debt, which sometimes happens when an account is passed from one collection agency to another, you can demand the credit bureaus remove the extra entries.)

How your credit score views old debts

Not paying your bills is a big bad when it comes to your credit. Delinquencies, charge-offs and collections all seriously hurt your score. But here’s something that’s really important to know:

When it comes to your FICO credit score, the one most used by lenders, what matters most is what the original creditor says on your credit report.

The status and amounts owed shown on that entry will figure much more heavily in your credit score than what a collection agency reports. If the original creditor shows a charge-off with a balance still owed, you might be able to boost your score by paying off the bill and getting the original creditor to reset the balance to zero. If the balance is already zero -- which credit bureaus say is typical when a collection agency takes over an account -- you can’t improve your score by paying up. "If the trade line balance is showing zero, you’re not going to help your FICO score by paying off a collections account," said Craig Watts, spokesman for Fair Isaac Corp., creators of the FICO credit scoring methodology.

'Settling' an old debt can hurt your score

You can actually make matters worse by "settling" an account for less than what you owe. Such settlements may get the creditor off your back, but the notation of "settled" on your credit report can sometimes be worse for your FICO score than just leaving the account open and unpaid, said Barry Paperno, a Fair Isaac manager.

"Settling the account can add a new element to its record at the bureau," Watts said. "Since that element's date would be more recent than the original item, it can end up lowering the score."

"Recency," or how long it’s been since you’ve had a negative mark, matters a lot to your credit score. The more recent the problem, the more heavily it weighs against you.

Now, this assumes you’re still dealing with the original creditor. If you’re dealing with a collection agency, a settlement can be even more of a wild card: It could help your score, it could hurt your score or it may have no affect.

Lenders may require you to pay old debts
Of course, just leaving the account unpaid might not be an option if you want to buy a house. A mortgage lender is likely to require that you pay off or settle any open collections that show up on your credit report as a condition of getting the loan.

If you’re interested in a settlement, credit repair experts suggest that, as part of your negotiations, push to have the creditor or collection agency either stop reporting the account altogether or demand that the account be reported as "paid in full" rather than "settled." Such treatment might not help your score, but it’s less likely to hurt it. You’ll have more clout if you’re able to pay a lump sum than if you have to set up a payment plan.

Credit bureaus really hate it when collection agencies agree to these demands and have even banned companies for failing to properly report transactions. But that doesn’t mean you can’t try.

How long credit bureaus can report your accounts

Your credit score is based on information in your credit report, and there are limits on how long your bad marks can be used against you. Once a negative item is on your file, it generally can be reported for 7½ years from the time you stopped paying on the account. (Bankruptcies can be reported for up to 10 years.)

So, if you stopped making payments on your Visa bill in January 2004, the lender can report a charge off the following June. The account can be reported to the credit bureaus until June 2011, when it must be deleted from the bureaus’ records.

The good news, if you’re trying to retire old debts, is that your attempts to pay up won’t prolong the time that the delinquency stays on your file -- if the delinquency was first reported to the credit bureau on or after Dec. 29, 1997. If your delinquency is older than that, you’re in a bit of a no-man’s-land. The old law allowed the reporting period to be extended based on the "date of last activity," which would mean your payment could restart the clock.

Even on older accounts, though, the credit bureaus say they will stop reporting the delinquency after 7½ years if you can prove the original date the account became delinquent, Detweiler said. That’s a pretty big if. A lot of borrowers simply don’t have the paperwork to prove their case.

How letting sleeping dogs lie can affect your credit

You can see why some borrowers choose to just let their old debts "fall off" their credit report rather than try to repay. Once the bad marks are gone, your credit score probably will improve, and you’ll still have the money you would otherwise have sent to your old creditors.

Note the word "probably." In credit scoring, little is certain. Thanks to the way the FICO is designed, sometimes a score actually drops after old, bad accounts disappear.

That’s because the FICO formula groups borrowers based on certain characteristics, such as whether they’ve had a bankruptcy or other credit problem. You could rise to the top of the "had-a-bankruptcy" group but, once your bankruptcy drops off your report, be "transferred" to another group, where you’d rank near the bottom.

"That move (from one group to the next) can sometimes be pretty graceless," Watts concedes. "It’s as though you fell off a chair. Your score can change a couple dozen points for no apparent reason."

Know your state's statute of limitations

That’s not the end of the complications. Each state limits the amount of time in which a creditor can sue you after an account becomes delinquent. Sometimes the statute is longer than the credit reporting limits, sometimes shorter.

The statutes of limitations for written contracts, for example, range from three years in Delaware to 15 years in Ohio, although the typical limit in most states is five or six years. The rules vary widely, but, in some states you can inadvertently extend the statute of limitations by entering into a repayment plan with a creditor or even by acknowledging that a debt is yours. Getting dragged into court and having a judgment entered against you could further hurt your credit score and your efforts to rehabilitate your credit.

Before you contact your creditors, you should know the details of the statute of limitations in your state. (If you’ve moved, it’s the state you live in now whose law will probably apply, even if you entered into the credit agreement in another state.) Your best bet may be contacting a consumer law attorney for help; you can get referrals from the National Association of Consumer Advocates.

You might also want to take a look at "12 tips for negotiating with debt collectors" for some ideas about how to conduct your negotiations. Several Internet sites, including CreditBoards.com, have message boards whose members share advice and tactics.

In the end, you may decide that trying to pay off your old accounts isn’t worth the hassle -- or you may decide just the opposite. Some debt experts, including Rhode, believe the ethical obligation to pay what you owe outweighs any short-term concerns you have about your credit.

"If you can afford to pay, pay," Rhode says. "Too many people live and die by what their credit report says."

It's been a long weekend, in which January Financial moved into new office space in the Irvine Spectrum area. I'm really looking forward to the new space, as it will allow us to work together much easier and provide an even higher level of service for our clients. I'll keep you posted on how things go.

Without further ado, here's a great article on how to beat the crowd when investing in real estate. Easier said than done, but knowledge of course is key...

Beat the Crowd when Investing in Real Estate

Copyright © 2005 Peter Dobler

We all are thinking about it and some of us are actually taking action and getting their hands on real estate investment properties. The longer the NY Stock Exchanges doesn’t produce desirable returns the more people are starting with real estate investments.

For most of us the obvious choice of properties are single family homes. Although you can invest in real estate without owning a home, most people follow the experience they made while purchasing their own home. This is familiar ground and the learning curve for doing a real estate deal of this type is pretty slim.

Of course there’s a drawback with this approach. The competition is fierce and there are markets where investors are artificially driving up the cost of the properties while completely discouraging first time home buyers. If this is the case, the burst of the real estate bubble is just a matter of time.

How do you avoid these situations and still successfully invest in real estate? How do you get ahead of the competition and be prepared for bad times in real estate investments as well? The only answer I have is commercial real estate.

Why commercial real estate you might ask? Commercial real estate is a solid investment in good and bad times of the local real estate market. The commercial real estate I’m referring to are multi unit apartment buildings.

Yes you will become a landlord and No you don’t have to do the work by yourself. You are the owner and not the manager of the apartment building. The cost of owning and managing the building is part of your expenses and will be covered by the rent income.

Apartment buildings are considered commercial real estate if there are 5 or more units. To make the numbers work you should consider to either own multiple small apartment buildings or you should opt for bigger buildings. This will keep the expense to income ratio at a positive cash flow. Owning rental properties is all about positive cash flow.

With investing in single family homes it is easy to achieve positive cash flow. Even if your rent income doesn’t cover your expenses 100%, the appreciation of the house will contribute to the positive cash flow. With commercial real estate the rules are different.

While single family homes are appraised by the value of recent sales of similar homes in your neighborhood, commercial real estate doesn’t care about the value appreciation of other buildings. The value of the property is solely based on the rent income. To increase the value of a commercial real estate you need to find a way to increase the rent income. The formula on how this is calculated would be too much for this short article. I listed a few very helpful books where you can find all the details.

What’s another advantage to invest in commercial real estate? Commercial real estate financing is completely different than financing a single family home. While financing a single family home you are at the mercy of lenders who want to make sure that you are in the position to pay for the house with your personal income. Commercial real estate financing is based in the properties ability to produce positive cash flow and to cover the financing cost.

After reading all these information about commercial real estate you want to go out there and dive into the deals. Not so fast. First, you need to learn as much about real estate as possible. In commercial real estate you’re dealing with professionals. If you come across too much as a newbie you will waste these guys’s time and your commercial real estate career ended before it actually started. Second, no commercial real estate lender will lend you any money if you can’t show at least a little bit of real estate investment experience.

What’s the solution to this? Go out there and do one or two single family home deals yourself. It doesn’t matter if you make huge profits to start off with. Most newbie investors are loosing money on their first deal anyway. If you can manage to show positive cash flow with your single family home deals you are ahead of the pack.

My advice, buy a small single family home in a decent neighborhood and rent it immediately. This will keep your out of the pocket expenses at a minimum and you will have rent income to cover for your monthly expenses. Bonus, you gain experience as an investor and as a landlord.

Here’s another observation I made during my real estate investment career. Most people like to analyze, learn, discuss and analyze some more. They never actually got to do a real estate deal. They love to talk about real estate investments, but never did it themselves.

My approach to real estate investment was simple.

- I bought some books about real estate investment.

- I read every single one of them.

- I put together a simple plan on how I want to get started.

- I started looking for properties.

- I bought my first investment property 30 days after I started reading my first book.

- I made positive cash flow with all of my properties so far.


What is my point? You have to go out there and practice what you’ve learned. The only valid credential in the real estate business is practical experience. Having a couple of deals under your belt, you can go out there and start looking at commercial real estate and even impress seasoned investors with your knowledge. Because you made this experience by yourself and you know what you’re talking about.

Book reference for commercial real estate investments:

Gary W. Eldred, PhD: “Make Money with Small Income Properties”

Jack Cummings: “Real Estate Financing and Investment Manual”

You will find these books and many more on my real estate investment website at http://www.suncoastrenttoown.com/author_directory.htm


Sincerely,
Peter Dobler

Peter Dobler is a 20+ year veteran in the IT business. He is an active Real Estate Investor and a successful Internet business owner. Learn more about real estate investments at http://www.suncoastrenttoown.com or send a blank email to mailto:suncoastrenttoown@getresponse.com

Article source: ArticleWorld.net

One of the toughest questions for mortgage brokers to answer is, "When is the right time to refinance my mortgage?". Here's a great article that will help answer that question...

When Is The Right Time To Refinance Your Mortgage?
by: Mark Lambie

You've heard that interest rates are down and you think it could be time to refinance your existing mortgage, but the entire loan application process was so exhausting during the initial loan that you aren't sure it's worth the hassle. You could very well be right, but there are some things you can do to help decide whether it's time to refinance your mortgage.

The first thing you need to verify is the interest rate for your existing mortgage and the interest rates being offered across the board for new loans. If there's not at least a one and a half to two point difference, you're probably not going to be significantly better off to refinance your mortgage. Here's why.

Remember those closing costs on your initial mortgage? You probably paid for an appraisal, perhaps a home inspector's services and even a survey if you have rural property. Depending on how long it's been since your original loan, you may be faced with having all those processes repeated. Especially if you are going with another lender, have had the existing mortgage for at least two years, have made major modifications to your home or property, or have seen some significant variations in property values in your area, you're probably going to be required to have an appraisal at the very least. While it's not a huge cost for an appraisal, comparing that with the amount you're going to save on a slight drop in interest rates could show that it will take months to recoup that expense. Don't forget that you'll likely have some additional closing costs from the lender on the new mortgage (you are, after all, taking out a new mortgage even though you have an existing loan) and you may even be facing penalties for paying off your existing loan early. Weigh those costs against what you expect to save before you take this step.

So does that mean that you should never refinance an existing mortgage? Actually, there are plenty of opportunities when refinancing your mortgage makes good financial sense. If you've significantly increased the value of your home or have been paying for several years, you may have enough equity to qualify for a better interest rate. You may also lower monthly payments or refinance to make improvements. In the end, it's up to you to weigh the costs of refinancing your mortgage and decide if the time is right for you to take this step.

I've been out of contact for a few days with all kinds of things, but all good stuff. Business is booming, so as I like to say, it's a good problem to have. I've got an article today from my friend Jay Conners, who has an excellent website for people who would like to know more about the mortgage industry (www.jconners.com). Jay is truly one of the "good guys" in an industry that, sadly, has a lot of snakes. Without further ado, here is an excellent article on referrals, which is the foundation of my business.

Giving Referrals to Get Referrals
by J.Conners
http://www.jconners.com

One of the best ways to get a referral is to give a referral. When you give someone a referral, they are forever grateful and will feel obligated to return the favor.

Before you can go ahead and give someone a referral, you must know them and know their business, this much is obvious. You wouldn’t refer somebody that needs their house sided to a painter would you? Of course not.

There are many ways to get to know people within your business community and a lot of places to go to meet them.

For starters you can attend networking groups, chamber luncheons, Lions clubs, or rotary clubs, to name a few.

These organizations meet either weekly or monthly, and they offer a great opportunity for people within the business community to meet, network, and get to know each other.

I once had a friend that I worked with in the mortgage business. He would attend networking luncheons religiously, but he would often come back from his meetings disappointed.

One day I decided to ask him why he was so frustrated. He replied by telling me that after all of the time he had spent talking with people, exchanging business cards, and flat out asking for business, that he had yet to receive any. The whole situation had him completely puzzled.

I than said to him, well, have you ever given anyone at these networking events you attend a referral? He replied that he had not, but the light bulb over his head became a lot brighter.

He took me up on my suggestion, and before long, the referrals started to come in.

This is not to say, that the only way to get a referral is to give a referral, because it most certainly is not. But it sure does help.

You may say to yourself, no one ever gave me a referral, so why should I give anyone else a referral. You really don’t need me to tell you that this attitude will get you know where, because it won’t.

Somebody has to start the referral process, so it might as well be you. This way you are working smarter and not harder.

One idea is to start a partnership with someone. If you are a loan officer, you might consider partnering up with a realtor. If you are a contractor, you may consider teaming up with a plumber.

Like it or not, the process of referring business back and forth to people in your business community can get a little bit political. So it is important to establish yourself within the business community and build as many relationships as possible. Make sure the relationships you build are with responsible and dependable people who you can count on to send you qualified leads, otherwise you are just wasting your time.

This truly is one of the smartest and easiest ways to get referrals heading in your direction, so give it a shot, and best of luck.

Today I've got an interesting article for you on home values. The author of this article is arguing that home values are way higher than they should be, perhaps as much as 70%. My main point here isn't to agree or disagree, but merely to point out that you should be careful when you read opinions and realize that even with a mountain of data, it's extremely difficult to draw meaningful conclusions.

For example, I've also read articles by very smart people stating that home values are actually UNDER-valued. This is based on the fact that even though prices are higher than they've ever been, we're making much more money than we used to and interest rates are lower. Also, there's a lot more demand since many people are buying second homes and many people that couldn't normally own a home now qualify thanks to an expanded secondary market for mortgages.

Remember, there are always two sides to every argument!

Home Loans and Mortgages – One Third of Homes in U.S. Overvalued
by: Charlie Essmeier

A new study by National City Corp. looked at home values for 299 American cities and compared them to where they “should be” based on a number of economic factors that determine home prices. The results were not encouraging; homes in nearly one third of America were judged to be “extremely overvalued.” That’s the part that’s getting headlines. A complete read of the report shows that things are even worse, as 100 cities in the U.S. have values judged to be too high by 18% or more. What does this mean?

It will come as no surprise to most people that the areas judged to be the most overvalued are in California, Florida, and New York and Massachusetts. Home prices in these states have increased at a rate that far exceeds the increases in salaries in these areas. When homes are priced in a way that is disproportionate to income, they become unaffordable. The mortgage industry has come up with a number of clever solutions to this problem by introducing an ever-increasing number of creative loan products. Interest only mortgages, where buyers only pay interest on the loan, rather than principal, for the first five years of the loan, and Option ARM mortgages, with “teaser” interest rates that can run as low as one percent, have allowed people to purchase homes they otherwise would not be able to afford. Neither one of these dangerous loan types contributes any money to the actual purchase price of the home, leaving their buyers in a precarious position should prices fail to keep rising. The nationwide increase in foreclosure rates suggests that the market is probably peaking.

What does this mean for the average buyer? Home prices in the top 100 markets in the U.S. are overpriced by anywhere between 20% and 70%. Prospective buyers should realize that any home they purchase now will probably not appreciate much more in the near future, and they should finance their purchases with this in mind. Buyers should make certain that they can actually afford the purchase price and that they can afford a mortgage that will reduce the principal of the loan over thirty years. A home purchase with any other terms would have to be considered a risk, since prices are more likely to fall or stay the same in the future than they are to rise. Use some common sense when making a purchase, and all will be well.

A lot of people get confused with all the different terms that people use in the real estate and mortgage industry. Two terms that sound very similar but are in fact fairly different are mortgage broker and mortgage banker. Here's an excellent article that explains the difference, as well as some tips on how to pick the right lender.

Speaking of, for a much more detailed guide on how to pick lenders and find the right loan for you, check out Mortgage Secrets Revealed: Insider Information You NEED To Know. This fantastic book can be found at http://www.homemortgagetruths.com.


Mortgage Broker vs. Mortgage Banker
by William Bronchick

Many consumers assume that “mortgage companies” are banks that lend their own money. In fact, a company that you deal with may be either a mortgage banker or a mortgage broker.

A mortgage banker is a direct lender; it lends you its own money, although it often sells the loan to the secondary market. Mortgage bankers (also known as “direct lenders”) sometimes retain servicing rights as well.

A mortgage broker is a middleman; he does the loan shopping and analysis for the borrower and puts the lender and borrower together. Many of the lenders through which the broker finds loans do not deal directly with the public (hence the expression, “wholesale lender”).

Using a mortgage banker can save the fees of a middleman and can make the loan process easier. A mortgage banker can give you direct loan approval, whereas a broker gives you information second-hand. However, many mortgage banks are limited in what they can offer, which is essentially their own product. In addition, if you present your loan application in a poor light, you’ve already made a bad impression. I am not suggesting you lie or mislead a lender, but understand that presenting a loan to a lender is like presenting your taxes to the IRS; there are many ways to do it, all of which are valid and legal. Using a mortgage broker allows you to present a loan application to a different lender in a different light (and you are a “fresh” face).

A mortgage broker charges a fee for his service, but has access to a wide variety of loan programs. He also may have knowledge of how to present your loan application to different lenders for approval. Some mortgage bankers also broker loans. As an investor it is wise to have both a mortgage broker and a mortgage banker on your team. SIDENOTE: MORTGAGE BROKERING. Keep in mind that mortgage brokering is an unlicensed profession in many states. If there is no licensing agency to complain to in your state, make sure you have personal references before you do business with a mortgage broker.

Choosing A Lender

Choosing a lender that you want to work with involves several factors, not the least of which is an open mind. You need a lender that can bend the rules a little when you need it and get the job done on a deadline. You need a lender that is large enough to have pull, but small enough to give you personal attention. And, most of all, you need a lender that can deliver what it promises.

1. Length of Time in Business

Since the mortgage brokering business is not highly regulated in most states, there are a lot of “fly-by-night” operations. Bad news travels faster than good news in business, so bad mortgage brokers don’t last too long. Look for a company that has been in business for a few years. Check out the company’s history with your local Better Business Bureau. If mortgage brokers are licensed with your state, check to see if any complaints or investigations were made against them. Also, ask for referrals from other investors and real estate agents.

2. Company Size

A company that is too big can be problematic because of high employee turnaround. Also, the proverbial “buck” gets passed around a lot. If you are dealing with a mortgage broker, it is often a one-person operation. Dealing with a one-man operation may be good in terms of communication if he or she is a “go-getter.” On the other hand, the individual may be hard to get a hold of, since he or she is answering the phone all day.

A small to mid-sized company is a good bet. You will be able to get the boss on the phone, but he or she will have a good support staff to handle the minor details. Also, a mid-sized company may have access to more wholesale lenders than a one-person company.

3. Experience in Investment Properties

It is important to deal with a mortgage broker or banker that has experience with investor loans. Owner-occupant loans are entirely different than investor loans. And, it is important that the broker or lender you are dealing with has a number of different programs. It is often the case that you find out a particular loan program won’t work, in which case you need to switch lenders (or loan programs) in a heartbeat to meet a funding deadline.