New Blog and Website

So I haven't posted on this blog because well, I have decided to abandon it and/or trade it in for a new blog and website, which is about 10 times cooler. If you come across this blog I hope that you will visit it. It is www.loganutahmortgages.com

Will the ARM make a comeback?

An ARM ,or adjustable rate mortgage, is a mortgage product with an interest rate that is tied to a certain economic index and that is fixed for a certain period of time (e.g. 1,3,5,7, or 10 years). After the fixed period the interest rate will periodically adjust as the economic index changes. In the mortgage industry, "ARM" has almost become a swear word. We can thank the media for this. So many bad things have been associated with an ARM... foreclosures, pre-payment penalties, rising payments, option-ARMS, negative amoritization, etc. The stigma has gotten so bad that I'm afraid that if I mention an ARM to a client that they are going to sprint out the door and never look back. Yet, with some trepidation, I have to say that there are some circumstances in which an ARM makes sense (gasp!). Check it out...Today a 30 year fixed rate is around 4.875%, but a 7 year ARM is at 4% and a 5 year ARM is at 3.875%! For a first time homebuyer that is certain that they will move after 5 years, why wouldn't they consider saving almost a full point of interest over that time. On a 100,000 loan, it's a savings of almost $5,000. Of course nobody can know for certain how long they will stay in a home but for many people I believe it is worth taking that risk. It's also important to know that it's not certain their interest rate will adjust higher after the fixed term. In today's market, many adjustable rate mortages are adjusting lower because the rates of the economic indexes are so low. I think it's time the ARM makes a comeback. I hope I don't go out of business for saying that.

Tax day!

Being self-employed can be a great thing. I set my own hours, I work for myself, and I have the freedom to run my business how I see fit. It also has its negative side though. Taxes for one are twice as complicated, as if they weren't already confusing. Instead of filing a single annual individual return at H&R Block, I now have a professional accountant who helps me file quaterly and annual taxes for my S Corporation.
Being self-employed can also make obtaining a mortgage very challenging. Many self-employed people that come to me make a lot more money than their tax returns actually reflect. This is because they take advantgage of a lot of write-offs. In the past self employed borrowers could just do a "stated-income" loan where the lender didn't verify income with tax returns. Well, we all know what happened with stated-income loans. With those types of loans being a thing of the past, it may behoove self-employed borrowers who are contemplating a refinance or purchase of a home, to reflect a little bit more income than they use to on those tax returns. Because it doesn't look like "stated-income" is coming back anytime soon.

1,599 grants remaining

Besides the $8,000 dollar tax credit for first time homebuyers, there is now a $6,000 grant for anyone that purchases a new-construction home. The guidelines are pretty much the same as the federal tax credit except the home must be new construction and the buyer does not have to be a first time homebuyer. There is some excellent information about it on the utah housing website.

Obama's Tax Credit

A lot of people have asked me about the new first time homebuyer tax credit and how it compares to the old $7,500 tax credit/loan. The two biggest differences that I can see is 1. It is for $8,000 and 2. It is not a loan but a legitimate tax credit that you don't have to pay back!! Sounds pretty sweet to me. One way to think about it is if you buy a home for $100,000, the real price is $92,000. Frankly I wish I were a first time homebuyer so I could take advantage of this incredible opportunity. For more information, I found this article on yahoo.com... First Time Homebuyer Tax Credit

New way to contact me!

So I just found this meebo widget and thought it could be a great way for people to contact me with their mortgage questions. Whether I'm online or not, and whether you are a current client, a potential client, a realtor friend checking on a deal, a friend, or just somebody with a mortgage question, I hope you will feel free to use this new chat platform. Contact me anytime!

Yield Spread Premium

In short, yield spread premium is the rebate that the lender pays to the mortgage broker. The amount of that rebate depends on the interest rate that the borrower agrees to. For example, a loan officer might offer a borrower an interest rate at 6% and the lender (e.g Countrywide) would pay the mortgage broker a 1% ysp (e.g. on a loan amount of $100,000, the ysp would be $1,000) At an interest rate of 5.75% the ysp might only be .5%, or $500 on a 100k loan. In the past it hasn't been required that the loan officer disclose the ysp to the borrower and it was kind of a secret. But that is changing and it is now required that the loan officer disclose the ysp on the good faith estimate (usually around line 814). This is great news for borrowers so that they can see if they are really getting a good deal on the interest rate. Word to the wise...anything above 1% ysp and you could probably find a better deal elsewhere.

Is it time to buy?

Sorry for not posting for a while. I have been pretty swamped with all of the refinances that people are requesting. While I was looking at my list of current clients I realized that 90% of them are clients who are refinancing and only 10% are clients that are purchasing a home. This got me thinking about a couple things. My first thought was that maybe I am the only loan officer in town with this ratio and I need to do a better job marketing to real estate agents (in 2009 I have the goal for 40% of my business to come from real estate agents. Right now it's like 10%) After talking to some of my loan officer colleagues that had similiar situations I thought "why aren't more people buying homes?!" With interest rates as low as they are and the first time homebuyer tax credit of $7,500 Iwould think that everyone would be scrambling to purchase a home. I've come to the conclusion that the media has poisoned everybody with the fear that they are going to lose their job and be foreclosed on their home. So a couple things need to happen...People need to stop listening to the media and Obama needs to push the "recession off" button in that secret room in the White house.

4.25% on 15 year fixed!!

Today an FHA 15 year fixed got as low as 4.25%. That is the lowest that Wasatch Mortgage has ever seen in it's 10 years of existence. The other nice thing about a 15 year fixed FHA loan is that if the borrower has 10% equity they will not pay any monthly mortgage insurance.