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Posts Tagged ‘money’

“Ask and ye shall receive”

I recently posted about the delivery fees that Freddie Mac will be imposing on loans with score below 680 and LTV’s above 70%. With that report, I have been asked several times how this will work… Will the borrower need to have an additional 2% for closing? Will this be paid in the rate? How will this work?

I do not have any “official” word, but here is how it should play out…

The delivery fee is charged to the seller of the loan… i.e. the lender. So, for example, if the lender is Wachovia or Countrywide, when they sell the loan to Freddie Mac (and even Fannie Mae) they will have to pay a delivery fee according to the borrower’s score and LTV. I assume this will be deducted from the money they earn when selling the loan back to Freddie / Fannie.

This will apply to all loans sent to Freddie / Fannie regardless of who originates the loan.. in other words, brokers and bankers alike will have to deal with this. It all comes down to when the lender sells it to Freddie or Fannie on the wholesale end after it is closed.

Now, how will it be addressed? The cost will most likely be included in the rate. The feedback I am getting is that when a loan is priced and locked, the delivery fee that the lender will need to pay will be included in the lender’s yield from the rate. So if Wachovia, for example,  is getting 2% in yield when they sell to Freddie, but the new fee will eat up 1% of that yield, they will lock the rate to the borrower with a higher yield to net the same money. This would result in a higher rate to the borrower.

In other words, a better credit score will now definitely yield a better rate to the borrower! And those with moderate credit (640-680) will be impacted by this. Below 640 has already felt the crunch and will feel it even more so.

Now, one thing to consider… and please pay attention to this: The delivery fee will be imposed on lenders selling their loans to Freddie / Fannie after March 1, 2008. HOWEVER, we will start seeing the rates increase sooner than March 2008, maybe as early as DECEMBER because the loans closed in December/January may not actually get delivered until around March! So NOW IS THE TIME FOR BUYERS TO GET OFF THE FENCE!

For more information on mortgage and home financing, or for help in the Charlotte NC area, please contact Ed Nailor with 1st Metropolitan Mortgage- your Mortgage Loan Specialist.

_________________________________________________

Ed Nailor
Home Loans in Charlotte

1st Metropolitan Mortgage
10801 Johnston Rd Suite 213
Charlotte, NC 28226

704-248-8694 Phone
visit http://carolinamortgageconnection.foundbydesign.net/

Get pre-approved to buy a home in Charlotte NC today

Earlier today I posted about the fact that Freddie Mac had announced new “delivery fees” that they are planning to require beginning March of 2008. I just read an article in the news that might expain why this is…

According to the Associated Press, Freedie Mac lost $2 billion in the 3rd quarter, much more than Wall Street expected. This was the largest loss EVER for Freddie Mac and they have got to find ways to re-coup some of this.  They have hired Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc. as financial advisors to help it examine possible new ways of raising capital. This new announcement may have come from these examinations.

It was nice to have the press quiet for a while about the mortgage “crisis”, but it appears there is still more news to come in the future. Regardless, rates are still near record lows! This is what amazes me to no end! All these losses and buyers still have more opportunity than ever to get a home!

Folks, get on the phone, shakes hands… do whatever you need to do to let people know… THEY CAN STILL BUY and doing it now WILL SAVE THEM MONEY!

Get pre-approved while rates are still low and programs are still available!

So you have saved at least a month’s worth of income. You are ready in case some quick emergency comes up. That is awesome! Now it’s time to attack!

It’s time to say goodbye to that debt!

While creating your savings, you found extra money somewhere. Its time to use that extra money to pay off the debt. But first you have to devise a plan of attack. Most “experts” agree that you should go after the highest rate card first. Again, I disagree with that. Don’t worry about the rate right now. I want you to focus on the amounts you owe.

Grab up all your bills. Sort them out…. let’s start with the revolving ones first. You know them best as credit cards. Today, we plan our attack on them. Right now I want you to list out the names and balances on a sheet of paper. Once you have done that, I want you to rank them in order starting with the SMALLEST BALANCE. That one will be #1. If you have 2 cards with the same amount, then focus on the one with the largest payment. That one would go before the other one.

Once you have numbered your order of attack, take the extra money you have been using to create your savings (not your savings itself!) and apply that money on top of your normal payment to work at paying off this first card. Once you have paid off that card, add the payment you had been making to that card and apply to card #2. Repeat until all are gone.

This is the best approach because it does 2 things. With every card you pay off, you feel a sense of accomplishment and hope that you will make it out. And, if something does come up that pauses your efforts, you will have less payments to make in a shorter period of time so you still feel like you are getting somewhere, even when you have to focus on savings again.

One note. When you pay off these cards, do not close the accounts. We will talk about what is next, but you will need them open. If you must put them up so you are not tempted to use them, that is fine. You can even cut the physical card, but do not call them to close any open accounts. You will see why soon.

I am excited for you in your plan of attack. Be patient. You did not get here overnight, and it will take time to dig out. But with a good plan of atack, you will get there faster than you think!

This is for the majority of us that live paycheck to paycheck, have little or no real savings and are in debt.

If you have a large IRA and major investments, you already know how to manage this thing we call money. If missing 2 weeks of work might cause your power bill to go out, you are not managing money well, even if you always make your payments. You are hanging on.

Many “experts” tell you to hurry up and pay down your debt now! I disagree. If you do not have a savings set up, paying off your debt first will become something that will defeat you long term. Consider this… You have $5000 on a credit card and bust your tail to pay if down. You finally get the balance paid down to only $2,500 and feeling great! Then the car needs repairs and since you have no savings, you need to use the credit card. Right back to $5000 and you feel defeated! All that work and you are right back to where you started!

If you had saved $5000 first, when the repairs were needed you would have had the cash to pay for them. Sure you may have had to put the debt reduction on hold until you rebuilt your savings, but knowing you only owe $2500 on that card still offers a mental reward. Add to that the fact that your minimum monthly payment on that credit card is half of what it once was, you can boost the saving up quicker and the go back to attcking your debt!