The Stonegate Blog

I know you may be a little bit overwhelmed and frustrated right now with all the NOISE and confusion about all the new government interventions in the mortgage and housing markets. As a Certified Mortgage Planning Specialist™, I make it a priority to stay updated on developments in the mortgage markets that may impact my clients. I have spent a lot of time reviewing the latest Making Home Affordable government program, and here are some of my observations. If you think this information is useful, please pass it along. Feel free to forward this email to anyone you know that may be impacted!

The Making Home Affordable government program is divided into two parts:

· Modification Program

· Refinance Program

Part 1 - Modification Program

Believe it or not, the details of this program are still being worked out. Despite all the hoopla and fanfare surrounding this program, it remains 100% VOLUNTARY, and mortgage servicers (the companies that actually collect borrowers’ mortgage payments) are not obligated by law to follow these rules and guidelines...YET. Oddly enough, if a financial institution has already received government funding, they are NOT obligated to participate. However, if a financial institution receives new or more government funding in the FUTURE, they WILL be obligated to participate.

In other words, the rules are still a bit sketchy and nobody really knows who will participate and how it will all work from a practical perspective. Most of what you read and hear about in the media will most likely be speculation at this point. In a nutshell, the program has three elements:

· The government is offering financial incentives to mortgage servicers who modify loans for borrowers.

· The government is offering financial reimbursement to investors if they allow servicers to modify loans and then take a hit on the borrower’s re-default if the property declines in value after the loan modification

· The government is offering financial incentives to borrowers who modify their loans and make their new payments on time

Vacation homes and investment properties don’t qualify for the program; only primary residences are eligible. Only borrowers who have experienced some type of financial hardship can qualify. In other words, you will need to document that your financial situation is worse now than it was at the time that you originally got the loan. Your income needs to have gone down, and/or your expenses need to have gone up. Click on this link if you want to see if you qualify for at least the minimum requirements:

http://www.financialstability.gov/makinghomeaffordable/modification_eligibility.html

Remember, even if you do qualify under these minimum requirements, your servicer (the company where you send your payments) might not be participating in the program just yet.

Part 2 - Refinance Program

Here’s how it works:

· You need to be current on your mortgage payments (no late payments in the last 12 months)

· Your mortgage balance cannot exceed 105% of the current value of your home

· Your mortgage needs to be owned or guaranteed by Fannie Mae or Freddie Mac

Based on current market conditions, this might make sense for you if:

· You have an adjustable rate, interest only, or balloon mortgage that you want to convert into a fixed rate; or,

· You have a fixed rate mortgage where the interest rate is greater than 6%. In fact, contact me even if your rate is as low as 5.5%. I’ll put you into my rate watch program and let you know when rates get to the point where you would benefit by refinancing.

Other Recent Developments

There have been many other recent developments in the markets, as well as new government legislation. Here are just a few recent items that may impact you or someone you know:

· Home improvement tax credit

· First-time home buyer tax credit

· Reverse mortgages for home purchase transactions (age 62 or older)

· Suspension of required minimum distributions for certain retirement accounts (age 70 ½ or older)

Let me know if you’d like to discuss any of these items in further detail.

Conclusion

I know that all the NOISE you are hearing about the mortgage industry and government interventions can be distracting and confusing. That’s why I’m here for you! As a Certified Mortgage Planning Specialist™, my role is to help you make sense of all the chaos and confusion in the market, so that you can make smarter mortgage and home buying choices. Please send me an email or give me a call so that we can discuss how these and other recent developments may impact you and your situation!

Closing costs fall into three primary categories; lender fees (paid to Stonegate), third party fees (for example: paid to the Appraiser, Title Company, etc..) and pre-paid items such as taxes, insurance and interest.

So when you are comparing various lender make sure you break the fees down in the following categories:

1. Lender fees (paid to the Lender/Broker)
2. Third Party Fees (paid to Third Parties)
3. Pre-Paid Items (for taxes, insurance, and interest)

Third Party fees and Pre-Paid items should not vary much from Lender to Lender. Pre-Paid items are also specific to your loan and not controlled by the Lender. The area that you need to focus on is the lender fees.

Any fee paid to the Lender/Broker is a cost associated with obtaining the loan, so if you are comparing two lenders and each have the same interest rate and term (30yr fixed rate at 5.00%) and one has fees totaling $700 and the other has fees totaling $1500 the Lender with the lower fees is charging you less for obtaining the loan.

Lender/Broker fees often get disquised so you need to really analyze the data and make sure you allocate all fees into the right category.