Smart financial move, the 15-yr mortgage

Smart financial move, the 15-yr mortgage

Minneapolis, MN:  “I own my home free and clear!“. How great would it be to say that? No payments when you retire. No payments while you are also paying for college. Putting money into your 401k vs paying it to the bank.
Look into a shorter term mortgage. This is the hottest new trend in home ownership.
Your parents probably took a 30-year fixed rate FHA mortgage, then tried to pay extra along the way to pay it off early in hopes of having no payments going into retirement.
During the period of 2001 – 2008, it was just the opposite. Many people opted for an adjustable mortgage, interest only mortgage, or even a 40-year mortgage. The reasoning was they would be flipping the house in a few short years at a great profit, so they didn’t really care what the payment was.
Today, old school thinking on the fast plan of a shorter term home loan is very popular.  Me me me, now now now, has been replaced with a pay it off fast mentality.
Clearly a shorter term loan saves you a lot of money in interest. On a $200,000 loan at 4.75%, the payment (just the loan) is $1043 per month. The total interest paid is a whopping $179,888. Switch that over to a 15-yr loan at 4.25%, and the payment goes up to $1504 per month, but the total interest is just $75,079. Half as much! A interest savings of $104,809

Many people claim they can’t afford the 15-yr payment, but I say otherwise. The average person can usually easily absorb the slightly higher payment with a little discipline and a slight adjustment to their monthly budget.

Eliminate the second new car, go out to a nice dinner a little less often, and shutting off the cable or satellite premium service all start to add up quickly, giving you one of the best savings opportunities of your lifetime.

I also hear many people talk about the loss of the interest tax deduction. I have a challenge for you. Can you tell me exactly what your tax write off benefit was this year?  Most people can’t.  The tax deduction is over-rated. Once you figure out how little it really adds up to in real dollars, you’ll quickly see the benefit of paying your home off faster.
Stop pissing money away on a 30-yr mortgage, refinance to a 15-yr mortgage. Earn equity faster, own your home in half the time, and make one of the best financial moves of your lifetime.


HARP – Home Affordable Refinance Program for underwater

(edit: New guidelines issued 10/24/2011 – Click here for new rules)
HARP, the Home Affordable Refinance Program for underwater homeowners has been extended until June 2012

St Paul, MN: The Home Affordable Refinance Program was set to expire this June 30th, but has been extended one year until June 2012. The extension is great news, as HARP has been about the only success story of all the government programs attempting to stem the tide of foreclosures.

Basically if your existing first mortgage is held by Fannie Mae, or Freddie Mac, and that first mortgage is LESS than 125% of today’s value, you may qualify and be able to take advantage of today’s low rates for refinancing.

To bring even more meat to the grill, Freddie Mac has also announced they WILL NOT add recently announce cost (rate) increases to this program.

Do you qualify for HARP? Check HERE


Top Reasons Why Your Should Refinance Today

Joe and Eric Metzler talk about why you should refinance today. Mortgage Interest Rates are set to go up soon  for many reasons. Fannie Mae and Freddie Mac are both increasing the wholesale costs of mortgage loans, the economy may be improving, and home values may continue to fall slightly, all items that will effect your mortgage interest rates. Searching rates on home loans, or rates for refinancing your mortgage in MN or WI? We have some of the best rates on home loans!

Visit Mortgages Unlimited, St Paul, MN at www.MortgagesUnlimited.biz


No Closing Cost Mortgage Refinance? Good or Bad?

No Closing Cost Mortgage Refinance? BUYER BEWARE?
Good or Bad Idea? YOU DECIDE after reading thisJoe Metzler, MMS - (651) 552-3681

St Paul, MN: Mortgage interest rates are currently at historic lows. Your mailbox and the airwaves have become full with mortgage companies competing for your business. Many of these advertisements are for “No Cost” or “No Lender Fee” loans.

Are No Cost Loans a Deal? For most people, usually not.

One of the most confusing areas for consumers in a mortgage loan transaction are closing costs. Here I’ll explain the advantages and disadvantages of the highly advertised “no closing cost” or “low cost “loans.

First and foremost, there is no such thing as a NO Closing Cost Loan! Everyone knows there are costs associated with getting a mortgage loan; appraisal, credit reports, state taxes, county recording fees, title companies fees, lender fees, escrows, and more. Someone has to pay these fees, and it is always YOU. How you pay them is what this article tries to explain.

Homeowners in Minneapolis, St Paul, Madison, Milwaukee, and throughout all of Minnesota and Wisconsin need to understand that in a no lender fee or no closing cost mortgage loan, the lender simply uses “negative” points to offset your costs. In the example below, by having the 5.00% rate (versus the 4.5% rate), you can reduce (or offset through interest rate) $5,000 of closing costs. By choosing this option, it appear as if you saved thousands in closing costs. GREAT! But while lower costs always sounds good, you now have a significantly higher interest rate! OK, now what?

No matter what anyone says, a zero cost, or no lender fee loan is NOT automatically a great deal. Although it may sound so much better than adding thousands in closing fees to your principal balance, you have to analyze each individual loan and client situation to determine the benefits. Many lenders speak highly of the “thousands of dollars” you save in fees. They never discuss the fact that you may spend significantly more in interest over the full life of the loan than you ever saved in up-front closing costs! In the example below, you can pay $12,578 MORE for your no cost loan!

FACT: In a refinance loan, the vast majority of people roll the closing costs into the new loan.

View the following chart, then call us. We’ll run your personal numbers. Then you can decide if a no closing cost home loan is right or wrong for you.

Deal or No Deal? Most Common /
NORMAL
OK short-term
BAD long-term
Most CommonLow Cost Option
OK short-term
Very BAD long-term
Loan Amount $205,000 $203,000 $200,000
Interest Rate 4.50% 4.75% 5.00%
Principal & Interest Payment $1,038 (+$20) $1,058 (+ $45) $1,073 (+$60)
Closing Costs On Estimate $5,000 $3,000 $0
Out of Pocket Closing Cost Paid $0 – all rolled in loan $0. $2k in rate, $3k in loan $0. $5k in rate
Interest Paid over 5 years $48,192 $50,271 $52,054
Interest Paid over 15 years $121,743 $127,744 $133,002
Interest Paid over 30 years $172,932 ($373,935) $182,215 $190,491 ($386,513)

OK, so you are looking at the math, and maybe say “this isn’t so bad”, especially if you are in the home under 5-years.

But wait, here is a giant “Gotcha”

ANY LENDER who sells the no cost mortgage simultaneously sells a client into becoming a “serial refinancer,” which is not looking out for the client. They are “churning” the client and raking in fees year after year by fooling you into refinancing constantly at “no cost”, but always moving you BACKWARDS into a new 30-year loan. How many times have YOU gone backwards?

Factor in the monthly payments on all those additional “backward years” on all those “no cost” refinances, and that “biggest no brainer in history” no closing cost loan has actually cost you dearly.

Churning of home owner mortgages is illegal in most states

I hope this article has helped you to understand the varied measures used to determine the advantages and disadvantages of zero cost loans. Each borrower is different, and the evaluations must be made on a case-by-case basis. As you can see, there are many factors to consider when looking at the available options. With us as your personal Mortgage Consultants, we will be able to answer all of your questions, outline the costs and benefits, and even give you a few new ones to consider!

While everyone’s individual financial situation varies, let us show you the math so you make the correct choice. Of course, if a zero cost loan makes sense for your case, we will be happy to do one for you.


DID YOU KNOW? Not all Loan Officers are Licensed!

DID YOU KNOW? Not all Loan Officers are Licensed!

Buying a home? Need a home loan? You call the various banks, brokers, and mortgage lenders shopping for the best deal, thinking this is the correct way to get a mortgage loan. Unfortunately, you’ve only did half of your homework, as the big issue is NOT where you get your mortgage from, but WHO you get your mortgage from. There are major differences in the quality, education, and experience between Loan Officers, and you DON’T want to be working with the wrong person.

Until recently, most Loan Officers got their training simply by being hired, given a desk, a telephone, and the employer saying “Watch and learn from this guy.” There were no schools, no classes, no educational or background requirements. A very small number of Loan Officers would take voluntary classes to be the best they could be (like myself), but this was the exception, not the rule.

As of January 1, 2011, there are two distinct classes of Loan Officer. Those with or without a personal license. Those WITH a personal license must have pre-license education, pass a difficult Federal test, pass a difficult state test for every state they wish to conduct business, criminal background checks, personal credit report checks, and having continuing education every year thereafter. Those without? No requirements at all (yikes!)

Furthermore, those WITH a personal license, YOU CAN LOOKUP ONLINE to verify their license, the company they work for, the company license, what state(s) they are  license, any disciplinary action, and where they have worked for at least the past 10-years. The system is called The Nationwide Mortgage Licensing System and Registry (NMLS). The NMLS Consumer Access web site is a fully searchable website that allows the public to view information concerning state-licensed companies, branches, and individuals.

Those Loan Officers who have a personal license are required to place their NMLS number on all materials; web sites, brochures, business cards, E-Mail, etc.

NMLS - Verify your loan office or mortgage company

Finally, THIS IS A CLEAR REASON why people should follow my other mortgage shopping rule: GOOGLE THE NAME OF YOUR LOAN OFFICER, and check them out in the public NMLS registry. What do you find before allowing them to handle the largest financial transaction of your life!

Be Smart – Get Answers. Your financial future is too important to gamble with than to simply use the guy at the bank, or the person giving you a low quote on some web site!