Kansas Association of Mortgage Brokers

Recently the Kansas Association of Mortgage Brokers issued a press release responding to the negative news in the media about Mortgage Brokers.

I realize that Mortgage Brokers get a bad name and that some of it has been earned. But the majority of Mortgage Brokers aren't actively trying to get you into a home loan that is going to bankrupt you. Shopping for a mortgage broker, as we've discussed before on this blog, is an important step to getting you into a great loan. Work with someone you trust, not just someone that gets you the best rate. Make sure you do your homework and ask lots of questions.

Here is the text of the press release issued by the KAMB:

Kansas Association of Mortgage Broker Responds to Negative News

Overland Park, Kan. – News reports have recently been dominated by the problems in the mortgage loan sub-prime market. The mortgage broker industry has come under intense scrutiny as a result.

To address the recent changes in the mortgage market, the Kansas Association of Mortgage Brokers (KAMB) would like to remind consumers that the recent downturn in the industry is the result of the combined efforts of every sector of the industry.

Myth: Mortgage Brokers set the sales price of a home.
Fact: Mortgage Brokers do not set the sale price of a home. The Seller and Buyer typically in conjunction with a Real Estate Agent set the sales price of a home.

Myth: The Mortgage Broker is responsible for setting the fair market value on an appraisal.
Fact: Mortgage Brokers use licensed professional Appraisers to arrive at a fair market value. Generally, the Appraiser is a neutral third party.

Myth: Mortgage brokers create the loan programs available on the market.
Fact: Mortgage Brokers do not and have not been the ones designing and establishing loan programs. The large array of loan programs in the market today were designed by banks typically in conjunction Freddie Mac (Federal Home Loan Mortgage Corporation) or Fannie Mae (Federal National Mortgage Association).

Myth: Mortgage Brokers underwrite their own loans.
Fact: While some mortgage brokers do underwrite their own loans, the majority do not. Underwriters at the end lender ensure the borrower meets all of the loan guidelines.

Myth: Mortgage Brokers created the demand for Mortgage Backed Securities (MBS).
Fact: Investors on Wall Street created the demand for MBS.

Myth: All loan originators are equal in the eyes of regulators.
Fact: Only mortgage brokers are required to meet state and federal law. All states now require at a minimum registration of loan officers employed by a mortgage broker. Most have minimum continuing education for loan officers employed by a mortgage broker.

Mortgage Brokers help borrowers find the loan that best fits their individual needs and then guide them through what can be a complicated process.

More than 60% of all mortgages in the United States are originated by Mortgage Brokers. The American public has made it clear that mortgage brokers are their loan source of choice.

Mortgage Brokers are in a unique position to help the average borrower. Rather than being constrained to the loan products that one bank has to offer, the mortgage brokers has access to many lenders, providing a borrower with many more options.

Unlike loan officers in a bank, Kansas loan officers working for a mortgage broker are required to be licensed and to annually complete continuing education.

Mortgage Brokers are usually small business people that work and originate loans in the same communities in which they live. They have a strong sense of community pride and a vested interest in the health and welfare of our community.

Just as there are bad actors in any profession, KAMB recognizes that there are bad actors in the mortgage industry, and works very diligently with State and Federal Regulators including the State Bank Commissioner’s Office. We have worked, and will continue to work, to weed out the bad actors in our profession. Members of the Kansas Association of Mortgage Brokers subscribe to a Code of Ethics and Best Business Practices.

KAMB recommends that consumers looking to purchase, refinance or consolidate debt ask if their loan officer is a member of the Kansas Association of Mortgage Brokers. By doing so, they ensure they are working with someone who meets higher education and ethical standards.

Kansas City Mortgage Group
www.kansascitymortgagegroup.com

Debt Consolidation

Debt Consolidation can be a life saver. When you get rid of or significantly reduce your high interest credit card debt you can take control of your other debts and see the light at the end of the tunnel. There are lots of ways to get out from under your credit card debt.

The first way is to make extra monthly payments on your credit card to reduce the balance. If you are just paying your monthly minimums you aren't going to see your balance go down very fast if at all. There are quite a few ways to go about this. You can have a written out plan so you know every month how much extra you are paying and to which debt. It takes dedication and commitment, but you will see your credit card debt go away. A good tip is to start with your lowest balance. There is a nice sense of satisfaction getting a card paid off and it will get rid of a monthly payment that you can put toward another credit card.

Another way to get rid of your debt is to consolidate your debt into your mortgage. If you have some equity built up in your home, one use for that equity can be to get rid of higher interest debt that isn't tax deductible.

You don't want to use the equity in your home without serious consideration. You've worked hard to build up your equity so you need to use it wisely. If your debt is growing and you are having a hard time getting out from under it, debt consolidation might be what you need.

When you consolidate your debt you take money out of your equity by refinancing. The money you take out is applied to the debts you want to pay off. You can pay off credit cards, student loans, cars or anything else that needs to be paid off. The advantages are that the interest you pay on your mortgage is likely tax deductible, you save money every month by having fewer bills to pay so your cash flow goes up and your most likely saving money by paying less overall interest.

The questions to consider are the cost of debt consolidation. When you refinance your mortgage there are fees associated with the process. You also need make sure that using the equity in your home is the best option available.

If you are interested in debt consolidation give us a call or drop us an email and we will be happy to answer any and all of your questions.



Kansas City Mortgage Group
www.kansascitymortgagegroup.com

The Federal Reserve Does Not Change Interest Rates

The Federal Reserve did not change rates after they met on August 7. This is the 9th time in a row they have left them alone.

For you, this means your credit card interest rate and Equity Lines of Credit will stay the same as they are directly based on the Prime Rate.

In the statement the Federal Reserve brings up the credit conditions becoming tighter for many households but also that job growth is still positive.

The voting to keep rates the same was unianimous.

Kansas City Mortgage Group
www.kansascitymortgagegroup.com

Source
Parsing the Fed Statement
The Wall Street Journal OnlineAugust 7, 2007
http://online.wsj.com/mdc/public/page/2_3024-info_fedparse_shell.html

Sub Prime Mortgage Radio Show

Owner and Mortgage Consultant of Kansas City Mortgage Group, Mark Rome, appeared on KCUR's Up To Date with Steve Kraske of The Kansas City Star. The discussion included a representative from Homefree USA and Paul Coquillette of the Federal Reserve Bank of Kansas City.

The topic was Sub-Prime loans, forclosures and how this is affecting Kansas City Mortgages.

The conversation can be downloaded as a podcast.

Kansas City Mortgage Group
www.kansascitymortgagegroup.com

New Home Loan Lending - Comparing

If you have chosen a Mortgage Broker that you trust, then the step of comparing mortgages is quite a bit easier. Working with someone you trust will mean you have sat down, discussed all of your goals, what you can and can't afford and what is important to you. Your mortgage broker should follow up with a loan that meets everything you were looking for (meaning you don't have to compare loans) or will present you a few options to choose from.

However, if you are still shopping for a mortgage and a Broker to work with you are going to have to sit down and compare different loans. This brings up a sticky point. Will you be comparing apples to apples or will you be trying to judge an apple against an orange.

Trying to look at two mortgages and seeing which one is better can be pretty difficult. Here are a few tips:

How long are you going to stay in your home?

Is this your dream home? Are you going to retire here? Maybe your family will be growing in 5 years or in 5 years kids will be moving out. Have a good idea how long this actual home is in your plans. If you can see yourself moving in 3-5 years taking a higher rate with a 30-year fixed might not be the best loan for you. On the other hand, if you just purchased the home of your dreams and can't see yourself moving a 30-year fixed might be your best bet.

How much risk are you willing or unwilling to take?

Know your limits. If the only way you will be comfortable is with a payment that is steady, a fixed rate might be the only type of mortgage that will satisfy you. If you are comfortable trying to save some money up front if it means some uncertainty later, getting an adjustable rate mortgage could be what you need.

Do you have available funds for up-front cash?

There are lots of programs out there that let you get into a home with almost no money out of your pocket. The flip side of no money out of your pocket is usually a higher rate. If you can put money down and not roll your closing costs into your loan you might save money every month but have to pay more money up front.

Know what you can and can't afford up-front so you can make the best decision for your pocket book.

Can't I just compare the APR?

The idea behind the APR is to give you an equal way to compare the “true cost of a loan.” Unfortunately, APR is a very confusing number. There isn’t one set way to calculate this number and you can’t really use it to equally compare rates from one company to the next because the lowest APR does not guarantee you the lowest monthly payments.

However, it is the closest way to compare loans "apples-to-apples" because the APR does include fees, points and other financing costs. Use the APR as another comparison tool, not the only comparison tool.

If you know the answers to these questions it will make it easier when you sit down to compare loans. You will be able to compare the interest rates, payments, terms and look beyond to make sure the loan fulfills your answers to these questions.

If you just focus on rate and payment you might gloss over a giant prepayment penalty or thousands of dollars in points to secure a better rate.

Know yourself....and a high-quality mortgage broker you trust.

Visit our FAQ or resource center for more answers and help to your questions.

Kansas City Mortgage Group
www.kansascitymortgagegroup.com

Home Loan Lending - Choices

Searching for a new home loan seems like it would be the easiest thing in the world. You can just go online and within seconds have 4 quotes right at your fingertips. You can open the yellow pages and find a million and one companies and individuals trying to get your business. You could ask a friend, walk into your local bank or go to the national chain bank that might even be closer than the local bank.

So, how do you get through all the mortgage companies, find the good companies and actually choose who you want to work with? Well, it takes a little bit of work but it can save you money, time and heartache.

Step 1 - Getting a list of companies. You can do this lots of different ways. The best place to start is talking with friends, coworkers and family members that have bought a new home or refinanced in the past year or two. Did they like who they worked with? Were the really happy with their mortgage and the service they received? And the best question of all: Is their mortgage broker still in contact with them?

The last question is important for lots of reasons. If the mortgage broker is still in contact with their past clients it means they know the value of their client, don't forget about their clients after a single transaction and provide high-quality loans. (Instead of trying to sell a loan that has hidden fees, inflated fees, adjusting rates that you didn't no about or all the other problems that give you buyers remorse.)

You can also find companies on the internet, in the yellow pages and visit your bank or credit union. But referrals for a mortgage broker from people you trust is hard to beat.

Step 2 - After you have your list of companies you need to interview them. Choosing who you want to work with goes beyond interest rates and fees. Without a doubt it is important to get a good deal. But you want to trust who you are working with. The best interest rate might not save you the most money. The lowest fees could be hiding higher fees somewhere else. If you trust who you are working with and know this person wants your future business, you can feel secure with what you are being told.

You want to ask your mortgage broker a couple of questions:
- Do you charge points for your loan?
- What are the best loans for people in my situation?
- Why should I work with you?
- Do you keep my up-to-date on my loan compared to the current market after I close?


You also want to hear good questions from your mortgage broker:
- How long do you plan on living in this home?
- Do you expect any changes in the next few years? (Getting married, having children, children moving away, promotions, retirement etc...)
- Are you conservative, aggressive or in between with your investments and finances?

Asking good questions will give you an idea of your brokers views and you can decide if you trust them. Having good questions asked will let you know that your broker is working to find you the best loan and not try to fit you into any old loan.

Stay tuned for how to compare loans...

Kansas City Mortgage Group
http://kansascitymortgagegroup.com/index.htm

Reasons to Refinance

There are lots of reasons to consider refinancing your mortgage. The most common reason is to lower the interest rate on your mortgage.

Lower Your Interest Rate.
Securing a lower rate on your mortgage can bring a lot of advantages. Most notably, it likely lowers your monthly out-of-pocket expenses so your cash flow goes up. This gives you extra money each month to pay down your mortgage, save or do whatever you want with. (Who doesn't like having extra cash every month?)

Build Equity Faster.
Switching from a 30-year mortgage into a shorter term mortgage, such as 10, 15 or 20-year mortgage can decrease the amount of time it takes to pay off your mortgage. The advantage is less overall interest paid on your mortgage. The flip side is your payment will most likely be higher.

Change Your Loan Program.
Your goals can change. When you first bought your home you may have started with an adjustable rate mortgage if you thought you would be moving soon or to take advantage of a lower rate. But rates adjust and your payment changes with them. Refinancing your mortgage to get into a fixed rate, or into a different loan program, is another reason to refinance.

Credit Score Change.
As you continue to make your house payments on time your credit score will get better and better. If you orginally bought your home and had some credit issues after a year or two it is a great idea to look into refinancing. You probably got a higher interest rate with some past credit issues. If your credit has improved you might be eligible for better loan programs and better interest rates.

There are lots of reasons to refinance your mortgage. Make sure you keep your mortgage working for you and your goals instead of working against you.

You can go to our website to find out more about Kansas City Refinance or use any of our multiple free mortgage calculators to help plan your mortgage future.


Kansas City Mortgage Group
www.kansascitymortgagegroup.com