March 2010

Investment Exchange

An educational real estate newsletter

SHOPPING FOR A MORTGAGE

Are you house hunting? Great! There has never been a better time than right now.

Keep in mind that there is so much more involved in the purchase process than just looking at pretty pictures, visiting open houses and visualizing where your things will fit inside your new home.

Getting the best loan, not just the best deal, is perhaps just as important.

Clearly, shopping for a mortgage is decidedly less fun than searching for a gem of a house, but it is a major decision for the short- and long-term viability of affording your dream house indefinitely.

In fact, it's imperative that you get preapproved for a mortgage ... preferably before you even start your home search.

By getting preapproved sooner rather than later, you're setting yourself up to move quickly when you do find the house you want. You'll know exactly what a lender is willing to give you and under what terms.

That means that you won't waste time shopping for properties that are more than you can afford. You might even get preapproved for more than you thought, which expands your purchase options.

One nice thing about mortgage shopping right now is the super low rates. Once you find a mortgage that suits you, lock in that rate and you'll save a bundle over time. We can all but guarantee that these rock-bottom rates won't last forever.

This issue of "Investment Exchange" is designed to get you familiar with your mortgage options so that you're on the ball when you do find that once-in-a-lifetime property.

You'll also get handy tips to make your credit squeaky clean before you apply. That way you're in a position to get the best terms possible.

Remember, house hunting is fun, but mortgage shopping should be numero uno on your to-do list.

top

Site feature spotlight

HOW TO GET AN FHA LOAN

Federal Housing Administration (FHA) loans can save you serious money and reduce your monthly mortgage costs. They're also ideal for those with less-than-pristine credit history.

Foreclosure.com wants to help you get one.

Whether you're refinancing or purchasing, an FHA-backed loan can save you a boatload of money. The FHA helps people who may not otherwise qualify for a mortgage get the funding they need to pursue their real estate goals.

Even if you've filed for bankruptcy in the past or lost a home to foreclosure, you may still qualify for an FHA loan. In addition, FHA loans demand fewer repairs than conventional loans and allow very low down payments — as low as 3.5 percent.

Talk about savings!

You can also find some pretty attractive terms with FHA loans, such as mortgage insurance rolled into the loan (rather than being paid out of pocket) and higher debt ratios than you find with conventional loans. These terms make qualifying for and carrying a mortgage much, much more affordable.

Our exciting On Demand Webinar, "How to Get an FHA Loan," is designed to teach you the ins and outs of qualifying for an FHA-backed loan. The course is led by Master-level Certified Foreclosure Agent instructor, Cathy McDaniel.

This course will teach you about:

• FHA options and features
• FHA loan qualification criteria
• FHA home appraisal
• FHA loan programs, escrow holdback and 203 (k) Streamline
• FHA refinancing, loss mitigation, down payment assistance and more

Cathy has helped more than 20,000 real estate agents and their homebuyers achieve their business goals since 2007. In 2008, she was named Educator of the Year by the Georgia Real Estate Educators Association.

Cathy's more than 15 years in the industry will help you figure out which FHA options work best for you (or your clients) so that you can get the best possible loan for the best possible price.

This Webinar is available On Demand from Foreclosure.com, which means you can watch it when and where you want, from the comfort of your home or office. It's the perfect blend of education and convenience.

Check out "How to Get an FHA Loan" here.

top

Web site search tips

NEW FEATURE: IMPROVE YOUR CREDIT SCORE

As we stated earlier, getting preapproved for a mortgage should ideally come before your home search.

But, in the grand scheme of things, preapproval is still step two.

Step one is cleaning up your credit score, which means doing everything in your power to get your credit as perfect as possible. Your credit score is what's standing between you and the best mortgage terms available.

Various factors affect your credit rating, including past credit history, current debt vs. income, as well as the type of debt you have (mortgages, credit cards, etc.).

Even if you think you have great credit, it's essential to get your hands on your credit report. You'll get a detailed account of your credit and you may be surprised by what blemishes show up.

You don't have to have gone bankrupt to harm your credit. Even something as minor as a forgotten, never-returned movie rental can cause problems.

To find out where you stand, you need to contact one of the country's major reporting bureaus (Experian, Equifax, or TransUnion) to get your detailed credit report.

If you find out you have bad credit, all is not lost.

First, you should contact any outstanding creditors to see if you can make arrangements to get them off your report. You can save cash by avoiding professional credit counseling, although in some cases it may be unavoidable.

Foreclosure.com has compiled a concise, easy-to-read resource to help you navigate a choppy credit report. It includes a side-by-side comparison of major online resources that could be just the ticket to clean up that credit report.

You'll also learn how foreclosures and short sales can affect your credit and learn what you can do to mitigate damage in these situations.

Find out more by checking out our brand new Foreclosure.com Credit Center.

top

Hot off the press

THE BEGINNING OF THE END?

Short-term mortgage delinquency rates fell to 9.47 percent in the final quarter of 2009.

That's down 17 basis points from the third quarter of the year.

The Mortgage Bankers Association (MBA) chief economist Jay Brinkmann has speculated that "the continued and sizable drop in the 30-day delinquency rate is a concrete sign that the end may be in sight."

The dramatic change is due in large part to the fact that the foreclosure actions that resulted from the 2007 subprime crisis are starting to dry up. The hardest-hit markets — most notably California and Florida — are reaching the end of the inventory that was purchased under unrealistic terms and backed by unrealistic mortgages.

These statistics include loans that are at least one payment behind but do not include those in the actual foreclosure process.

"Thirty-day delinquencies have historically been a leading indicator of serious delinquencies and foreclosures," said Brinkmann. "With fewer new loans going bad, the pool of seriously delinquent loans and foreclosures will eventually begin to shrink ... It gives us growing confidence that the size of the problem is now about as bad as it will get."

Good news for many of us, although the MBA cautions that longer-term delinquencies — just like longer-term unemployment — still have a strong presence in the market.

Because mortgage delinquency rates tend to closely follow unemployment rates, it's prudent to not expect a strong rebound until employment is on a steady uphill climb.

In the meantime, investors' ears should be perked up. As the foreclosure, preforeclosure and delinquency rates start to disappear, so do the deals. The window that we have been expecting to close may finally be on its way down.

top

Our success stories

DENNIS HEARING, REO PRO

Dennis Hearing started focusing on the REO business back in 2007, before the flood of short sales and foreclosures.

A Keller Williams Realty Agent in Fort Lauderdale, Fla., as well as a CFA expert and Certified Short Sale Agent, Dennis is a busy man.

Says Dennis: "The data suggests we have a fairly long road ahead of us with short sales and REOs before the market 'bottoms out.' My goal this year is to continue to educate homeowners about the opportunity that a short sale offers and personally help 100 families achieve a successful short sale."

That's a lot of business for just one agent, but Dennis says the trick is to take advantage of the market as it is — not wait around until the economy improves.

"Education is key," urges Dennis. "To agents who say, 'I can't afford it right now,' I say, '[You] can't afford not to right now!'"

Dennis is serious when it comes to his own real estate education. He's taken a great deal of courses through Foreclosure.com's Agent University and says they're among the best in the business.

"After realizing the value and quality of courses offered by Agent University, I began immersing myself in [the courses] with the obvious focus on REO management and marketing, as well as all of the short sale courses."

And how has this helped his career?

He's extremely well equipped to help homebuyers and investors save a lot of money in the short sale and REO game — and it shows with how busy he is. Dennis gets a consistent flow of buyers in all price ranges from all over the country — a true testament to Foreclosure.com's massive Internet exposure.

"I am currently looking for more buyer agents to help me handle all the buyer leads I have coming in," he says.

Not bad for a market that's supposedly in a slump!

Dennis has already registered for the Master program, which was recently rolled out in response to high demand, so he can fine-tune his skills even further.

Keep up the good work, Dennis!

top

Real estate tips

HOME LOAN ABCs

These days, homebuyers have a long menu of options for home financing.

These different types of loans have evolved out of the necessity of making buying a legitimate and obtainable goal for buyers. Your choices may seem daunting, but the idea is to give you the options so that you can choose a loan that best suits your financial preferences.

The most general categories of loans are fixed- and adjustable-rate mortgages.

Fixed-rate mortgages stick to the same interest rate for the life of the loan. Fixed rates mean mortgage payments you can easily budget for and a degree of immunity from rate increases. Many buyers prefer the predictability of these loans.

Adjustable-rate mortgages, on the other hand, have rates that fluctuate with the prime rate. They offer a greater degree of risk due to exposure to interest rate hikes, but they also afford you the opportunity to take advantage of rate drops if and when they occur.

There are also various hybrid loans on offer, which combine the features of both fixed- and adjustable-rate loans. You may have a fixed rate for a certain period and then convert to an adjustable rate or have a portion of your loan at a fixed rate and the remaining adjustable.

In short, there are a variety of options that you will have to consider carefully.

Sometimes mortgages are assumable, meaning you essentially inherit a mortgage along with your property purchase. This option can be ideal for buyers who may have trouble qualifying for a mortgage on their own, although the terms for assumable mortgages vary from jurisdiction to jurisdiction.

Don't forget about FHA-backed loans, which provide an additional alternative for people with spotty credit and/or a low down payment. FHA loans can often pave the way to home ownership for people who would otherwise not qualify for a mortgage.

Timing is an important factor — you don't want to assume the risk of a variable rate when interest rate hikes are imminently expected. Your choices will also be governed largely by your personal preferences, finances and comfort with risk.

Talk to an expert today to see which options are available to you.

top

Deals of the Month

HOT FORECLOSURE DEALS!

Prescott Valley, AZ
$95,000
3 beds/2 baths
1,587 sq. ft.

Lebanon, KY
$130,000
3 beds/1.5 baths
n/a

Acworth, GA
$199,900
5 beds/3 baths
3,912 sq. ft.

Linda's Learning Lane

PLEASURABLE SHOPPING AND SERVICE

As I answer the front door a delivery man hands me a beautifully wrapped package from Godiva Chocolatier. I am curious who would send me such a lovely gift, and to my surprise, it is my mortgage broker.

I would never have expected a gift from him, but as time has gone on I have learned that he values every relationship he makes.

This mortgage broker knows his products
and his clientele and I have referred him often.

Now as you shop for mortgages and try to make sense of all that is available to you, it is important that you work with someone who has a track record of positive outcomes. There are lots of ways to find someone who is willing to work with you. References are important because you are dealing with your financial life.

Several years ago I was asked to deliver a keynote speech to a 20-year-old mortgage company. In preparation for the presentation, I met with the CEO and interviewed him on what they were currently experiencing in their business.

One of the comments that he made really stuck with me to this day.

It used to be that there were a handful of mortgages products, but now there are hundreds and variations on the hundreds. Getting educated on the right type of mortgage for you is critical for you to make the best choice.

There are different venues for you to explore. Mortgage companies will often offer seminars on the different products that are free to attend. I would encourage you to attend, but attend with a critical mind understanding their goal is to place you in a product. Do your own research and speak with others who are using that type of mortgage.

As you make your determination on which product and mortgage professional to use maybe you too will enjoy a Godiva cup of dark hot chocolate!

top