Shopping should be done at the Mall. 5 reasons why shopping can cost you more money.

I love going to the mall. There are so many stores to choose from. I    get  the opportunity to check out all the stores looking for the greatest price. I am there for jeans and I do not have the need for the customer service team to assist me in trying them on. There is little value that staff at the retail stores can add other than an occasional explanation of the product. If I leave a store and then I decide to go back two hours later the price is still the same. Malls are great for a one stop shop and one size fits all type of product. My only question would be: Do you get your suits at the mall? If answer is yes then answer the follow up: Do you leave that day with the suit that you just bought?

Mortgages are an items that need to be tailored to your specific dimensions. They are not something that you can just pick a store and then check with another store and say the price tag was cheaper over here. Price Tags can be deceiving. In our industry they are called the “Good Faith Estimate.” Here are 5 reasons why shopping can cost you more money:

1. Rates are a moving target – In the mall you can go from store to store and then back to the original store and purchase the item that you found to be the most well priced. However, imagine if as soon as you left the store they had a price change for the worse. When you went back to buy the item that was initially $100 you found out it was $125. Had you committed ealrier in the day you would have paid $100. The flip side is you could come back and find the item to be $75 and feel like not only did you make the right choice but you got a deal. This is what is going on with rates. They change daily and in many cases multiple times a day. A Good Faith Estimate is exactly that an estimate. Some will give the the absolute best case scenario and others will price in the volatility of the market. The latter is done to prep you for the worse so that you avoid let down or shock late in the game.
2. Mortgages are Custom – There is not a one size fits all mortgage. They are custom tailored to meet the needs of the individual applying for the loan. When  you are looking at every store and comparing our GFE’s (small part of what we do) there will not be an extraordinary amount of work put into your file. Our job is to shop the best deal for you. This is what brokers do. See the definition of Broker brought to you here compliments of the free dictionary. In short we organize deals and negotiate contracts for a commission. The tailor is not going to begin cutting the suit before you buy it. You may get measured and fitted but the real action will not take place until you have committed. Common ways to show your committment are paying for the credit report and the appraisal for starters and providing all the documents to give you an accurate assessment.
3. Change in the Guidelines – While you are out looking at other stores to find the right deal for you other stores are changing what they offer. Imagine going back to the store and the item that you were looking to purchase says no longer in stock or discontinued. You may be able to find a used version online or from a store that you do not trust but you would have to weigh that risk on your own. Today’s climate has led to many changes in our guidelines. Many consumers missed the boat on Nehemiah. This was seller funded down payment assistance and it has been taken off the books. When you look so hard for the deal you may miss out on the opportunity of your life time. Don’t pick the fleck out the pepper!
4. Credit Scores – Each month just after the 3rd or so your active credit will report to the bureaus. If you have had new charges post to your debts or bought something new or inquired about a new car your score may suffer the consequences. If you were borderline 620 and your score drops below this mark your chances for an FHA have just taking you away from the Mall of options and sent you to one of two specialty stores. You know what that means right? Higher Prices. You are now going to pay more for your product through the specialty store and there is no guarantee that they will be able to stay in the market long. You have to protect your score and when you have it pulled by a Broker they have that score and can use it for up to 90 days before they would have to re-pull a new report.
5. Price is what you pay value is what you get – Often times as a consumer we are shopping for the best price. I can understand and respect this. I don’t want to pay more than I have to either. However, there are many more elements to the whole customer experience. You want to feel comfortable, informed, in the know, respected and Valued. Often times when you get a victory so to speak on the price you take a hit on the value. You will get the bare minimum but that is to be expected considering you paid the bare minimum. So I like to subscribe to the wise saying “Price is what you pay and value is what you get.” You cannot shop value in our market.

If you take nothing away from this at all please understand this: Shopping can cost you more than committing to the individual you feel most comfortable with. Shop for trust and information not for price. Ask someone to refer you to someone that you can be excited to work with. You will find by doing this you will get exactly what you are looking for. Malls are a moving target and are not a fair representation of our industry. We do not sell retail and therefore your rate and price may not be waiting for you when you come back. Leave the mall as something you do on the weekend with the family or friends. We are here to work with and for you not against. Businesses built by Referral receive nothing from charging you an unfair price for their product or service.

The Mall in Motion!

With or Without Harp here are 5 ways you might Refinance your Home!

Are you considering refinancing your home? You cannot listen to all the the talk of low Mortgage rates and not consider looking into it. Maybe you have some equity and would not mind taking out a little cash right now. The problem is the devil that is on your shoulders. Yes, there are naysayers out there that say that it cannot be done or that you would be crazy to cash out of your home right now. I know I get it. Jealousy is a disease of the worst kind. The bottom line is that if you are considering refinancing there are a few different options that you have.The following is a list of opportunities that may be available to you:

1. Streamline FHA – This is a simple and effective way to lower your rate on your FHA mortgage. If you currently have a rate that exceeds 5.875% then you may want to talk to your professional. There are limited costs such as title insurance, processing and few miscellaneous. You will receive a refund from the upfront MIP that you paid or financed initially and that can be applied to your costs. In most cases that I have done or seen the borrower brings their monthly payment to the close of escrow or less.
2. VA IRRL or VA Cash-out Refinance - The VA IRRL is similar to and FHA streamline. The goal is to minimize the cost of the refinance so the Veteran can lower the rate on their note. A Cash Out VA loan is the same as a traditional cash out mortgage but for Veteran’s only and with certain restrictions.
3. DU Refi Plus - This program is part of the HARP (Home Affordability and Stability Plan) that was recently released. If your loan is owned by Fannie Mae you can refinance your first Mortgage to 105% of the homes value. If you have a second in place then that second can be subordinated to an unlimited CLTV. This will vary case by case and lender by lender and many of the wholesalers have their own overlays. Overlays are added guidelines to protect their investors. Essentially stricter underwriting.
4. Freddie Mac’s Relief Refinance Mortgage – This Program is the same as the DU Refi Plus but Freddie Mac requires that you return to the current servicer of the loan. What this means is that if you have a Freddie Mac owned loan and that loan is serviced by Countrywide you will have to refinance with Countrywide. In my post Breaking News Fannie Mae and Freddie Mac to the rescue? I have listed the sites where you can find out who owns your mortgage.
5. Traditional Refinance – If you are one of the few that have equity in your home you have the ability to capitalize on today’s low rates. The one concern is the appraisal on many of these loans because often times the lender will do an AVM or Desk Review of our appraisal. This is especially common when you are looking to take cash out of the property. Here are a few ways to refinance traditionally:

• Rate and Term Refinance – A rate and term refinance is simply as it states. It is when you refinance to lower the rate or the term of you mortgage. Many cases you can do both at the same time. I have several clients that are taking advantage of this opportunity right now. They are cutting the term of their mortgage from 25-30yrs to 15-20 yrs.
• Cash-Out Refinance – A cash out refinance occurs when you borrow equity from your home. The cash may be used to pay off debt, home improvements, vacation, investing or whatever else you choose to do with it. WARNING – The appraisal on a cash-out refinance will be scrutinized the higher the LTV. Also, there are costs that are associated with a cash-out refinance that you will not incur on a rate and term refinance. It is part of the risk based pricing that Fannie Mae and Freddie Mac have gone to.
• Government Cash Out or Rate and Term Refinance - This is the same as the traditional except that it is bound by Government Guidelines. For Example FHA has limited refinance transactions to 85% LTV.

As always this information is to help you gain a better understanding on what may be available to you. I strongly encourage you to consult you mortgage professional and find out your options today!

Thank you,

Matt Freeman