Upside Down On Your Mortgage? Ask Us How HARP Can Help YOU!

While there is debate as to when the housing market began to crash, or what factors fueled the housing crisis which ultimately ignited an economic recession not seen in three generations, there’s no debate about the extensive loss of wealth which hit many homeowners like a kick in the teeth.  Over the course of a short two-year period, from 2007 to 2009, the value of real estate owned by U.S. households plummeted by $6,000,000,000,000.1

Count those zeroes…that’s six trillion dollars.

In terms of understanding the depth or magnitude of a number like six trillion, consider this:  six trillion seconds equals 189,276 years.  There are six trillion miles in a light-year.  Six trillion, of anything, is a LOT.  But let’s step away from that mind-bending figure and look at an example of what this loss of wealth may have looked like to the average homeowner during the recession.

Harry Homeowner purchased his home when home values were continuing to rise dramatically.  He found a great deal on a modest home priced at $300,000.  Harry even had enough assets to make a down payment of 20% so that he could avoid costly mortgage insurance.  So Harry borrows $240,000 (80% of the purchase price) and he is one happy camper, especially since he was able to get a really low interest rate on his Adjustable Rate Mortgage (ARM).  Over time, Harry notices things about the house that he’d really like to improve, like the out-dated kitchen and bathrooms.  He also wants to add some outdoor living space and decides to have an in-ground pool built.  With interest rates at historic lows, Harry decides to borrow some of the money necessary for these improvements by taking out a 2nd mortgage on his home to the tune of $50,000.

And then the housing market crashes.

During the recession, home values decrease significantly.  Harry would like to refinance his home because the interest rate on his 1st mortgage is going to increase soon, and not having the security of fixed rate mortgage is really starting to bother him.  But Harry has a major problem.  The most recent appraisal of Harry’s home only reflects a valuation of $240,000, and that’s with the improvements he has already made.  The valuable equity Harry attained by making a down payment of $60,000, in addition to the equity he should have realized from his home improvements is now gone.  The balance on his 1st mortgage stands at $230,000 and he still owes the full $50,000 on his second mortgage.  With total mortgage debt of $280,000 on a home that is only worth $240,000, Harry is officially upside down (or “under water”) on his mortgage.  And with that interest rate on the 1st mortgage set to increase in the near future, Harry needs to know if there is any way he can secure a fixed rate mortgage in today’s market.

Enter the Home Affordable Refinance Program (a.k.a. “HARP”).  If Harry’s 1st mortgage was backed by Freddie Mac or Fannie Mae prior to June 1st 2009, Harry’s mortgage is eligible for refinancing.  In fact, under HARP, homeowners can borrow up to 105% of the value of their home to pay off their existing 1st mortgage and finance any costs associated with the transaction.  As far as the second mortgage is concerned, it will simply be subordinated to the new 1st mortgage.  And even though Harry’s loan-to-value on the new 1st mortgage is in excess of 95%, the fact that he does not currently pay PMI with his mortgage automatically excludes him from paying it on his new mortgage.

UniSource Mortgage Services is proud to offer loans under the Home Affordable Refinance Program.  If you, or someone you know, would like a personal consultation with one of our mortgage professionals concerning this program, or any of our other mortgage products, please call us toll-free at 1-800-995-4694, or email us at TeamUnisource@gmail.com.

1 http://fivethirtyeight.com/features/why-the-housing-bubble-tanked-the-economy-and-the-tech-bubble-didnt/#ss-1

UniSource Mortgage Services, Inc. Appoints New Mortgage Specialist

Premier Mortgage Company Recruits Talent

ImageOrlando, FL – UniSource Mortgage Services, Inc. (http://www.unisourcemortgageservices.com/) announced today that John Fletcher has joined the company to further develop its client base in the Florida residential mortgage market. John comes with a wealth of experience in real estate as a managing partner of Freedom Homebuyers LLC. He has lived in Central Florida for over 20 years, and is a member of both the Central Florida Realty Investors Association and Ron LeGrand’s Gold Club. John is also a former member of the Jacksonville Real Estate Investors Association. Early in his professional career, following his graduation from the University of Florida, John served as president of a geospatial firm in Gainesville, FL. Going forward, he will capitalize on his personal and professional network to increase mortgage volume and further expand brand awareness for UniSource.

John joins UniSource as Orlando Branch Manager and Mortgage Specialist to continue UniSource’s success in expanding its footprint throughout the southeastern United States. John comments, “This transition feels natural because of my passion for real estate. With the impressive variety of loan products UniSource has to offer, I am excited to provide mortgage financing services to my friends, family, and others who are referred to me for their mortgage needs. This opportunity is such a blessing and I am fortunate to be joining such a respected company that prides itself in absolute integrity and excellent service.”

Bill Fletcher, president of the company, said “I am thrilled to have John join our dedicated team of mortgage professionals. I have every confidence that he will be a tremendous asset to our company and our valued clients.“

About UniSource Mortgage Services, Inc.

UniSource Mortgage Services, Inc. (NMLS #103644) is a full service mortgage broker in Florida (License #MBR1249), South Carolina (License #MB-0514306), North Carolina (License #B-116209), Virginia (License #MC-3700), and Tennessee (License #108769). Mortgage financing is available to qualified applicants for the purchase and refinance of residential properties, whether those properties serve as a primary residence, second/vacation home, or investment property. Aside from conventional financing options available through the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and the Federal National Mortgage Association (“Fannie Mae”), UniSource also provides mortgage financing through the Federal Housing Administration (FHA), the United States Department of Agriculture (USDA), and the Veterans Administration (VA). Both conforming and non-conforming loan programs are available.

The APR – The Great Equalizer

These days, consumers are always looking for ways to stretch their dollars, whether it’s clipping grocery coupons from the paper, shopping online for that “must have” big-ticket item, or even shopping for a mortgage.  But sadly enough, most consumers, even those who consider themselves well-versed in matters of finance, don’t understand how to compare multiple mortgage offerings in order to determine which one is really “the best deal”.  And in their quest for that best deal, borrowers simply ask two questions:  “What’s the interest rate?” and “How much are the closing costs?”

There is one question that can be asked by borrowers that will take both the interest rate and certain costs into consideration, and that question is: “What is the APR?”

APRThe Annual Percentage Rate, as defined on the Federal Truth-In-Lending Disclosure Statement, which is provided to all borrowers, is “the cost of your credit as a yearly rate”.  It is the “Great Equalizer” when it comes to comparing the costs and terms of credit.

If one borrows $200,000 at 4.000% on a 30-yr fixed rate mortgage, the monthly P&I payments are $954.83.  That payment will never change regardless of what the APR is.  However, if there were $3,000 in pre-paid finance charges (those charges are also identified under federal law), the APR for that loan would be 4.126%.  The borrower will always make payments based on an interest rate of 4.000% for the life of that loan, however, when factoring in the $3,000 of finance charges that were paid to obtain the loan, the “cost of credit” is actually 4.126%.

There aren’t many “big ticket” items that will surpass the cost of one’s mortgage.  You don’t have to have an advanced degree in mathematics to compare mortgage offerings.  Just look for the APR!

Please Contact Us with any questions about a rate quote, or your existing mortgage.

Avoid Cookie-Cutter Mortgages

Often times I’m asked by my past clients or new prospects, “Is it worth it for me to refinance my mortgage?”  This question has become more and more prominent as interest rates continue to drop significantly.

ImageSomewhere, somehow, someway, some financial genius uttered these words, “If your rate does not decrease by at least 2%, it’s not worth refinancing your current mortgage loan.”  I’m sure 90% of the folks that read this article have heard that very same statement.

Well, genius or not, that statement is simply not accurate.  I certainly understand the intent of the statement, but making a blanket declaration like that is a bit irresponsible.  I have hundreds of clients that would agree with me.  That’s like me stating that every person should get a 10-year fixed rate mortgage, regardless of their personal situation.

And therein is the key:  Everyone’s personal situation is different.  No two clients have the same income, debt, credit scores, house payment, or financial portfolio.  I might be talking with a young married couple who recently purchased their first home, or I might be talking with a mature couple who is now retired and living on a fixed income.

My job, as a mortgage broker, is to find the best possible mortgage solution that meets the goals of my client.  If I have a client that comes to me who just refinanced six months ago, it may very well make sense for them to refinance their loan.

Case in point:  Mr. and Mrs. Jones just refinanced their home with my company in March of this year.  At that time, they closed on a 30-year fixed rate mortgage at 4.750% with no points and no origination fee.  Mr. Jones emailed me the other day asking if it “made sense” for him refinance now that rates are even lower than they were earlier this year.  While I don’t think it would make sense for Mr. Jones to refinance to the lower market rate of 4.250% and incur another round of closing costs, I did inform him that I could lower his interest rate to 4.375%, and that I would be able to pay all of his closing costs so that the loan effectively costs him nothing.  The only thing Mr. Jones has “lost” is that he’s already paid six months of interest on his current loan.  However, Mr. Jones is very pleased with the fact that his new mortgage payment will be lowered by $72 per month.  Over 30 years, the new loan is going to save him nearly $26,000 in interest.

Any mortgage broker or loan officer can quote a rate.  It’s really a simple thing to do.  But I have always viewed it as my responsibility to serve in the best interest of my clients, which is why I want to understand their personal situation and what goals they are trying to achieve.  Gaining this insight has proved invaluable in assessing what products would best fit my clients.

So remember, there is no cookie-cutter answer or mortgage product that can be applied to every situation.  Besides, I don’t know any client who actually wants to be lumped in with the masses.  Everyone’s situation is different.  Just ask Mr. Jones…he’s on his way to saving $26,000.

Want to know if and how much you could save if you refinance? Contact Us and we would be glad to give you an quick and accurate estimate!