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The Mortgage Planning Process

March 8th, 2010 9:59 PM

MORTGAGE PLANNING PROCESS

The mortgage planning process is different than the typical "shopping for a mortgage" experience.

The typical shopping for a mortgage experience includes:

Wasting your valuable time trying to save $25/month by comparing rates, fees and closing costs among different lenders.
Wasting your valuable time trying to baby-sit the mortgage company you’ve reluctantly chosen to work with.
Being promised one thing and then getting something different.
Being "sold" on one mortgage product over another.
The mortgage planning relationship is about you:

Receiving valuable financial advice and guidance that can literally save you hundreds of thousands of dollars.
Trusting a professional who is committed, qualified and equipped to deliver what they promise.
Experiencing a "concierge" level of service when you are in the market to buy a home, refinance your mortgage or make cash flow changes to enhance your lifestyle.
Implementing a defined financial plan of action in helping you achieve your life goals and dreams.
Maintaining an ongoing high trust relationship with a team of financial advisors who can help you make necessary changes in your debt, cash flow and home equity planning strategies.
This is a relationship, not just a transaction. As such, it requires a defined system of accountability in order to work effectively. The Mortgage Planning Process consists of the following five steps:

1. Establish and define the client-planner relationship.

Mortgage Planner Should:

Ask you for information about your financial situation and your time frame for results and success.
Gather all the necessary documents before giving you the advice you need.
Clearly explain or document the services they will provide to you.
Explain how they will be paid and by whom. Unless you are willing to pay a flat fee for mortgage and real estate equity advice, mortgage planners are typically compensated through a commission structure set up with the lenders they work with.

You Should:

Clearly explain how financial decisions are made in your household and include all the key decision makers in consultations with your mortgage planner.
Be prepared to share personal and financial information with your mortgage planner in order for them to be able to advise you on how best to achieve your goals.
2. Analyze and evaluate your financial status.

The mortgage planner should analyze your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you have asked for, this could include analyzing your credit situation, real estate equity, debt situation and cash flow.

3. Develop and present mortgage planning recommendations and/or alternatives.

The mortgage planner should offer mortgage planning recommendations that address your goals based on the information you provide. The mortgage planner should go over the recommendations with you to help you understand them so that you can make informed decisions. The mortgage planner should also listen to your concerns and revise the recommendations as appropriate.

4. Implementing the mortgage planning recommendations.

You and the planner should agree on how the recommendations will be carried out. The mortgage planner may serve as your "coach," coordinating the whole process with you and other professionals such as CPAs, CFP^® professionals, attorneys, Realtors, builders, insurance professionals and other qualified advisors.

5. Monitoring the mortgage planning recommendations through a quarterly or annual mortgage and equity management review.

You and the mortgage planner should agree on how you will both monitor your progress toward achieving your goals. During this review, your mortgage planner can adjust their recommendations, if needed, as your life changes. Most often, this process involves periodic assessment of:
- Your fluctuating cash flow needs.
- Changing market interest rates and mortgage strategies.
- Income and career alterations.
- Family changes including:
  - Children’s financial needs.
  - Caring for elderly parents.
- How your real estate equity and investments are performing from both a cash-flow and "internal rate of return" perspective.

fast facts

Establish and define the client planner relationship
Analyze and evaluate your financial status
Develop and present mortgage planning recommendations
Implement the mortgage planning recommendations
Monitor the mortgage planning recommendations through a quarterly or annual mortgage and equity management review

David Wakefield - NMLS # 180383, CMPS^®

PrimeLending, A PlainsCapital Company
6867 Southpoint Dr N #108
Jacksonville, FL 32216

904.394.1398 direct
904-237-1450 alternate
866-241-1521 fax
dwakefield@primelending.com
http://www.davidwakefield.com

Posted by David Wakefield on March 8th, 2010 9:59 PMPost a Comment (0)

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Homebuyer Tax Credit for Individuals on Qualified Extended Duty Service

February 27th, 2010 11:53 AM

Homebuyer Tax Credit for Individuals on Qualified Extended Duty Service

First off, let me start by saying thank you. Thank you for serving our great country and for all of the sacrifices you have made. Being eligible for a VA loan is one of the great benefits of serving in the military.

There are special rules that apply to the homebuyer tax credit if you are a member of the uniformed services, the Foreign Service of the United States, or an employee of the intelligence community.

Here is how it works:

A "first time home buyer" is defined as someone who has not owned a primary home in the last three years. If you are a "first-time home buyer", your tax credit will amount to 10% of the purchase price of your new home not to exceed $8,000.
A "long-time resident" is defined as someone who has lived in the same primary home for 5 out of the past 8 years. If you are a "long-time resident", your tax credit will amount to 10% of the purchase price of your new home not to exceed $6,500.
The tax credit does not need to be paid back if you continue living in the home as your primary residence for three years without selling it. If you sell the home in connection with government orders for official service, the credit does not need to be repaid even if you sell your home within the three year timeframe.
The home must be purchased for less than $800,000 before May 1, 2010. If you sign a binding contract to purchase a home before May 1st, you would need to close on the transaction before July 1, 2010. If you have served for at least 90 days of the year outside of the United States, you have until May 1, 2011 to purchase your home and receive the tax credit. In that case, if you sign a binding contract to purchase a home before May 1, 2011, you would need to close on the transaction before July 1, 2011.
Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.
You cannot purchase the home from a related party like a spouse, direct ancestor, or direct lineal descendent (child or grandchild); however, you can still qualify for the credit if you purchase a property from siblings, nephews, nieces, and others.
If you are married, both spouses must qualify for the credit.
If more than one unmarried individual is buying the property, the credit can be split up among all the individuals who qualify. However, the total credit taken cannot exceed $8,000 (or $6,500 for "long-time residents"). Alternatively, if only one of the unmarried buyers qualifies for the credit based on their income or past home ownership status, the individual who qualifies for the credit can claim the full credit.
The credit applies even if you have co-signers on your mortgage loan.
The credit applies to 1-4 unit homes as long as you live in one of the units as your primary residence - you could live in one unit and rent out the others.

How does the tax credit work?

A tax credit is kind of like a gift certificate that you can use to pay your taxes - it reduces your income tax bill on a dollar for dollar basis. Imagine paying your bill at IRS Restaurant, and then later getting an IRS Restaurant gift certificate. Normally, you would need to go back to IRS Restaurant and buy more food in order to use your new gift certificate. But what if IRS Restaurant allowed you to just turn in your gift certificate for cash? That's how the home buyer tax credit works! All you need to do is file a form with the IRS after you buy your new home and they will send you a refund check for $8,000 (or $6,500) - just like the example of IRS Restaurant that allows you to exchange your gift certificate for cash! Remember though, you'll receive the $8,000 (or $6,500) from the IRS AFTER you purchase your new home, so you cannot use the funds to help with your down payment.

For more information about the home buyer tax credit or other recent updates to the mortgage and real estate markets, just give me a call. I would be happy to assist you with your mortgage in the purchase of your new home!

To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, by any person for the purpose of (i) avoiding tax-related penalties or (ii) promoting, marketing or recommending to another person any transaction or matter addressed in this communication. I recommend that you consult with properly licensed legal, tax and investment advisors for specific advice pertaining to your individual situation.

David Wakefield - NMLS # 180383, CMPS^®

Posted by David Wakefield on February 27th, 2010 11:53 AMPost a Comment (0)

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How to Successfully Get a Mortgage in 2010!

February 20th, 2010 2:41 PM

How to Successfully Get a Mortgage in 2010

Getting a mortgage in 2010 is a little more complicated than it has been in the past due to the challenging economy and increased government regulation of the mortgage industry. In fact, it's like a giant hurricane has swept through the housing and mortgage markets, leaving chunks of debris and danger in its wake. But never fear; that's why I am here! As your Certified Mortgage Planning Specialist, my role is to walk by your side, be your personal guide, and set you up for success every step of the way. Here are a few of the challenges that we will tackle together as we navigate the danger zone known as the 2010 mortgage process!

New Good Faith Estimate

The US government has created a new version of the disclosure form known as the Good Faith Estimate (GFE). The old GFE itemized all your closing costs and illustrated your "cash-to-close" - the amount of cash you would need to bring to the closing if you are buying a home, or the net proceeds you would receive at the closing from a cash-out refinance. The new GFE lumps in your closing costs under certain categories instead of itemizing them, and does not illustrate your cash-to-close. Also, if the seller is paying closing costs or points on your behalf, this is not reflected on the new GFE. In other words, it will look as though you are paying these fees even though the seller is paying them.

As your Certified Mortgage Planning Specialist, I go above and beyond the government's minimum requirements for my clients. In fact, I have created special systems and easy-to-understand forms to help illustrate the total costs associated with the loan options available to you. Please contact me for more details.

New Appraisal Guidelines

Most mortgage loans these days are either insured by the Federal Housing Administration (FHA) or sold to Fannie Mae or Freddie Mac. This means that mortgage banks and brokers need to follow the rules set by Fannie, Freddie, and the FHA. In 2009, Fannie and Freddie adopted new rules surrounding the home appraisal process. In 2010, the FHA followed suit and implemented many of the same guidelines. What this means for you is that the appraisal process is going to be more stringent and inflexible, costly, and time consuming than it has been in the past.

In fact, many appraisals are now conducted by appraisers who may not live in your community, resulting in value estimates that may not agree with your own opinion of what your home may be worth. Also, many appraisals now go through multiple layers of screening and are handled by Appraisal Management Companies, resulting in higher costs and fees. Finally, loan originators are prohibited in most cases from ordering appraisals or communicating with appraisers. Even so, it is important to keep in mind that an appraisal is simply somebody's opinion of what your home would sell for in today's market. You and I are entitled to disagree with the appraiser and have a different opinion, but the lending guidelines that we need to follow require us to use the appraiser's opinion when calculating your loan amount and strategy.

As your Certified Mortgage Planning Specialist, my commitment to you is that I will help you understand the appraisal report once it is completed. If there are any errors, I will do what I can to get them corrected. Most importantly, I will work hand in hand with you to adjust the mortgage strategy as necessary if the appraiser's opinion of value comes in below what you or I think your home may be worth.

New Disclosure Rules

The US Congress has enacted some new laws, and the Federal Reserve Board has issued some new guidelines that could delay the loan process. For example, if the APR on your loan changes by more than 0.125% before the closing, the lender needs to issue new disclosure forms and give you time to review the new forms.

Here are just a few examples of what could cause the APR to change:

You decide to lock in your interest rate or get a rate lock extension
You decide to reduce your loan amount
You are getting an adjustable rate mortgage and the index value changes
Your credit score changes before closing, resulting in a higher rate or higher fees
You decide to pay more or less points than what you initially requested

As your Certified Mortgage Planning Specialist, my commitment to you is that I will help you avoid costly delays to the best of my ability by planning with you ahead of time and setting you up for success. While I can't control everything that happens during the loan process, I do have the experience to know what pitfalls to look out for and help you plan accordingly.

Higher Credit Score Guidelines

As stated above, most mortgage loans these days are either insured by the Federal Housing Administration (FHA) or sold to Fannie Mae or Freddie Mac. This means that mortgage banks and brokers need to follow the rules set by Fannie, Freddie, and the FHA - all of whom have issued stricter credit scoring guidelines. I know it sounds ridiculous, but if your credit score is less than 740 (gasp!) you may get hit with higher fees if your loan is being sold to Fannie or Freddie! Most of my clients are responsible individuals who take pride in paying their bills on time and maintaining a good credit rating. However, many Americans have recently been hit with unexpected financial difficulties due to the challenging economy.

In fact, many credit card companies have reduced the credit limits on accounts that have never even been late. This is causing credit scores to go down across the board for people who have never been late on any payments in their life! If you fall into this category, or if you have some challenges with your credit score, you may get hit with higher costs when it comes to getting a mortgage. As your Certified Mortgage Planning Specialist, I will work with you to evaluate your options and point out strategies and ideas for increasing your credit score and getting a great deal on your mortgage.

Please contact me for more information on any of these items and how they may impact your situation. As always, I am here for you every step of the way. Together, we will make getting a mortgage in 2010 a very rewarding experience for you and your family!

David Wakefield, CMPS^®

Posted by David Wakefield on February 20th, 2010 2:41 PMPost a Comment (0)

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Buying a Home with Little or No Money - May 2009

May 1st, 2009 10:29 PM

So the question is, can you buy a home now with little or no money?

The answer is yes you can.

Buying a home should be a fun experince although often it is a time wrought with challenges. One of the biggest challenges for buyers is coming up with sufficent funds for down payment.

That being said, how do you come up with the funds for the down payment? In some cases you might not need any funds at all. At the moment we have access to BOND and SHIP funds that can assist with your down payment. The Florida Bond program offers a $10,000 interest free second mortgage that can be used to cover your down payment and closing costs.

Other options? If you buy in Clay, St Johns or Nassau county, you may be eligible for the USDA loan. This is a great loan that offers 100% financing with no mortgage insurance. It operates similar to a VA loan and has a "Guarantee Fee" that is financed on top of the loan amount. It also allows for the seller to cover all of the closing costs and prepaid items.

What else is there? FHA with 100% Gift Funds or come up the a 3.5% down payment and the seller can cover all of the buyers expenses. VA loans offer a loan with no downpayment and the seller can cover all of the buyers closing cost and prepaid items.

Be sure to contact me directly with any questions regarding mortgage financing in or around the Jacksonville, Florida market!

Make it a great day,

David Wakefield

Posted by David Wakefield on May 1st, 2009 10:29 PMPost a Comment (0)

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My New Blog

David Wakefield - NMLS # 180383, CMPS®

David Wakefield - NMLS # 180383, CMPS®

David Wakefield, CMPS®

David Wakefield - NMLS # 180383, CMPS^®

David Wakefield - NMLS # 180383, CMPS^®

David Wakefield, CMPS^®