Free Credit Reports

There are many ways to get your hands on a credit report today. But like many things in life, you get what you pay for. There are three major credit reporting bureaus and all three of them are relevant in the mortgage industry; Experian, Equifax, and Transunion. All three of these bureaus can be found on the internet and all three of them will allow you to request a free copy of your credit report.

• experian.com
• transunion.com
• equifax.com

After you receive a copy of your credit report they will try to enroll you into a credit monitoring service with a monthly fee. In some cases, they automatically enroll you and you have to contact them to turn off this service. We are not saying that the credit monitoring service is not without value, but you do not have to pay them just to view your credit. If you find an inaccuracy, you will have to pay a fee to the bureau and then you can dispute the credit item on-line. We recommend direct contact with the bureaus to eliminate the delays and additional fees of middle-men.

There are other popular on-line services that will give you a credit report for free too. The well advertised freecreditreport.com is a good example. They will give you a single bureau (Experian) report for no cost. However, you will begin a free trial membership in their credit monitoring program as well. If you don't cancel your membership within 7-days, you will be billed monthly until you cancel. To dispute any inaccuracies on your report you may have to pay extra fees. It is the same type structure as dealing with Experian directly.


JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
www.communityfirstfinancial.com
http://activerain.com/jcunningham

Don't give lenders your credit card!

In any industry you are going to experience good and bad representatives within that industry. Be it an accountant, a mechanic, or a bartender - there are great ones and there are very poor ones. The lending industry is no different. I need to share a true story I heard from a perspective client an hour ago.

I got a just call from a woman named Tanya who lives in Georgia. She found my name & number on Google from an old Active Rain blog I posted in Nov 07. (Active Rain Really Works) Anyway, she wanted my opinion on her recent phone call with Quicken Loans.

Apparently, she had called Countrywide to get approved for a FHA streamline refinance (and did) and then they quoted her a rate. Then called Quicken Loans for a 2nd opinion on a rate and the representative told her this. "Countrywide is currently being purchased by B of A and your loan could be held up for 6 to 9 weeks due to the buyout. Whatever they quoted you will never close within 30 days, so the rate they are giving will surely change before you close..." "...Also, I need your credit card number to lock your rate with our company. We can prepay the appraiser, and cover your application fee with your credit card..." "...you cannot lock your loan without a credit card number..."

Holy Cow! I cannot believe that anyone would actually say that - but I guess I am wrong. Countrywide is an exceptional lender, and I am pretty sure that Quicken even sells their loans to Countrywide. I have never heard of a underwriting or funding delay at Countywide due to their impending merger. They are very solid!

***Listen closely everyone - if any lender asks you for a credit card number to lock your loan DO NOT DO IT! I don't think that they actually use your card in any way to secure a lock for your loan - but I do think it is an act to get you to commit to them and stop shopping around. I also do not believe that Quicken Loans would condone this activity if they knew about it. It is probably a desperate act by a very Jr. Loan officer (I hope).

All you need to provide to lock a potential loan is your name, contact info, your social security number, and the subject property address. All of these items should already be covered during the application process. The bottom line is to beware if someone asks you for your credit card number to lock your loan.

Arm yourself with knowledge!! (& have a great day)

Jim

JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
www.communityfirstfinancial.com
www.jimcunninghamcff.blogspot.com
http://activerain.com/jcunningham

Jim's Mortgage Newsletter May 08

Jim’s Soapbox

(Arizona Real Estate Newsletter - May 08)

My wife Madalyn often says to me “…when one doors closes, another door is opened”. I have found that is a great way to describe today’s Real Estate market here in Metro Phoenix.

A common media-driven perception today is that the Phoenix housing market is far more risky than it has ever been before. I find that to be a funny concept for the media to promote, because in really isn’t accurate. Actually, the risky time to buy real estate in Phoenix was that period of time between the unnatural value boom, and the inevitable drop off. Metro Phoenix had a very stable (appreciating) market for 10+ years leading into the boom, and we have almost returned to the point where property value would have appreciated to without the peak and valley of ’05 to ‘07.

I am not going to argue that everything is roses & rainbows within the housing market right now. However, I would like you to take notice that there are so many other ways to take advantage of Arizona Real Estate, that regardless of the condition of our current market, it always the perfect time to do something.

I would like to share some Real Estate projects and concepts that are booming today. The housing market is not lousy, it is simply different.

· Rehabs
· First Time Purchase
· Investment Purchase
· Home Equity Lines of Credit

Notice that I am not suggesting in any of these concepts that you sell any of your property. You should never sell real estate in a down market unless you really have to. I believe we are almost to the end of the depreciating portion of the cycle – hold on to your property.

REHABS

“Rehab” is a buzz term in our industry for any renovation you plan on doing to an existing home. If you want to add a new bedroom, expand your bathroom, build a guest house, or enclose your patio – you are basically talking about a rehab project.

Today is a great time to renovate your home. Compared to 18 months ago, rehabs are much cheaper per square foot and they get finished in a fraction of the time. In 2006, it could take up to 60 days to get the concrete delivered – not to mention the delays in framing due to the lumber shortage. I am not in the construction industry (I am a lender), but I can attest that projects that took 9 months to complete in 2006, now take about 2 months. The summertime is also a great time to rehab your house in metro Phoenix, because the delays from rain & humid weather are pretty hard to come by.

There are several ways to finance your Rehab project depending how big your project is. Sometimes drawing on a new (or existing) Home Equity Line of Credit is the best way to go for short term money. Also, “one-time” construction loans are a popular option for large scale projects. Either way, you can call me with questions because there are special programs for Rehabs to keep your closing costs to a minimum.

Here is the name of a Rehab Specialist I trust, and have worked with for several years. His name is Marten Niner. His cell phone is (602) 739-7073 & his email address is justintimecontracors@yahoo.com. Martin can both help you with the design of your project and give estimates. He is a good first step in this process.

There are many other great Rehab companies here in Phoenix, just be sure to ask for references before you commit.

PURCHASE YOUR FIRST HOME

In case you haven’t followed the housing trend this year I have great news,… it is a buyer’s market!! The next 6 months, preceding the election, could mark the low tide of property values in Maricopa County. I could not think of a better time to buy than when property is at its lowest. Buy low and Sell high are still pretty good words to live by! Take advantage of distressed property prices and have the seller pay for 100% of your closing costs. The last 8 purchases I financed had the seller paying every penny of the closing costs.

Also, 100% financing is still around. I have FHA programs with Down Payment Assistance (i.e.Nehemiah and Ameridream) that let you purchase with only $500 out of pocket. I have the 102% Rural Housing program if you would like to purchase a home in Anthem, Queen Creek or Buckeye (for $0 out of pocket). If you are not sure if you qualify, call me & I can let you know the next day.

INVESTMENT PURCHASES

Again, in case you haven’t followed the housing trend this year I have great news,…IT IS A BUYER’S MARKET!! This is probably the best time to get an investment property since the summer of 2001! A common complaint that I hear today is the inability to do 100% financing on investment homes. Well, that statement is very true; you are going to need 10% - 20% down to buy an investment property. However, you can actually purchase a home that has a positive “cash flow” now. You can find a pre-foreclosure property with $50K in equity the day you buy it. (You won’t be able to get to that 50K equity out right away, but you could leverage it to your favor in about 366 days J).

I also have a great Hard Money Lender that will allow you to purchase an investment property (that requires a rehab) and they will lend you 90% of the whole project (including the cost of the rehab). So, for 10% down you can buy a Fixer Upper, and finance the repairs all at the same time. I quoted them out last week, and they were charging only 8.875% and 1.5 points. That is a smoking deal!

HELOCs

Even though a lot of banks have run away from selling this type of product, there are still a few banks that do them very well. The advantage of the Home Equity Line of Credit has been two fold. There is the advantage of the low rate and the flexibility to use it. Today the Prime rate is 5% & I have HELOCs with rate as low as Prime -1%. That means you can borrow at a net rate of 4%. I am confident that 4% interest rate beats most credit cards, furniture loans, pool loans, fixed 2nd mortgages, and car loans. It is the most powerful debt consolidation tool available. next to inheritance

The ability to leverage a HELOC to 100% to the value of your home has basically disappeared, but 85% is still available. If you have $10,000 in revolving debt and Equity in your home you should think about consolidating.

I am looking towards a great summer both socially and professionally. If you have any questions on this material, or just want to say “Howdy”, feel free to give me a call or an email. The line about inheritance was a joke – I am trying to keep you on your toes.

All Best!!
Jim

JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
www.communityfirstfinancial.com
www.jimcunninghamcff.blogspot.com
http://activerain.com/jcunningham

What did todays rate cut mean??

Today’s prime rate cut of .75% means that mortgage rates are going to continue to drop even lower,.. Right? Not Necessarily!!!

As much as I hope that rates continue to drop for homeowners, this rate cut does not mean that the 30 year rates will go down immediately. Rates have actually dropped significantly over the last 3 weeks on the assumption that the Feds were going to drop the Prime rate at least .50% (and some speculated that it might be as high as 1%). Had the Feds only dropped the rate .25% today, rates would actually have gone up today due to the over speculation from the previous weeks.

Please note that 30-year fixed rates correlate directly to long term bond yields, not the Prime rate. Thus, the outlook for the future of our economy is the most important factor in what 30 year rates do today,.. And unfortunately that is very subjective.

SO WHAT DOES THAT MEAN TO YOU??

The good news is that rates are as good as they have ever been in the last 6 years. If you need to refinance out of an ARM do it now. In fact, my advice for the last 6 years has been pretty consistent, regardless of the market. IF IT MAKES SENSE TO REFINANCE OR PURCHASE TODAY – DO IT. These markets are very difficult to predict, and loan programs are changing (for the worse) every day. I would rather you Ieave .125% on the table by refinancing now, than losing .25% by waiting too long, or worse… losing your ability to refinance.

Arm yourself with knowledge!

Jim

JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
www.communityfirstfinancial.com
www.jimcunninghamcff.blogspot.com
http://activerain.com/jcunningham

The Next Refinance Boom is Here

THE GOOD NEWS ABOUT RATES!!

Despite all of the recent well reported real estate related woes, I have great news for everybody. RATES ARE DOWN! And truth be told, rates are actually way down. Rates are currently better than anything we have seen in the last 3 years, and by the time you read this, they could be at an all time low for the last 10+ years!

The reason they are so good today is really difficult to pinpoint. There are really dozens of reasons, but my market advisors are saying that these low rates are influenced from the speculation that the Fed will continue to lower prime (which is a good guess).

Here are my rates on Jan 15th. These rates assume that you are a perfect borrower*. If you are not that perfect borrower – rates are still very good.

30 year fixed 5.625% (no points)
15 year fixed 5.000% (no points)
5 year ARM 5.375% (interest only) (no points)
5 year ARM 4.875% (interest only) – (paying one point)

Please give me a call (or email) to explore if this is a good time to refinance. Aside from the many that will refinance during this rate spike, this is a fantastic time to purchase investment property.

All Best!!

Jim

*Perfect borrower is generally someone with a 700+ credit score and can document their income (tax returns/paystubs) and reserves (bank statement/401K). Also, the perfect borrower will have a 20%+ equity position in their home.

JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
http://www.communityfirstfinancial.com/
http://www.jimcunninghamcff.blogspot.com/
http://activerain.com/jcunningham

Bush's subprime rate freeze problem

President Bush recently signed legislation to freeze the introductory 2 year "teaser rate" on all subprime loans for an additional 5 years. The rate freeze will apply to loans taken out between January 1, 2005, and July 30, 2007, and scheduled to rise in 2008 and 2009. This is designed so that on the 25th month of a 2/28 subprime ARM your interest rate does not adjust (up) and increase your monthly payment by $100s of dollars.

Truth be told that this is nothing more than a political move. It looks like Bush is doing something substantial, but it really has no impact. This is what my father likes to call "Air & Scenery", because it really cannot help nearly as many people as they are predicting.

Consider this; one of the criteria to qualify for the rate freeze is to not have been 30 days late since the current loan has been in place. There were so many good 100% financing programs available 1 year ago that good borrowers did not have to get subprime loans for these purchases. I would speculate that 75% (or more) of the subprime loans originated 2 years ago were for legitimate subprime borrowers who had sub 600 FICO scores.

I would venture to guess that well over half of these people have been late on their mortgage in the last 18 months.This means that of all the subprime loans that are "targeted" for this interest rate relief - over 50% of them will not qualify due to their mortgage history.

This does not even consider the other criteria for this rate freeze. The sad truth is that probably less than 25% will get any benefit from this maneuver.

Arm yourself with knowledge!

JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
http://www.communityfirstfinancial.com/
http://www.jimcunninghamcff.blogspot.com/
http://activerain.com/jcunningham

What is Locking a loan really mean?

What does it mean when a lender "Locks your Loan".

A common misconception people have of the locking process goes something like this,… The lender/broker asks you if you want to lock in the rate at 6% for 30 days. You agree, and then the broker calls the bank and tells them to set aside X dollars at 6% for the next 30 days. And now that you are locked, you do not have any options to “change” you loan scenario. Be aware my friends, this is not true.

To lock a loan is basically an agreement to a specific “point in time” with a lender. A good way to envision your lock is to write down the date and time that you agreed to lock your rate. Now you and the end lender have agreed to do business under the market conditions surrounding that specific lock time. If you locked right now for 30 days then you would be granted pricing on December 28, 2007 at 9:14 am for the next 30 days regardless of what happens to the "market".

Lenders can have hundreds of different loan programs available every day, and the price that bank is willing to pay brokers for loans are constantly changing. This locking freezes all of the prices given at that time, and keeps them all available to you. So, what does that mean to you??

You have the ability to change many different things in regards to your loan that do not break the lock. You can change the loan amount. You can extend the lock period (for a fee). You can change the loan program (from a fixed to an ARM). You can even change the rate if you wish.

In changing the rate you are not altering how much the end lender is paying the broker for that loan. However, you can "buy down" the rate by paying your broker a fee, or you can raise your rate and have your broker pay for some of your closing costs with the additional money he/she will get for your loan.

So why is this important??

If your loan officer tells you that you cannot change aspects of your loan because you are “already locked” – that is usually not true. This could be a red flag that you are getting into a suspect loan. Be sure to ask direct questions about your lock, and if the answers you get are unclear or vague, you should probably look for another loan officer.

Arm yourself with knowledge!

JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
http://www.communityfirstfinancial.com/
http://www.jimcunninghamcff.blogspot.com/
http://activerain.com/jcunningham

What can I expect during the Refinance Procedure?

What can I expect during the refinance procedure?

The Details

Something that is often overlooked within the home loan industry is the education of the client in the steps of doing business together. As the borrower, you should want know what the process is, and what to expect from your loan officer. This is a basic account of the events that take place during a refinance transaction when you are dealing with me.

First Contact – Every loan starts somewhere, and in the technology age it is usually a phone call or an email. Occasionally, it still happens when I meet someone in public and we exchange business cards. But it seems that phone calls, emails, and internet (blog links), are common.
In the first contact we will introduce ourselves and talk briefly about what your basic goals are, and how soon (ideally) you want to take action. The first contact then ends with me saying “…the next step is the application, and that will take about 20-30 minutes. Do you want to do it now, or set a time to do it later this week?”

The Application - A full application is necessary to give you (the borrower) accurate information and loan options. There are hundreds of factors that lenders (banks) take into consideration when approving loans and these should all be identified in the application. The method I prefer, to get the most accurate information, is to interview you over the phone.
The questions that I ask are things you will usually know off the top of your head. I want your Social Security #, work history for last 2 years, information on your home, and basic financial information. As you answer the questions, I enter them directly into my computer. The next part of this phone application is when I ask permission to pull your credit report. We will then briefly review your credit report to identify strengths, weaknesses, and find any inaccuracies in it. I will also tell you your credit scores and even give you a copy of your credit report if you wish.
The last phase of the application is when we discuss your goals in more detail. Typical questions are,… Do you want to simply lower your payment (rate & term) or do you need cash out for debt consolidation or home improvements? How long do you see yourself in that house? Do you want to keep it as an investment property when you move? Do you want to leverage this property to buy additional property? Etc… Some people have simple goals and some are quite complex. In some cases, people just want to know what their options are.
At the end of the application, I will tell you how much time I will need to produce your loan options. Usually, I need 24-48 hours to get back with you – but I will urge you to call me if other ideas or questions come up during this planning window.

Loan Options – At the conclusion of my analysis, I usually come up with one (or more) solutions that will make sense for you (the borrower) to pursue. To make things easier for you to understand, I will email one (or more) Good Faith Estimates (GFE) to you before our upcoming phone call. You will be instructed to print the Good Faith Estimates so that we can review them together over the phone. I always recommend that you print the Good Faith Estimates so you can take notes on them.
We will then review the Good Faith Estimates over the phone, and I will explain the loan program, fees, interest rates, escrows, and estimated payments until you (the borrower) are comfortable with all of the information on the Good Faith Estimate. This process could take a few minutes for some people, whereas others can take well over an hour to understand all of the concepts of this transaction. We will not move forward to the next step of the loan process until I feel you are comfortable with this material.
Also, please note that sometimes my conclusion is that you should not refinance right now, and we revisit this idea in 6 or 12 months.
At this point you (the borrower) will tell me one of three things. All of which are OK.
· You like an option you see, and want to move forward
· You would like a day or two to review the options before choosing
· You would like to either see more options or end the pursuit of refinancing
Once you have made the decision to move forward, we can either Lock the interest rate or Float. Locking is a simple as telling me “I want to lock this rate”.

Locking - This term refers to how we secure the interest rate on your new loan. The bank that your loan is going to, will allow us to “lock in” today’s interest rate that they are offering. They will guarantee that specific rate for a fixed period of time, typically 30 days. I recommend locking the rate at this time and begin processing the loan.
You also have the option to Float. Floating means that you are not locking in today’s rate – rather, we will see what the market does over the next few days (or weeks) and try to get a better rate. We can do this for you in hopes of bettering your situation, but it is a gamble and there are losers.
The truth is that interest rates change every day, and even the savviest financial expert cannot tell you what is going to happen to rates. We can make educated guesses on the future of interest rates, but there are so many variables that affect the market that we can often be wrong. My advice to everyone is, “…If the loan makes sense with the rate you see today, you should lock that rate and move on.”

Send You the Application - You were probably wondering when you were going to get this. Well, after we agree on a Loan Option, I will send you the application and it will be specific to that Loan Option. When you receive the application you will notice that it has already been filled it out with your information. As you review the application you will proofread the answers you gave me, sign it, and send it back.
There will also be a cover letter attached with the application that gives you a list of additional documentation that I will need. This list typically requests items like Pay Stubs, Tax Returns, Bank Statements, Photocopy of Your Driver License, etc… There will also be a return envelope for you to return the application and copies of the items I request. If there are any areas that are not perfectly clear we can review them at this time.

Processing - This is a general term in lending that can mean so many things. In this case I am referring to the internal paperwork that I request on your behalf in addition to your application. We can have dozens of items to collect for your loan, but the big ones are your Appraisal, Title Report, Home Owners Ins., Loan Payoff Amount, HOA, Flood Certification, and Property Tax info. Aside from the Appraisal, all of these items get collected by me without any effort on your part.
The Appraisal does require that the appraiser comes to your home for a brief inspection. He will take pictures of the inside of your home & possibly measure some rooms. Most appraisers will take less than 20 minutes of your time for this inspection. I will have the appraiser to contact you by phone to pick out a time that works well for both of you.
Once my processing is complete, and I receive your application back with the requested documentation, we enter a new stage called Underwriting.


Underwriting – The bank that will be servicing this loan always requests that the loan gets underwritten before they fund it. Underwriting is the process of a special person reviewing all of the information & documentation to verify that all of the loan requirements are met. This process of underwriting usually takes a few hours, however it can take several days before the underwriter can see the file due to their current volume, or where they are physically located.
During the underwriting process, the underwriter can request additional documentation from us if they have any issues with the loan. This additional list of documentation is referred to as “conditions”. In most cases, I will handle all of the conditions myself. On occasion, I may call you to get me more info on something, or to write a letter of explanation to the underwriter.
Once all of our conditions are “satisfied”, we can now move on to you signing the documents on your new loan.

Signing the Documents – Here is when I call you with the good news that your loan has been approved, and to schedule a time for you to sign the final loan Documents. This usually takes place at the Title Company and will take from 30 – 90 minutes depending on how many questions you may have. Be prepared to sign your name about 100 times. If your schedule does not permit you going to the Title Company, I can have a mobile signer come to your home or office at your convenience.
This will actually be the very first time that you see the final numbers on the loan. The more important numbers would be your monthly payment and how much money you will be getting. Up to this moment, everything you have seen in the application and the good faith estimate are truly estimates. Now that you are seeing the final numbers for the first time, you are given a Recission Period to make sure that you are OK with all of the final number you see.

Recission Period - This is basically a 3 day period that begins the day after you sign. It is design for you to reflect upon the numbers you experienced at the signing. The goal is to give you ample time to opt out of the loan if you do not like what the final numbers are. The loan will not fund and you will not be able to collect any money from this refinance until the recission period ends and the loan Funds.
Please note that if you are in a hurry to get the money, that you cannot waive the recission period – and you have to wait the 3 days to get you money.

Funding - The rescission period has ended and the bank has funded the loan. Funding is the act of receiving a wire of money from the bank to the Title Company. I will give you a call and let you know that the loan has funded and the process is complete (or in the case you are cashing out) you can collect your money now. Typically in a cash out scenario, the Title Company will ask you at the signing if you want them to mail the check, hold the check for you to pick up, or if you want a wire transfer to one of your bank accounts.
For those of you who were consolidating your debt, and needed to pay some debt at closing to qualify, those checks will be mailed out by the Title company on this day as well. Congratulations, your refinance is over. Only one thing left to do… refer me to your friends and family. Over 75% of my business is by referral, so do not be surprised when I ask you to refer me if you are pleased with this experience.

Timeline – A typical refinance will take about 3 to 4 weeks to complete from the day I take your Application over the phone. Sometimes we can speed up this process, but do not expect to get your refinance completed in less than 12 business days.

JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
www.communityfirstfinancial.com
www.jimcunninghamcff.blogspot.com
http://activerain.com/jcunningham