Today’s motivational message is about “Financial Foresight.” When I first glanced at it, I thought it was an odd choice for a “Tuesday Tidbits” topic, but then as I studied it, I realized it’s very appropriate … and timely. Who doesn’t struggle with finances? Especially in this meltdown/downturn (whatever you want to call it).
I deal with people’s financial information every day and see that even those with “money” have their challenges in this area. I’m not a financial planner, but given my line of work over the past 20+ years (i.e., helping people realize the dream of homeownership), I consider myself somewhat skilled in the area of financial planning and financial consulting, at least enough to have an opinion…
I am excited to reference the book, “The Richest Man in Babylon” today. It’s one of my favorite, basic books on accumulating wealth and contains what I believe are “priceless secrets to building wealth.” I used to send our new borrowers a copy of this book after they have applied for their home mortgage, along with the message that “we’re in this together” as we help them build wealth through mortgage management. Seems like now would be a good time to restart this old habit.
If you would like to read (or re-read) “The Richest Man in Babylon,” I have ordered a case and would be happy to send you a copy as my gift. Just click here to send me an email, and I’ll forward you one. The only catch? You have to read it and apply at least one of its principles as soon as you can (consider #7 ):
1. Start thy purse to fatten: pay yourself first – save 10% of all you earn (if you are not doing this, consider starting with the next paycheck).
2. Control thy expenditures: spend less than you earn – start budgeting – do not confuse necessary expenses with desires.
3. Make thy gold multiply: invest your savings (a man’s wealth is not in the coins he carries in his purse, but it is the income he builds).
4. Guard thy treasure from loss: invest where it is safe; consult with wise men (and women); secure the advice of those experienced in the profitable handling of gold.
5. Make of thy dwelling a profitable investment: (I like this one, of course) – own your home, don’t rent – people are money ahead with homeownership.
6. Insure a future income: plan for certain investments or provisions that may endure safely for many years.
7. Increase thy ability to earn: I’ve always liked this one and believe in it immensely – cultivate thy own powers, to study and become wiser, to become more skillful. Examples: move up the career ladder; obtain higher education; seek and obtain a higher paying job; find ways to earn more money if you receive bonuses or commission (my coach says there’s a season to work hard, and that now is it and we’ll be rewarded for working hard); work with a trusted lender who has a high pull-through rate so your loans actually close (emphasis added by me – our pull-through rate is consistently over 98%). The list could go on and on. When I get applications where the people are making $10/hr. full time, I yearn to teach them this seventh principle.
So, good luck with your finances! [Oh, by the way, there’s even a chapter in the book about the “Goddess of Good Luck” – and is basically summed up in these words, “Men/women of action are favored by the Goddess of Good Luck.” Remember also the words of my coach, “Action creates inspiration, and not the other way around.” Act and get inspired … it can help you gain and retain wealth!]
IN LENDING NEWS – WHAT’S EXCITING TODAY?
Call me for any questions. And don’t be afraid of quick closings! With in-house control on most of our product offerings, we are experts at quick turn times!
RATES AND THE MARKET
What happened last week to rates? Wow! It was a crazy volatile week with some major upward movement on Wednesday/Thursday. Mortgaged-backed securities simply fell apart. We’ve known to plan for the worst (3/31 marks the date the government ceases participation in buying MBS) and hope for the best; knew this was coming, and it did. Thank goodness things have backed off slightly from last week’s highs (but we can’t become complacent in the least)
There will likely be a lot of pressure on rates going forward. Most of what we are reading (and feel ourselves) is that rates will continue to move up. Last week reminded us that rates move up faster than they move down. When something negative happens in the market, fear tends to move in, which creates momentum and, viola, rates spike up. The Fed does not control mortgage rates, nor have a direct affect on mortgage rates, the market does. It’s about supply and demand (buying and selling) and prices. Call me if you need a quick tutorial on this.
Now what? We still have a wonderful opportunity!. Okay, so we lost some very attractive rates this past week, but hey, rates are still at incredible levels in the big scheme of things. Call me for any rate quotes and scenarios.
FHA 203K LOANS – THE PERFECT MORTGAGE FOR A FIXER-UPPER HOME (PURCHASE OR REFINANCE)
Carrie still offers FHA 203k loans! Cornerstone has been doing 203k’s for about 6 years and has a centralized processing and underwriting department within the company that handles the back end with competence and expertise. My team and I were “trained” on the idiosyncrasies of the 203K loan and have been successfully closing 203K loans for years now. Given our vast construction and FHA experience, as well as Cornerstone as a veteran of the product, it is a great opportunity for you and we will serve you on this very well. I’m sure some of you read the article in the Star Trib (click here if you haven’t). This IS a GREAT loan product when you use someone that has mastered the process. DON’T BE AFRAID.
HOT TOPIC – FUTURE EMPLOYMENT
We are coming into the time of year when borrowers are likely to be changing jobs. Teachers are considering new contracts; college students are about to graduate and start their first “real” job. Physicians will be coming to start at the U. Inevitably these “professionals” want to purchase a home, get moved in and settled before starting their new job. So … how do we help these borrowers buy their dream home without having started their new job prior to closing?
On the conventional side — thank goodness, we have a couple investors and MI companies who will allow income from the borrower’s new job to be used as qualifying income if they have not yet started employment. This is done with an employment contract (i.e., doctors, lawyers and teachers usually have these); terms have to be reasonable; must have a prior two-year history or college transcripts in lieu of this. The contract must state that the borrower’s guaranteed starting date is prior to the date of the borrower’s first mortgage payment. So, in other words, the borrower can close up to 30 or even 60 days prior to their start date (we just need to make certain that they start employment prior to the date of the first payment)
FHA allows closing up to 30 (and even 60) days with a non-revocable contract (just means it’s basically bullet-proof). This is at the underwriter’s discretion.
Call me to review specifics. We’ve gotten creative in some cases and have even closed outside these dates – simply depends on the borrower’s situation and what we can do for them and how they fit into policy.
GUIDANCE ON PRIOR SHORT SALES/SHORT PAYOFFS
Not surprising, we’re seeing more credit reports with prior pre-foreclosures/short sales/short payoffs – and probably will continue to see this for some time to come. FHA and VA have policies in place for how to handle these. Note that if there were delinquencies on the mortgage, these are being treated as foreclosures … and then the required seasoning of 3 years (FHA) or 2 years (VA) must have elapsed in order to do a new loan. Guidance is also given if the prior mortgage was not delinquent (there are a few tests to pass before being able to do the new loan). Please call me for guidance to determine how your buyers can qualify if they’ve had a prior short sale or short payoff.
Would you like to learn more about how to qualify for a mortgage? Contact Carrie Guarrero Today!
Carrie Guarrero is producing Regional Manager and Vice President of Cornerstone Mortgage Company in Burnsville, Minnesota. If you are looking for Burnsville real estate, contact Carrie first!
Popularity: 3% [?]
If you enjoyed this article, please consider sharing it!
In your hot topic about future employment, you mentioned that there are some investors or MI companies that would allow a buyers income promised from a new job to be used as qualifying income. What is an “MI company” and how do you find “MI companies” and investors who would help with this?
Thanks!
That’s a great question. Private Mortgage Insurance is acquired by the lender you are working with and its important that they have relationships with several “MI companies” to allow for this kind of flexibility. The same is true for “investors”, meaning end mortgage companies that they may sell your loan to after closing. At Cornerstone we have a large number of investors that we sell to; all of whom have their own unique guidelines. This allows for a greater number of options and flexibility in approving loans for the consumer. Its really about picking the right company and Loan Officer to work with when you are applying for a loan.