Real Estate Financing...

AFTER soaking in the smells and sounds of New York City yesterday, Jennifer and I arrived home.  For me, I was just relieved to get out of the freaking car.  You see, me and highways don't get along too well.  In fact, even being on the highway gives me more anxiety than watching a Dustin Diamond sex tape.  I digress, though.

WE hadn't been to our local watering hole for quite some time.  So we ventured out into the beautiful weather of Allentown and walked over to Stahley's.  When we arrived, the first person to greet me was John, one of the owners and bartenders.  In a deep, raspy, Randy "Macho" Man-style voice, he asked me, "Hey J, what's the interest rate?"

HAD I not been friendly with Mr. John, I would have been a smart alleck and replied, "8% with three points and a blood sample" just to make things interesting.  But I told him.

DINNER and drinks were had and I got to thinking.  Drinking and thinking don't always go hand in hand, but things were a bit different in this case.  A lot of us in the Mortgage Industry despise the "rate question" because, well, for a lot reasons.  The factors that go into determining what interest rate you will be paying are plenty.  I've even written in the past that it isn't the wisest of questions to ask from the get go.  I had a sort of epiphany, actually more like a quasi-epiphany, but it was an epiphany.  For the record, I think that is the only time I've used the word "epiphany" three times in one sentence.  Anyway, when John asked me that question I actually considered it a good thing.  But why?

I have been in this business eight years.  They have been eight very interesting years.  Highs, lows, and a whole bunch in between.  One of the most sage pieces of wisdom ever dispensed to me was, "Make everyone aware of what you do for a living."  John is aware.  In fact, another bartender there came up to me and we waxed intellectual about the housing industry in general, the economy, and women's lingerie.  Okay, so the latter didn't happen.  Walls of words need a few sentences of interest if they are to be read in their entirety:)

"FELL" is a curious term, at least to me when talking about being in love with what you do.  But I have.  I really love what I do and I find myself more than willing to talk about it every chance I get.  It hasn't always been the easiest living in the world, yet I could be a taxi driver in New York City.  That would be interesting.  If you know me, imagine me driving a cab in New York City.  That could turn into one heck of a reality series.  I probably wouldn't be around long enough to reap the rewards though, as heart attacks tend to be bad for one's health.

IN living this life, there are reminders.  John's question was a reminder to me and maybe for some folks reading.  Never be afraid to let folks know what you do for a living.

LOVE seems to be the opposite of hate.  I've loved my job and hated my job.  I'm pretty sure all of us have felt that way.  But I love my job just enough to never be afraid to spout what I do to the masses.  Last night I handed out my business cards like they were Philly Cheese Steaks at the Eagles opener.  John is buying a house before the Tax Credit goes bye-bye.  I wonder who he is going to call.

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About the author:  Jason Sardi loathes driving.  Jason also isn't the biggest fan of driving and will fight to the death in ever stepping foot in a car whose destination is the Autobahn.  But Jason Sardi loves the Mortgage Biz and is more than willing to help and educate to the best of his ability.  His area of service include PA, NJ, NY, CT, DE, MD, VA, SC, FL, MI and IN.  Mr. Sardi can be reached toll free at 1-866-262-8720 ext. 229 or on his cell at 610-653-0317.  If email suits your soul, contact at jsardi@ihmci.com.

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By the way, if you mention this blog and I close your loan, drinks are on me at Stahley's.  Germany is out;)

This post, in part, was inspired by my friend JL Boney.  His sarcastic piece of script was asking why one should wait to buy in this market.  Let this particular piece be not a wake up a call or a call to action, but a simple reminder.  There are options, explore them.

The Top 10 Reasons to not use that 100% USDA Product:

• You can borrow 100% of the appraisal amount plus the guarantee fee (approximately 102% financing).  It's not an uncommon occurrence for the applicant to be able to include all or most of the closing costs within the loan.  I've been a big advocate of having money in the bank after closing for any costs that occur once you own the home, yet isn't it easier to have money (that you could be investing, at even the lowest returns) and save it by not making a down payment?  After all, borrowing others people's money doesn't make sense at all, especially when you can invest yours instead.

• Most of the closing costs may be included in the loan amount, if justified by the appraisal.  Or you can chose to spend every last dime you have on a down payment and closing costs!

• No private mortgage insurance necessary.  This actually makes your monthly payment lower.  But frankly, who wants that?  Besides, mortgage insurance is our friend;)

• The processing on these loans is done by local lenders.  There's no need to let local folks see up your skirt when you can spread your financial legs to a National Lender whose awareness of your community is akin to Charlie Sheen's awareness of fidelity. 

• Repayment Ratios are somewhat Liberal.  Compensating factors such as (credit score, rent payment history, cash reserves, ongoing increases in wages) are all factors.  Common sense doesn't figure into the rationale for lending these days, though.  Ignore that stuff.  Common sense is no longer a part of lending.

• Whether they be new or existing homes, many qualify in areas across the country.  "Rural" may not be what you think it is, as defined by the USDA.  Sure, we are rural in some areas, but don't let that fool you... this is about lending on a piece of land that cows can graze and consume with acreages that would make Jed Clampit blush.  If you don't live on a farm, you can't get this loan.

• If you are of moderate income, you are in like sin.  But who in their right mind that has moderate income wants 100% financing? 

• Low fixed rates with that 100% financing!  Ugh, most folks want to pay out their ears in down payment money to get a low rate.  Right?

• Hire a good Realtor.  Why?  Heck, there is no limit to seller's contribution if done that way.   Your Realtor can help you negotiate this. Check with your funding source/lender and their particular overlay (meaning that government guidelines are what they are, yet the lenders making these loans may not always follow these guidelines to T).  Or, take the alternative route and save thousands of dollars by not hiring a Realtor and doing it yourself.  I mean, how hard could it be?

• One of the best Mortgage Deals across this Nation is awaiting.  But who needs a great mortgage deal when cash is flowing through your accounts like beer through a tap at a keg party.  I know, yet another alcohol reference.  Speaking of which, it's 7:22 and I just got home an hour ago.  Time to open the old adult malt beverage.

~  Jason Sardi is a Mortgage Consultant licensed throughout many states on the East Coast.  While having no Best Sellers to his name, he's really a decent chap for all intensive purposes.  By email, Sardiman can be reached at jsardi@ihmci.com.  By phone, he can be reached directly at 610-653-0317.  Don't you just love when folks talk in the third person?~

"I went to the woods because I wanted to live deliberately. I wanted to live deep and suck out all the marrow of life." ~ Henry David Thoreau

It was one of the first loans I closed.  A "Yellow Page" lead came a calling and I was there to answer.  The gentlemen on the other line was looking to buy his Mother's home.  We hit it off, more than just a day to day client/consumer connection.  I'll always be thankful for that.

A few months back, he called me wanting to refinance his home.  He was looking to get a bit of cash-out and lower his interest rate.  We were just about clear to close (the three magic words in the Mortgage Biz) and I had left him a message on his cell phone.  I didn't hear back for about a week.  That was unlike him.  So, being the persistent chap that I can be, I called again.  He answered this time.  He told me that he just found out that he had three months to live.

I must admit that I didn't quite know what to say.  No encouraging words or enlightening thoughts were conveyed from my lips to his ear.  I was comfortably dumb at that moment in time.

This past Friday I called his cell phone just to see how he was doing.  It was disconnected.  So, I called his home phone.  His wife got on the line and I asked how he was doing.  "Sweetheart, he died Tuesday," she said.

I also found out earlier this week that a close friend of one my best friends passed away at a very young age.  That kind of stuff tends to make one think or re-think this here life.

Death, to my knowledge, is inevitable.  I'm cool with that.  But how many reminders, constant reminders, do I need... to live every damn moment with every scope of my being?  Shoot, there's a lot that goes into this existence (family, finances, friends, imperfections, etc), yet I hope not that I learned from this one... but I actually live what I learned.

Life is precious and is the only thing all of us are experiencing together until the inevitable happens.  I have no need or desire to go "Tony Robbins" on anybody's posterior, but my own.  For me, tears wield a vicious sword of truth.  The truth is, I want to make every moment count.  I just need to make sure that my written words are actually lived, rather than a false document of my life.

Perhaps you've been throwing around the idea of entering into the wonderful world of buying a home.  Maybe you've even came across a house that not only tickled your fancy, but left that euphoric taste of bliss running through your bones.  Either way, probably the most important thing you can do is to become educated.  From there, there's one place to start... Behold, The Basics:

• Cash isn't necessarily King.  If you are paying rent, pay it on time and do so by check.  That's a documented housing history.  Any applicable down payment you have has to be sourced from the banking institution with whom holds your depositories.  Documentation is one of the important things lenders look for these days.  So, if you are slinging crack in the alleys in your spare time, instead of putting that money in a jar beside your bed... put it in the bank.  Of note, I don't endorse slinging crack.  I just endorse documenting your rental history and funds that you have to come to the table with to close.
• Before even traveling down the road of tangibly looking to buy a home, know what your credit score is before making any decisions.  In the current lending atmosphere, your credit score has never been more important.  Here's a link to help you get a grasp on the importance of credit in borrowing money in general, let alone to buy a home. 
• Don't be Mortgage Poor.  Many times you are pre-approved for X amount of dollars because on paper, that is what the lender deems "affordable" in your world.  There's one small problem with that, the lender doesn't live in your world... You Do!  Sit down and go over your monthly expenses (utilities, credit cards, student loans, car payments, insurance, groceries, any vices you like to partake in, etc) and come to an understanding of what type of payment is comfortable for you.  And don't forget to figure in the taxes, home owner's insurance, and PMI/MIP (if applicable) along the way.  Your Mortgage Professional can help you with that.  By the way, I'm a Mortgage Professional and enjoy helping:)
• A Tax Advisor can be your friend.  While I realize that the words 'tax' and 'friend' are strange bedfellows in the same sentence, read on.  A lot of you folks may have heard about the tax credit for home buyers and for those who haven't, remove the rock and continue reading.  First-time home buyers (includes folks who have not owned a property for at least three years) qualify for a tax credit of up to $8,000 if purchasing a home before December 1st, 2009.  As long as it's owner-occupied for at least three years, that credit does not have to repaid.  If that doesn't give you enough incentive, all homeowners qualify for tax credits for various home energy efficiency improvements throughout 2009!
• Hire a Buyer's Agent.  They represent you and you alone.  It doesn't cost you a dime and you can be relatively certain that your best interests will be at the forefront of your Agent's heart.  Buying a home doesn't have to be complex, a Buyer's Agent can make your life and the transaction so much easier.
• Get a Home Inspection.  A lot of lenders don't require it (whereas they require an appraisal) but a Home Inspection could very well save you a bundle of money down the road.  Imagine for a second you just bought a home and the boiler breaks down, the roof starts to leak, the electrical system takes a dump, etc... all could have been avoided with an initial Home Inspection.  Consult your Buyer's Agent to see if getting a Home Inspection is the right thing to do for you.
• With the large amount of inventory on the market, you may find a lot of homes that need some work.  The condition of some of these properties may be such that Conventional Financing of any sort is just not possible.  No worries, though.  A great product to utilize in these cases is the FHA 203(K) Loan.
• Once you are pre-approved and have a signed sales agreement, don't apply for any additional credit at all.  While I'm aware that many folks want plush and extravagant furniture to accentuate the decor of their home, do not start buying anything on credit until after your loan closes.  Applying for credit of any kind in the thralls of the transaction could adversely affect your credit scores, disrupt your debt ratio, and even flat-line the transaction all together.
• If you have questions, ask them.  I don't care how mundane you think they are, ask.  The only stupid question is silence when one is on the tip of your tongue. 

There are many ways to save money when buying a home.  You can look for the best interest rate, lowest fees, have your Cousin Al become a Loan Officer so you can get a Family Discount, etc.  Yet, the one way you can save maybe the most money is to become as educated as you can going forward.  Seek out quality education, don't count on it to always seek out you.

Jason Sardi

"Your Friendly Neighborhood" Mortgage Consultant

610-653-0317

jsardi@ihmci.com