What to do, what to do???

Before I even start, read all the way to the end for some valuable information.

Unless you put 20% down on a home, you most likely have had to pay PMI (or mortgage insurance) as part of your monthly mortgage payment. This is the only insurance that you will probably ever pay for that you, the consumer, will never reap the benefits of. Many people pay this monthly fee without even know what it is. The simplest way to explain mortgage insurance is by saying that if you ever default on your mortgage, the PMI keeps the lender from taking a loss on your mortgage.

Mortgage insurance has always seemed like a waste of money when you are the one paying it, but it was always such a low portion of your payment and it only lasted for five years, so it wasn’t that huge of a deal…….until now. In April of 2013, the PMI rate went up pretty drastically. For a $130,000 mortgage, you are now looking at paying approximately $140 per month in PMI. You think that’s bad? Now it never drops off. So if you have a 30 year mortgage, that is how long you will be paying that PMI. That is a lot of stinking money. When the President raised this rate, I really don’t think he realizes how many people it would keep from buying a house, but in certain price ranges, that hike in rate made a difference between qualifying and not qualifying.

I’m here to give you a couple of ideas to reduce your PMI or even eliminate it all together.

1) Consider purchasing your next home in an area that qualifies for the USDA Rural Development Program. Closest to the OKC Metro area, this would include anything in Grady County or McClain County (Blanchard, Newcastle, Tuttle, Chickasha, Purcell, etc). This loan program does not require a down payment and the PMI rate is super low.

2) If you are a CDIB cardholder (Native American), take advantage of your heritage and utilize this loan program. The PMI rate is lower and you are only required to out down 2.5% down instead if 3.5% like in an FHA.

3) If you are a Veteran, use the VA loan and get a zero down loan without any PMI. Unless you have a disability though, your funding fee is going to immediately use up some of your equity, so keep that in mind when picking out your property. I like to try to help my VA buyers find properties that are lower than market value. Unfortunately, the good loan program does come at a cost.

4) if you are a bit open-minded and can look through some of the dirt and grind that sometimes comes with foreclosures, try to get hold of a Fannie Mae property. These properties will typically qualify for either a Homepath Mortgage or a Homepath Renovation Mortgage. Without going into too great of detail, I love doing these programs for my buyers and I love selling Fannie Mae properties. You have to out 3% down payment, but you do not have to pay any PMI whatsoever. If it qualifies for the Homepath Renovation Mortgage, you can finance some repairs or upgrades to the property into the loan as well. These usually include flooring, painting, countertops, etc.

5) Many people believe you have to have 20% down in order to obtain a conventional loan, but that is not true. You only need 5% down to get a conventional loan, which also gives you a lower PMI rate than you get with FHA, but if you do the rare 5/15/80 Program, where you put 5% down, then get a loan for 15% and then another loan for 80%, that eliminates your PMI requirement, because technically on paper your down payment is the combination of the 5% and the 15% second mortgage.

I spend a lot of time working with lenders and finding what the best deals are fe my buyers. If I can be of any assistance, please call me and we will see what the best scenario is for your situation.

Credit Repair

There are many potential buyers out there that get denied for a mortgage loan and just don’t know where to turn. I know someone that can help. This guy has taken some of my denied buyers and got their credit repaired to where they qualified to purchase a home. They are a very reputable company out of Atlanta, GA and several lenders recommend them. It is Matt Kadow with Continental Credit. His phone number is (310) 874-4226. Let them tell you what they can do for you too. Then we can find your dream house.

My Top Mortgage Loan Officers

Those that have awarded me the opportunity to help them with their home or land transactions, whether buying or selling, can vouch that I work very closely with my team that I have chosen very meticulously. No, it’s not a real estate sales team and they do not work for a real estate company, but I can’t provide the service that I am able to provide without them. They are as follows:

Jillian Villareal with Leader Mortgage Corp in Moore, OK; and
Shelby Weston with Red Rock Mortgage and Lending in Oklahoma City, OK

No matter when or what I text them, I can expect a response. They have both gone out of their way to qualify my buyers late at night and on weekends so we can get offers in, because as we all know, real estate doesn’t only happen during regular business hours. Furthermore, I may meet a new buyer on a Friday evening and they may be in love with a house that I’m not so sure will still be available when Monday rolls around. Currently, these are my lenders. I say “currently”, because I am always looking for new ones, but I am so dang picky because my standards are high when it comes to my clients. I am not one of those Realtors that send my buyers to their lender and just hope that the buyer understands everything. I make sure I am fully aware of the programs that are available as well and some of the strategic ways of doing business and I want my lenders to want to be just as creative as I am to give the client the greatest advantage.

I have worked with several lenders and loan officers in the past. Some of them I absolutely loved the way they did business once the buyers were qualified, but the problem was the length of time it took to get them qualified. Then others would qualify buyers quickly, but then the rest of the transaction was horrible. I don’t want my buyers to be stressed out buying a house. I want it to be fun. So these loan officers that are professional, but not stuffy, are a perfect fit to compliment my real estate business.

There are lots more to my team (title companies/closers/processors, inspectors, and the fixit gurus), but these are the Mortgage Loan Officers. If you are looking to get prequalified or even refinance your current home, you can’t go wrong with either of these; however, they do offer different programs than each other, so let me know what your ultimate financial goal would be as far as your next home purchase and I will explain to you which of these lenders may be the best fit for you and why.

Price Per Square Foot Is A Misleading Valuation Method

As a Realtor I have seen many members of the general public, as well as other Realtors, try to use dollars per square foot as a means of measurement to determine market values. I hate to be the bearer of bad news, but that is only a very small piece to the puzzle.

There are several reasons why looking at the price per square foot by itself will not work. The easiest example I can give you is that I could easily say that there is a neighborhood in South Oklahoma City with a range of Price per Square Foot from $35 per square foot up to $89 per square foot. There are several comparable properties within each range. There are many ways to categorize these properties, but I typically break them down into four categories. Then within those four categories, I will take the price per square foot of closer, more comparable properties.

Category #1: Fixer-Upper – These are the properties that are the lower prices per square foot and usually consist of the short sales and foreclosures. These homes are usually distressed and need lots of repairs.

Category #2: Outdated – These properties are typically in good condition and move in ready, but they just need some cosmetic updates, which may consist of appliances, paint, and carpet.

Category #3: Updated – These homes are updated, nice and are approaching the upper end of the price per square foot range in the neighborhood, without being considered the very top of the neighborhood.

Category #4: Luxury – There are usually very few of these properties within a neighborhood. These properties are typically not what I would consider the “smart buys”, but with unique upgrades, they usually carry an appeal of luxury that none of the other houses in the neighborhood will carry.

Seriously? Raise the Price and They Will Come?

I don’t think you will ever find a group of people more anxious to see an increase in home sales than home sellers and Realtors; however, when it comes to listings that have previously sat on the market with other brokers, sometimes for extended periods of time, it just blows my mind when after setting on the market for a long time with nearly zero activity, that they actually believe they can sell it for a higher price just because another name is on the sign out front.

It does make me wonder though if when the new company listed it, if they added a second story,which would have given it more value. :-)

You Thought You Were Improving

In the past several years, there have been several changes made that reflect how our credit scores are calculated. Let me give you a couple very typical scenarios that many people don’t realize about their credit scores and then I will follow each one with a tip to get the greatest advantage out of that particular situation.

Scenario #1: A person plays it safe and gets a credit card with a $500 credit limit. We all know that $500 doesn’t go far, so the card gets maxed out. This person’s credit score drops even if every single payment is made on time because you get penalized (for lack of a better word) for utilizing more than 50% of your available credit line.

Tip #1: I never advise anyone to use credit cards for every day items, but only keep it available for emergency use only. Raise the limit at least double than what you need and it will work for you. Now, just because its there, doesn’t mean it has to be spent.

Scenario #2: A person had a medical bill that went to collections which ended up as a negative item on his credit. When he/she paid off the debt, you would think the credit score would go up, right? Not necessarily.

Tip #2: Often times even when people pay off collection items, they may notice their score may actually go down a bit. The things that weigh most heavily on your score aren’t the things that happened years ago, it was the most recent. In a collection account, even if you’re paying it off, the systems will show some sort of activity that it may not recognize. When you pay ANYTHING off (as far as collection accounts go), get in the habit of asking for a “deletion agreement”. You will send that paper to all three credit bureaus and your score will rise.

Trent gives you a unique look into real estate today.


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