Recent Posts

Beware of the Pitfalls with Jumbo Mortgages

(February 20, 2009)

Before the mortgage meltdown, just about anyone could get a loan with a fairly attractive rate.  Lenders were offering loans from no money down to negative amortization (this is where your balance goes up, not down). Many even had programs that did not require you to prove any income documentation.  All that has clearly changed over the last two years or so and home owners with jumbo loans have been trapped paying substantially higher interest rates just because their loan balance is higher then normal.

Those with jumbo mortgages are encouraged to shop around to secure the best financing available, but should be aware that not all banks offer the same programs.  There are many lenders out there that really don't want to take the risk with these higher loans and are pricing them accordingly.  Just today, I priced out a jumbo scenario and found out  large variation of interest rates and points.  Rates at more then 23 different lenders varied from 4.75% to over 8.5%.  One of the same loans even required the loan to be bought down by demanding over 9 full points just to get a 7.00%.

Luckily, there are programs out there to help homeowners with jumbo loans to save substantial money on there mortgage payments with out having to pay outrageous rates and points.  Homeowners with solid credit and decent equity in their homes should expect to rates to be in the low fives for their jumbo loans.  Those with substantial equity built up in their loans are even being compensated by some lenders by being offered extra rate reductions. 

The money saved from refinancing to a lower rate could be substantial and may end up literally saving jumbo mortgage borrowers hundreds of thousands of dollars over the life of their loans.  These savings are really amazing and many pay for themselves in just a few months or less. 

Over the last 24 months, program guidelines on all loans have become continuously more restrictive.  With all the bail outs happening there has not been much attention to the jumbo mortgage area, which really has been neglected.  It is hard to say whether there will even be any improvements for jumbo mortgage holders but one thing they do need to pay most attention to is the growing demand for increased equity requirements by lenders.  This has become extremely difficult for borrowers with the recent declines in home values in the upper scale housing markets.

In some cases, borrowers are being asked to pay down their loans before lenders will even close them.  This could tie up cash reserves in a bad economy and may not be the best thing for those without stable income or for self employed business owners. This could be a limiting factor for some and may not be so bad for others. 

Let's compare two hypothetical borrowers: 

Borrower A has their own distribution business and his business may require him to have plenty of money liquid to pay expenses or float the business while waiting for revenue from clients.  Being with out surplus cash reserves to save thousands on their mortgage may not be the best use of their money, especially when their business, family and house are on the line if something goes wrong. 

Borrower B is the Vice President of a growing medical care facility for seniors and has a very high income.  He has some money on the side but not enough to pay down his mortgage enough to qualify for his loan.  Borrower B, with the high salary and stable employment, may borrow money from his 401K and use some of his current savings to pay down his principle to qualify for the refinance.  Since he will be skipping at least one mortgage payment, he will then have a lower loan balance and will also be drastically reducing his monthly mortgage payments. This in turn will enable the borrower to reestablish his cash position and pay the loan back to his 401K without really changing his regular contributions and end up saving him several hundreds of thousands of dollars over the life of his loan.

As you can see it can be very advantageous for some borrowers to make a substantial investment in their home because in time, this investment will by far pay for itself.  Another option for those who are coming up with a substantial principle payment can opt for an interest only mortgage.  This does two things. First allows the borrower to save as much money as possible on their payment since they just pulled out a large portion of their savings and gives them the chance to rebuild.  The second benefit for those who opt for the interest only mortgage is to maintain the maximum allowable income tax deduction on their mortgage. This works good for some, because they have just made a large principle payment and now have the chance to build their savings back up or pay down other debt.

The biggest pitfall borrower's face is that home prices may continue their decline and homeowners may not be given this chance again.  While it is possible for some relief to come into the market, but it is highly unlikely to come into the jumbo market sector.  That being said, this is a good time to take advantage of these new low rates for jumbo mortgages review your finances.  If rates or programs do get better, you can always take advantage of them when they come out.  If they don't, you could be left kicking yourself for not jumping when the opportunity presented itself and may find it nearly impossible to refinance down the road.

In conclusion, the rates are the lowest they have been in years for jumbo mortgages and it is important to take advantage of these low rates while they last.  Just this week, one of the lenders offering the government sponsored FHA streamline refinance for borrowers with low credit scores just went out of business.  Unfortunately, we had to tell some borrowers they could not be helped because the program no longer existed.  It is also most important that the refinance makes sense for your personal position and will save you a substantial amount of money. 

He is Making a Niche Helping Families Plan For Their Retirement

Oak Brook, IL-  In the past, traditional mortgage lenders have look passed opportunities to help clients achieve financial independence.  Not when working with this mortgage expert.  "I've helped many clients wipe out credit card debt and cut their monthly expenses nearly in half" said Brian Saviano, a local mortgage expert with Elite Financial Investments.

Many times, people are too concerned with preserving equity in there homes to wipe out high interest rate credit cards.  Often, using the equity in your home can save you several hundreds of dollars per month meanwhile decreasing the amount you pay in taxes.  It is a common myth that you should to pay off your mortgage early and shouldn't increase your mortgage balance for anything.  That used to be the way things were done back in the twenties. Back then, mortgages had "due on demand" clauses which allowed banks to call in home loans and demand money.  Unfortunately this happened during the Great Depression forcing many out of their homes and created the mindset that it was best to pay off your mortgage early.  In fact, there used to be parties when they paid off their homes and burned their mortgage papers.  Now banks no longer have these clauses in them, so there is no reason to fear having a loan. 

Unfortunately many families are burdened with credit card debt, mortgages, utility bills, high gas prices and even cell phones for their children.  Meanwhile, they neglect saving for retirement just to keep up with day to day expenses.  The viscous cycle begins when people run out of money to pay for everyday necessities and are left with no choice but to use their credit cards with intentions of paying them off next month.  The banks are notorious for luring families up to their eyeballs in debt with minimum payments so low and deceptive teaser rates.  Consequently, many families will never break free from the trap and neglect saving for their golden years.  This leaves them without proper the proper nest egg to enjoy a secure retirement and forces them to depend on others to help them while their fixed incomes don't match rising monthly expenses. 

"It doesn't have to be this way and there are solutions," said Saviano.   By reviewing options with a trusted advisor, families can often payoff their consumer debt and increase their monthly cash flow.  This allows families to break free from the trap and save money for their retirement.  By consolidating debt with a home loan, your level of debt remains the same but you can drastically lower your monthly payments by several hundred dollars per month and can also increase your income tax savings.  Saviano advises his clients to meet with a C.P.A. to discuss the impact on their taxes.  When this is done properly, those in debt will have room to breath again and sleep much better at night. 

After Brian helps his clients cut their monthly expenses by so much, he directs them over to a Certified Financial Planner so they can properly protect their families and secure a a comfortable retirement.  Brian said, "You can see the difference in people when they are back in control of their finances and makes me feel great when I know I have made a difference in their lives."

Working simultaneously with a mortgage consultant and financial planner can have an immediate impact on your finances and enable you to achieve your dreams faster then ever dreamed.  Brian even has a program which allows him to notify his clients whenever there is an opportunity to save even more money with a no cost refinance. 

For additional information, go to: http://www.FirstTimeHomeBuyersTips.com/ to receive your special report "How to Payoff Your Debt ads Quickly as Possible So You Can Start Enjoying Your Life."  No salespeople will contact you.  If you are a homeowner with high credit card balances and would like to learn more about improving your financial situation, call Brian for your free consultation.

Brian Saviano is a Local Mortgage Expert who specializes in helping homeowners optimize their finances to create financial independence by effectively managing their home equity and properly plan for retirement.  Brian can be reached by dialing 312-376-1190 Extension 118.

Elite Financial Investments is an Illinois Residential Mortgage Licensee & Equal Housing Lender.

Brian Can Help You Finance You Purchase Your New Home or Refinance Your Existing Home Loans and Save You Thousands of Dollars in Unwanted Interest.  Brian helps those living in Chicago and All of the Suburbs Including: Addison, Arlington Heights, Algonquin, Aurora, Barrington, Barrington Hills, Bellwood, Berkley, Buffalo Grove, Burr Ridge, Carpentersville, Cary, Deerfield, Des Plaines, Elgin, Elk Grove, Elmhurst, Elmwood Park, Evanston, Forest Park, Glencoe, Glendale Heights, Glenview, Gurnee, Hanover Park, Highland Park, Hinsdale, Hoffman Estates, Huntley, Ingleside, Inverness, Itasca, Joliet, LaGrange, Lake in the Hills, Lincoln Park, Lincolnwood, Lisle, Lombard, Long Grove, Maywood, Melrose Park, Montgomery, Mount Prospect, Naperville, Niles, Northbrook, Oak Brook, Oak Park, Oswego, Palatine, Park Ridge, Plainfield, Plano, Prospect Heights, River Forest, River Grove, Rolling Meadows, Roselle, Saint Charles, Schaumburg, Skokie, South Barrington, Streamwood, Vernon Hills, Warrenville, Wheeling, Westchester, Westmont, Wheaton, Winnetka, Wilmette, Willow Springs, Wood Dale and other suburbs.

Mortgage Expert Brian Saviano Urges Home-Owners to Consider Refinancing Now Before Housing Prices Continue Decline

"Home-owners may save a substantial amount of money on their mortgage by refinancing now before housing prices continue their decline

Oak Brook, IL January 25, 2008- With the recent surge in foreclosures, home-owners are starting to feel the pinch as housing values decline hence, limiting the ability for many to capitalize on the recent low rates.  In many areas housing prices have fallen as much as 10% over the holiday season due to the slow down in the economy and banks tightening up on guidelines. 

"Many home-owners should consider refinancing their homes today to take advantage of the low rates before housing prices continue to drop," says Brian Saviano a local mortgage expert with Elite Financial Investments based in Oak Brook, Illinois.  "They should also consider pulling any excess equity out of their homes now while they still can before housing prices continue to drop further."  

The mortgage industry is experiencing sweeping changes driven by the recent surge in foreclosures and mortgage lenders closing their doors. The Federal Reserve has been taking all measures to protect the economy from a recession by lowering the interest rates.  This coupled with the houses new bill to raise conforming loan limits to as much as $730,000 may be the perfect time for those with higher rates to consider whether a refinance may be beneficial or not.  Saviano urges those to seek out advice from a reputable licensed mortgage loan advisor.

"No one knows for certain which way the economy is ultimately headed and for those that take action now while the rates are low, might be well served down the road if housing prices continue to worsen," adds Saviano.  With all the uncertainty that is going on right now borrowers certainly stand to benefit and may save several thousands of dollars.

HAMP Home Affordable Modification Program

Those Facing Foreclosure Does Not Mean You Have to Lose Your Home

Facing foreclosure can be a very stressful process. The problem is, is that you have so many so called foreclosure experts who have recently crawled out of the wood work ofering to help you solve your foreclosure dilema.  Their interests can be to either buy your home from underneath you and either resell it or lease it back to you.  In either case you must be careful and watch for the common traps.  Often times, people do mean well by trying to purchase your home at a discount to what you owe on your balance..  This process is called a short sale.

Short sales can be a great way to get rid of the property and save your credit before it gets too late.  If you can avoid foreclosure, by all means do it.  Having a foreclosure appear on your credit can be the worst thing to happen to your credit and can make it almost impossible to get a new mortgage for atleast three years.  The common pitfalls of foreclosure can be the buyer never buys your home (due to a number of reasons) the lender does not allow you to get any cash back from the transaction regardless of how much equity you have in the property, or the lender comes back to you for any loses they incur (known as a judgement of defieciency). 

A judgement of diefiency can create a taxable event to you.  Often times, you think you are walking away from your problems only to be given a 1099 by your lender for the amount of money they lost.  This can be a devastating setback because this is money you owe to the IRS and is almost impossible to get out of this debt.  Those facing foreclosure should consider all options and be sure to consult with an expirienced attorney. 

If you are in foreclosure, it is essential that you gain control as soon as possible so you do not ruin your credit.  Having a good credit rating is a must in this economy and can cost you a better paying job as well as substantially higher interest rates over the life of your loan.  

 Those who have fallen into foreclosure because they have been a victim of the bad economy, lost a job, or had a medical set back and have over come their set back may be able to qualify for a special pay rate reduction to help keep their homes and save their credit.  Visit  our website for more information.  Those whose financial situations have deteriorated, may wish to just get out of the home they can't afford and start all over with either a short sale or a deed in lieu of foreclosure-where you voluntarily give your home back to the bank.

Stop Foreclosure Help