What’s Your Mortgage IQ?

A recent Zillow survey shows that prospective home owners still have a bit to learn about mortgages.  Here are some of the findings, along with facts to help you become a more educated buyer:

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Survey Finding: One-third of home buyers think they need a down payment of at least 5% to make a home purchase.

FACT: Loan programs insured by the Federal Housing Administration (FHA) require as little as 3.5% down. FHA loans also offer more flexible underwriting guidelines than conventional financing, and can be used for single- and multi-family homes (up to four units).

 

Survey Finding: 24% of home buyers believe the best mortgage deals are available through the banks where they have savings and checking accounts.

FACT: Other lenders can compete with and often offer lower rates than institutional banks, along with a wide range of loan programs to choose from.

 

Survey Finding: 20% of homeowners think that underwater mortgages — those in which borrowers owe more than their homes are worth – can’t be refinanced into lower rates. 

FACT: Programs like HARP (the Home Affordable Refinance Program) and Freddie Mac’s Relief Refinance Mortgages (a.k.a. Open Access) can help eligible home owners refinance despite declining property values.

 

Survey Finding: One-third of homeowners believe that after a foreclosure or short sale, it takes a full seven years before credit scores recover and they can buy another home.

FACT: Some homeowners who foreclose their home or sell it on a short sale can obtain financing for a new one in as little as two years.

With all the information (and misconceptions) surrounding mortgages, learning what you need to make smart, informed decisions can feel pretty overwhelming. While we encourage our clients to learn as much as they can about the home financing process, we also know few people have the time to do all the research on their own.

That’s where the value of an experienced loan officer comes in. By carefully working to learn your life plans and financial circumstances, an experienced, reputable loan officer will give you trusted feedback and guidance, so you can find a loan that fully meets your needs and circumstances.

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No News Isn’t Necessarily Good News

As Sandy and Dan Lucca of Plymouth, MA, walked through the usual steps of buying a new home, they had no idea how suddenly or unexpectedly the process could fall apart.

They’d already completed a home inspection, signed the purchase and sale (P&S) and were approved for a loan, when they received a call from their mortgage company, informing them that they wouldn’t be able to meet the closing deadline due to processing delays.

Dan and Sandy were stunned. When they first applied for a loan, the lender confirmed that their timeline wasn’t an issue.  “Since then, we hadn’t heard anything from the bank, so we just assumed everything was fine,” said Dan Lucca.

When it comes to mortgage lending, no news isn’t necessarily good news. Particularly in today’s economic climate, many lenders are struggling to meet closing deadlines, but don’t readily offer up that information. When they finally do, it’s often late in the process, which can put borrowers in real jeopardy.

For Dan and Sandy, they got the call from their lender just nine days before their closing. With their existing house to be sold in the coming days and a substantial down payment on the line, they were set to lose a lot of money with no place to go.

Not knowing what to do next, they promptly told their realtor about the delay, who in turn urged them to contact Jeff Pilon, a radius loan officer.

“Unfortunately, this is not an uncommon scenario,” said Jeff Pilon. “People reasonably assume everything is fine until they’re told otherwise, which typically happens late in the game, and that’s when the fun begins.”

After just one phone call with the Luccas, Jeff and his underwriting team snapped into action. Eight days later, Dan and Sandy received a full loan commitment and closed on their new home, as originally scheduled.

“In a matter of days, Jeff was able get us back on track,” said Sandy Lucca. “He took all the stress away.”

To prevent loans from falling apart due to time delays, Jeff strongly encourages borrowers to ask lenders upfront how long it will take to get a full commitment. Then listen carefully to the answer. If the lender indicates any potential for delay, it’s best to walk away and find another company that can assure you of working within the needed time-frame.

When Timing is Everything

With today’s stricter lending standards, you’d think people who actually get approved for a loan would sail through the process. But that’s not always the case. For qualified borrowers who need to close a loan quickly, many lenders simply can’t commit, which can jeopardize homebuyers’ plans.

Take Daisy Marroquin, a 22-year-old Army National Guard soldier from Framingham, MA, who fully qualified for a loan and was promptly approved by three lenders. The home she wanted to buy was a short sale, so she needed to move fast.

That’s when she hit a major roadblock.

The closing needed to happen in three weeks, but all three lenders said they couldn’t do it in that time-frame; each said the process would take at least 35 to 40 days. By then, the home would be gone, and so would the “once in a lifetime” deal Daisy had found.

The next day she relayed the story to a colleague, who suggested contacting Andria Dolce, a loan officer at radius.

“I hate to say it, but I was kind of skeptical,” said Daisy. “I’d never heard of radius before, but Andria was recommended and at that point I had nothing to lose so I gave her a call.” She was immediately glad she did.

Andria was able to approve Daisy’s loan within hours and arranged for an appraiser to inspect the home the next day. Twenty days later, Daisy closed on her loan, without confusion or fuss.

“Andria made it all so easy,” said Daisy. “I couldn’t believe it, especially after hearing ‘no, no, no’ from everyone else.”

Meanwhile, Andria knew they could get the deal done with the right support and focus.

“People’s borrowing needs don’t always perfectly match our typical timeline,” said Andria. “But when time is of the essence, you just have to hustle a little more to make it work.”

After the mad rush to buy her new home, Daisy is taking a sigh of relief as she settles in.

“This is the perfect house for me, but I never could have financed it through another lender. Without radius there to help me grab the deal, it would have slipped right by.”

Networking Helps Couple Re-Finance

“We were in the process of re-financing with another vendor and the process was taking a very long time with very little communications from the vendor.  My husband attended a networking event and caught up with Andria from radius and she offered to take a look at our re-finance information.”

“Andria was able to provide us with a timely turnaround, enabling us to receive the low rate we wanted.  The electronic communications were highly efficient – all the pre-application paperwork could be viewed securely and electronic signatures were accepted.  Even the formal closing process was customer-focused in that the attorney came to our home after work hours to accommodate our schedules.”

“We were very pleased with our re-finance process executed by Andria and would highly recommend her services to others.  Our neighbors are currently working with her and are having a similar positive experience as well.”

– Sandi Griffiths

Assistant Vice President, Investor Services

Brown Brothers Harriman

New Year Predictions

crystalball RESIZED

Originally posted on January 10, 2013

There’s no crystal ball to tell how or when interest rates may change in the coming months. But here’s a realistic look at what affects them and how to put it all in perspective.

While the new year comes with lots of resolutions and predictions, I’ve never been one to make many of either.  Resolutions are often quickly broken and predictions have as much chance of being right as they do wrong…

By far, the question I get asked most often is, “Where are interest rates going?” My usual answer is, “Good question!”

Honestly, no one knows exactly what interest rates will do nor can they foresee a change in advance.  We can make a lot of educated guesses, but they are no more than that.

There’s often a lot of confusion as to how interest rates are set. Contrary to what you sometimes hear on the news, the government doesn’t “set” interest rates.  The Federal Reserve sets the Federal Funds rate (a.k.a. the discount rate), which is the rate at which banks borrow from the government.  They are very short-term rates, directly impacting equity lines, auto loans and credit cards. They do not directly affect mortgage rates, though.  In fact, sometimes when the Fed increases the Federal Funds rate, mortgage rates drop.

Mortgage rates are directly tied to Mortgage Backed Securities or mortgage bonds, but they are often mistakenly thought to move in step with the 10-year Treasury Note. Not only do they not always trend in the same direction, but sometimes have an inverse relationship.

In the most simplistic terms, there are many economic factors that affect mortgage rates, but bad economic news coupled with tame inflation keep mortgage interest rates low.

Right now, rates are artificially low due to the Quantitative Easing (QE) actions of the Federal Reserve.  The Fed is currently buying $85 billion in mortgage back securities each month. This QE activity has kept rates at today’s historical lows.

Mortgage rates move in “real time” just as stocks do; both are subject to change at any given time while the market is open. While it would be great to purchase a stock at rock bottom and then sell at its peak, no one can predict those circumstances. The same holds true for mortgage interest rates. A few days after I locked the interest rate for my own home, rates fell .25%. That’s just how the market works. But far too often, clients focus so much on interest rates that they lose sight of the big picture.

The truth is, there are multiple factors that contribute to locking in a good mortgage. Yes, interest rates are one of them, but many other considerations play an important role, too.

That’s why it’s critical to work with a trusted mortgage banker who takes the time to learn about your financial and living circumstances, and offers advice based on where you’re at now and what your plans are for the years ahead.

So here’s my best advice regarding today’s interest rates, which are as low as I’ve seen them: Try not to obsess over their micro-movements. Take the time to find a mortgage that works for you on all fronts, and is one you’re comfortable paying.  Then shut out the media and move on with the things that matter to you most, like your home and family. To me, that’s the real big picture, and that’s what’s most important.

Happy New Year!

Holiday Enlightenment at Dunkin’ Donuts

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Originally posted on December 18, 2012

The holidays are a ridiculously busy time of year for just about everybody. For me, between end-of-year closings and other work projects, along with an endless list of holiday tasks, I’m usually trying to accomplish way too much at once. And that’s when I do stupid things.

The other day, I was in the Dunkin’ Donuts drive-through to pick up my morning coffee, when I started thinking about the day ahead and how much I needed to do in so little time. As I reached for my briefcase to review a few documents, my foot slipped off the brake and I crashed into the car in front of me.

My attempt at multi-tasking in the three-minute drive-through caused a five-minute delay for me, the man whose car I hit and the people behind us. So I certainly learned my lesson there.

But what really blew me away wasn’t my foolishness. It was the reaction from the driver. After assessing his car and realizing there wasn’t any damage, he just shrugged and told me to have a nice day. Then he hopped back in his car.

I wanted to hug the guy. Whether his car was damaged or not, I fully expected him to criticize or lash out (and he would have been totally justified in doing so!), but his easy-going, relaxed attitude threw me for a complete loop.

The only way I could think to thank him in the moment was to tell the Dunkin’ Donuts woman on the speakerphone that I would pay for whatever he ordered.

As I thought about the incident afterwards, I suspected that the man’s reaction wasn’t in the spirit of holiday generosity. He’s probably a kind, patient and forgiving person in general. But his attitude reminded me just how important and meaningful those qualities are, and how much they impact other people.

So when I start to get stressed and distracted about everything I need to do, particularly in the days ahead, or when someone does something I’m not thrilled about, I’m going to channel that morning and regroup.

Meanwhile, when I was back in line at Dunkin’ Donuts the following day, I made sure not to smash into anyone. Then I paid for the person behind me. I’m not taking credit for this idea – I think I heard it from Oprah.  I just hope it made the stranger’s day a little nicer, in a small token of appreciation for the driver who brightened mine.

I hope your holiday season is filled with kindness, patience and generosity, too. Happy Holidays!

Happy Lucky 13, radius!

Sarah and Keith 1

Originally posted on November 12, 2012

Thirteen seems to be our lucky number at radius. Thirteen years ago, we launched the company with 13 employees, working out of temporary office space with four desks and phones on each side. The phone lines were split, so that at any given moment one of us could be seen sprinting across the room to answer one. It was a chaotic and stressful time, but also incredibly exciting and in hindsight, pretty comical.

Thirteen years later, we have more than 80 employees and seven offices in Massachusetts and New Hampshire (and a lot more phones and desks), with a lot more stability and structure and no plans of slowing down.

But no matter how much we continue to grow and change, our core values of service and integrity – which radius was founded upon – continue to guide everything we do. That’s incredibly important to me and it’s one of the things I’m most proud of.

As we’ve evolved over time, we’ve tried hard to maintain a small company feel, but the reality is that we’re no longer the start-up we used to be. This particularly struck me one day this past summer when I was walking through the office. I passed someone typing away at her computer and had absolutely no idea who she was.

I’m a pretty down-to-earth person who never aspired to being “above” anyone or anything. But in that moment, that’s exactly how I felt and it was a total shock to the system.

For many years, I personally knew each and every person who worked at radius and they knew me. I realize that that level of contact and connection may not be realistic anymore, but to me, it’s one of the most unfortunate consequences of corporate growth.

Along with feeling sad that this person was a stranger to me, I knew she didn’t know me either and probably didn’t know our company’s history. I also realized she was not alone. There are many newer faces at radius who don’t know how we began or why. So for all of those people, and for our valued, long-time employees and partners who know us well and may enjoy a trip down memory lane, here’s our story:

In 1999, Keith Polaski and I worked for a mortgage company, which was a whole-owned subsidiary of a Fortune 100 company. The industry landscape was dramatically shifting. Traditionally, mortgage lending had been completely customer service driven. It was now beginning to center around meeting management objectives. This new playing field completely disregarded the very consumers who’d helped the company grow and succeed.

Keith and I were at a crossroads. We could either move to another large mortgage banking company and deal with similar issues and practices (given the economic climate at the time), or we could take an enormous leap of faith, bringing all the solid underwriting and customer service practices we’d built our careers around, and start our own company to ensure that those fundamental values and principles were never compromised.

The choice was easy. We brought along a small group of star employees who believed in us and shared our core values, and radius was born 13 years ago almost to the day.

At the time, many of our friends and family thought we were nuts. Keith and I had abandoned high paying positions and could have sailed along without taking on all the risk and unknowns of launching a new business.

Since then, Keith has been an amazing business partner. While we haven’t always agreed (we have boxing gloves in the office and we’ve used them), we’ve been able to find common ground because our values and goals are fully aligned.

In particular, we’ve always agreed that with the right team of talented and dedicated employees, we could maintain a level of mortgage lending services people need and deserve.

I’m fully convinced that the unrelenting hard work and dedication of those 13 people who first jumped on board with us not only helped us successfully launch radius and deliver on those principles, but also drove us through countless challenges and obstacles in the years ahead.

Those 13 people, most of whom still work at radius, continue to play an integral role in helping us navigate today’s tumultuous mortgage climate. And they serve as role models for the types of employees we’ve continued to hire.

Today, we have an incredible team that brings their talent and commitment to radius each and every day and largely reflect the work ethic of our original 13. They are the backbone for the service and quality we continue to offer our customers.

I hope to maintain some level of connection with all our employees as we move ahead, even if it’s in the most basic form of knowing their names and saying a quick hello in the hallway, as I quickly made an effort to do with the “stranger” I passed a few months back.

Because as big as radius may get, our core values among our clients, partners and employees alike will always remain the same: Treat people with honesty and respect and they will do the same by you.

So to all the people we work with at radius, thank you for getting us to lucky 13 and here’s to many more years to come.

Two Owned Properties, One Established Borrower… No Loan?

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Originally posted on December 12, 2012

Despite owning two residential properties, one borrower couldn’t get a mortgage loan, until Dave Viveiros, a radius senior loan officer, stepped in to help

 

Getting a loan these days isn’t easy. More and more people who’d have sailed through the process in past years are now facing obstacles. In many cases, the solutions are out there, but finding them can take a bit of time and ingenuity.

Stuart and Alexandra Trafford, who recently got a loan through radius, are a perfect example.

The Traffords owned two homes in Delaware, living in one and renting out the other. When the couple recently decided to move to Boston, they rented out both properties and planned to use their rental income to buy a condo.

Stuart contacted a national mortgage lender to get a pre-approval. With strong credit scores and an established employment record, he thought the process would be easy. It wasn’t. Stuart was told his debt-to-income ratio was too high. This was chiefly the result of difficulties qualifying his rental income, along with his monthly car payment debt.

Stuart and Alexandra were upset, frustrated and feeling stuck. They’d already moved to Boston and were living with family while they searched for a new home, but now they couldn’t get the financing to buy one. That’s when their Boston realtor referred them to Dave Viveiros, a senior loan officer at radius financial group inc.

“Stuart’s situation was tricky,” said Dave. “But for borrowers like him with an established record of paying bills on time and consistent employment, there’s usually a way to find a reasonable solution.”

After working through several options together, Dave and Stuart came up with a plan. They restructured Stuart’s debt by lowering his down payment on the Boston property, and used the leftover money to pay off his car loan. By eliminating his car payments, he reduced his overall debt, making him eligible for an FHA condo loan.

Dave says it took a few tries to get it right, but radius’s flexibility played a key role in the Traffords’ success. “Radius has an expansive array of lending options, which makes a big difference in helping borrowers get a loan that meets their needs.”

The Traffords recently moved into a condo in Fort Point and are thrilled. “When we thought we’d lost the opportunity to buy a new home, Dave saved the day,” said Alexandra. “I can’t thank him enough. We wouldn’t be here without him!”

Zip Lining

Zip lining 1                       Zip lining 2

Originally posted on November 6, 2012

Since I keep getting asked about my recent zip-lining experience, I figured it’s about time I shared it with you.

First, let’s start with this basic fact: I’m absolutely terrified of heights, so I was not looking forward to zip-lining at all. I only did it because my friends were convinced it would be a fun adventure for all of us to try together.

Let me also warn you that this is not a story about me facing my fears to learn that I actually love zip-lining and have become more empowered because of it. I did learn some valuable lessons, but they’re different from what you might expect. With that in mind, here’s my zip-lining story…

My first task was to climb a 50-foot telephone pole, and I was not happy about it. When I got to the top, winds whipping wildly, I held on with a death grip, petrified to look down and panicked that I’d fall. My feet were frozen on the platform, and I truly believed in that moment I’d have to live on my tiny square of safety forever.

Meanwhile, my guide kept asking me philosophical questions like: “What are you most afraid of?” “Are you scared of losing control?” I know I was supposed to be cooperative and pour out my inner fears, but all I really wanted to do was punch the guy. In fact, pushing him off the platform and getting rid of him altogether would have been even better.

Clearly, my options for survival were not good.

The truth is, there wasn’t any one thing I was particularly afraid of, or at least anything I could pinpoint in the moment. All I knew was that I was doing something everyone said would be rewarding, and it didn’t feel that way at all.

When I finally took a leap from the platform, I thought I’d be zooming along at a crazy high speed. It turned out to be a much more reasonable ride, and the experience wasn’t so bad after all.

I still can’t say I loved zip-lining by any stretch, but I got through it a lot better than expected.

Looking back, I think we’ve all been in situations where we’re nervous to take that leap of faith, with people around us convinced it’ll all be fine.  And usually they’re right. But it’s still hard to do something that scares you, and it’s no fun having other people tell you what to do, or suggesting how you should feel about it.

I sometimes see our clients dealing with that same conflict, particularly first-time home buyers. Committing to a mortgage loan for the first time is a scary, overwhelming ordeal. As much as we may say it’s a worthwhile investment (and, of course, I truly believe that it is), it’s hard to absorb that message when so much is at stake. It can truly feel like jumping off a ledge with nothing to catch you if you fall.

Out of everything I learned from zip-lining, my most important take-away was to remember how threatening the fear of the unknown can be, and to not push someone when they’re feeling panicked in that moment.

While the actual ride – whether it’s applying for a mortgage loan or zip lining – usually turns out to be far less scary or dangerous than we anticipate, we all need to leap on our own time and terms, and no one should be telling us how to think or feel as we prepare to take that first step. All we can do is offer support from start to finish, and be there in the unlikely event that they trip or fall.

So when you’re standing at a cliff, how do you manage to move forward? And when people around you are hesitating to take a leap, what do you think is the best way to help?

– Sarah Valentini

Top 10 Tips for Getting a Mortgage Loan in 2013

It can feel like a real jungle navigating the world of mortgages. Here are our top 10 tips for clearing the path to getting a loan.
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Originally posted on January 23, 2013

1.       Don’t hold out for lower rates and prices
People often ask me if interest rates have hit “the bottom”.  By the time we really know the answer to that question, the window of opportunity may be over.  Interest rates and home prices are as attractive as ever, so if you’re now in the market to buy a home, get started!

2.       If you already own a home, conduct a mortgage check-up
If you haven’t refinanced within the past six to eight months, it make senses to consider doing so. You may be able to lower your interest rate, reduce the length of your mortgage term, consolidate some debt or even increase your term, if appropriate. Still, there’s no “one size fits all” approach to refinancing, so make sure to talk with a trusted advisor who can help you review your current circumstances, future plans and financial goals.

3.       You may still be able to buy or refinance even if your financial situation isn’t “perfect”
It isn’t easy to get a mortgage these days, but it isn’t impossible either.  The best way to find out if you’re eligible for a home loan is to get a pre-approval.  Even if you learn that you’re not eligible right now, you’ll likely become a qualified candidate in the future, as long as you begin following basic employment, credit and savings guidelines.

If you’re renting and on the fence about taking on a mortgage, consider how much rent you’ve been paying and for how long. Chances are you’ve spent a fairly sizable amount of money.  For example, if you’ve paid $1,500/month for the past three years, you’ve spent $54,000. That’s money that has no investment value and will never be recaptured.

While there are circumstances when it’s positively better to rent, it’s wise to speak with a loan officer and learn how much you can afford, along with what your monthly mortgage payment would be. You may be pleasantly surprised how much you can buy for the same money as renting.

4.       Yes, the paperwork and process can be daunting, but go with it
Getting a mortgage loan has changed quite a bit over the past few years and involves more paperwork than ever before. I’m the first to admit that it’s not fun and can be downright annoying. My best advice is this: Just go with it.  Mortgage lenders and underwriters are under enormous pressure to make sure the foreclosure crisis never happens again. As a result, an unprecedented level of documentation is now required.  Unfortunately, consumers often become frustrated because providing one document may trigger the need for three more.  Again, go with the flow and remember that as tedious as the process may seem, it protects everyone’s best interests.  And with today’s low interest rates and savings potential, the hassle is well worth it!

 5.       Service matters
People often tell us, “ABC bank said they can do a lower rate.”  Our general response is, “Read the fine print.”  Mortgage rates are basically commodities that vary very little between lenders.  If you see a big difference, there are likely conditions with the “great deal” that make it not so great, and you should quickly steer clear of them.

All too often, we’re asked to fix loans that fall apart with other lenders who don’t have the resources, expertise and/or commitment to get the job done. That’s why it’s critical to work with a lender that understands your loan commitment needs and truly knows how to meet them from start to finish.

6.       Credit follows you everywhere
Most likely, your credit will be pulled during pre-approval, application AND just prior to closing, so it’s very important that you not take on any additional debt prior to closing.  If you must take out a new loan during the mortgage process, make sure to discuss it with your loan officer to prevent it from adversely affecting your mortgage.

7.       Be completely honest, we’ll find out everything anyway
People often leave out pertinent details about their finances because they think they don’t matter or, worse yet, because they think they will cause a problem. In fact, the reverse is true. The more we know upfront about your circumstances, the better we can assist you.

8.       Paying off your mortgage early isn’t always a good thing
Yes, you can save a lot of interest by accelerating the rate at which you pay down your mortgage.  But before you do, make sure to focus on other non-tax deductible debts (such as credit cards, student loans, car payments, etc.) with higher interest rates first.  Mortgage loans carry a much lower interest rate than most other debts.

Also consider saving for emergencies, retirement and education before worrying about paying off your mortgage loan.

9.       You can buy a mortgage with little or no money down
There are still attractive government insured mortgage programs with little or no down payment required.  When I tell people this, they often counter that those types of loans caused the mess we’re now in. To adequately address that thinking is a story for a different day, but in short, highly qualified loans can be made with small or no down payment.  Having good credit and a proven ability to repay a loan is the key.  Don’t let the lack of a large down payment hold you back from buying a home.


10.   You get what you pay for (and when you don’t invest enough, you pay for it somewhere)
I’m sure most people would agree that they wouldn’t want to find their doctor on discountdoctors.com.  That’s because there’s a difference between a bargain and a value. Bargains usually come with a price, primarily low quality and defects.
On a similar note, we often hear clients say they don’t want to pay for a realtor or attorney, and that they want to get the absolutely lowest rates possible.

We all want a good deal on our purchases and investments, but it’s important to strongly factor in the value of working with knowledgeable and trustworthy professionals.  You’ll save more in the long run from their advice and guidance than shopping for a rock bottom deal and hoping against hope that the gamble pays off.

It comes down to the old adage: If it sounds too good to be true, it probably is.