Are you throwing money away? ……

…….Which loan is right for you?

                                                    3/1 ARM         5/1 ARM         7/1 ARM         30 Yr Fixed

Loan amount                                 $200,000         $200,000         $200,000         $200,000

Interest Rate                                 6.00%             6.25%             6.625              7.00%

Amortized over                              30 years         30 years         30 years         30 years

P & I Payment                               $1,199            $1,231            $1,281            $1,331

Savings per month                        $132               $99                 $50                 $0

Although this table will show you which loan will provide you the lowest payment, such a loan may not be the right loan for your financial situation.

Total Cost Analysis for 60 Months:

Total Payments                             $71,946           $73,886           $76,837           $79,836

Principal Paid                                $13,891           $13,326           $12,511           $11,737

Interest Paid                                 $58,055           $60,561           $64,326           $68,099

Balance Left                                 $186,109         $186,674         $187,489         $188,263

Closing Cost                                 $2,800            $2,800            $2,800            $2,800

Total Cost                                     $60,855           $63,361           $67,126           $70,899

Net Savings                                  $10,045           $7,539            $3,773            $0

Simply comparing the payment that a loan offers cannot make a true loan comparison. There are various other fees and issues which effect the overall cost of a loan. The table above analyzes the difference in total overall cost of your home loan. Evaluating the total cost is the key to selecting the lowest cost mortgage for your individual needs.

Term Reduction:

Reduction per month                     $132               $99                 $50                 $0

Equity Increase in 5 yrs                 $9,210            $6,952            $3,545            $0

Equity Increase in 10 yrs                $21,632           $16,446           $8,478            $0

Equity Increase in 15 yrs                $38,388           $29,413           $15,342           $0

Debt Free in                                  23.2 yrs          24.5 yrs          26.8 yrs          30 yrs

Total Interest Saved                      $60,355           $52,076           $33,042           $0

You can become debt free faster by applying monthly savings each and every month towards the principal of your mortgage loan. Additionally, these consistent prepayments may also save you thousands and thousands of dollars in interest savings over the life of your loan.

Asset Accumulation:

Payment per month                       $132               $99                 $50                 $0

Accumulation over 3 yrs                 $5,351            $4,013            $2,027            $0

Accumulation over 4 yrs                 $7,438            $5,579            $2,817            $0

Accumulation over 5 yrs                 $9,699            $7,274            $3,674            $0

Assets > Mortgage                        21.8 yrs          23.3 yrs          26.2 yrs          30 yrs

Total Accumulation                        $196,727         $147,546         $74,518           $0

You can increase your cash assets by placing your monthly savings dollars each month into an annuity or investment account that may eventually accumulate total assets exceeding your mortgage.

Please feel free to reach out. We at Supreme Lending Tahoe Team are happy to discuss all your options and determine which financing is right for you! 

 David Colarchik

Branch Manager NMLS #300510

775.832.6522

David.Colarchik@SupremeLending.com

264 Village Boulevard, Suite 2B

Incline Village, NV 89451

TahoeLending.com

Text ‘Dave’ to 313131 to

download my mobile app

Disclaimer:

The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Supreme Lending, and do not necessarily represent the views and opinions of Supreme Lending. In no way do I commit Supreme Lending to any position on any matter or issue without the express prior written consent of Supreme Lending’s Human Resources Department.

Branch Manager: David Colarchik

Main: 775-833-7100 | Direct: 775-832-6522 | Fax: 775-833-7108

264 Village Blvd Suite 2B, Incline Village, NV 89451

David.Colarchik@supremelending.com

Pay Points or Not?

Anyone who's ever shopped for a mortgage has faced the question - - and borrowers who expect to stay in their homes for some time generally have been advised to pay points in order to get a lower mortgage rate. But new research turns the conventional wisdom on its head, showing that for most people paying points is a bad idea.For the most part, points benefit the lender, not the borrower.

Each point is an up-front payment equal to one percent of the loan. Paying one, two or three points gets you a lower interest rate and smaller monthly payment. With points, we have more choices. If you have the mortgage long enough, that saving will more than make up for the cost of the points. Once the break-even point is passed, you're ahead.

It's simple arithmetic.

For example, Wachovia advertised a 30-year, fixed- rate loan for 5.5 percent and 1.75 points. After paying $5,250 in points on a $300,000 loan, monthly payments would be $1,703. The bank also had a 5.875 percent loan with just 0.125 points. Points on the same loan would be just $375 -- but monthly payments would be $1,775.

It would take 68 months for the $72 difference in payments to offset the extra $4,875 in points you'd pay to get the lower rate. After that, the decision to pay points would save you $72 a month for as long as you had the mortgage. You'd save a whopping $21,024 if you had the mortgage a full 30 years.

Seems simple enough.

But it turns out that most people get it wrong.

The problem, according to the study, is that most homeowners don't keep their mortgages as long as they expect to when they get them, so they don't reach the break-even point.

Abdullah Yavas, business professor at Penn State's Smeal College of Business, and Yan Chang of Freddie Mac, the mortgage-funding company, looked at 3,785 mortgages granted from 1996 through 2003.

They found that the average homeowner paid off his or her mortgage about three years before reaching the break-even point. Only 1.4 percent of borrowers kept their loans long enough to make paying points worthwhile. The study also found that borrowers who declined to pay points almost always made the right decision. Only 1.5 percent of them would have saved money by paying points. Disturbingly, borrowers who paid points tended to wait too long to refinance their loans after rates dropped, missing chances to reduce their mortgage payments. Apparently, this was because of a mistaken belief they should keep their loans long enough to "pay off" the points. In fact, the points should not enter into this decision. All that matters is whether the new mortgage would be held long enough for the reduction in monthly payments to offset the refinancing charges.

Points do have their place. After all, it is possible to save by paying them, if you keep the mortgage long enough.

But how do you judge that? I suspect most people focus on how long they expect to keep their home -- until they start a family and need more room, or until the kids move out or mom and pop retire.

But many of these events are not as predictable as we think. And then there's another big unknown: Will mortgage rates rise or fall after you get your loan?

Even if you stay in your home as long as you'd expected, falling interest rates may make it worthwhile to refinance. If that happens before the break-even date, much of what you'd paid for points may have been wasted. It becomes profit for the lender.

One final factor to consider: What else could you do with that money if you did "not pay points?

Taking the example above, imagine the extra $4,875 that could be spent on points instead was put in a bank account paying 5 percent. And imagine that if the higher points were paid, the $72 in monthly mortgage-payment savings could be banked at 5 percent.

This postpones the break-even date by a year -- to 80 months instead of 68. Since the $4,875 would be growing, it would take longer for the $72 in monthly savings to catch up.

 David Colarchik

Branch Manager NMLS #300510

775.832.6522

David.Colarchik@SupremeLending.com

264 Village Boulevard, Suite 2B

Incline Village, NV 89451

TahoeLending.com

Text ‘Dave’ to 313131 to

download my mobile app

Disclaimer:

The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Supreme Lending, and do not necessarily represent the views and opinions of Supreme Lending. In no way do I commit Supreme Lending to any position on any matter or issue without the express prior written consent of Supreme Lending’s Human Resources Department.

Branch Manager: David Colarchik

Main: 775-833-7100 | Direct: 775-832-6522 | Fax: 775-833-7108

264 Village Blvd Suite 2B, Incline Village, NV 89451

David.Colarchik@supremelending.com

4 Major Mistakes That Can Delay a Loan Approval:

1)      Excluding details about your financial profile

We need to know everything at the onset since seemingly innocuous actions can become a significant delay; in addition we need to know about all of the borrower’s real estate, assets and income.

2)      Not providing every single piece of information:

These days’ borrowers are required to provide a lot of documents.  We are very good at know what the underwriters need, one of the biggest causes of at Close of Escrow (COE) delay is a borrower who challenges us on every request and takes their time in getting us the requested information.  We can’t do our job without the document just as a mechanic can’t repair your car without tools.

3)      Not sharing offer details with the lender

We need to know everything about the purchase contract or any pending potential changes.  Last minute addendums can kill a loan approval.

4)      Being unrealistic about rates.

You can’t lock a rate before you’re in contract because the rate lock runs with a borrower and a property.  Internet rates: many internet rates publish may look low, but when you read the fine print they are often with points or other caveats.  For the most part we all draw from the same well and usually a significant difference in advertised rate means there’s a catch—remember if it’s too good to be true…

David Colarchik

Branch Manager NMLS #300510

775.832.6522

David.Colarchik@SupremeLending.com

264 Village Boulevard, Suite 2B

Incline Village, NV 89451

TahoeLending.com

Text ‘Dave’ to 313131 to

download my mobile app

Disclaimer:

The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Supreme Lending, and do not necessarily represent the views and opinions of Supreme Lending. In no way do I commit Supreme Lending to any position on any matter or issue without the express prior written consent of Supreme Lending’s Human Resources Department.

Branch Manager: David Colarchik

Main: 775-833-7100 | Direct: 775-832-6522 | Fax: 775-833-7108

264 Village Blvd Suite 2B, Incline Village, NV 89451

David.Colarchik@supremelending.com

Thinking of Buying a Second Home?

Freddie Mac recently predicted that 2016 might be the best year for housing in a decade with most sectors, sales, construction, and prices, set to reach new recent highs.  They base this on several factors, mortgage rates, employment, household formation, rising home inventories and increasing prices. Second homes are not as rare as one might expect. In fact more than 20% of residential home purchases in 2014 were for secondary residences. The numbers are rising and it’s important for those considering to understand that financing a second home is a bit different than financing the purchase of a primary residence. Nevada’s great tax benefits and improving economy, along with securing a home as a place to retreat and enjoy life’s simple pleasures are just a few of the reasons why many choose the Tahoe area to invest in real estate. If you’re thinking of buying a second home soon or in the future, align yourself with a knowledgeable, trusted mortgage lender who will provide transparency of the process and guide you now on steps to make qualifying easier.

Prepare a Down Payment
As a mortgage on a vacation property is considered higher risk, many lenders require buyers to have a larger down payment – generally 20%. There are potential options for securing cash such as taking cash out via a refinance on your primary residence while rates are still low. In fact, recently, the share of cash-out refinances were the highest since 2008. Alternatively, you may want to consider taking out a home equity line of credit (HELOC) on your primary residence to finalize the purchase of your secondary residence. In many cases, a gift from parents or family is OK to use for a down payment, as well.

Identify the Interest Rate on Your Loan

If you plan to use your second home strictly for personal use, then you are likely going to be able to secure an interest rate that is comparable to that on your primary residence. As mortgage rates are still low; it is a good time to finance the purchase of a second home. Please note that if the second home purchase is for investment reasons, you may be locked into a higher interest rate – an increase of about .5%.

Qualifying

Qualifying to buy a second home can be trickier than qualifying for your first home. If you’re self employed it’s always better to capitalize verses expense when possible, and if you’re employed, think twice before filing a 2106 “Un-reimbursed Employee Expenses” form with your taxes. It’s imperative to get pre-approved or consult early with a mortgage professional in the earliest stages as you ponder buying your happy place.

David Colarchik

Branch Manager NMLS #300510

775.832.6522

David.Colarchik@SupremeLending.com

264 Village Boulevard, Suite 2B

Incline Village, NV 89451

TahoeLending.com

Text ‘Dave’ to 313131 to

download my mobile app

Disclaimer:

The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Supreme Lending, and do not necessarily represent the views and opinions of Supreme Lending. In no way do I commit Supreme Lending to any position on any matter or issue without the express prior written consent of Supreme Lending’s Human Resources Department.

Branch Manager: David Colarchik

Main: 775-833-7100 | Direct: 775-832-6522 | Fax: 775-833-7108

264 Village Blvd Suite 2B, Incline Village, NV 89451

David.Colarchik@supremelending.com

When an Appraisal Comes in Lower than Expected, Next Steps

Financing real estate almost always requires an appraisal, an unbiased estimate of what a buyer might expect to pay-or a seller might expect to receive-for a property.  There are occasions when you receive the appraisal and it does not meet your expectations.  What do you do next?  

There are strict laws that went into effect in 2010 as a result of the housing crisis, designed to protect appraisers from undue influence.  On a purchase loan, you also encounter another definition of market value - the price agreed to by a seller and buyer.  Add to the mix real estate agents and loan officers with compensation riding on the close.   But a lower than expected appraised value can also work to the buyer’s advantage to renegotiate the price, or walk from the deal, so talk with your Realtor if adding an appraisal contingency is right for you when making an offer.

Lenders calculate the maximum loan amount based on the lower of the appraised value or the purchase price.  If the buyer is applying for maximum financing and an appraisal comes in below the sales price, the buyer must decide if they are willing and able to put more money down, should the buyer wish to continue with the original agreed upon price.

Appraisers are not perfect and many lenders have a Reconsideration of Value (ROV) process, which provides the lender the opportunity to point out inaccuracies and/or suggest additional comparable sales for consideration.

Appraisers rely primarily on the sales comparison approach on residential properties to value factors like location and amenities and will research recent sales in the local area to find comparable properties. The selling prices of these properties are used as a basis to figure out the value of the property being appraised, also known as the subject property. Then the appraiser compares and contrasts what the subject property and the comparable properties have to offer.

The first step if you’d like your lender to file a ROV is to review the report and research.  An appraisal is based upon data so verify the key facts in the appraisal.  Is the square footage of the subject property correct?  Did the appraiser note the level of improvements?

Appraisers must use the most recent and most similar sales in analyzing the value of the subject property. So look to recent sales in your neighborhood.  Was there a more similar sale or a more recent sale or a sale closer in proximity not utilized?

Remember - appraisers cannot overlook sales in the immediate neighborhood that have like-features in lieu of properties that are farther away and are more dissimilar.

The next step is for the lender to write up the ROV request, and the homeowner and/or Realtor may assist in providing information.   The lender cannot request or imply a target number but may ask questions regarding findings from research.   It’s best to ask good questions and present facts without emotion.  Consider tone and language choices - we have an audience - the appraiser. And we want to invite him or her to enter in a respectful written "dialogue" about the property. Remember the appraiser was not out to disappoint, and confronted with strong facts that are aligned with the above, will likely result in a careful and thoughtful response back.    
Different lenders have a variety of appraisal practices and resolution options in the event of a lower than expected appraisal.  It’s key to work with an experienced lender that has a law abiding appraisal process and knows how to research and address issues to serve all parties involved.

David Colarchik

Branch Manager NMLS #300510

775.832.6522

David.Colarchik@SupremeLending.com

264 Village Boulevard, Suite 2B

Incline Village, NV 89451

TahoeLending.com

Text ‘Dave’ to 313131 to

download my mobile app

Disclaimer:

The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Supreme Lending, and do not necessarily represent the views and opinions of Supreme Lending. In no way do I commit Supreme Lending to any position on any matter or issue without the express prior written consent of Supreme Lending’s Human Resources Department.

Branch Manager: David Colarchik

Main: 775-833-7100 | Direct: 775-832-6522 | Fax: 775-833-7108

264 Village Blvd Suite 2B, Incline Village, NV 89451

David.Colarchik@supremelending.com