Friday, December 19, 2008

A Borrower’s Guide to Locking In Your Interest Rate

Are you in the process of getting a home loan for a home purchase you are planning to make here in Southern Oregon? Or, maybe you heard about the incredibly low interest rates we've been seeing for qualified homeowners looking to get a lower interest rate than they have presently? Want to grab this opportunity before it gets away from you? Confused about the way the pricing can move in this extremely volatile market we've been experiencing in the mortgage industry? You need:

A Borrower’s Guide to Locking In Your Interest Rate

When you “lock in”, you are requesting the lender guarantee the interest rate on your loan and the lock period is for a specific length of time – e.g. 15 days if your loan is approved and ready to have final loan documents drawn so you may close your transaction within this period of time, 30 days which covers the processing time for most conventional refinance times, 45 or 60 days for many purchase transactions which often are scheduled to close within that period of time, longer periods for loans on newly constructed housing. The longer you request the interest rate be guaranteed/locked-in, the more it costs. Say you are approved on a program that offers a 4.75% interest rate, and you are considering a 15 day lock that would have a cost of 1 point (one percentage of the loan amount) or a 30 day lock that would have a cost of 1.25 point. The longer the lock you choose is for, the higher your points may be. Depending on the loan program you are on, you may also buy the interest rate up to have lower points, or down by paying more points.

To know what the true cost of the money you are borrowing is, you will look to the APR – the annual percentage rate – which takes an average of certain closing costs and the interest rate you pay, including mortgage insurance, and average them out over the term of your loan giving you a percentage. The higher the APR percentage, the higher the costs associated with your loan. It is important you check the APR because sometimes a loan quote you have received that sounds good because it's "note rate" - the rate quoted to you - is lower than other quotes, but due to higher fees, mortgage insurance, etc., its APR works out to be higher, making it not the best deal for your long term plans.

With the closing of so many banks and lending companies over the past several months and the laying off of staff due to the market downturn, the remaining lenders sometimes have longer processing times, and this would also need to be considered when choosing the lock period. It is always good to leave a few extra days on the lock period in case there are unforeseeable delays, especially on purchase transactions. Even when you are working with the best of the best professionals on your transaction, with so many factors associated in transactions, things can happen to delay a closing. The stories I could tell after 25 years! Couriers in auto accidents on the way to the recorder’s office with documents to be recorded, sellers who pass away, closing funds that were stolen by a teller from a buyer’s bank account… situations that simply could not be controlled by the parties to the transaction.

These cases have been extreme cases, and the large majority of transactions I’ve been involved in closed on time. Careful attention, to the process and experienced professionals working together, eliminates most delays. Want more information or a free consultation about your individual goals and objectives? Call (541)608-6003 or go to .

See you at the closing table!

Karen Cooper – OR/CA Mortgage Consultant –

Tuesday, December 9, 2008

Southern Oregon ABC’s of Homebuying Class this Saturday December 13th at Rogue Community College

The next "ABC's of Homebuying" HUD approved course for first time homebuyers is coming up this Saturday December 13, 2008 from 9 a.m. - 4 p.m. at Rogue Community College in Downtown Medford. Not only is this is the required course for several first time homebuyer programs, but it is a great source of information for the first time homebuyer AND buyers who are re-entering the market after being on the sidelines of the real estate market for several years.

For information on registration and directions, follow this link, or contact the Southern Oregon Housing Resource Center at ACCESS, Inc. (541)774-4329.

If you are planning to attend and saw this notification here, look for me as your Instructor for Section 2 on Financial Preparation and possibly Section 3 on Mortgages.

See you at the closing table!

Karen Cooper - OR/CA Mortgage Consultant -

Wednesday, December 3, 2008

Investors May Finance Up To 12 Properties

Here in Southern Oregon where we haven’t experienced the same level of real estate market devastation as California, Florida, Nevada and Arizona there is still a silver lining to be found in our beautiful puffy cloud skies.

With market values in Jackson County Oregon roughly 8% lower in our year over year statistics, we’ve also seen a steady contraction in the inventory of available homes for sale – also 8% lower year over year.

As is customary when the general populace begins to think we are seeing some great values, there are buyers coming out of the wood work…450 of them, to be exact, from August 1st through October 31, 2008 in the Rogue Valley.

Many of these buyers are investors, savvy, experienced, and taking advantage of some great bargains. Until recently, these investors might be able to take out purchase money financing with no limitation on the number of financed properties they owned. This has just changed:


  • Max LTV for investment properties is now 65%.

  • Cash-out on 3-4 unit investment properties is limited to 60% max LTV.

  • The number of financed investment properties owned by one borrower is limited to 10 (this does not include their financed owner-occupied and/or second homes).

  • Out-of-State investors are strictly case-by-case, and limited to 60% max LTV.

  • At this time, there are still no exceptions allowed under the Non-Owner Occupied program.

For Investors meeting Fannie Mae Underwriting criteria (680+ credit score) may put as little as 15% down, but cannot have more than 10 financed properties INCLUDING THEIR PRINCIPAL RESIDENCE AND SECOND HOME.

Still not bad, all things considered. So, Southern Oregon investors, call today for your free consultation, or go online at .

See you at the closing table!

Karen Cooper – OR/CA Mortgage Consultant –

Tuesday, December 2, 2008

5% 30 Year Fixed Rate, But My Value Is Too Low?

With the recent major improvement in the Bond Market Yields finally translating to improved interest rates on long term fixed rate conventional financing, there has been a bit of a flurry of activity here at Quality Home Loans in Southern Oregon, trying to help clients take advantage of this boon.

Keeping track of the homeowners who may benefit from refinancing as opportunities present themselves is a part of any professional, experienced mortgage consultant’s duties. Since the public doesn’t catch wind of market moves until the media reports come out days/weeks later, the average person often misses the boat by the time they pick up the phone to call to see about getting a lower interest rate on their home loan. Maybe your profession has nothing to do with the finance/mortgage industry, so you go to the professionals who do follow this.

Seeing the lower trend in some mortgage programs’ interest rates, the past several days have been spent checking on value ranges for homeowners who would save enough to warrant the expense associated with refinancing. Then, it’s time to prepare a Good Faith Estimate and Truth-In-Lending Disclosures on the proposed programs for those homeowners and investors who could gain enough interest savings to offset their closing costs.

Unfortunately, many property owners’ values have descended. Those that have tapped in to their equity before may find themselves “underwater” – owing more on their mortgage(s) than their property is worth in today’s market. Others may have purchased their home within the past 1-5 years, and although they haven’t touched their equity by refinancing or taking out a 2nd loan/line of credit, they may be located in areas where foreclosures are prevalent causing the market values to be set by these distressed sales.

I am working with two such homeowners who purchased their homes a year ago and want to get a lower interest rate and eliminate mortgage insurance. Even though the mortgage insurance may be tax deductible for them (this ruling is subject to change), and they got good deals at the time they purchased their homes, the values have either decreased slightly or stayed the same. Having the required mortgage insurance in the equation makes refinancing too costly.

So, the one gentleman who wanted 5% with no mortgage insurance would have to be quoted 5.25% (apr 5.412%) on his conforming 30 year fixed rate $227,000 mortgage – and he may or may not get the appraised value needed to even do this, since his appraisal would need to come in at the high end of the range of sales comparables available today.

But, another family who has owned their home since 2001, has 35%+ equity even after taking out a 2nd to consolidate student loans a year ago WILL be able to take advantage of the really low interest rates we’re seeing right now. Yet another, who has owned their rental since 2003 is sitting right on the edge of whether the numbers “pencil out” or not, so they’ll have to decide if anteing up the appraisal fee to find out is worth while.

If you are wondering if it makes sense for you to refinance your home/property in Oregon or California, call or contact us online for a free consultation.

See you at the closing table!

Karen Cooper – OR/CA Mortgage Consultant –