Friday, August 7, 2009

Southern Oregon Seniors, Did You Know You Could Use A Reverse Mortgage To PURCHASE A Home?

A lot of information goes around about the Reverse Mortgage that is the tool many senior homeowner’s choose to use to help bridge the gap between their retirement benefits and their everyday expenses, but Southern Oregon Seniors, did you know you could use a Reverse Mortgage to PURCHASE a home? The general terms are the same as when you already own a home and take out a Reverse Mortgage, aka “Home Equity Conversion Mortgage” or “H.E.C.M.”.

Some general program details:

-You must be 62+ years old
-You never have to make monthly payments on the amount you borrow
-Credit history and income do not matter. The amount of money available to you is based on your home’s appraised value and/or the FHA loan limit (currently $625,500 nationwide) and your age
-Money may be disbursed to the homeowner in a lump sum, through monthly payments or accessed through a home equity line of credit.
-This is a non-recourse loan, meaning the homeowner(s) or heirs can never owe more than the home is worth
-You must reside in the home more than 50% of the year, which will be checked annually
-You must pay your property taxes and homeowner’s insurance, and maintain upkeep on the home.
-When the day comes you no longer live in the home, you or your heirs have time to make arrangements to refinance or sell the home and payoff the Reverse Mortgage

So, if you have sold a home and are purchasing another, you might want to consider using a Reverse Purchase Mortgage, which might work something like this:

Buyer is 65 years old, purchasing a home for $300,000 and is considering paying cash for it. You cover your down payment and closing costs, financing the rest with the Reverse Purchase Mortgage – A HUD FHA insured home loan that has no monthly payments – leaving almost $175,000, with which you may supplement retirement benefits, earn interest, save for a Rainy Day.

Sound like the solution you and your family have been looking for? Call or e-mail for more details.

See you at the closing table!

Karen Cooper – OR/CA Mortgage Consultant –

Saturday, July 11, 2009

Hear Ye! Hear Ye! Southern Oregon First Time Home Buyers! Need Down Payment Assistance?

Hear Ye! Hear Ye! Southern Oregon First Time Home Buyers! Need Down Payment Assistance?

Are you a First Time Home Buyer in Southern Oregon who thinks you have to rent because you haven’t been able to save for a down payment? Think again! Down Payment assistance funds are once again available to eligible first time home buyers meeting the income criteria. As always, funding is limited, so don’t wait! Call or e-mail me for further details.

See you at the closing table!

Karen Cooper – OR/CA Mortgage Consultant –

Tuesday, June 23, 2009

Thinking of Buying A Foreclosure Home In Southern Oregon?

Here in Southern Oregon, in the traditional peak buying season we’re seeing quite a bit of activity in the lower price ranges of the real estate market. Even Ashland, where prices are at the higher end of the scale for the Rogue Valley, sales are picking up. In Medford, White City, Central Point, Eagle Point the under $200,000 price ranges are seeing a flurry of activity, especially heavy in the lower price ranges where both first time home buyers looking to take advantage of the $8000 tax credit before it sunsets December 1, 2009 AND investors who are seeing price ranges that will cash flow and meet their investment goals are competing against each other. The inventory of available homes is shrinking consistently now, with the Mar-May 2009 number of homes on the market 27% less than the same period in 2008. Foreclosure sales are still representing a large percentage of these sales, and this market segment is likely to pick up a bit more when the State once again releases the funding for the Neighborhood Stabilization Program, probably sometime toward mid to end of July.

So, how does the “average buyer” buy a foreclosure home? Typically, you won’t find the average buyer on the courthouse steps trying to pick up a bargain through the Trustee’s Sale. This is where you will find the sophisticated, experienced investors who know the risks associated with purchasing foreclosed homes in this manner. The average buyer is working with their savvy, experienced Realtor, who has explained the many risks associated with these “as is” purchases where the bank who owns the property has no idea of how the property was treated by previous occupants. Their Realtor is advising their buyers how to limit risk and protect themselves through home inspections and other more specific types of inspections specific to a property, such as septic system and well/ water flow/quality inspections and certifications. And, their Realtor is watching for these properties to come on the market – knowing even before they are on the Multiple Listing Service that they are coming down the pipe, letting their buyers position themselves to pounce as they come on the market.

Sound intimidating? With the right professionals on your team, it doesn’t need to be. Southern Oregon Buyers are finding amazing deals this way. They are choosing their own Realtor to look out for their best interests vs. the bank’s representatives who are looking out for the banks. Here are some financing tools that may help you if you choose to buy a foreclosure/bank-owned home:

Home Path – Fannie Mae’s specific program for buyers purchasing a home that Fannie Mae owns. A “standard program”, or a “renovation program” for homes in need of some work. Fannie Mae works with local Realtors and Lenders on the sale of their homes so you may work with your chosen professionals. Here are the general highlights:
  • Low down payment and flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only)You may qualify even if your credit is less than perfect
  • Available to both owner occupiers and investors
  • Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer
  • No mortgage insurance
  • No appraisal fees
  • HomePath Renovation Mortgage Financing to fund both your purchase and light renovation
HUD Homes – These homes went back to HUD after an FHA loan was foreclosed upon. This foreclosure process is a slow one, so we haven’t seen many of these on the market in our area, but we do see a handful of them in our area. With only $100 down payment required, plus other buyer incentives, buyers may find they are paying as much as they are paying for rent, but own their own home.

Neighborhood Stabilization Program – This federal program that was devised as part of the stimulus packages approved in late 2008 has had a slow start getting to market so buyers may use it. Eligible Buyers purchasing foreclosed homes in the eligible areas that have seen a high concentration of foreclosures may get up to $50,000 to be used for matching down payment, closing costs, prepaid expenses, eligible repairs and mortgage reduction. A recent change in June has led to further investigations by the State of Oregon who administers the program. This process will hopefully be complete and the program re-released for eligible buyers purchasing foreclosure homes

USDA Guaranteed Rural Housing – This program is not specific to foreclosure properties as are those programs listed above, but it does have a unique feature that allows for a “holdback” of up to $10,000 for repairs to be made after close of escrow that may be financed. Buyers meeting the income/property eligibility requirements of this program end up with a great government loan with no down payment and no mortgage insurance required.

Some of these programs have income limits, some have population/area limits, so feel free to check with me to see what is available to you based on your individual circumstances.

See you at the closing table!

Karen Cooper – OR/CA Mortgage Consultant –

Monday, June 8, 2009

Who Is Krista Bolf, Principal Broker at Coldwell Banker Prowest in Ashland?

Although Krista Bolf, principal broker at Coldwell Banker ProWest in Ashland Oregon has an impressive list of credentials that go with her, it is the person behind the resume that impresses me the most.

Having had the pleasure of working on several transactions with Krista since we first met while working together on a Rogue Valley Habitat for Humanity and Ashland Community Land Trust project in 2006 and taught the HUD approved “ABC’s of Homebuying” at Rogue Community College, I’ve since seen Krista’s clients benefit from her sharp negotiating skills, solid knowledge base about the Rogue Valley properties and issues, and her extraordinary listening abilities. I do not hesitate to refer home buyers who are in need of good representation on their home purchase, be it their first home, move up home or an investment purchase, knowing they are in good hands. Together Krista and her business partner Rick Harris can – and have – handled these transactions smoothly and professionally every time.

Personally, Krista has consulted with me and my husband on multiple transactions, from our house to a rental home to general market information on commercial property decisions we have contemplated. Even when the information provided led to us holding off on listing our property due to market conditions, Krista has earned our respect and confidence with her professionalism, straightforwardness and follow through. And her dry wit can be very much appreciated in the circumstances we sometimes find ourselves working in with today’s real estate/mortgage industry.

Alright, alright…enjoy the list of Krista’s accomplishments. But, you’ll need to meet her in person to wholly appreciate the Krista Bolf I have come to know.

Licensed Realtor in Oregon since 1994

Licensed in California 1990 to 1994

REALTOR Membership Service

- Oregon Association of Realtors, 2009 President Elect

- Executive Committee 2006-2007

- Business Issues KOG Chair 2006

- Business Issues KOG 2004-2007

Rogue Valley Association of Realtors
- Realtor of the Year 2009
- Realtor Image Award 2006

- Oregon Association of Realtors Director 2007

- Affiliates Committee 2002-2003 Ashland Board of Realtors

- Secretary 1995 – 1997 REALTOR Designations Advanced Training

- ABR - Accredited Buyer Representative Specialized Buyer Agency training

- CRS - Certified Residential Specialist Less than 5% of Realtors nationwide achieve this specialized training


- Trainer 1999 - 2006

- HUD approved “ABC’s of Homebuying” Instructor

Other Affiliations

- Ashland Community Land Trust President 2002,2003, 2005,2006

- Women's Council of Realtors

International Real Estate

- International Corporation de Inversiones

- Real estate sales and construction in Mexico

- AMPI-Association of Real Estate Professionals

- TRC–Transnational Referral Certified Agent

- Subscriber Member of

See you out there!
Karen Cooper – OR/CA Mortgage Consultant –

Monday, June 1, 2009

Ready...Set...WAIT! No, DON'T Wait!

Have you ever played "On your mark...Get Set....Wait!" with your kids? Or, "Red Light, Green Light"? I know my husband and I have done this, and are learning as time goes by that this isn't a bad lesson for our kids to get in the world we live in today. I'm thinking I wish someone had played "ready set wait!" with me a bit more when I was a kid, so I might be a bit more tolerant of the world I live in today - especially when it comes to the real estate/mortgage industry!

Monetizing the $8,000 tax credit
HUD Secretary Donovan opened mouth and insert foot at the National Association of Realtors convention in Washington, D.C., announcing a wee bit early that the guidelines had been changed so that eligible FHA home buyers could have their participating lenders "monetize" tax credit funds they are eligible for so that these buyers may use these funds to meet the minimum 3.5% down payment requirements on FHA home loans. I'm glad Secretary Donovan did this, because although this announcement and its associated Mortgage Letter were retracted until the fine nuances were ironed out, Friday May 29th a new letter was issued. So, eligible first time home buyers, call your lenders and see if they are participating with this program to make the funds available to you.

Neighborhood Stabilization Program
Well, finally, the waiting is coming to an end for some of these programs to be up and running for today's eligible Oregon home buyers to take advantage of. The Neighborhood Stabilization Program is just awaiting its final stamp of approval which should be coming through any day now. One segment of this program will be made available to home buyers who are looking to purchase bank-owned or privately financed properties that have been taken back through foreclosure proceeds. Matching down payment funds, closing costs and reasonable/eligible repair costs may be funded through the Neighborhood Stabilization Program funds - up to $50,000 per home!

Yes, you heard that right...GO! The Neighborhood Stabilization Program for Oregon is about ready to accept reservations. If you are a buyer who has gotten all your ducks in a row and are prepared to jump on this opportunity, DO IT NOW! Not many lenders and realtors have familiarized themselves with these program requirements, so you may be a bit frustrated when calling around about it. If you are looking to buy in Southern Oregon, call me and I can help you with your financing, and recommend you to Realtors who are knowledgeable about the program guidelines. Why the sense of urgency you may ask? Very limited funding allocation is available, and it's first come, first served, so the early birds will be catching this particular worm. I've been on the phone with all my eligible buyers and Realtor referral partners spreading the word, and would love to play a part in the successful outcome of the Neighborhood Stabilization Program, which is to help eligible home buyers while getting foreclosed homes off the market.
Oregon is trying to get the $8000 "monetized" for non-FHA or non-participating lender programs by June 30, 2009, so get ready now!

See you at the closing table!
Karen Cooper - OR/CA Mortgage Consultant -

Monday, May 11, 2009

Know a Southern Oregon First Time Home Buyer who could use up to $50,000 for their home purchase?

Oregon is onboard the Neighborhood Stabilization train, and has submitted proposals to HUD on how they plan to allocate funds from the Neighborhood Stabilization Program that was approved under the 2008 Housing and Economic Recovery Act. The number of foreclosed homes in Jackson County has led to allocation of funds from the Neighborhood Stabilization Program to Jackson County home buyers willing to purchase and rehabilitate these bank owned homes. The last update I received from Oregon Housing and Community Services was they are awaiting the final stamp of approval from their legal department before releasing the final guidelines, but here are some you may expect:

  • Maximum NSP investment per home buyer will be $50,000 or the difference between the total cost (acquisition and modest rehabilitation) and amount of mortgage eligible buyers can obtain (which ever is less). This means down payment assistance, folks!

  • Funds will be in the form of a "soft second" loan, bearing no interest with payments deferred until the homeowner refinances or transfers title.

  • A share of the appreciation will be due at transfer of title, and may potentially be waived if OHCS grants an exception.

  • Income limits for Medford Area $18,200-83,800 depending on family size (2008).

  • Work to be done by a licensed contractor, and cannot be done by the homeowner. Work will be paid for upon close of escrow.

Sound like something that might be a solution to your becoming a homeowner? Call for more details, or go online and apply to be preapproved for your home loan today at

See you at the closing table!

Karen Cooper - OR/CA Mortgage Consultant -

American Pacific Mortgage, 301 B Crater Lake Avenue, Medford OR 97504 OR License ML-2338; 3000 Lava Ridge Court #200, Roseville, CA 95661 CA DRE Broker License 01180222

Monday, March 16, 2009

Oregon Not Set Up to Fund $8000 Tax Credit Through Closing

It is with regret that I report the findings of my quest to find a way for qualified Oregon home buyers to utilize the $8,000 tax credit recently approved, and apply it to their down payment on home purchases.

The State of Oregon does not have the necessary revolving fund needed in order to be able to advance the $8,000 Federal Tax Credit to buyers through this state's housing programs, such as the Purchase Assistance Loan and/or Oregon Bond Loan. Oregon Bond Loan is already struggling to sell the mortgage revenue bonds that fund the RateAdvantage and CashAdvantage programs, and the RateAdvantage program is about to do the way of the CashAdvantage, Down Payment Assistance and Purchase Assistance Loan programs which all ran out of funds in 2008, and still remain unavailable to qualified Oregon home buyers. The State of Oregon's focus is to fund the Oregon Bond Loan and other existing programs, so starting a new program like establishing a Revolving Fund to help pass through these $8,000 tax credits to qualified Oregon first time home buyers is out of the question.

But, all is not lost, Oregon home buyers! Even though funding has not been released for the USDA Guaranteed Rural Housing program by some lenders, if you buy a qualified property under this fantastic No Money Down program that is a government backed 30 year fixed rate loan, there are still lenders that WILL close on this program right now, letting you get the jump on what just might be a very busy Spring/Summer buying season here in the Rogue Valley in Southern Oregon.

If you have discovered like many first time home buyers that prices have come to levels that make the monthly costs of owning a home almost equivalent to renting one, and want to take the plunge while interest rates are low and before the $8,000 tax creditis no longer available to you (sunsets after December 1, 2009), call me. I'd love to sit down and run through the numbers of the various programs that might be available to you, and tell you about the many wonderful tools available to help you enjoy the many benefits of homeownership. Schedule your free consultation today!

See you at the closing table!

Karen Cooper - OR/CA Mortgage Consultant -

REAL Help for Struggling Homeowners On The Horizon?

Although the Making Home Affordable Program is to be made available to struggling homeowners April 4, 2009, and official announcement went out March 4th from the Federal Housing Finance Agency, the banks and mortgage companies have not yet figured out the details of the Home Affordable Modification or Home Affordable Refinance programs. A call made to Countrywide Home Loans today to inquire about Note Modification through the "Making Home Affordable" program resulted in being directed to call back at the end of March. I hope they get on this soon, as some of the people I've been talking to have been teetering on the edge trying to hang on for quite a while now.

I'm getting calls from existing customers who are hearing reports on the recent housing stimulus package released March 4th, so I figured it was time to call in and find out for myself what homeowners are facing when they initiate the process of obtaining a note modification. I was happy to discover that one of the questions asked by Countrywide's automated system was to inquire if the call was being made by the individual or by a "third party", which hopefully means the banks and mortgage companies are cracking down on the many note modification transactions that homeowners have the ability to (and should!) take care of themselves.

CBS Marketwatch. Com published an article that gave more detail than has been available up to this point. Highlights are:

For Note Modifications-
-There are incentives now for removing second liens on loans modified under this program
-There is a refinance option for homeowners who have an existing mortgage owned by Fannie Mae or Freddie Mac if their current loan-to-value ratio is above 80%
-Mortgages with an unpaid principal balance of up to $729,750 may be eligible for the program
investor-owned properties may not participate (I've read a contradiction to the investor owned criteria, today)
-This program is scheduled to expire by the end of 2012
-Servicers will receive an up-front fee of $1,000 for each modification, which in turn may be passed through the program participants as "pay for success" fees paid for still-performing loans of $1,000 per year going to homeowners who make their payments on time int he form of principal reduction payments of $1,000 each year for up to five years
-Lenders receive bonus fees if modifications are made while a homeowner is still current on their mortgage payments

For refinances-
-Lenders must reduce monthly payments on mortgages so that the borrower's payment is no greater than 38% of income
-The government shares the burden of reducing payments to 31% of the homeowner's income
-To reach the 31% target, interest payments will first be reduced down to as low as 2%
-If the rate is still above 31%, then the life of the loan can be extended up to 40 years. Only then would the plan forbear principal at no interest to meet the target.

More details need to be ironed out, and I know I have many questions still, like does the 31% include tax and insurance payments? How is income calculated for homeowners whose income is self-employed/commissioned/bonus income? My guess is it will be the same automated underwriting system criteria we've had in Desktop Underwriter for Fannie Mae loans.

So, as unpalatable as all the stimulus bills and bailout programs have been, SOMETHING needs to be done to stem this fast descent we're seeing with our economic downturn. Do you think these programs will help? If not, do you have better ideas?

See you at the closing table!
Karen Cooper - OR/CA Mortgage Consultant -

Saturday, February 21, 2009

Here Today, Gone on Friday? How Is YOUR Bank Doing?

There’s a lot of talk these days about the nationalization of U.S. banks, how good credit unions may be a safer place to park our money these days, and the “Texas Ratio” which calculates the likelihood of a bank’s failure. The Texas Ratio is a ratio that was developed by Gerald Cassidy and many other analysts now at RDC Capital Markets that they formulated during the Texas Savings and Loan crises back in the early1990s. It takes a bank’s non-performing assets and loans which include loans that are delinquent for more than 90 days, then divides this number by the bank’s “tangible equity plus its loan loss reserve”. If this calculation equates to a ratio of 1:1 – a number of 100 or great – it is considered a warning sign. The higher that number, the better the chances of that bank’s failure.

As much as I like to crunch numbers, I also like to use my time wisely! So rather than dig around and collect the data to calculate these numbers for banks we have relationships with both personally and through business dealings, I’d much rather have a list to check that someone else already did, although I probably will calculate these ratios for banks we have accounts with. I came across this link in a comment on an article on CBSMarketwatch that not only provides the names and Texas Ratios for several banks, but their locations are mapped, too. But, being the type who likes to check and double-check my data sources, I like having another information resource.

So, now we can pay attention to banks who have accepted T.A.R.P. funds AND keep an eye on this Texas Ratio results list to see if we need to do any other “readjusting” so that: a) we aren’t supporting organizations whose business philosophies do not coincide with our own, and b) we don’t get thrown under the bus by the fast demise of a bank. For example, Silver Falls Bank was one the most recent Oregon Bank failures, having been taken over by the F.D.I.C. on Friday, and their Texas Ratio is reported at 176 on this list, but in January 2008 they were putting out positive reports on their stability! The FDIC will not publish their internal list that they keep, and as much as I would hate to see any “run on a bank”, nor do I want to find I can’t get to my money if I want to! Yeah, our deposits are insured, but who wants to deal with this?

Is this Texas Ratio an infallible predictor? Obviously not, since WaMu and Wachovia did not have Texas ratios that sent up caution signs, yet they have both failed for various reasons. So, how healthy is YOUR bank? Maybe you should check it out.

See you out there!

Karen Cooper – OR/CA Mortgage Consultant –

Ready...Set...GO! Get Your $8000 Tax Credit for Your Down Payment!

There is some good news on the horizon for home buyers who are ready, willing and able to enter the world of homeownership!

There are several provisions in the overall stimulus package that President Obama's approved Tuesday. One of the most beneficial provision for home buyers is an $8,000 home buyer tax credit for new home buyers - buyers who have not owned a home in the past three years. For qualified home purchases in 2009, the legislation:

· Stipulates that the $8,000 tax credit does not have to be repaid, unlike the tax credit passed last summer (has a recapture provision if the home is sold in the first 36 months, though);
· Keeps the tax credit refundable, or claimable regardless of tax liability;
· Extends the "sunset" date from July 1, 2009 until Dec. 1, 2009 so that consumers can utilize it during the critical summer and fall buying months;
· Allows tax credit home buyers to participate in the mortgage revenue bond programs, such as Oregon Bond's RateAdvantage program; and
· Permits state housing finance agencies to help buyers at closing by advancing the credit amount as a loan using tax-exempt bond proceeds - this is even better than the Oregon Bond CashAdvantage program, as you may still take the really great rate on the RateAdvantage program.

While much of the focus has been on the home buyer tax credit, there are several other important components in the legislation that will help small businesses and bolster the housing market. Additional provisions that relate to housing in H.R. 1, the American Recovery and Reinvestment Act of 2009, will:

· Help home borrowers wanting to purchase or refinance homes in the high-cost markets by extending the 2008 FHA, Fannie Mae and Freddie Mac loan limits of $729,750 through the end of 2009;
· Temporarily allow exchange of Low-Income Housing Tax Credit allocating authority for tax-exempt grants and appropriates $2 billion in HOME funding for affordable housing projects (this should make housing developers trying to keep their construction crews busy happy!)

Think $8,000 would help you get the home you want to buy? Want to find out if you meet the criteria? Call me at (541)608-6003 or e-mail me for your free consultation, and I'll gladly share my 25 years of experience with you.

See you at the closing table!

Karen Cooper - OR/CA Mortgage Consultant -

Wednesday, February 4, 2009

Don’t Forget The Taxes and Insurance And Maintenance Expense!

Something I’ve always made a point of emphasizing with first time home buyers – and with long time homeowners and move up buyers as well - are the “other costs” associated with homeownership. Many first time homebuyers are focused on the principal and interest part of the mortgage payment, and when they use an online loan calculator (or often times when speaking to their loan officer), the attention remains on the principal and interest portion of the payment only. And it recently came to my attention that homeowners seeking note modification may also be focused only on the mortgage portion of their monthly payment.

But, what about the other expenses that will be used when a buyer or homeowner is being qualified for their home loan:

Property Taxes
Homeowner’s Insurance
Mortgage Insurance
Homeowners Association Dues

And how about utility expenses - electricity, natural gas, heating oil, wood/pellets, water, sewer, trash pickup- are these expenses being included in your budget? Or maintenance costs, landscape maintenance, roof repair, paint/stain, septic system maintenance…have you seen the movie “The Money Pit”? This can be a lengthy list! Have you incorporated these other expenses associated with the home you are purchasing in to your budget?

So, my tips for today…

First time homebuyers – make sure you are budgeting for all the costs associated with homeownership AND that you have the cash available to make the repairs and/or do the updating you plan to do to your new-to-you home. One of the tools you may use to accomplish this goal is a loan program that will assist you with meeting your objective to purchase a home AND do repairs/updating, like the USDA Guaranteed Rural Housing loan or a Remodel/Renovation loan.

Existing Homeowners seeking Note Modification – consider all your monthly housing expenses when looking at the terms your lender is offering you. Don’t you want to turn the majority in favor of the homeowners who successfully accomplished their goal of remaining in their home through note modification?

See you at the closing table!

Karen Cooper – OR/CA Mortgage Consultant –

Thursday, January 1, 2009

When Is It Time To Refinance? (Part 1 of 6)

A long-time, good client of mine recently asked “how do I know when it makes sense for us to refinance? Is there a set rule of thumb we should follow?”.

Well, there really is no set in stone rule, as there are so many variables involved in determining this. I know a lot of people use a very rough rule of needing to reduce your interest rate by at least 1%, but there is so much more that needs to be considered than just the interest savings alone.

One of the most important determinations my clients and I make together is what their main objective is and which loan program offers the pricing that best helps them meet that objective. For example, not all that long ago, for the person holding a property for a short time whose monies may have been tied up in the stock market making a nice return for them, the Option ARM (adjustable rate mortgage) may have been the best choice for many of them, as while they were paying the initial low interest rate they could leave their investments where they were at, bringing them great income.

But, this situation only fits a small segment of those seeking financing. More often, people are looking to refinance in order to:

  • Exchange an existing adjustable rate and/or interest only mortgage for a low fixed interest rate
  • Consolidate mortgage(s) and/or other bills
  • Exchange an existing fixed rate mortgage for a lower fixed rate mortgage
  • Take a substantial amount of cash out from equity in order to do long overdue updating or purchase a retirement home while prices are low

As with all your major financial decisions, you should include your tax professional in the loop during the decision making process. The professional services of your tax expert could help you avoid serious tax consequences. Don’t you think the fee they charge you might be small in comparison to the tax liability a mistake could bring you?

To keep these articles manageable in size, I’ll be addressing each case in its own post, as well as some common hurdles being faced in today’s lending environment. Until then,

See you at the closing table!
Karen Cooper – OR/CA Mortgage Consultant –

When Is It Time To Refinance An Adjustable Rate or Interest Only Mortgage? (Part 2 of 6)

Does it sound crazy that someone would give up an interest rate in the low 4’s to take an interest rate of 5-5.25% - AND spend thousand of dollars to do it? Many people today are doing just that. “Why?!?!?” you might ask. Well let’s look at some history and basic Econ 101.

What eventually happens after a government prints trillions of dollars and pours it in to its economy? INFLATION! What is the evil nemesis that triggers interest rates on mortgages to shoot up? INFLATION! Forget the effects of shouting “Fire!” in a crowded theater, as this will be nothing like the stampede many believe will be storming through the gates when INFLATION becomes the common call we all hear in the news.

Don’t get me wrong, I’m happily paying the extraordinarily low interest rates we have on our home equity lines of credit, grinning from ear to ear at such “cheap money”. But, folks, these interest rates are NOT NORMAL, and like the high housing prices many thought might go on forever they are UNSUSTAINABLE. I’m just grateful that our home equity lines of credit have terms that allow us to make a simple phone call to lock in a fixed interest rate on it when the tide turns, which it inevitably will do. I’m expecting to be on hold for quite a while the day I make that call while our bank sorts through the many other people frantically trying to so the same thing.

So, what if you have a nice low adjustable interest rate? Why would you want to pay the closing costs associated with refinancing AND/OR take a higher interest rate than you are presently paying? Well, I don’t know about you, but MY crystal ball seems to be a bit foggy. There is no clear projection on WHEN the interest rates will rise, nor HOW FAR or HOW FAST they will rise. What happens if you have a projected interest rate target, and you miss it? If you end up with a higher rate for the long term fixed rate mortgage you refinance in to, did hanging on to the lower adjustable rate a while end up costing you much more in the long run? So, maybe you give up 3/8% in annual interest savings for a year, but then you end up with ½% higher on the fixed interest rate for the long haul.

Gauging this exactly is as easy as gauging “the bottom” in the real estate values…we’ll only know it was there when we’re looking back. So, taking in to consideration that we presently have interest rates we haven’t seen in many decades, do you think it’s a pretty good gamble to take to lock in a fixed rate now?

See you at the closing table!
Karen Cooper – OR/CA Mortgage Consultant –

When Is It Time To Refinance to Consolidate Mortgage(s) and Other Bills? (Part 3 of 6)

Would you believe there are many people out there with 20-30-40-50% equity in their homes, even based on today’s current market values? Even people who own their homes free & clear of any loan? Some people look at their long term financial objectives, which may include paying their home loan off within a certain period of time, look at their budget, and steadily chip away at their loan balance. I realize we don’t hear nearly as much about these folks in the media, but trust me – they DO exist – and there are quite a few of them in the U.S.!

I have heard from such people who are looking at their future plans which include putting their kids through college, finding their retirement home or updating the home they’ve decided they’ll be staying in for the long term after all. Some of them had unexpected expenses they incurred debt for, and are looking to shuffle things around with mortgage interest rates so low. Dealing with that four letter word l*i*f*e, there are always unforeseen events cropping up, including those that affect us financially that we may or may not have been able to set aside the reserves to cover.

So, maybe it is time to shift that $50,000-70,000 worth of student loans in to a more tax advantages form of debt. Maybe it is time to buy that retirement home while values are so low, renting it out until the market turns around or the last child is launched, and it’s time to sell an existing primary residence. Maybe a young person/couple whose income has increased dramatically is looking for a second home and/or restructuring of their financing for tax purposes. Maybe your tax professional has done some year-end consulting with you and recommended a debt load be shifted around.

These are the types of scenarios which come with very specific individualized goals where a set rule of thumb cannot be used to gauge if interest rates are “low enough” to refinance. So many questions need to be answered, like:
  • How much is the interest being paid on each debt being consolidated?
  • What would the retirement home rent for, and how much needs to be put down to have it “hit break even” until it is moved in to as a primary residence?
  • How long will the home being financed be held?
  • What eligible tax benefits are available?

There really is no set rule of thumb that may be applied in these scenarios. An individual’s plan needs to be looked at and its variables taken in to consideration. Maybe other savings need to be applied to the transaction, or partial debt rolled in with the monthly savings applied to paying off the balance not paid off.

This is where bringing in the professionals to help analyze your individual plan becomes crucial. And this is also where I am reminded to thank those people who have shown the confidence to include me in their decision making processes. It is with great satisfaction I see so many people succeeding with their real estate ownership, and I’m grateful to be a part of their success.

See you at the closing table!
Karen Cooper – OR/CA Mortgage Consultant –

When Is It Time To Refinance An Existing Fixed Rate Mortgage for a Lower Fixed Interest Rate? (Part 4 of 6)

This is the type of transaction where the rules of thumb are most likely to come in to play. A homeowner or investor is strictly looking to reduce their existing interest rate and/or payoff their mortgage faster. And here is where many people are told they need to save at least 1% on the interest rate to make refinancing worthwhile.

But again, there are variables that need to be considered:
  • What are the closing costs associated with the transaction?
  • When is your “breakeven point” when the interest savings will have covered the costs associated with the transaction?
  • How long do you plan to keep the home/property?
  • How far are you in to the repayment of your existing mortgage(s)?

I’ve spoken with many people who are “waiting out the real estate market”, waiting for when this current cycle turns and their property values increase. We can only give this our best guess on how long this will take, but a guess needs to be made to try to make sure the costs will be recovered within and the benefit of the lower interest rates seen during that period of time. Some people have no intention of ever selling their home, and having a longer period to hit the “breakeven point” would be okay. Others have had their existing mortgage for many years, and a lot more of their payment is going toward reducing their principal than paying interest, so how much interest remains to be paid based on their amortization schedule comes in to play. Still others experience such a dramatic improvement in their existing rate that the costs are offset very quickly.

This is where it is critical that you: a) talk to your financial planner/tax advisor and b) go to someone you know and trust to talk about your financing, someone whose goal is to help you meet your goals and objective, not just make a profit from you.

See you at the closing table!
Karen Cooper – OR/CA Mortgage Consultant –

When Is It Time To Refinance to Cash Out a Large Amount of Home Equity? (Part 5 of 6)

There are some pretty financially savvy people out there carefully watching what the markets are doing, including the bond markets and mortgage interest rates. Over the years, they’ve listened carefully to their financial/tax advisors and have educated themselves, keeping up with what these markets are doing. They caught the wave of low interest rates several years ago, and already have a nice low fixed rate on their mortgage.

But, the time has come for them to take some equity out of their home/property, maybe for one of the reasons listed in Part 3 of 6 of this series of articles. If they already have an interest rate of 4.5%, and the interest rate they might qualify for today is 4.625-5%, why would they want to refinance? Should they instead take a 2nd mortgage loan or line of credit? Should they just sell their home/property and pay those closing costs instead?

Once again, several variables need to be considered:
  • How much cash out will they need, and for what purpose? What tax ramifications are they facing for this purpose (contact your tax professional!)?
  • What is the “blended rate” if the cash out was taken in the form of a 2nd mortgage?
  • What is the difference in closing costs between taking a 1st mortgage and a 2nd mortgage based on the lower loan amount, or a “no cost” home equity line of credit?
  • If the property securing this loan will be eventually sold, what is that projected sale date?
  • If the property being refinanced will be held long term, where is the owner in their amortization schedule on their existing mortgage?

Now I’ve said this over and over again, but under this reason for refinancing you especially need to talk to your tax professional before you subject yourself to tax consequences and incur unforeseen or avoidable tax liabilities. Believe me, I speak from experience, having incurred an unnecessary capital gains tax liability on a transaction I did in 1989 without consulting my tax advisor. One of those really expensive school of hard knocks lessons I’d like to see others avoid!

See you at the closing table!
Karen Cooper – OR/CA Mortgage Consultant –

When Is It Time To Refinance? – Common Obstacles In Today’s Lending Environment (Part 6 of 6)

It is hard for me to believe the percentage of people who have inquired about a home loan with me I have had to tell I couldn’t help due to one reason or another. In 25 years in this business, I’ve never seen so many! Here are some of the most common reasons for the people I’ve talked with:

  • Estimated Market Value determined by an appraisal is insufficient to support the loan amount you wanted to borrow.
  • Need Stated Income program due to self-employment, but these programs are no longer available.
  • Declining Market Value Area determination restricts your loan amount by 5%
  • Wanting to know you are getting the lowest interest rate, timing the “bottom” of the market, but missing it by procrastinating or gambling on waiting and having low distress sales further decrease your property’s value.
  • You haven’t been monitoring your credit, and an error was discovered when you applied for your loan and/or creditor(s) lowered your credit limit sinking your credit score due to the ratio of amount owed vs. the account limit.
  • Your revolving/installment debt balances increase and/or your income has declined, so now you don’t meet the tighter debt-to-income ratio criteria many programs have.
  • You fall in to the "Jumbo Loan" category, a market that has been turned upside down due to the exit of the investors who provided the funding for these loans, and the available interest rates are too high.

Now more than ever we need to remain proactive with monitoring our credit, limiting our credit usage, budgeting, and investigating as best we can the financial companies we are looking to do business with.

See you at the closing table!
Karen Cooper – OR/CA Mortgage Consultant –