Jeremiah Phillips of First Mutual Corp

The average homeowner doesn’t need spend a penny on Private Mortgage Insurance. Sometimes PMI will make sense if it’s the difference between a good deal and none, but normally it won’t.

What Is PMI?

PMI is an insurance policy required by most lenders when you are putting less than 20% down on a home purchase. Some loans programs even require more than 20% equity before waving the requirement for mortgage insurance.

This insurance pays out to a lender in case you default on your mortgage loan payments and the lender has to foreclose. The policy does NOT protect you if you lose your job or can not make payments on your mortgage for some reason. However, even though you are not protected by the policy, you are the one paying for it; and unlike mortgage interest expense it is not tax deductible.

What PMI Will Really Cost You As A Borrower?

On average, mortgage insurance costs about $60 per month per $100,000 of loan amount. A $200,000 mortgage that equals $1,440 per year and you get NO tax deduction for it. More importantly, you also have lost the opportunity to use this money somewhere else. If you structure your mortgage so that you do not have to pay PMI and instead invest just the first 5 years worth of monthly payment savings into your retirement account, over the course of 30 years this money would grow to over $160,000. And this lost opportunity cost of $160,000 plus dollars is the real cost of paying mortgage insurance.

How To Avoid Paying PMI On Your Next Mortgage.

The following methods for avoiding having to pay mortgage insurance can be used whether you are buying a new property or refinancing an existing property. The two most popular methods are:

1) The 80/10/10 or 80/15/5 approach, which stands for an 80% First mortgage, a 10% 2nd mortgage, and 10% or 5% down payment or equity in the property. This is the best method in our opinion and the one we use most often. Since PMI only applies to first trusts or primary mortgages, we structure a first trust to be no greater than 80% of the value of the property, and we then couple that with a second trust for the remaining moneys that are needed. Thereby achieving the total dollar amount needed to make the loan but also waving the need for PMI by keeping the first trust at 80% Loan To Value.

2) Find a lender that will allow you to finance the PMI into your mortgage interest rate. Some lenders will do this and others will not. The idea is simple though. You agree to accept a slightly increased interest rate typically a ¼% increase in your rate and the lender then pays the PMI for you. The advantage of this method is that the money you would have paid in Private Mortgage Insurance is now a part of your interest payment against your loan and is now tax deductible.

Finally, there are many different ways of saving money on our monthly mortgage obligations as well as our other liabilities. This concept of viewing liabilities as part of our overall financial plan is important not only to help us save money but critical for us to be able to achieve financial security.

Finding The Right Home Loan Has Never Been Easier!

How To Avoid Paying Private Mortgage Insurance

What PMI Is?
PMI is an insurance policy required by most lenders when you are putting less than 20% down on a home purchase. Some loans programs even require more than 20% equity before waving the requirement for mortgage insurance.
This insurance pays out to a lender in case you default on your mortgage loan payments and the lender has to foreclose. The policy does NOT protect you if you lose your job or you don’t have enough cash to make your mortgage payment. However, even though you are not protected by the policy, you are the one paying for it; and unlike mortgage interest expense it is not tax deductible.

The Real Cost of PMI To A Borrower.
On average, mortgage insurance costs about $60 per month per $100,000 of loan amount. A $200,000 mortgage that equals $1,440 per year and you get NO tax deduction for it. More importantly, you also have lost the opportunity to use this money somewhere else. If you structure your mortgage so that you do not have to pay PMI and instead invest just the first 5 years worth of monthly payment savings into your retirement account, over the course of 30 years this money would grow to over $160,000. And this lost opportunity cost of $160,000 plus dollars is the real cost of paying mortgage insurance.

How To Avoid Paying PMI On Your Mortgage.
The following methods for avoiding having to pay mortgage insurance can be used whether you are buying a new property or refinancing an existing property. The two most popular methods are:

1) The 80/10/10 or 80/15/5 approach, which stands for an 80% First mortgage, a 10% 2nd mortgage, and 10% or 5% down payment or equity in the property. This is the best method in our opinion and the one we use most often. Since PMI only applies to first trusts or primary mortgages, we structure a first trust to be no greater than 80% of the value of the property, and we then couple that with a second trust for the remaining moneys that are needed. Thereby achieving the total dollar amount needed to make the loan but also waving the need for PMI by keeping the first trust at 80% Loan To Value.

2) Find a lender that will allow you to finance the PMI into your mortgage interest rate. Some lenders will do this and others will not. The idea is simple though. You agree to accept a slightly increased interest rate typically a ¼% increase in your rate and the lender then pays the PMI for you. The advantage of this method is that the money you would have paid in Private Mortgage Insurance is now a part of your interest payment against your loan and is now tax deductible.
Finally, there are many different ways of saving money on our monthly mortgage obligations as well as our other liabilities. This concept of viewing liabilities as part of our overall financial plan is important not only to help you save money, but critical for you to achieve financial security.

In a recent Industry survey it was revealed there are 5 common mistakes most homebuyers make in mortgage shopping that can have a significant impact on the outcome of your negotiations. If handled correctly, these issues could result in a mortgage that will cost you a lot less over a shorter period of time.

Before you commit to mortgage, consider these 5 mortgage tips. And if you do, you can make your mortgage payments work much harder for you.
Tip #1) Get pre-approved for a mortgage before you go looking for a home.

Pre-approval is easy, and can give you complete peace-of-mind when shopping for your home. In fact, you can usually get a written pre-approval at no cost or obligation, and it can all be done quite easily over-the-phone.

Tip #2) Commit to a monthly dollar amount that works for you.

When you discuss your mortgage options with your lender, you’ll not only find out what level you qualify for, but also the monthly dollar amount of the mortgage. Your situation may give you a pre- approval amount that is higher (or lower) than the amount of money you would want to pay out each month. By determine the monthly amount, you won’t waste time looking at homes that are not in your price range.

Tip #3) You should think about your long-term goals to determine the type of mortgage that works best for you.

There are a number of questions you should be asking yourself before committing to any mortgage. Questions like: How long will we own this home? What direction are the interest rates going and how quickly? Is your income expected to change in the near term? The answers to these and other questions will help you determine the most appropriate mortgage.

Tip #4) Make sure you understand what prepayment privileges are and what type of payment frequency options you have.

As we both know, the more frequent payments you make, weekly or biweekly, can literally shave years off your mortgage. Simply by structuring the payments, so that they are paid more frequently, will significantly lessen the amount of interest you will be charged.

For the same reason, authorized pre-payment of a certain percentage of your mortgage, or an increase in the amount you pay monthly, will have a major impact on the number of years you will have to pay and could shorten your payment term considerably.

These two payment options can cut years off your mortgage, and save you thousands of dollars in interest. However, not every mortgage has these prepayment privileges built in.

Tip #5) Ask if your mortgage is both portable and/or assumable.

A portable mortgage (is not always available in every state) is one that you can carry with you when you buy your next home and allows you to avoid paying any discharge penalties. This means that you will not have to go through the entire mortgage process again unless you are making a move up to a much more expensive home.

On the other hand, an assumable mortgage is one that the buyer for your home can take-over when you move to your next home. This can be a very powerful tool at the negotiating table making it much easier and more desirable for a buyer to buy your home, and again saves you any discharge penalties.

Jeremiah Phillips Announces 2006/2007 Compliance Checklist

Jeremiah Phillips of Custom Mortgage Solutions announced today it has released an industry leading 2006/2007 Mortgage Company Compliance Checklist. This checklist was designed as a buyer’s guide to help consumers select a mortgage company with an unbiased scorecard. meets their needs.

A First In The Mortgage Industry. . .

“The industry standards for mortgage companies and their loan officers weren’t stringent enough for Custom Mortgage Solutions so we were forced to develop a 16-point compliance checklist for all mortgage professionals! And with the recent explosion of mortgage companies charging excessive fees for marginal service, it’s become a welcome buyer’s guide by hundreds of consumers and realtors. said Jeremiah Phillips, Senior Vice President of Sales for Custom Mortgage Solutions.
He went on to further say. . .

“Our philosophy is to help our clients make the best possible buying decision when selecting a mortgage. We offer world-class customer service, fast processing speed that literally save our clients thousands. Because of this, we’ve quickly grown to be one of the most recommended mortgage companies by local realtors, CPAs and lawyers in the Southern New Jersey and Philadelphia area.”

Click here for the 2006/2007 Compliance Checklist

Learn more…

About Custom Mortgage Solutions
With more than 10,000 customers and thousands of professionals recommending them, Custom Mortgage Solutions is now known by many experts as the standard in the mortgage industry to follow. Today, more than at any time in the past, the success of any mortgage company hinges on one thing: honesty.

Custom Mortgage Solutions offers various mortgage programs to fit their diverse needs of most potential home owners - such as:

Self Employed
Stated Income and/or Stated Assets
No Income/No Asset/No Employment
Mortgage History Only Program
Bank Statement Only
Rental History Only

Website http://www.todayslendingrates.com

Custom Mortgage Solutions
Jeremiah Phillips
Sr. Vice President
email: jphillips@cmslending.com
phone: (800) 869-2631 Ext 208

How To Avoid The 7 Biggest Mistakes Refinance Shoppers Make

The word count for this e-newsletter is: 460; Approximate time to read: About 2.5 - 3.0 minutes.

Refinancing can be very stressful and costly if you don’t take the time to do your homework. We simplified the process by helping you avoid these mistakes shoppers make in refinancing.
1. Is Your New Interest Rate Low Enough

Make sure that you savings on the new interest rate is low enough to justify the process of refinancing. It is best to decrease your interest rate by at least .75% to 1%. For example, this will save you about $100.00 a month on a $150,000.00 mortgage.

2. Know Your Closing Costs Up Front

By law, closing costs must be disclosed within 3 days of the loan application; however, there are different approaches to calculating them. Closing costs are initially estimated until the details of your specific loan are clear. It is wise to use a worst case scenario and be pleasantly surprised.

3. Be Sure You Fully Understand Your Reason(s) For Refinancing

Some refinance simply to reduce their interest rate. You should be aware that simply reducing your interest rate is not always to your advantage, so make sure that the gains from your rate reduction more than cover the related fees. There are, however, other legitimate reasons to refinance that may not be related to interest rates. Some are debt consolidation, home improvements, or a major purchase. Some of these choices may offer other financial or personal advantages, such as taking cash out to buy a car. In this example, you may be able to deduct your interest payments on your tax return. Always consult an accountant or tax attorney before making these types of decisions.

4. Beware Of “APR” Advertising

“APR” stands for Annual Percentage Rate. Some mortgage brokers use “APR” teaser rates to get your attention; however, they may actually end up costing you more. Such rates are often derived by using a 30 year mortgage coupled with an accelerated payment plan. Most lenders allow you to select such a plan, if you chose. Know your actual interest rate that you will be paying when comparing mortgages.

5. Should I Consider An Adjustable Rate

Adjustable rate mortgages or “ARM’s,” can be very helpful in assisting people into the housing market. They can help minimize your monthly payment, however, in the long run they can cost you more money if additional refinancing occurs.

6. Beware Of The Quality Of Service Provided

You want your refinance to be accomplished with as little hassle and in the shortest period of time. Ask your mortgage broker details of their service plan and performance guarantees and make sure you get them in writing.

7. Not All Loan Officers Are Created Equally

Be sure to ask your mortgage loan officer about all their available loan products, terms and rates. A subtle difference can save or cost you thousands.

Finding The Right Home Loan Has Never Been Easier!

As the #1 most recommended mortgage professional by local realtors, CPAs and lawyers in the southern New Jersey and Philadelphia area, we specialize in finding ways to say “yes”!

Whether you’re dealing with a new home buyer or an existing home owner, a credit superstar or credit challenged – Custom Mortgage Solutions has hundreds of home loan options.

Call today and we can discuss their loan needs sooner vs. later.

Greetings From Jeremiah Phillips,
The word count for this blog is: 351; Approximate time to read: About 3.0 - 3.5 minutes.

Sometimes getting approved for a mortgage can be harder than finding that perfect home. With that in mind, we put together a list of 5 tips to help you get the mortgage you want.
1. Increased Ability To Finance Your Closing Costs

You can now finance up to 100% of your closing costs thanks to recent changes in Federal Housing Administration (FHA) guidelines, compared to the old limit of 97%. This is very good news for the first time home buyer who typically has less cash available at the time of closing.

2. Increased FHA Limits

There FHA loan amount maximums have increased, which is particularly helpful for people living in high cost housing markets. FHA ‘s mortgage limit is now tied to local housing costs. The limit is now 95% of the median home price, or 75% of the Fannie Mae maximum loan amount, which ever is lower. This is another avenue for the first time home buyer to achieve the dream of home ownership.

3. Increased Accessibility To Down Payment Assistance Programs

With the rapid increase in home prices over recent years, more and more people are having the dream of home ownership ripped from their hands. Typically one had to go through a rigorous process to qualify for a down payment assistance program. Today, there are now programs which have very little hassle. Ask your mortgage broker if they have access to such options.

4. Rapid Loan Approval

One of the latest innovations in the mortgage industry is the advent of computerized loan approval. These programs provide both rapid loan approval and more uniform loan approval practices. This type of approval is done by scoring a borrower’s credit worthiness which quantifies the risk they will default on the loan. Does your mortgage broker use such a program?

5. Affordable Mortgages Which Don‘t Verify Income

These loans are perfect for those people who are self employed, real estate investors, retired persons and anyone who doesn’t want to have to prove their income. It is essential to have a good credit score in order to qualify for non income verified loan.

Finding The Right Home Loan Has Never Been Easier!

Whether you’re dealing with a new home buyer or an existing home owner, a credit superstar or credit challenged – Custom Mortgage Solutions has hundreds of home loan options.

Visit my web site or call today and we can discuss their loan needs sooner vs. later.

Happy 4th of July!!!

Remember not so long ago, when you could make your fortune in real estate. It was nothing then to buy a home, wait a short while, and then sell it at a tidy profit.
It’s more critical than ever to learn how to avoid costly seller mistakes in order to sell your home fast and for the most amount of money.

Selling your home is one of the most important steps in your life. This 9 step system will give you the tools you need to maximize your profits, maintain control, and reduce the stress that comes with the home- selling process:

1. Know Why You’re Selling, And Keep It To Yourself

The reasons behind your decision to sell affect everything from setting a price to deciding how much time and money to invest in getting your home ready for sale. What’s more important to you: the money you walk away with, or the length of time your property is on the market? Different goals will dictate different strategies.

However, don’t reveal your motivation to anyone else or they may use it against you at the negotiating table. When asked, simply say that your housing needs have changed.

2. Do Your Homework Before Setting A Price

Settling on an offering price shouldn’t be done lightly. Once you’ve set your price, you’ve told buyers the absolute maximum they have to pay for your home, but pricing too high is as dangerous as pricing too low. Remember that the average buyer is looking at 15-20 homes at the same time they are considering yours. This means that they have a basis of comparison, As a result, the home will sit on the market for a long and buyers will think there must be something wrong with your home.

3. Research Current Home Prices In Your Neighborhood

(In fact, your agent should do this for you). Find out what homes in your own and similar neighborhoods have sold for in the past 6-12 months, and research what current homes are listed for. That’s certainly how prospective buyers will assess the worth of your home.

4. Find A Good Real Estate Agent To Represent Your Needs

Nearly three-quarters of homeowners claim that they wouldn’t use the same realtor who sold their last home. Dissatisfaction boils down to poor communication which results in not enough feedback, lower pricing and strained relations.

5. Maximize Your Home’s Sales Potential

You may not be able to change your home’s location or floor plan, but you can do a lot to improve its appearance. The look and feel of your home generates a greater emotional response than any other factor. Clean like you’ve never cleaned before and fix everything, no matter how insignificant it may appear. Present your home to get a “wow” response.

Allow the buyers to imagine themselves living in your home. The decision to buy a home is based on emotion, not logic. If you follow them around pointing out improvements or if your decor is so different that it’s difficult for a buyer to strip it away in his or her mind, you make it difficult for them to feel comfortable enough to imagine themselves an owner.

6. Make It Easy For Prospects To Get Information On Your Home

You may be surprised to know that some marketing tools that most agents use to sell homes (eg. traditional open houses) are actually not very effective. In fact only 1% of homes are sold at an open house.

Furthermore, the prospects calling for information on your home probably value their time as much as you do. Make sure the ads your agent places for your home are attached to a 24 hour prerecorded hotline with a specific ID# for your home which gives buyers access to detailed information about your property day or night 7 days a week without having to talk to anyone. It’s been proven that 3 times as many buyers call for information on your home under this system.

7. Know Your Buyer

In the negotiation process, your objective is to control the pace and set the duration. What is your buyer’s motivation? Does s/he need to move quickly? Does s/he have enough money to pay you your asking price? Knowing this information gives you the upper hand in the negotiation because you know how far you can push to get what you want.

8. Make Sure The Contract Is Complete

For your part as a seller, make sure you disclose everything. Smart sellers proactively go above and beyond the laws to disclose all known defects to their buyers in writing. If the buyer knows about a problem, s/he can’t come back with a lawsuit later on.

Make sure all terms, costs and responsibilities are spelled out in the contract of sale, and resist the temptation to diverge from the contract. For example, if the buyer requests a move-in prior to closing, just say “no”.

9. Don’t Move Out Before You Sell

Studies have shown that it is more difficult to sell a home that is vacant because it looks forlorn, forgotten, simply not appealing. It could even cost you thousands. If you move, you’re also telling buyers that you have a new home and are probably highly motivated to sell fast. This, of course, will give them the advantage at the negotiating table.

Finding The Right Home Loan Has Never Been Easier!

As the #1 most recommended mortgage professional by local realtors, CPAs and lawyers in the southern New Jersey and Philadelphia area, we specialize in finding ways to say “yes”!

Whether you’re dealing with a new home buyer or an existing home owner, a credit superstar or credit challenged – Custom Mortgage Solutions has hundreds of home loan options.

Call today and we can discuss their loan needs sooner vs. later.

What are values in your area doing??

Across the board as a lender and someone who sees a lot of appraisals - we have seen the trend of 10-15% increases in values in a one year term deminishing to a point and current homeowners trying to sell there home having to decrease the sales price of there home just to be able for a buyer to get financing. In order to get financing someone looking to purchase a home the home has to appraise for the sales price in most cases for the buyer to be able to afford to buy the house.

Here are some ways to help improve the value of your home.

Like most Americans, your home is probably your single largest investment. While the value of your home is largely determined by such things as location, size, condition and amenities, there are still steps you can take to maximize its worth.

First, you need to evaluate your plans carefully if you’re improving your home to put it on the market. Cutting corners could hurt rather than help your prospects, but you don’t want to go overboard either. Your home’s value should be no more than 20% above the average. That means a $10,000 kitchen improvement project might be a better idea than a $10,000 hot tub, especially if no other homes in your area have hot tubs.

In other words, it’s best to keep changes simple.

Here’s a list of remodeled projects that buyers are likely to find valuable:

Add a bedroom: Three- and four-bedroom homes are most desirable.

Install a master bathroom: When a bedroom has a bathroom, it means extra value.

Install a new shower: A new shower says a modern home.

Change your fixtures: Get a faucet that adds a decorative element to the bathroom.

Re-grout the tile: If the tiles are in good shape a new grouting does wonders.

Install new kitchen cabinets: Even just a paint job and some new handles will give your cabinets a fresh look.

Improve functionality: If you’ve got the space, an island is the way to go. New appliances make a difference too.

Expose the floors: Remove old carpet and show off the original floor. If you don’t have hardwood floors, consider new carpeting.

Install new doors: Doors set off a room and make a great difference.

Paint the interior: A new paint job speaks volumes. Good colors to use are white, off-white, and a light yellow.

Add new light fixtures: Replace any that are damaged or out-of-style.

Add a fireplace: Even if you don’t plan on using it much, it adds great value.

Take advantage of unused or underused space: If you can convert a basement or attic into a useful room, do it.

Landscape: A few strategically located plants and a neat-looking yard will impress.

Add a deck: It’s a great use of exterior space because it increases your total entertainment area.

Dress up your porch and entrance: A freshly painted door with a new door handle can bake a great first impression.

Replace the windows: New windows not only give your home a new look, they can also lower your energy bill.

Remember, when it comes to your home, it’s important to keep pace with your neighbors. Don’t let your home become the most expensive on the block - but don’t fall behind either. This is a case where it’s best to be right in the middle!

Rates are on the rise and nobody likes it. Being able to offer someone a low 6% rate has quickly vanished. Also seeing the prime interest rate continuing to rise is hurting even me with a Home Equity Line of Credit. Luckily there are ways around it?

Do you see the rates leveling off anytime soon? What are your thoughts.

Here are six ways to prepare yourself to come out ahead:

1. If you’re only making minimum payments on your credit cards, start paying more. If you can’t come up with the money to increase your payments, start budgeting or tighten your existing budget, cut spending, and pay down credit card debt with the money you save.

2. Don’t be fooled by your “fixed rate” credit cards. Your credit card company legally must only give 15 days written notice before raising your rate. Even so, if interest rates are expected to increase and you haven’t already transferred your balances to lower-rate cards, you should consider doing so, looking for those that promise a low rate for a specific period of time. For advice on the fastest way to reduce your credit card debt, see Get Out of Debt Now.

3. If you have a home equity line of credit, consider taking out a home equity loan to repay it if interesst rates are expected to rise. Since interest rates on home equity lines of credit are tied to the prime rate, if rates rise, so will the interest on your loan. Depending on how much you borrowed, this could quickly become a payment you can’t afford, and your house is at risk. By replacing the home equity line of credit with a home equity loan, you lock in a lower interest rate.

4. If you have an adjustable rate mortgage, and you plan to be in your home for at least five years, consider refinancing to a fixed rate mortgage when rates are expected to rise.

5. As mortgage interest rates rise, you’ll be able to afford less house for your money, so if rates are expected to rise and you’re in the market for a house, consider stepping up your house-hunting efforts. Be sure to research real estate trends in your area so you don’t buy at a period of inflated home prices.

6. If you’re in the market for a new car, consider accelerating your plans before interest rates rise, possibly taking advantage of zero percent financing. These offers often disappear as rates rise.