The Mortgage Men

I have been hearing about a $7,500 tax credit. Who is eligible to claim the $7,500 tax credit?

2009-02-12T07:13:00.000-08:00

Ken Kolodziej says-
Dan Burrell in Virginia Beach, VA asked, "I have been hearing about a $7,500 tax credit. Who is eligible to claim the $7,500 tax credit?"
The current 900 billion dollar stimulus package recently passed by both House and Senate and the final compromised bill expected to be presented to the President by 2-16-09 which he said he will sign changes everything for this tax credit rules and regulations.
As for right now please check out ActiveRain's 7500 Tax Blog for eligibility info.

How do you think the inauguration of President Barack Hussein Obama will change/affect the housing market? And do you think he will restrict or expand

2009-01-30T12:21:00.000-08:00

Ken Kolodziej says-
Miss Laraine Grubbs in Suffolk, VA asks, "How do you think the inauguration of President Barack Hussein Obama will change/affect the housing market? And do you think he will restrict or expand the involvement banks and Wall Street have on real estate?"
He has many programs earmarked to assist sagging housing market in his proposed 850 billion dollar stimulus package. He does not have it yet; congress must pass it. Assuming that he gets the OK from congress, he will try to postpone foreclosures. Foreclosures have a devastating effect on house values and dampen consumer confidence. He will try to stimulate economy and consumer confidence by tax cuts, creating jobs and stabilizing the housing market. The stability to the housing market will be achieved when consumer confidence is restored. To accomplish this, all other pieces of the puzzle must fit. There is no magic formula for this, but create one piece of the puzzle at time to fit, and that is not an easy task.

He does have an access to second half of initial 700 billion stimulus package which was passed previously under Bush administration. Spending of first 350 billion did not have an expected result. Previous administration dished out the money without any string or accountability of effort by recipients to stimulate the economy. As a result most of the money ended up in banks, Wall Street and insurance companies which never circulated back to consumers as intended. The new Administration has already stated that remaining money will be spent differently. They will make recipients of the money accountable and use the money for what it is intended for: money circulation. Treasury will buy bad assets from financial institutions which in turn should free up money for them to lend which should start circulation of money.
Thank you Laraine for this beautiful question!

Straight Talk

2008-12-15T08:51:00.000-08:00

Ken Kolodziej says-
Want some straight talk about home mortgage loans? I have found some interesting and easy to understand information on a blog called Picket Fences Home Loans.com. Sometimes I know I am having a day where my brain is not functioning correctly and I can't even remember what my phone number is! So I turn to places like this to help me get out of my funk quickly!

What do I need to have with me when I come to get pre-qualified?

2008-10-13T07:06:00.001-07:00

Ken Kolodziej says-
Pharrell Jenkins in Norfolk, VA is finally ready to purchase a home. After working long and hard to provide for his family he takes a big sigh of relief because all he needs to know now is, "What do I need to have with me when I come to get pre-qualified?!"
If you are employed, you should bring with you: W-2s from the previous 2 years and pay stubs from the last 30 days, copies of your bank statements, and copies of your latest statements for any other asset such as an IRA, 401-K and brokerage accounts. Also, bring with you a list of liabilities: name of creditors, balance and monthly payment. If you are self-employed, bring your last 2 years of Federal Tax Returns in lieu of W-2s and pay stubs.

My cousin went into default and an investor wanted to pay off her mortgage or something. Why??? What does he get out of it?

2008-10-13T06:47:00.000-07:00

Ken Kolodziej says-
Alex Lebonin in Roanoke, VA is faced with difficult times. She recently asked, "My cousin went into default and an investor wanted to pay off her mortgage or something. Why??? What does he get out of it?"
Sometimes, when a mortgage goes into default, rather than letting a mortgage go into foreclosure, the lender may be willing to "renegotiate" the mortgage. They may be willing to lower the interest rate or forgive a portion of the loan balance. They do this sometimes depending on circumstances because it may work out to be more cost effective for them to avoid a foreclosure, which can be very costly for everyone.

I guess you could say that the homeowner makes out in this case.

But there was more to this story!
She replied, "This was not a lender. It was an investor. And the homeowner DID NOT make out. She is going to lose everything. The question I am asking for an answer to is, what does an 'INVESTOR' get out of buying off a mortgage in default."
Oh you are talking about a con man! They are not investors, they are predators who happened to have some money. They look for homeowners who are in a stress situation and are behind in their mortgage payments; offering to take your troubled mortgage off your hands. Be very careful in dealing with these people. Even though they tell you that they are going to pay off your mortgage; after you transfer your property to them they usually don’t do it until, absolutely necessary and/or if they think that they can make some money. Meanwhile you no longer own the property, you will be out on the street and your credit may be worse than before. I know of cases where these so called 'investors' have taken possession of a home and collected rent until the mortgage was foreclosed. Of course, it didn’t affect them because the transfer deed was never recorded.
They will go through with it only if they can turn around and sell the house to make a profit.

What is the point of Mortgage Insurance and do I need it?

2008-10-06T14:57:00.000-07:00

Ken Kolodziej says-
Tiffany Hall from Chesapeake, Virginia wants to know, "What is the point of mortgage insurance and do I need it?"
Mortgage insurance protects lenders from default by borrowers. There are two types of mortgage insurance programs. One is FHA Mortgage Insurance. This is required by the Federal Housing Administration (FHA) for all FHA residential loans except for 15 year loans with more than a 5% down payment. The other is Private Mortgage Insurance for conventional loans. Typically, mortgage insurance is required by lenders for all conventional loans with less than 20% down payment.

As I said, mortgage insurance insures lenders in the event the borrower defaults on payment and ends up foreclosing on the property. When the foreclosure is completed, the lender turns the property over to the FHA or Private Mortgage Insurance Company and, depending on the type of loan on the property, they will get their money back. However, private mortgage insurance companies have the option to either accept the property and pay off the lender or pay the lender anywhere from 23% to 35% of the unpaid balance and tell the lender to keep the property.

By requiring mortgage insurance on a loan, lenders are willing to make loans with very little down payment. The FHA minimum required down payment is 3.5% effective 1-1-08, and for a conventional loan, it is 5%. Of course, there is a cost associated with mortgage insurance called a mortgage insurance premium, which the borrower pays. The cost of the premium will depend on the down payment. The more borrowers put down, the cheaper the premium will be, except for with an FHA loan. The annual premium for an FHA loan is 0.55% of outstanding principal balance.

Why did I receive a notice of default?

2008-10-02T14:44:00.000-07:00

Ken Kolodziej says-
Adriana Cruz from Richmond, Virginia recently sent in her question, "Why did I receive a notice of default?"
This may seem like an easy question, but I am still asked this a lot. Assuming that you did send in your payment. It could be that your payment and the default notice crossed in the mail. Remember that your payment is due on the 1st of each month, although you are given a 15 day grace period before the late charge is assessed. Some lenders will send out a default notice if the payment is not received by the 10th of the month. Also, please keep in mind that the criterion is the receipt of your payment by the lender, not when you mailed it. Good luck.

Mr. Kolodziej. Is everything going to be okay now that the government has assumed the $70 billion deficit?

2008-09-25T14:10:00.000-07:00

Ken Kolodziej says-
Another great question from our hometown Virginia Beach, VA. Trey French asks, "Is everything going to be okay now that the government has assumed the $70 billion deficit?"
I assume that you are referring to a proposed 700 billion dollar package that the current administration presented to Congress last Friday, that they are working on now (9/25/08). I don't know that everything is going to be okay, but I know for sure that they need to do something and do it quickly. By buying bad mortgage securities from banks and institutional investors, which nobody wants to buy today, it will restore their liquidity position so that they can lend again. Also, it should boost moral and confidence in the financial sector of our economy, which we need. We cannot tell the potential impact until we know what the finished product with all the bells and whistles attached to it will consist of. Let's revisit this subject in a couple of days after the compromised agreement is reached. This is a good question, one that is relevant and interesting. This will be one for the history books.. or at least Wikipedia!

What is my price range for buying myself a home?

2008-09-24T10:53:00.000-07:00

Ken Kolodziej says-
This question came all the way from Mr. Micheal Eisen in San Diego, CA. He asked, "What is my price range for buying myself a home?"
This is a loaded question. It depends on many factors such as your income, length of employment, debts, credit scores and assets. Market interest rates and the type of loan will also affect your affordability. The best suggestion I can make is to contact a reliable mortgage professional and let him run a “pre-qualification” for you. Be prepared to provide him with the pertinent information I stated earlier, and he can give you a price range for purchasing a home. You are welcome to contact me and I will gladly provide that service for you. Just click Old Virginia Mortgage, under the affiliates section for my contact information.
Along with how much you can afford you should also consider your "lifestyle". Do you like to take vacations? If so, consider a lower priced house. Do you have kids on the way? Maybe a more expensive house located in a great neighborhood is more important.
But for an easy starting point. Use the 2.5 rule. Which is your gross yearly income times 2.5. Which will give you the highest possible cost of home that you can afford including down payment.
If you want a rough estimate, and I stress rough estimate becuase there is a lot of room for tweaking loans left out of this method go to Ginnie Mae and use their loan calculator.

What is FICO?

2008-09-23T09:54:00.000-07:00

Ken Kolodziej Says-
Thank you for this beautiful question from Ann H. in Manns Harbor, North Carolina. She asks, "What is FICO?"
FICO is defined as: credit scores issued by the three major credit bureaus in the US. These credit bureaus are Equifax, Transunion and Experian. A credit score is a mathematical model that analyzes information on your credit report. The numbers that represent your score range from 300 to 850. The higher the number the better the overall credit. FICO credit scores are mathematically calculated by analyzing payment history, types of credit, length of credit, balance of credits(usage) as compared to available credit line and the accumulation of debts from the last 12-18 mos.

What are MY credible sources of income for obtaining a loan?

2008-09-23T09:02:00.000-07:00

Ken Kolodziej Says-
First off, thank you, Meghan from Virginia Beach, Virginia, for asking "The Mortgage Men", our first brain-buster! Meghan wants to know, "What are her credible sources of income for obtaining a loan?"
This is an easy question to start off with because it is a black and white subject. YOUR credible sources are as follows:
Salary, hourly wages or commission. Income (must cover 2 years), trust funds, interest income and capital gains if continuance can be established.