My New Blog

You have been listening to these infamous prognosticators, but you are still just as confused as you have ever been!  What are you supposed to do?  Should you lock now, or should you wait?  Should you buy discount points, or should you get by with the minimum expense?

All of these questions are TERRIFIC!  The bottom line is this.....no one REALLY knows how to advise you!  Right now, the market is in flux.  The Federal Reserve has artificially brought about a reduction in short term interest rates; however, it has caused a lot of skepticism among investors.  With some lenders tightening guidelines, and others getting out of the mortgage industry all together, it has created a marketplace that requires professionals!  Who REALLY knows what to do to get the best terms available?

I have a CRAZY set of theories.  Are you ready for these?  

The "Refinance" transaction:

a)  Is the new rate lower than your current rate?

b)  Does your payment savings recoup your costs? 

c)  How long will it take?

If you can recoup the costs of refinancing your current mortgage in one third (1/3) of the amortization schedule, you should refinance your loan.  For example, you are refinancing your home at 5.50% for 15 years.  Your closing costs total $5,000.00.  Your payment savings each month are $75.00.  Over the course of the next 5 years (1/3 of your new 15 year mortgage), you will save $13,500.00.  YOU SHOULD DO THIS LOAN!!!

The "Purchase" transaction:

a)  Is the interest rate reflective of your credit?

b)  Is the interest rate reflective of your equity position?

c)  Does it fit YOUR budget?

If you have excellent credit (a middle credit score in excess of 740), you should definitely qualify for most mortgage products available today.  If you have a down payment in excess of 20%, you should qualify for most mortgage products available today.  The remaining qualifying condition is YOUR debt ratio.  Most lenders prefer to see that your total housing payment ratio (principle, interest, taxes, insurance) PLUS the total of your remaining monthly obligations do not exceed 40% of your gross monthly income.  If you meet ALL of the above mentioned criteria, you will qualify for the best terms and conditions available for a specific product.  If you do NOT meet all of the above mentioned criteria, you may qualify for an alternate program.  It takes all of the pieces to determine the final picture!  If it all fits, SECURE THE LOAN!!! 

That's all for now.  Come back to this blog often.  I will do my best to bring you the information that is relevant to your mortgage needs!!!  THANKS!!!

Steve Smith, President of A.C.L. Mortgage Services, L.L.C.

Email address:  steve@acl-mortgage.com