Know the pitfalls of refinancing....

The TV and radio ads make it all seem so easy. Walk into a lender's office, refinance your home loan at a rock-bottom rate, and walk out with a lower monthly payment.

Here's a little tip: It's not so easy.

If you know the pitfalls, you can at least prepare for them - and perhaps chart a wiser course. A few issues that could have your application earmarked for the ‘Rejected' pile:

1. Heightened credit score demands

If you're refinancing, that means you've successfully secured a home loan already. But since then, lenders have started to demand near-pristine credit scores. "Now to get access to the lowest rates, you need a FICO score above 740," says Keith Gumbinger, VP of mortgage information site HSH.com.

Not quite the perfect score of 850, but still quite challenging to achieve. Credit scorer FICO does not break out the average number for refi applicants, but the national average is 690 -- well below what will get you prime lending rates.

2. Low appraisal

While interest rates have gone down, so have U.S. home values. The average home value dropped a third from the start of 2007 to the start of 2012, according to housing analytics firm Fiserv. For refinancing, that's a problem.

Chicago's Jesse Raub and his wife have owned a home for about three years, and recently started the refi process. But then the appraisal came in low.

"Beware that the appraised value of your home may not be what you think it should be," says Raub, 27, who's a trainer and educator for Intelligentsia Coffee. "Our new mortgage amount was close to the total value of the home - which required us to get mortgage insurance as well."

3. A home equity line of credit

You may have forgotten that you once took out a home equity line of credit. You may have not even touched a penny of it. But it could still derail a refi, because it means another lender has a claim on the value of the home.

"If you're refinancing your first mortgage, the lender of the home-equity line has to agree to that," says Mike Fratantoni, vice president of research for the Washington, D.C.-based Mortgage Bankers Association.

Essentially, that lender needs to sign off on being second in line, and agree that the primary mortgage will always be paid off first (in the event of a foreclosure, for instance). "There may be fees associated with that, and so a home-equity line of credit is one more thing that could make a refi more difficult."

4. Condo or co-op troubles

If lenders are going to fork over hundreds of thousands of dollars, they don't want any issues to make them nervous. And when the property is subject to decisions of an unpredictable board of directors, that can make them nervous.

"Any number of issues might trip you up," says Gumbinger. "If the building finances aren't in good shape, or if the insurance isn't paid up, or if there are any units in foreclosure, or if there are any lawsuits against the condo association, or if the building is comprised largely of renters. All kinds of fun stuff can arise."

5. Timeliness requirements

Banks want to see the most up-to-date financial information possible before they sign off on a mortgage. But they also have a tendency to ask for document after document after document regarding your financial situation. If the refi process has ballooned to 60 or even 90 days, but they require documents from the last 30 days, that could put you on a carousel of paperwork straight from the ninth circle of hell.

So get out your yoga mat, breathe deeply, and have a mantra ready. You're going to need lots of patience. "Expect the worst," advises Erin Lantz, director of the mortgage marketplace for real estate site Zillow.com. "If you come to terms with that at the beginning, it will remove the stress later on."

(Follow us @ReutersMoney or finance/personal-finance">here Editing by Beth Pinsker Gladstone)
By Chris Taylor; NEW YORK; Sat Oct 13, 2012 9:00am EDT


Yes, at MIG have these issues too. But we know what we are doing and routinely get our clients closed in 20 - 40 days. Call or reply to this email if we can help.

Fee Increase to Impact Home Loans

The Federal Housing Finance Agency (FHFA) has again increased the guarantee fee they charge to lenders delivering loans to Fannie Mae and Freddie Mac. This is important to know, as this increase has a rippling effect that will impact the cost of mortgage financing.

Here's what's happening and what it means to home loan rates:

What exactly is this "g-fee"? The guarantee fee or "g-fee" is an amount charged by mortgage-backed securities (MBS) providers, like Freddie Mac and Fannie Mae, to help protect against credit-related losses in the overall mortgage portfolio. In other words, it acts a lot like insurance and helps lower the overall risk...which means home loans can be offered at terrific interest rates to borrowers that have good – but not perfect – credit.

What exactly is the impact of the rate increase? The increase will impact loans with different amortizations in different ways. For example, for a $200,000 home loan, the increased g-fee (assuming a .125% increase in rate) would equate to $250 more per year in interest, or $7,500 more over 30 years. Someone buying or refinancing a home can certainly choose to buy down the cost with cash up front – but most folks will not do this.

Why is the guarantee fee being increased? FHFA has increased the guarantee fee to collect more revenue to enhance the safety and soundness of the Government Sponsored Enterprises (GSEs), and perhaps indirectly encourage private firms to participate in the mortgage market.

Who will this impact? The change will impact all new borrowers using Fannie Mae and Freddie Mac loans.

When will it start? Officially, the increase to guarantee fees will begin on December 1, 2012. However, Fannie Mae will also be making adjustments to pricing for those loans that are committed on or after November 1, 2012. It’s important to note that the increase is already being seen in rate sheets right now, since home loans being originated now will likely not be closed, pooled and securitized until December and therefore will need the increased g-fee priced in earlier.

The bottom line is that the g-fees will be going up...and this will impact homebuyers looking to obtain a home loan through Fannie Mae and Freddie Mac.

~Mortgage Market guide

P.S. I am told that most if not all companies have already reflected this is this in their pricing. And as you know the rates are still amazing. But bottom line it is another case where big government is getting paid by you and you probably didn’t even realize it.

Learning To Use Credit Wisely

While we were driving back to Nashville, we listened to the “Dave Ramsey show”, which I haven’t done in a while. I think he does a tremendous amount of good, except if you follow him completely you will wind up without a credit score. He teaches folks to live without credit and I believe people should learn to manage credit.


He does that because there are a lot of people who will never manage it. They fall victim. So credit may be  similar to addiction to alcohol, gambling or tobacco. You just learn to use it, not abuse it.

He also talked about all the good people trying to talk to the major mortgage servicing companies about missed payments, late payments, short sale approvals and the like. He used their names which I will avoid. He points out that the person receiving the calls hates their job and for the most part doesn’t want to be there. That is probably why they aren’t there the next time you call. They found a better job and moved on, leaving you to talk to someone who could care less. He just says to keep trying, but lower your expectations. And if they tell you you have to be late or skip payments, don’t listen. You just hurt yourself more in the long run.

If you want someone to talk to, to find out if you have options, please give me a call at 615-777-4663 or send me an email at george.margrave@migonline.com, I am here to help in any way I can.

Meet Our Newest Team Member

This week I am pleased to announce that I have added a new member to my team.  You may know him from past times at MIG.  He is David Baker.  It will be his job to do everything that will make our clients continue to believe that no one can give better service than the George Margrave team at MIG.  He comes in with experience with a lot of the things he needs to know.  The rest he will pick up quickly. Welcome him when you get a chance.  You can reach us at 615-777-4663.

TN Closing Costs Are Average for U.S.

Origination and title costs on a $200,000 mortgage averaged $3,754 nationwide, down 7.4 percent from 2011, based on Bankrate's annual survey. Origination fees declined 1 percent; while title and closing costs shrank nearly 12 percent. For the third straight year, New York had the highest closing costs at $5,435, followed by Texas at $4,619 and Pennsylvania at $4,467; while Missouri, Kansas, and Colorado had the lowest closing costs at $3,006, $3,193 and $3,199, respectively.

The average closing cost on a $200,000 mortgage in Tennessee in 2012 is $3,747 (in line with the national average) -- $1,587 for origination fees and $2,160 for title and closing costs.

Bankrate.com surveyed up to 10 lenders in each state in June 2012 and obtained online good faith estimates for a $200,000 mortgage to buy a single-family home with a 20 percent down payment in the state's largest city. Costs include fees charged by lenders, as well as third-party fees for services such as appraisals and title insurance. The survey excludes taxes, property insurance, association fees, interest and other prepaid items.

To see results for the entire U.S., go to: http://www.bankrate.com/finance/mortgages/2012-closing-costs/closing-costs-by-state.aspx

[SOURCE: Bankrate.com]

Call me at 615-777-4663 or email me at george.margrave@migonline.com .

Check out our credit tips at www.youtube.com/teammargrave

MIG Took 4th Place in TN in Market Share Gain

• Statewide Market Share Gain—MIG took over the 4th place in statewide market share for the first 6 months of 2012. AND we are only $25M behind SunTrust to move up another position. I feel confident that we can pull it off in the next 6 months.


• Great Customer Survey Responses for June—we had our highest response rate yet with 24% of closed loans responding. My personal belief is that customers respond to “satisfaction surveys” when the experience is really great or really poor. The fact is proven in our rising response rate. I would put these results up against any competitor in the state.

• Survey responses

o 98.4% rated the LO good or excellent

o 100% rated the processor good or excellent

o 96.1% stated documents were ready on time

o 96.9% stated clear where to make first payment

o 97.6% expected or better than expected overall experience

o 97.6% good or excellent total experience

o 97.6% would recommend MIG to others

~~~From Steve Smith

You can reach me at 615-777-4663 or via email at george.margrave@migonline.com if you would like to find out what we can do for you or to chat about these numbers.

Mortgage Insurance

This week's topic is so important, but it makes some people's eyes glaze over. It is Mortgage Insurance. It is rare that a loan is made (that does not show 20% equity or down payment) and you don't see mortgage insurance. It is probably the most important thing to talk to me about when you call about a mortgage. It may be more significant than the interest rate. With all the defaults in the housing industry we have seen huge changes in MIP, PMI, Funding Fees, Guarantee fees etc. The only plus is PMI (which is the conventional loan version) is showing signs that are positive. For it you need 5% of your own money or equity and 720 plus credit scores. If you have that I can show you how to save money. But if you don't, it isn't worth waiting . You might miss these great interest rates.



Call me at 615-777-4663 or email me at george.margrave@migonline.com to discuss your options.

Is It Hard to Get a Mortgage?

I know that you have all heard that it is tough to get a mortgage approved. Well it is, but mostly it is common sense regulations that are designed to create good mortgages for good borrowers and home owners. The kicker is that so many of my so called peers at my competitors don’t know what they are doing. They are driving their clients insane. They don’t answer their questions and if the news is not good they don’t deliver the message, much less solve the problem.


I and my team pride ourselves in recognizing and solving issues. We don’t bat 100%, but we do well if I do say so. Every month we wind up saving someone’s purchase or refinance when some other lender just didn’t know what to do. My 27 years is good for something. :)

Email me at george.margrave@migonline.com or call me at 615-777-4663 for more info or to chat about it.

Credit Inquiries and What They Mean

We get many questions about how many points are affected by a credit inquiry. This is a simple yet difficult question to answer. Let me explain. There are two types of inquiries that a person must take into consideration. Here is a look at both of them:


Soft Inquiries: These do not affect your credit score and thus you don’t have to worry about them. They are reported on your credit report which confuses many people. A soft inquiry, or “soft pull” as we refer to them, are harmless in nature. There are many examples. Here are a few:

1) You have a credit card and you see they have pulled your credit. This is done by your credit card company to see if you have missed paying any of your other financial obligations. If you have been late, this allows them to increase the interest rate on your credit card per your agreement! Very few people notice this when they open a credit line because they don’t read the agreement.

I know what you’re saying: what does a late payment on some other line of credit have to do with my payment history on this credit card? Yes it’s unfair but non-the-less reality.

2) Pulling your free annual credit reports at www.annualcreditreport.com. Again, these don’t affect your score and is something everyone should do once a year. The credit reports are free but you have to pay a fee if you want the score.

3) Lending institutions regularly pull your credit for “pre-approved” offers. You know the main culprits here—usually credit card companies that want your business.

4) A few other examples are when you apply for employment or by landlords for renting or leasing an apartment or a house.

Hard Inquiries: Ok, these are the only ones you have to worry about. When I talk to clients I make it simple by telling them if you apply or initiate an application for a vehicle, credit card, line of credit or a mortgage etc… then it is factored into your credit score.

From my experience many people get into trouble with inquiries when they are making purchases at major department stores or other large businesses. At checkout the clerk tells them they can get “15% off this purchase” if they apply for a credit card or line of credit with that business. Do not do this! Department store cards are not rated the same as major credit cards and the interest rates are usually much higher!

Finally, keep in mind hard inquires stay on your report for two years but are most often only factored into your score if they are within the last six months.



From Thomas McGee

By the way T-minus 12 on the increased MIP. Call me so I can help you avoid it.

You can reach me at 615-777-4663 or via email at george.margrave@migonline.com

Higer MIP Coming April 1, 2012

No, that is NOT an April Fool's joke, but you can bet it really looks like one.

The FHA announced that it is raising Mortgage Insurance Premiums (MIP) for FHA mortgages. These increases will only impact new FHA loans and DO NOT impact existing FHA borrowers. The MIP changes can be summarized as follows:



* Upfront MIP increase by 0.75 points to 1.75%. The UFMIP as is the case now can be financed into the mortgage. This change is to be effective from April 1, 2012.


* Effective April 1, 2012 FHA is also increasing its MIP by 10 bps as required by the Temporary Payroll Tax Cut Continuation Act of 2011.


The FHA estimates these changes will add over $1 billion to their fund based on their volume projections through September 30, 2013.


We will have additional details as soon as possible.


From Jesse Lehn, MIG

Remember you can always reach me at george.margrave@migonline.com or http://www.mignashville.com/ or by phone at 615-777-HOME (4663). 

Reverse Mortgages

We haven’t talked about reverse mortgages lately. In the right situation they are wonderful. All of a sudden our client has no house payment (except taxes and insurance). In some cases they may even get a payment to them in the form of a lump sum of cash or other bills paid off. There is no credit check so credit is not a factor. The equity in the home and the borrower’s age are the main factors. If you have a friend that is interested send me the address and birth date and we can give you a rough idea.


You can reach me at 615-777-4663 (HOME) or email me at George.Margrave@migonline.com