Mark Clemens Help for Home Sellers and Buyers MN / WI

Why does it cost so much more for the second mortgage in an 80/20 transaction?

Many times the second mortgage in an 80/20 program is in excess of 10% and many times as high as 12%. Generally it is charged by the same bank that agreed to do the first.

These rates sound very high especially to those whose FICOs are above 640. The reason they are high is that a default in the first two years will make it nearly impossible for the bank to recover. In essence then, the bank is willing to take this risk if you are able to pay an extra $200-300 mo.

Should I apply for 100% financing?

You should never apply for 100% unless you have to. It typically costs you more money in the long run to do so, though higher credit scores do make this less economically problematic. The thing to remember is that decreasing equity results in increased risk. That always translates to increased interest rate.

Because of the higher rate, many buyers will be declined because of the loan to value ratio. Sometimes only $200-300 per month will tip the scales. That is often the difference between 100% financing and 95%.

Do you help out of town buyers?

I help out of town buyers, in town buyers, buyers from Austrailia etc. A buyer is a person in need of house to fall in love with. That is EveryPerson. But I am best able to help buyers if they know that they want to live in W StPaul, Mendota Hts, Mendota, Lilydale or Sunfish Lake. These areas are within 3 miles of where I live and are ones in which Carol and I have been to semmingly every open house for the last 3 years. That is an exaggeration but........

Corporate people needing to be close to 494 for access to places such as 3M, the Mall of America, Bloomington or Edina are encoraged to start communicating 6 months before they need to move. That will give both us a chance to determine if we can work together optimally. It should also narrow down the options to less than 5.

Is it a bad idea to "fall in love" with a house?

It is not a bad idea to fall in love with a house. In fact it is THE thing that you should do. Never settle for less. Make an interim purchase if you must but know that it is only an interim purchase and then do what you must to acquire the home of your dreams.

People who have trouble with "falling in love" with a house may believe that they shouldn't for philosophical reasons or that they will never be able to find and/or afford that "one and only" residence. This type of thinking may be appropriate on the basis of a current pay scale or of a need to keep from becoming attached to material things.

Separating out realistic thinking from idealistic dreaming is what a good realtor can help with. Helping you to ultimately acquire what you really want and what you actually can afford is what every true realtor should be about. But, keep in mind that with a strong mortgage background, I may be able to open up some doors that others can't.

Is there such a thing as "The Bank"?

There is no such thing as "The Bank". People who use these words believe that all banks are alike in what deals they will and will not do. Of course no bank will do an illegal transaction, but this is not what's meant.

Typically "The Bank" is one of many similar but different instituions that said "No" to you at a given point in time. This really means "An underwriting department that declined your request on the basis of the way that it was presented". In other words, even the bank which said NO to you before might have said YES if I were the one who had presented your documents.

Unless you are asking for 80 % of the purchase price, have a 700 credit score and 2 yrs of adequate W2s, your loan will require some expert work. That's why you should let me help.

What is the most common mistake that a buyer can make?

The most common mistake made by buyers, whether they are first timers or veterans, is to assume that they are able to afford (or not afford) whatever they may want. In other words they really do not know what they qualify for.

The only way to know for sure is to become pre-approved (not merely pre-qualified) for the greatest amount of money that your stable income will support. Determining this amount will take approximately ten working days. Without knowing what this figure is you are opening yourself up for disappointment , missed opportunity, and in some cases the refusal of a seller to even consider your offer.

How important is my realtors photographic ability?

One of the first questions you should ask of your listing agent is about his or her ability to take pictures. These are for the MLS. They must not only make a good impression, but they must also have your home sold before the buyer even walks through it. Without good ones, the number of potential buyers is drastically reduced.

Of course the reality of your home must be as good as the picture which it represents. Therefore any and all maintenance issues will have had to have been addressed prior to the taking of numerous photos for the MLS (and all marketing brochures--email and paper).

What if the first offer we get is from a speculator?

If your home is staged, speculators will not want to waste thier time. But let's say there is a brand new speculator trying to see if you will accept 25 % below market value. That is not a problem. You simply counter back at full price cash. A staged home is a way of presenting yourself as a non-desperate seller who has done everything possible to attain the full market value of his home. In other words, staging says that you are able to wait. It also says that you are confident about your home's basic appeal. These statements about you as a seller are crucial in getting top dollar for your home.

Should I refinance a pay option arm?

You should not refinance a pay option arm. In other words, it is not in you best interests to do so.

Many people think that paying on the teaser rate of 1.75-3.5 % will only result in negative ammortization, which will be far surpassed by "fixed" appreciation. Given this supposed inevitability, they would be able to refinance at a fixed rate in a 1-3 yr period possibly with another pay option arm (or sale to another buyer).

This could conceivably work in a rapidly appreciating marketplace, but that is not something to count on.

Obviously I am into giving conservative advice. The kind that might be most liked by first or second time homebuyers. More economically aggressive people such as business owners or realestate speculators will want to pursue more liberal mortgage options like ineterst only loans or the POA.

When should I refinance?

You should refinance only when you have to. In other words you should do so only when you need a substantial amount of cash.

It costs money to refinance and it almost always uses up some of your equity. Further it starts the clock ticking all over again. In other words you now have 30 years to repay your loan instead of 25.

Refinance is a good news / bad news undertaking. First the good news, meaning you now have the money you need. Now the bad : it costs  you alot of money to get it.