Not only have people asked why we created RateWindow they have asked what does it do for real estate agents. In an attempt to answer those questions– 1st of all Why?

We created RateWindow because as an owner of a financial planning firm, in a former life, we were always dealing with our clients and their mortgages on purchases and refinances. As we dealt with those clients we came to the realization that the biggest purchase most people make in their lives is their home. We also realized that the three most important things about real estate ARE NOT location, location, location. The three most important items are financing, financing & financing. As we dealt with this more and more we decided to dig deeper into how mortgages were priced and how they could be structured to serve the best interests of our clients. We didn’t have to dig too deep to realize that our clients best interests were not being served by the lending community at all, but were serving the pockets of the lending institutions and their mortgage originators.

From this investigation came the idea for RateWindow, a tool for consumers to be able to see all the interest rates available from a mortgage originator and make the choice that was best for them not the originator. RateWindow reveals the rate sheet to the borrower in a simple, concise, and understandable way so they can choose what is best for them. As an example if a borrower needed some additional funds to cover closing costs then they can choose a higher interest rate and use the attached YSP (yield spread premium) to offset those costs. They can also see what the higher interest rate would do to their payment and they can see it in 30 or 15 year fixed rates or for 5/1 arms. The borrower could also choose the par rate or what it would take to buy the interest rate down. Borrowers armed with that information created a great deal of trust with a mortgage professional who worked off the platform of trust and full disclosure, including a fixed fee for the service the mortgage professional performed.

This included that all third party fees such as processing, appraisal, and other fees were passed through at cost and did NOT include any junk fees that further padded the pocket of the originator. Clients of both the real estate agents and mortgage professionals loved the transparency of the transaction so we decided it time had come to bring it to as many borrowers as we could and thus came the creation of RateWindow.

Secondly, what does it do for the Realtor? We have designed RateWindow as a small application (widget) that will run on anyone’s website including real estate agents sites. Real estate professionals work really hard to get people to their sites so RateWindow provides their sites with additional adhesives so they will stay there. A real estate agent could say to a prospect, “Go to my site and not only can you see all the real estate for sale, you can also check out all the mortgage rates available and if needed get cash for closing costs.”

Not only can you wear the White Hat for your prospects and buyers to expose them to total transparency in the mortgage world, RateWindow also will send a “soft touch reminder” newsletter with your branding and most recent blog post to those who opt in for updates on the rates available. All of this comes from your website and doesn’t take your hard earned traffic somewhere else!

I applaud the FHA working in concert with the OIG (Office of Inspector General) in researching the underwriting guidelines of 15 mortgage lenders. The main thrust of the investigation is to make sure that these mortgage lenders are not issuing loans that would undermine the financial viability of the FHA. These 15 mortgage lenders had a higher than normal incidence of defaults on the loans that they issued.

With the FHA being one of the major sources of home mortgage financing it is imperative that they are protected from what we have been through recently with Fannie and Freddie loans.

David H. Stevens, Assistant Secretary of Housing for the FHA has said, “It’s important to note that FHA has been taking actions against poorly performing lenders since the day I took this job six months ago. This cooperative effort with the OIG is another indication that we will not tolerate lending practices that pose a risk to the FHA fund, and we have pledged to assist the Inspector General’s Office in any way we can. The Inspector General’s initiative will help us determine whether there is fraud at these companies and better manage risk in the long run.”

We here at RateWindow will be cheering you on!

The new mortgage disclosure form required to be used as of January 1, 2010 commonly known as a GFE (Good Faith Estimate) in my opinion doesn’t adequately accomplish Washington’s goal of complete transparency.

In a recent blog post I put on Active Rain I identified all of the fees that are charged to a borrower are lumped into one number. If all the costs that a mortgage loan originator can charge are in one number it will open up opportunities for a borrower to be confused as to what the charges amount to. Since these charges for completing a mortgage are for the most part not changeable a loan officer is going to charge as much as possible. The reason for this is, if the borrower completes the loan as quoted in the GFE it is locked in with very little variance. As an originator if the charges exceed the costs that he quoted it could cost him (the loan officer) money. Most loan originators are not going to be willing to pay to provide a mortgage for someone and have it cost him money.

Having all the charges lumped into the one line could also be confusing to the borrower. Transparancy should allow a borrower to identify all the costs in a line item format so an educated decision can be made.

I never thought I’d see the day when the Washington Post and I were on the same page.  But there it was—right there on my screen—an article posted online about transparent mortgages.

Okay, so I admit it—the article isn’t ACTUALLY about transparent mortgages, per se.   It’s about how to reduce the amount of closing costs that homebuyers have to pay.   But one of those suggestions?  To shop and negotiate all of a loan’s terms, not just the rate.

Finally!  Folks are starting to get it!  There is more to a mortgage loan than just an interest rate…a lot more.  And if there’s one thing that the past few years has taught us, it’s important to take a look at all of the details before making a decision as big as the one to buy a home.

Here’s an example that’s pretty close to home for me.   A friend of mine—we’ll call her Janice—was looking at buying her first home.   Now, in the interest of full disclosure, I have to tell you that Janice has worked in my office for about 10 years or so, so she was pretty familiar with the mortgage process.  But this time it was different, because it was her name on the mortgage.

Now, she was bound and determined to get absolutely the lowest rate she could possibly find.  Weeks went by as she considered loan option after loan option, debated whether to lock her rate or let it float—to tell you the truth, she was making us all a smidge nuts.  (Sorry Janice.)  But one day, when she was going through everything that she would have to bring to the closing table, she took a closer look at the rate sheet.   And what did she realize?  That by taking a rate that was just 0.5% of a point higher, she would receive a credit of almost $2,000 that she could use toward her closing costs.   That made a huge difference in her budget.  But the difference in her monthly payment?  $9 a month.

Now there are those folks who would start protesting and saying how when you multiply that $9 a month over the term of the loan, you’d pay thousands more than the credit you received.  Yeah.  So again in the interests of full disclosure, I should tell you that after Janice has paid on the loan for 217 months—almost 18 years—she will indeed be “upside down” on that $9 a month payment.  It is also likely that by then she’ll be making more money than she is now—at least more than $9 a month more—or that she will have long since sold the house.

Listen, the point is that everyone who is buying or refinancing a home needs to look at all of the loan terms—including asking to see the back-end (transparent) pricing that the loan officer sees—before making a decision that will impact their budgets now and in the future.   And yes, requiring lenders to be as competitive as possible in every aspect of the loan programs they’re promoting.

Congratulations, Washington Post.  You got this one very, very right.

A lot of information has been in the news recently about folks buying and selling (or trying to sell) their homes.  Less focus has been paid, however, to why right now is a great time to refinance.  And the folks who should really be paying attention?  Those heading into retirement in the next decade or so.

In a report titled “Should You Carry a Mortgage Into Retirement”, Anthony Webb, a research economist at the Center for Retirement Research at Boston College finds that retired households are better off repaying their mortgage, as they are unlikely to find a return on investments that make more than they’re paying in interest every year—even when taking tax deductions into account.

Having been in the financial services industry for over 30 years, I was actually surprised to learn in Webb’s report that as recently as 2007, 41% of folks in their 60’s had a mortgage—and more than half of them actually had money that they could use to pay off their house in entirety.   But I understand why.

You see, while everyone would love to head into “their golden years” with no debt and plenty of cash in the bank, most people have to take a realistic, balanced approach based on where they are now and what they’ll need in the future.  If your home is paid in full, but your cash reserves are limited or non-existent, retirement won’t be a piece of cake.  After all, as I like to say, you can’t eat sheetrock.  On the other hand, if your savings and investments are being drained because of monthly mortgage payments, that also limits the time and resources you have to enjoy a well-earned retirement.

That’s why for those who are thinking about retirement within the next 15 years or so—especially those who have lived in their home and have a positive equity position—now is a great time to refinance to a lower rate.  And, depending on how long you have until your retirement and your ability to build long-term wealth, it can also be an excellent time to reduce the term of your loan.  By doing so, more of each monthly payment goes towards paying down principal and getting you closer to being a homeowner in the truest sense of the word—without putting you at risk of being house-poor either in the short term or longer one.

So should you carry a mortgage into retirement?  Only you can answer that one.  But whether the answer is yes or no–just remember that now is still an excellent time to make the most of every dollar by reducing your interest rate or loan term.

My wife and I have been married for 32 years, brought 8 (no, that’s not a typo) kids into this world, and have had the opportunity to buy four homes in which to house them and us.   And there has never been a single time that we’ve agreed on what we are looking for when we buy them.

Sure, we knew about how many bathrooms we needed (there were never enough) and how many bedrooms would fit all of us.  We could even agree quite often about the size of the garage (again, never big enough).   But that’s about where it ended.  You see, for me, I dreamed of finding a house that I could move into, unpack, toss my feet up on the coffee table and stay awhile without having to replumb, rewire or repaint.  My wife, on the other hand, would still be carrying in boxes from the moving truck as she plotted exactly which shade of beige (during my marriage, I’ve learned that there are roughly 38,000) she would paint the kitchen.

The fact is, men and women are different.  And a recent Coldwell Banker survey learned a lot more about how.   Women would rather live closer to their extended family than their job, and they tend to know faster whether a house is right for them.  Men were more likely to need to see a house two times or more before making a decision, and were far more likely to want to turn an extra room into the proverbial “man cave”; i.e, an entertainment center.

What I thought was particularly interesting, however, was how many (70%) of those surveyed said that they make financial decisions together—something I found very heartening.   After all, things like buying a house are huge commitments for any couple, and both of them should have a say in the process.   And not just choosing the house itself, but also realistically discussing the kind of payment they can afford each month, what kind of financing they’re going to look for, the real estate agent they’re going to choose and the lender they’re going to work with.

And, most importantly, how soon the kitchen has to be painted.

I have a friend who’s a little—okay—A LOT nervous about the economy.  But this is really nothing new; I think she’s been nervous about the economy for about the last 20 years.  Good times and bad, market ups and downs, she’s worried about what’s going to happen next.   In her world, the sky is always falling.

Now, I’ve been in the financial industry for longer than I care to mention—certainly longer than my youthful appearance would suggest.  And admittedly, I get concerned about an occasional market downturn.  But I don’t let it send me into a spiraling world of worry, despair, and ulcers.  Here’s why:

Our market is relatively young.  Do you realize that it took more than 50 years–until 1982—before the Dow Jones crossed the 1000 mark?  It was only then that the market began to really skyrocket, taking only 5 years to hit the 2000 mark, another 8 to hit the 4000 mark, and less than 4 more to hit the 10,000 mark.  In short, between 1982 and 1999, the stock market gained 9000 points!

Unfortunately, the people who are currently investing in—and reporting on—the market (including the mortgage market) seem to forget its history.  If you were to turn on the television or read an online market analysis, you’d almost believe that the Dow began functioning in 2003 (the last time the market was at today’s levels) and that the explosive growth that peaked in late 2007/early 2008 was normal.  That’s just simply not the case.

So I’m telling you what I tell my friend when she begins running and clucking:  Markets rise and markets fall.  Interest rates go up and down.  Property values change—not always for the better in the short-term.  But when you take a long-term perspective, both on investments and homeownership, growth is not only likely, it’s highly probable.    And I also tell her that Warren Buffet and the market foxes like him didn’t make money by buying high and selling low; they invested when the market is down and take advantage of future growth.

And here’s a little something else to remember—especially when it comes to buying a home in today’s market.  Just 15 years ago, people were clamoring to buy when interest rates on a 30-year fixed rate loan were at 8.00%.  10 years before that, 17% percent was a screaming deal.  Today’s rates start at 4.75% for that same 30 year loan, and loan professionals—at least, those with whom I work—are making mortgage loan information a whole lot more transparent and reducing loan fees and costs.  Now, combine those rates and that level of disclosure with home prices at a 5-year low…and things don’t look quite so bad, do they?

Chicken or fox?  You choose.  As for me…I’ve never much cared for feathers.

As a Texan, I’m used to pretty much everything being bigger here, from the size of our trucks to the smiles on our faces.  It was nevertheless disappointing to read in a report from RealtyTrac that Texas is now making some big news in a not-so-great way:  it’s in the top 10 states for foreclosure filings.   Foreclosures were up 6% in July from the month prior—and up 16% from the same period the previous year.

But according to Mark Dotzour, director and chief economist of the Real Estate Center at Texas A&M, not all is lost in the Lone Star State.  In fact, he believes that now is the time to buy or build a home here, with one significant caveat:  that “the federal government doesn’t cause further damage to the U.S. economy with higher levels of intervention in healthcare, taxation, cap and trade and rewriting accounting and legal standards.”

Now generally I’m a pretty optimistic guy with high hopes for the future.  In fact, I’m one of those folks who encourages people to turn off their televisions, ignore the doom and gloom and go out there and do some economic stimulating all on their own.  I’m a cheerleader for home ownership and believe that the recent downturn can end once the public starts investing in real estate—and their futures—once again.   And yes, I’m going to keep leading the charge for transparency in mortgage lending as a way of turning this industry around.

But I’ve got to tell you that Doutzour’s warning gave me pause.  You see, in the midst of raucous town hall meetings, the skyrocketing national debt, and the government being involved in private business a little too much for my comfort (regardless of which party is in office), I’m just not sure that “further damage” isn’t at least somewhat inevitable.

And this is one time that this Texan actually hopes that he’s wrong.

Are you thinking of becoming a first-time homebuyer?   Then put on your running shoes and get moving!

Time is quickly ticking by for folks looking to enter the housing market before the $8,000 federal tax credit expires.  That deadline?  November 30, 2009.

Sure, you’re just winding down your summer vacations and getting the kids ready to head back for school.  It’s likely that the last thing on your mind is what will happen after Thanksgiving.  And that could be a mistake.

Why?  You see, because of recent changes in lending laws, mortgage companies are simply unable to close loans as quickly as they used to—even those who are committed to transparency in mortgage lending.    Underwriting that used to take a matter of days now takes weeks.  Appraisals are taking longer.  More homeowners are (wisely) getting home inspections done prior to the sale.  And some homeowners are buying properties under short-sale agreements, which only lengthens the process even more.  As such, it’s wise to count on about 6 weeks to 2 months to go from loan application to the closing table.

That means that RIGHT NOW is the time to be pre-qualifying for your loan and working with a real estate agent to find the right home.

If you’re not sure what the tax credit is, here is a great “fast facts” overview prepared by Chicago Tribune columnist Kathleen Lynn in an article earlier this month:

• The tax credit is equal to 10 percent of the home’s purchase price, up to a maximum of $8,000.
• Buyers can claim the credit on either their 2008 tax return or 2009 tax return. If the closing occurred after April 15, 2009, a buyer can claim the credit on a 2008 tax return by filing an amended return. For more information, go to www.irs.gov.
• The home sale must close by November 30, 2009.
• Full credit is available to buyers with modified adjusted gross incomes of $75,000 (single) or $150,000 (married).  A reduced credit amount is available for people with incomes of up to $95,000 (single) or $170,000 (married).
• Two programs — one state, one federal — offer bridge loans or “prefunds” so eligible buyers can use cash from the credit on their home purchase this year. For more information, go to www.fha.gov.
• Buyers do not need to repay the credit if they occupy the home for at least three years.

So if being in your new home for the holidays is on your wish list—and if you want to get the benefit of a fairly hefty tax credit—lace up your shoes, stretch our your hamstrings and begin the marathon that is buying your first home.

On your mark, get set….GO!

I’m sitting at my desk going through a stack of papers and contracts and checks that somehow seemed to multiply exponentially when I was in California for a few days, and I just realized that I could save a lot of time if I stopped reading things and just started signing things willy-nilly.  And, given the number of not-so-discreet glares and throat-clearing “hints” from the administrative folks around here who are waiting for me to get my part of the job done so that they can do theirs, I discern that there are those in my office who think that I should just put pen to paper and get it all over with.

But here’s my problem:  I actually want to know what I’m signing.   As such, I actually have to read every word of every line of every paragraph because, to be honest, I rather assume that there is language in there somewhere with the potential of throwing me, my companies, my family, my friends, and the flowers along my front walk under the proverbial bus.  And I’d prefer to at least try to avoid it if at all possible.

And a few minutes ago, as I was about halfway through the second ridiculously complex contract that I’d been meticulously reviewing, I thought how much easier life would be if everyone got on board the transparent bandwagon.

I mean, what if this contract read:  “You promise to pay us, and we promise to do what we say we will”?   No loopholes, no hidden agendas—just a promise to do what is clearly spelled out.

Or what if Congress wrote a bill that said “This is what we want to do, plain and simple” rather than burying the intent in 1000 pages of who knows what with some hefty pork thrown in?  Certainly, it would seem to be helpful in avoiding the recent uprisings in town halls across the country—or at least give the “well-dressed protestors” a more specific topic at which to focus their derision.

But, I feel like I can’t download a song off the internet or buy a gallon of milk with my debit card without entering into a binding agreement that might ultimately result in the surrender of my first offspring.  And as you would expect, the bigger the purchase, the greater the fear of potential loss.

And that’s why I can’t help but wonder why anyone would ever work with a mortgage professional who didn’t believe in absolute mortgage transparency.  Who didn’t believe that his or her clients should know—up front—exactly what they were going to pay, and for what, and why.  Who provided this kind of information not because they HAD to, but because they WANTED to.  I mean, if you’re going to invest hundreds of thousands of dollars in a home, why wouldn’t you demand to work with someone who wanted to give you all of the information you needed—in a way that was easy to understand?    The fact is, I would.  And I hope that you would, too.

All right, I just got yet another glare from a certain staff member, so I’d better get back to it.  At the top of my stack is what appears to a 14-page reimbursement request she submitted which begins “For good and valuable consideration” and is riddled with “party of the first part” nonsense.  And I think I see something about a mental health day, a manicure and shoes in here.  Did someone just hear a bus headed my way?