Rise and shine Memphis and Good morning to IHEART listeners around the country. You’re on the Real Estate Mortgage Shoppe program. I’m your host Jo Garner, mortgage professional with Evolve Bank and Trust. Today we’re talking about “Signed, Sealed Delivered—Real Estate Purchase Contracts and Mortgage Rate Lock Agreements.” But whatever real estate topic you want to discuss, you’re welcome to join us around the coffee table by calling us on the air at 901 535-WREC. That number again is (901) 535 9732. Our co-host today is Attorney Ron Cohen, co-owner of Premium Title Group. Ron, great having you with us today.
Pat Goldstein, realtor with Crye –Leike here in Memphis is with us today too. Pat has been voted Realtor of the Year by the Memphis Area Association of Realtors . Pat, you’ve been a realtor for a long time.
There’s some definite opportunities out there right now to buy real estate at a very affordable price with what is still considered historically low interest rates. According to recent numbers, inventory on homes or sale is low, so prices have been edging up with the demand. If you’re thinking about selling your house it may be a good time. If you are thinking of buying a house, prices are still very low and the rates are still in the 3’s and 4’s .
If you’re comparing renting to buying you may be surprised at how much house you can get for the same amount or less than you paid in rent. If you’re planning on keeping the house for 3 to 5 years or more, you may want to consider purchasing. I had a customer who had been renting a 2-bedroom apartment around Memphis paying about $1,300 per month. He recently closed on a house for around $150,000 with 3 Bedrooms, 2 Baths, garage and patio with a lawn. The payment for the house with everything was a little over $1,100/mo.
The mortgage rates are still moving up AND down multiple times a day. They had started going up again earlier this week and then eased back down yesterday. The long term trend is toward higher rates unless something major happens. The 30 year fixed rate loan with no points is about 4.5%. The FHA/VA 30 yr fixed rate is about 4.25% and the conventional 15 year fixed rate came in around 3.625% to 3.75%.
Besides helping our clients get their home purchase loan closed this week, we also have another common request. Cash out refinances are becoming more popular. Now that the values are moving up on houses, people who have a lot of equity in their houses or people with no loan at all owing on their home or investment property can pull cash out on the property and use the money to pay off higher interest rate loans, OR reinvest somewhere else to build wealth. If the financial gurus are right that mortgage rates are going up, then a cash out refinance on your house could give you a low fixed rate to use for 10-15 -20 or 30 years. I talked to a very astute businessman this week who had paid cash for about 10 properties. He and his wife discussed their plan to acquire up to 30 or 40 properties. He came into my office and we put together a plan. First we plan to get him cash out on some of his rental properties that currently have no loans on them, giving him a huge amount of cash to invest in purchasing more property to build his wealth.
Since most conventional loan investors hold each borrower to a limit of up to 10 financed properties, he plans to put 10 properties in his name and buy 10 properties in just his wife’s name so together even with Fannie Mae and Freddie Mac’s rule that you can only have up to 10 financed properties, between him and his wife getting 10 each that gives them a chance to get 20 financed properties . Its all in planning. If you want to talk about a plan to build YOUR real estate portfolio, call me directly at 901 482 0354. That number is (901) 482 0354
No one can see into the future very clearly. But here is what you CAN do. You can see where the mortgage rates and the market have been. You can see where they are today. If you know what you want to accomplish today or tomorrow with buying or selling real estate or investing somewhere else, consult with an experienced realtor, mortgage loan officer or attorney, our financial advisor or other professional to see where you are in relation to where you want to go and how to get there. My word to the wise: IF the Deal Works For You Today, Do It Today.
If you want to talk about your plans and get real numbers, call me directly off the air at 901 482-0354. www.mortgagelloansblog.com
Today we’re talking about whatever you want concerning your real estate or financing. If you have a real estate legal question, now’s your opportunity to talk with Attorney Ron Cohen. You can call us on the air at 901 535-WREC That is 901 535-9732
Pat Goldstein, you’ve been a realtor for about 30 years. I know you have some wisdom you can share with us from your experience dealing with contracts. Hopefully today you’ll get to share some true stories with us.
Ron, our topic today is “Signed, Sealed , Delivered—Contracts and Mortgage Rate Lock Agreements.” I know you have some wisdom to share with us about how to protect yourself with a contract. How can a client protect himself by using a contract.
Questions for Attorney Ron Cohen to answer:
1. Why is a Contract Needed:
To verify ownership.
To verify marketable title.
To prevent seller from selling to someone for more money.
To prevent Buyer from finding something better and backing out.
2. A Contract May Consist of Any Type of Writing Such As:
One or more letters.
Escrow instructions.
A receipt.
A check.
A promissory note.
A grocery list.
As long as the contract contains essential terms, a court may read missing terms into the transaction.
It is the glue that holds everything together until closing.
3 Must the Contract be in Writing:
Oral contracts are unenforceable. Oral contracts violate the Statute of Frauds.
4 Will Any Old Writing Work:
The writing must contain certain essential terms such as:
Names of the parties.
Description of the land.
Price.
Terms of the sale.
Signature.
5 Should the contract contain other terms:
The writing should also contain terms relating to:
Type of deed.
Evidence of marketable title.
Contingencies such as financing.
Remedies for default.
Questions for Pat Goldstein to answer:
1. Can you recall any situations where buyers or sellers ran into a snag because something not spelled out in the real estate purchase contract?
2. Can you recall any situations where a buyer or seller was saved due to details in their contract
Questions for Jo Garner to answer:
1. When is it better to pay points to get a lower rate and when should you take the higher rate with no points.
Most borrowers want to pay the least amount of closing costs, so it is rare to have someone pay points—unless the seller or someone else is paying for them.
There are two questions you want to ask yourself when you are trying to decide whether to pay extra money to buy your mortgage rate down.
The first question is how long are you going to have this loan? Less than 5 years? Over 5 years? Paying a full 1% of the loan amount will usually lower the interest rate about a quarter or 3/8th of on the interest rate. You want to make sure you keeping the house long enough to make it worth spending that extra money to get the lower rate.
The second question is –how long will it take me to recapture the additional investment of buying a point or more? If you are paying only a ½% to pay the rate down, then it may take about 2 to 3 years to realize your money back on your investment. If you are going to have this loan for over 5 years, then it could make sense to pay a full point or origination fee to get the rate down lower than market. The savings on the lower payment compared to the payment without buying down the rate is a difference that usually takes about 5 years roughly to recapture the 1% you paid to get the rate lower. .
If I recently had a young couple in my office and they were buying their first house. Since their budget was tight they insisted on a payment not to exceed “x” amount. In order to keep their payment within their means, ,we needed a lower rate and it was going to cost close to 1% of the loan amount over and above normal closing costs. Since the price of the home was close to $100,000, 1% of the loan amount would have cost them a wopping $950 extra—and that was money they just didn’t have. BUT, when we read through their home purchase contract, it said the sellers were willing to pay the maximum of 6% of the price of the home toward the buyer’s costs. . Much to the buyer’s surprise the amount the seller agreed to pay on their behalf was enough to pay ALL of their closing costs, prepaid property taxes and homeowners insurance with just enough left over to cover the extra 1% needed to buy the rate down.
My customers got the payment they wanted for no extra money out of THEIR pocket. If it is someone else besides you paying the costs to buy down the rate, then go for it—it doesn’t matter how long you’re staying in the house—you’re not paying the points anyway. But if you did have to pay that, let’s say, 1% to get the rate down, it normally takes roughly 5 years to recapture your investment. Call me and I can do these quick calculations for you. Call me directly at 901 482 0354. 901 482 0354.
2. What is the difference in costs between a mortgage rate lock in period of 30 days versus 45 days or 60 days ?
The shorter mortgage lock terms are less expensive than the longer terms. However, peace of mind is worth quite a bit. If you have a real estate purchase contract that is set to close in 30 days, my advice is to lock the rate for 45 days just to give yourself extra time in case there is a snafu with the title on the property, the seller or something else . The difference in costs between a 30 day and 60 day lock is about 25 basis points. What that means is if you are borrowing $100,000, the 60 day lock would costs about 25 basis points or $250 dollars more than the 30 day quote.
Get the lock agreement in writing . usually the loan officer will tell you if you are going past your expiration in time to attempt to extend the lock. But it doesn’t hurt to call the loan officer at least a week before the lock expiration to make sure it can be extended.
3. What are some important items concerning the real estate financing that needs to be specified in the home purchase contract?
Real Estate Tip of The Week: (Ron Cohen—do you have a tip of the week? 1 min or 1.5 min long? Pat can add a short one too if she has one)
Jo has two announcements to make: Talk Shoppe offers free education and networking for anyone interested in real estate or business. This Wednesday 9A-10A at DeVry University at 6401 Poplar Ave 6th floor in Memphis you can join us for practicing the Mastermind Principle based on the book Think and Grow Rich by Napoleon Hill. Come prepared to share and receive ideas, referrals and resources from other business people in a small group setting. Talk Shoppe events are free. For more information about Talk Shoppe go to www.TalkShoppe.BIZ
Next Saturday 9AM right here on News Radio AM 600, the Real Estate Mortgage Shoppe program Eric Meyers of 5 Diamond Roofing will be giving us some tips on how to detect trouble spots on the roof. Tips on what type roofing might be cost-effective for your home. How to avoid roof repair scammers and more.
To hear today’s podcast and past podcasts, visit me at www.mortgageloansblog.com That’s www.mortgageloansblog.com
Transitional Music: “Nowhere To Run, Nowhere To Hide” by Martha and the Vandellas, “Good Advice” by Allan Sherman; “Signed, Sealed, Delivered” by Stevie Wonder
Ron A. Cohen
Of Counsel: Kusper & Raucci, Chartered
33 N. Dearborn Street
Suite 1530
Chicago, Illinois 60602
312-332-5000
312-346-1145 (direct)
312-332-4663 (facsimile)
Pat Goldstein, VP The Gold Standard in real estate. Voted 2006 Realtor Associate of the Year Crye Leike, Inc 901 606-2000 patrecia@att.net
Jo Garner’s Bio www.MoneyShoppe.NET (901) 482 0354 jogarner@mindspring.com www.mortgageloansblog.com
Jo Garner is a mortgage officer with extensive knowledge in tailoring mortgages to her customers who are refinancing or purchasing homes all over the country. She offers conventional, FHA, VA or other loan programs for refinancing and purchases.
Jo can help you look at rent vs buy, when it makes sense to refinance, how to get the best deal on your home purchase financing.
Jo Garner has been in the real estate/financing business for over 20 years. She got her start in Portland, Maine where she first began her real estate career. She received her real estate education from the University of Southern Maine and was personally mentored in San Diego, California by Robert G. Allen, author of Nothing Down, Creating Wealth and The Challenge.
On moving back to West Tennessee in 1987, she went into business buying and selling discounted owner-financed notes secured on real estate. In 1990 Jo went to work for a residential mortgage company and has been a mortgage loan officer for over 17 years. Her goal is to offer excellent, affordable service to her customers, tailoring the loan programs to the specific needs of her clients.
In addition to her work in the mortgage field, Jo Garner is the primary sponsor and founder of Talk Shoppe in Memphis. www.TalkShoppe.BIZ She was also the editor of Power Shoppe, a free weekly ezine designed for real estate professionals and others indirectly connected to the real estate industry and currently publishes on her blog www.MortgageLoansBlog.com .
For real estate financing solutions, plug into the Real Estate Mortgage Shoppe program. You can find mortgage rates, FHA Streamline refinance with no out-of-pocket costs, refinancing options, home purchase loan programs, answers and real estate, money-saving tips and more.
Contract Needed :
To verify ownership.
To verify marketable title.
To prevent seller from selling to someone for more money.
To prevent Buyer from finding something better and backing out.
A Contract May Consist of Any Type of Writing Such As:
One or more letters.
Escrow instructions.
A receipt.
A check.
A promissory note.
A grocery list.
As long as the contract contains essential terms, a court may read missing terms into the transaction.
It is the glue that holds everything together until closing.
Must the Contract be in Writing:
Oral contracts are unenforceable. Oral contracts violate the Statute of Frauds.
Will Any Old Writing Work:
The writing must contain certain essential terms such as:
Names of the parties.
Description of the land.
Price.
Terms of the sale.
Signature.
Should the contract contain other terms:
The writing should also contain terms relating to:
Type of deed.
Evidence of marketable title.
Contingencies such as financing.
Remedies for default.