Rich folks with money to play with

Sometimes, many people just wish someone would come along with tons of money to give away. Wouldn't this be a wonderful thing when you just can't seem to get ahead? You just can't seem to become part of the American Dream - owning your own home!

Well, Gordon Albrecht of FCI Lender Services might have the answer in "private money." And so we all ask, "Where do I sign up?"  To everyone's dismay, Albrecht and other participants won't divulge who is fronting the money.

"It's private money for hard-situation loans," he says. These undisclosed investors are movie stars, entertainers, professional athletes, successful businessmen who have from $1 million to $20 million to play with. The privacy is understandable, considering the mayhem that could occur.

So what brought private lending to fruition? The primary reason is that the subprime lenders are gone. The credit crunch is still here. These loans are used mainly for a quick-fix solution, those that don't fall within the guidelines of "regular" mortgages. For example, someone who was recently divorced and a few months behind on the mortgage would be a good candidate. These are called "situational loans."

One company, Integr8tive, is offering these privately-funded, star-backed loans. They will extend credit to individuals with Debt to Equity ratios as high as 60%. That sounds great, but they also must have at least 20% down a minimum 700 FICO score. Obviously not easy requirements to meet - but wouldn't it be great to know that one of your favorite professional football players just might be investing in you?

If you don't meet the criteria above, contact Grandview Lending. We will treat you like a star!

When you're in too deep - a more permanent solution

Often, at some time in one's life, they face financial hardship. These tough financial times most often affect mortgage payments because they are usually the largest debt incurred, and the highest monthly payment people face. My first suggestion is to always talk to your lender - the mortgage professional cannot help you if they don't know your situation.

The suggested fixes in my previous blog can often help save your home during short-term circumstances. However, if you are shortchanging financial goals - such as saving for retirement - that's a sign it might be time to rethink what you are doing. Instead, try the following strategies to avoid having your home wreck your finances.

If you've already trimmed your budget as thin as possible, you may need to consider more drastic moves.

• If you have both a variable-rate home equity line of credit and a primary mortgage, you may save hundreds of dollars a month by refinancing into one new fixed-rate loan that ropes in both balances. A $200,000 fixed-rate mortgage at 6 percent, plus a $100,000 Home Equity Line of Credit (HELOC) at 9.25 percent, works out to total monthly costs of about $2,230.Roll that entire $300,000 into a 30-year fixed-rate loan at today's rates and your payment will be approximately $1,800 ... a savings of about $450 a month. That will quickly offset the cost of the refinance. 
• Consider refinancing if your credit has improved or you simply didn't get a good deal the first time around. If you currently have a 15-year mortgage or are more than 10 years into a 30-year loan, stretching out the payments will save you money now, though you'll pay more interest in the long run.
• If refinancing isn't a solution and you think you might not be able to make your monthly payment, call your lender immediately and ask about a temporary reduced payment schedule, known as forbearance.

The last thing a lender wants is to foreclose; they run the risk of losing money. Keep in mind that your lender isn't obliged to give you a break, but you have a good chance if you can prove financial need and have a plan to get back on track. And you'll avoid a ding on your credit score.

Unfortunately, there are times when no amount of budgeting and strategizing will alleviate your housing stress, it's time to consider moving on. The good news is that if you have owned your home for several years, you may still be able to sell at a profit. This will also keep your credit rating intact and position you to own another home in the future.

If you're in too deep - a temporary solution

We provide industry news to help keep you up to date on what's happening in the mortgage industry. This information will assist you in making the proper decision regarding your specific situation. Of course, it's always imperative to speak with a mortgage professional to discuss your individual needs. Some of these decisions include when to move up, stay put, downsize, refinance, take out a 2nd mortgage, etc.

However, it's frequent, especially in these economic times, that people face a different issue with the cost of their mortgage - what if you're in too deep? Then what?

If you're among the many homeowners now straining under the weight of a too-big housing payment, the worst thing you can do is ignore the problem. The best thing you can do is size up your situation. Is the housing stress you are facing the result of a:

1. short-term problem (i.e., layoff or healthcare costs)? or...
2. more fundamental problem such as a miscalculation of what you could afford?

If the stress is temporary, the solution could be as simple as rethinking your spending. Review your past 6 months of bank and credit card statements. What adjustments in spending can you make? Some suggestions are:

• cancel health club memberships
• skip a vacation
• lower the cost or eliminate gift-giving
• eat at home more often
• scrutinize your entertainment expenses

Look at the other side of the coin and think how you can increase your income. One option would be to reduce your withholding, which will increase your take home pay. A part-time, temporary job is also another avenue to consider to get you through this temporary financial crunch.

The effort you place could be the answer to saving, rather than losing, your home.


If your situation is more permanent, the solutions are much different. These options will be discussed in our next post.

Extra! Extra! Read all about it!

I'm sure you've noticed many recent headlines about mortgage fraud, mortgage lender "misdeeds" and even arrests. It seems it's in the newspapers, on television, and on line. Even links are presented on Facebook and Twitter informing of the issues this country currently faces. If you haven't been aware of these issues, here are a few examples to bring you up to speed:

Defendants Arraigned in Suffolk County Mortgage Fraud
Two Indicted in Mortgage Fraud Scheme
Arrests Made in Alleged Orange County Loan Mod Scam

After Audit, HUD Office Files Charges Against Georgia Lender

N.J. Lender Subpoenaed by HUD, Stops Funding

So why would a mortgage lender bring this up? Because we believe it makes sense to do your due diligence when preparing to sign a contract - a contract/loan that will most likely be the largest investment you'll ever make.

If you're considering purchasing a new or refinancing your current home, we encourage you to do your homework. The same goes for any other type of transaction that includes your residence (home equity, reverse mortgage, etc.). Check out the mortgage company. Ask friends and neighbors for referrals. "Interview" a few before making your decision. 
 
And when you're ready for that next loan, we'll be happy to assist you. Honestly, ethically and in your best interest.

Saving, spending and giving

Since I am in the "mortgage business", I often find myself in discussions regarding money. Credit scores, interest rates, payment plans, investments ... the list goes on. There are so many variables, so many issues, so many person-specific "things" that we all need professionals to guide us when making high-dollar decisions. I am grateful for the opportunity to serve as one of those advisors.

But not all money topics are complicated. I'd like to introduce you to a very simple book, titled Three Cups. This book was developed by Tony Townsley, a gentleman from our Parish at Saint Maria Goretti. He presents the importance of having 3 cups and using each of those cups for saving, spending and giving. 

My son, who is in 4th grade, and I are using Three Cups which was given to him at school at the beginning of Lent. The book has provided a great way for us to go through Lent and to talk about the importance of sharing our gifts with others, saving for our future and spending wisely on our needs today. It has also given my son and me a focal point for discussions about the money he receives on birthdays, for chores and so on. I would recommend this book as a great tool that can help all of us live and teach our faith ... with our wallets.

Visit the website to learn more about Three Cups and to read others' stories how they've used the book as a roadmap for teaching financial responsibility.