Now more blogg-ier than ever

Hello-

I've been very busy lately posting on my new blog. Please check it out at http://expertinlending.thewrittenblog.com/ . It is loaded with useful information.

I'll keep this blog around for a little while longer, but won't be making any more posts here. Be sure to bookmark my new site: http://expertinlending.thewrittenblog.com/ and check it often, as I will be making many more contributions to it in the weeks to come.

See you there,
Donavan

The Woes of Subprime...

You might have heard by now that subprime lenders have been dropping at a rate of nearly 2 per week. Why should you care? Because this could have ramifications for anyone who borrows money, not just those with low credit scores.
First, let’s not shed too many tears for this niche in the lending industry. They’ve been taking a lot of heat lately, deservedly so, for their shady business practices. The term “subprime lender” has become synonymous with “predator” for their reputation earned as those who take advantage of the desperate. And anytime you have congress threatening to enact tighter restrictions on the entire industry, chances are you’ve done a few bad things. This is a high risk/high reward business. When times are good, they make money by the truckload. Just take a look at this front page article by the Wall St. Journal about one lender’s extravagant rewards to their employees.
But when things go south, they go in a hurry. The reason for this starts with the housing market. Subprime lenders specialize in lending to less credit-worthy borrowers. These borrowers are more likely to default on their loans. In a rising housing market that’s not such a big problem for the lender who can easily foreclose and recapture their money. But when the market is stagnate, or even declining, the lenders take a bath on their repossessed homes.
This could have a huge effect on the market as a whole. These loans, or more specifically, the right to collect these loans, are often bundled up and sold to investors on Wall Street. If those investors lose too much confidence or money in the lending market, rates will go up across the board. Payments will be higher on everything from the new car loan, to your Nordstrom credit card. Nobody wants that.
The hope is that this shakedown is temporary, and will succeed in weeding out the bad apples that have given the subprime industry the reputation as a bunch of sharks. In fact there are many reputable subprime lenders out there who provide a terrific service to borrowers that otherwise would not qualify to own a home. Not surprisingly, those same lenders appear to be weathering this storm just fine. I guess that just proves that it pays to do business the right way all along.
If you or anyone you know needs help with mortgage financing, please visit my website today at http://www.expertinlending.com/

My Zestimate of Zillow

It’s amazing just how quickly word on Zillow.com has spread. In just a little over a year, this website went from "zill-who?" to one of the most popular tools for current and prospective homeowners. I have to admit, it’s a great concept. I mean, what’s not to like about a free service that can appraise your home in seconds?
Well, maybe the fact that according to a recent Wall St. Journal study, Zillow’s "Zestimates" are off by 5% or more, over 70% of the time! And what’s worse, when it’s off it’s REALLY off. Here’s what they said:

"When Zillow is bad, it can be terrible-off the mark by more than 25 percent on
one in 10 homes. In one case it was off by $2million."

And this:

"In 34 of 1,000 transactions, Zillow was off by more than 50%."

At kbb.com you’ll have to fill out approximately 45 fields before getting an estimate on the value of your car. Zillow asks for one: the address. My point is that while it is fun to look up property values online, before making a financial decision such as buying or selling a home, please speak with a qualified real estate agent or appraiser first. If you need a good recommendation, please email me today. For now at least, there’s still no substitute for the human perspective.

MI to be tax dedcutable in '07!

Good news for homebuyers this year. The President has signed into law a bill making Private Mortgage Insurance, or PMI tax deductible. This long overdue change gives homeowner's with less than the traditional 20% down payment one more affordable option when buying a home.

In the past, PMI (or just MI) has made single-loan financing above 80% loan-to-value unafordable because the extra expense was not deductable. To avoid the MI cost, most borrowers split up their loans into a first/second mortgage combo. Depending on your situation, you may not have to do that anymore. Borrowers have always told me that they prefer the convenience of one loan rather than two, and now that could be the smarter way to go.
Of course, we still want to look at every option for you to see which one is the best. If you or someone you know is looking to buy a home this year, please contact me today.

Hitting The Cycle

I get a lot of questions about the current state of the market. Will prices flatten or go down, and can money still be made by investing in real estate? I want to tackle these questions here, since like many of my clients, I'm also an investor in rental properties and have a few thoughts on the subject.

Home values have gone way up over the past few years. Now with rates beginning to rise, the mortgage payment for those appreciated homes will become too high for many potential homeowners, meaning that they will have to rent for a little while longer. The housing market will flatten somewhat until the economy can catch up to the higher market values.

Therefore I think for now it will be tough (not impossible) to make money flipping houses. We just don't have that kind of appreciation right now (I still love the show Flip That House). However with a surplus of renters out there, rent rates will be going up, therefore buying and holding an investment is a great choice. You don't need to necessarily make money on the rental income, but you should try to at least break even (contact me to discuss creative fincaning that will get that payment down low). Eventually this market will get hot again, because it's all part of a cycle. When it does, you will be in a perfect position to make money. In a hot market, it's a lot easier to sell the property that you already own (paid for by your renters) than it is to scramble to find a fixer upper, fix it, and sell it all before the "up" market cools again.

Then with that money you made by selling during the peak market cycle, you can use it as a down payment on your next "buy & hold" investment during the market cool down. Rinse and repeat. You're now on your way to becoming the next Donald (or Donna) Trump.

So will the market slow down? Yes. Is now a good time to invest? Yes. It's all about the big picture, smart financing, and buying the property that works for this strategy. I can help you with the financing, but if you're ready to start looking for that property, let me know. I work with a number of qualified real estate agents, and based on your needs I can match you with the one that's perfect for you.

I hope that you found this blog useful. If you or anyone you know would like to be included in my newsletter mailing list, contact me today at http://www.expertinlending.com/. Until then, Happy Holidays!

To State or not to State...

This has been coming up a lot lately so I think the time is right to discuss What is Stated Income?
It's surprisingly simple really. When you do a stated income loan you are doing just that, stating your income, and nothing more. We will not verify your income. No collecting pay stubs, w-2's or two year's tax returns. So why wouldn't everyone do this? Two reasons, 1) not everyone can qualify for this loan and 2) you may pay a slightly higher interest rate for doing it.

When you take income out of the equation, lenders need to see that you have other qualities that are just as good, or better to make up for the loss of this one. For instance, if you have stellar credit, or lots of equity in your home, then chances are you would qualify for the stated income loan with no bump in your interest rate. If those other qualifiers are simply average, you'll still likely qualify, but with a slightly higher rate. And if your credit is poor, or you have no equity or down payment, it might be very difficult to qualify for this loan.

So who needs to go stated? Anyone who has difficulty verifying their income. Many of my self employed borrowers go this route because their tax returns don't do justice to the income they actually make. Borrowers who earn bonuses, or commission income, but don't have a solid 2 year history to back it up might also consider going stated. However a lot of my clients who have high credit scores now go stated simply because they can. It cuts down on the paperwork, and as I said earlier, as long as one or more of your other "qualifiers" are good, there will be no affecting the rate you will receive. Be sure to ask me if you qualify for stated income, also called "super-streamline" qualification.

Don't forget that even though you may not need to document income, you will still have to prove employment and show that you have sufficient assets. If you can't do both, we'll have to look at a "no-doc" loan. It's an easy loan to do because we verify virtually nothing but your credit score, however the rate you'll pay will be higher.

There are tons of loan programs, for almost every type of borrower out there. So if you think there's no way you'd qualify for a loan, please give me a call or visit my website http://www.expertinlending.com/ The stated income loan is just one way to get loans done, and there are many others, which I'll be discussing in future posts.

Who Is This Guy?

Hello and welcome to my first foray into blogging. I would like to take this first post to explain who I am, and why you should care.
My name is Donavan Dichter. I'm a mortgage broker who's been in this business since '98. That gives me a lot of experience in an industry where 80% of the people in it, have been for 3 years or less. Many people have jumped on board lately, and I don't blame them, it's a good business to be in. But with that much inexperience out there, the numbers of people getting burned by bad loan officers has gone up. Lack of service and knowledge, laziness and greed is giving this business a bad name. I hope to offer you an alternative to all of that.
Long ago I realized that in order to keep a base of clients and referral sources, I would have to shift my focus from "sales" to service. In addition to this blog, I have a monthly newsletter, a website (www.expertinlending.com), and soon will begin launching a podcast.
Why should you care? Because this is my passion. I read trade publications, follow trends, attend seminars, and am always looking for new ways to be better at what I do. I'm a homeowner and have bought, sold and managed investment property for over 10 years. I have trusted professional contacts in every field related to home ownership, and the financial world. I will share what I learn from them, as well as my own experiences, and what's new or relevant the industry. In short, this blog will help anyone who'd like to know more about about owning real estate.
There won't be a regular posting schedule, I'd rather pop in when I have something worthy to share. Therefore I suggest that you check back regularly. In the meantime, if you'd like to receive my monthly newsletter, please email me at donavand@go-summit.com. Also, be sure to check out my website at www.expertinlending.com. It's LOADED with cool stuff from a "Rate Tracker" that will alert you when the rate you're looking for becomes available, to a chance to win a free mortgage payment!
Of course, if you or anyone you know needs help with mortgage financing, please contact me today.
Donavan Dichter
Your Mortgage Broker, and Expert In Lending.