Friday, December 29, 2006

Sources of Mortgage Loan Money , Part 2

Once Freddie Mac, Ginnie Mae, and Fannie Mae purchase loan pools, they break the packages down into smaller ownership parcels called "mortgage-backed securities” which are Bonds. Each security (or bond) represents a small ownership interest in the pool of loans, of which your loan is only one small part. Because the investment risk is diversified, mortgage-backed securities are a very safe financial investment.

Stocks and bonds, including mortgage-backed securities are sold on Wall Street to institutions or individuals who are looking for exactly this type of investment. By selling the bonds, Ginnie Mae, Freddie Mac, and Fannie Mae obtain new funds, with which to buy new pools of loans (so mortgage lenders can get more money to lend to their new borrowers).

So why not just bypass the "middle man" and get your home loan directly from one of the big three lending institutions? Because Fannie Mae, Freddie Mac, or Ginnie Mae are Quasi-Government agencies that were charted by the federal government and they are not allowed to deal directly with consumers.

Besides, many of today’s mortgage products offered by your local mortgage brokers are not provided by the Quasi-Agencies. Many mortgage programs and products are provided by wholesalers who do the same things the Quasi-Agencies do: they sell mortgage-backed securities on the bond market. Qualification standards are different: the wholesalers can sometimes provide financing when Fannie Mae, Freddie Mac, and Ginnie Mae will not.

What’s more, mortgage brokers know the areas of specialty of various wholesale lenders. They can hand-pick the product and wholesaler (from a pool of hundreds of them) that offers the best deal for your unique circumstances. (Also, if your loan gets declined for whatever reason, you're not necessary out of luck: they can simply repackage it and submit it to another wholesale lender.)

Thursday, December 28, 2006

Sources of Mortgage Loan Money , Part I

Where does your mortgage money come from and why don't lenders run out of money? Over the next several days, we'll examine this topic.


Most of the money that is made available for home loans comes from three major lending institutions:
  • Fannie Mae: Federal National Mortgage Association (FNMA)
  • Freddie Mac: Federal Home Loan Mortgage Corporation (FHLMC), and
  • Ginnie Mae Government National Mortgage Association (GNMA)

As a borrower, you apply for a home loan through a mortgage broker or banker. Once your mortgage professional completes all required processing and verifications, he decides whether you qualify for a loan. After you obtain financing for the purchase of a home, you begin making monthly mortgage payments.


Your mortgage loan may be packaged into a "pool" with several other loans and sold off to Fannie Mae, Freddie Mac, or Ginnie Mae. (Some mortgage companies don't sell directly to those major investors, but sell their loans to the wholesalers, who then in turn sell it to one of the big three institutions). Once this happens, it frees up more money in a portfolio. This gives the mortgage lender the necessary resources to make additional loans to other homebuyers.

Once your loan is sold off, your mortgage professional isn’t the loan owner anymore. Instead, he is the loan servicer. (This means that he receives a monthly fee from Fannie Mae, Freddie Mac, or Ginnie Mae for processing your mortgage payments.) Don’t be surprised if over time your home loan gets transferred from one mortgage servicer to another. They aren't selling your loan again, only the right to service it.

Wednesday, December 27, 2006

How bad will the 2007 housing market be?

Everyone's wondering it, and Business Week attempts to answer it an an insightful article.

The news magazine asked economists at leading real estate research firms to provide their outlooks for the housing market in 2007. They concluded that:
  • interest rates will remain at historically low levels
  • homebuyers will see more opportunities, and,
  • best of all (for those planning for the long term), 2009 could be primed for a comeback

Friday, December 22, 2006

Get a Free Credit Report Every Year in New Hampshire

Increase your credit scores NOW by disputing any inaccurate credit information in your credit file and by requesting your old negative records be removed. You can do this now and get results nearly immediately. Here's how:

The FACT Act entitles New Hampshire consumers to one free “Personal Credit Report” each year using a Web site called www.AnnualCreditReport.com

Also, you may be entitled to additional free “Personal Credit Reports” within 60 days of notification that your credit was used to deny or adversely impact your efforts to secure one or more of the following:
  • Credit
  • Employment
  • Insurance
  • An apartment rental
  • A government license
You may also be entitled to a free “Personal Credit Report” if you have been unemployed, the recipient of public welfare, or if you have reason to believe info on your credit report is inaccurate due to fraud.

Thursday, December 21, 2006

Is It Time to Buy?

The New Hampshire Association of Realtors (NHAR) recently addressed “buyer hesitation” in the homebuying market. They noted that many buyers, particularly those who are not in a hurry, are hesitating purchasing a property because they believe that prices are likely to be lower in the near future. According the the NHAR, this represents a significant shift in the psychology of home buyers from a year or two ago (when most of them thought home prices would keep rising).

The question they try to answer is this: When will this hesitation-leaning consumer sentiment regarding housing start to turn into a now-is-the-time-to-buy attitude? They concluded that:
  • if average wages continue to rise, and
  • if second home buyers remain in the picture
then the consumers’ perception is likely to be that home prices are stabilizing and it's time to buy.

Good Reasons to Buy an Existing Home

Yesterday, I discussed good reasons to buy a new home. Today, I'll cover why you should consider buying an existing home:


  • Existing features When you buy an existing home, you usuallydon't have to worry about buying the extras, such as blinds for the windows, a security system, an irrigation system, or a landscaped backyard.

  • Land In many areas, new homes may be built on smallerlots than older properties.

  • Established neighborhoods You know who your neighbors are before you move in.

  • Mature landscaping Less maintenance will be required than when nurturing new plantings.

  • Cost savings New homes cost more in labor and material costs.

  • Track record When you purchase an existing home, you know how much the property has appreciated over the years.

  • More room for negotiation Builders have a number of costs to recoup when developing a new community. You may have more flexibility with a motivated seller.


Ultimately, what you decide to buy is an individual choice. Whether you buy new construction or a pre-owned property, it's hard to go wrong. In the end, it's all the same: you've bought a home that is to your liking....

Wednesday, December 20, 2006

Good Reasons to Buy a New Home

Buying a home is both a logical and emotional decision for most people. Whether to buy new or used will continue to be a topic of discussion as long as there are homes to sell.

Here's why you should consider buying new:

Easier to comparison shop... and save! All new homes are the same age and options are listed upfront. Price breakdowns make it easy to spot a good value. Also, when builders compete, buyers benefit. Builders are now offering thousands of dollars in incentives and attractive financing options to earn your business.

Warrantees New homes carry better and better new home warranties. Options are available include:

  • specific warrantees by individual builders
  • third-party limited insured warranties against major structural defects
  • appliance warranties


Better Products Up-to-date technology in construction, frequent and timely inspections, and features that reflect consumers' changing needs are showcased in new home construction.

Energy Efficiency New construction needs to adhere to stricter energy codes. Your new home will cost less to heat in the winter, less to cool in the summer.

Site Selection You get to choose the lot. Do you want to be near a lake, on a cul de sac?

Designed for You! Builders of new homes offer a variety of functional floor plans to fit your unique requirements. You may be able to eliminate or add rooms, upgrade materials, include additional architectural details, and generally customize the home.

More space! New homes typically offer greater square footage, more bathrooms, larger garages, and greater storage space than existing ones.

Choice of Finishes A new home is new. It's yours and no one else has ever laid claim to it or lived in it. You get to choose the carpet styles and colors, tile, cabinet stains, wall coverings, appliance colors, lighting fixtures, exterior color, and more.

Lower Maintenance Costs You'll be far less likely to worry, "How long until THIS breaks down?" The answer is simple: much longer when you're the first to use everything.

Looking for a great rate on your next new home? Call Compass Mortgage at (603) 472-2272 or e-mail me at charley.farley@weloannh.com.

Tuesday, December 19, 2006

Best Moment This Decade to Buy a Home, Says MSN

MSN Real Estate has published an interesting article on why now is the best time to buy real estate:

"It's ho-ho-house-hunting season, the time when homebuyers can drive the best bargains. And this month is likely to be better than any recent December." What's more, there's little competition, and sellers are more willing to compromise.

Why Get Pre-Approved?

Getting pre-approved is the fastest way to get answers to these questions:

  • How much can I afford?
  • How much cash do I need?
  • How much will my monthly payment be?

Be a savvy New Hampshire homebuyer - get the proof. A pre-approval from Charley Farley and Compass Mortgage carries a lot of weight with local sellers and Realtors:

  • It proves you have financing from a reliable lender they trust.
  • It increases your bargaining power since it's like "cash in hand".
  • It makes the entire home buying experience less worrisome, knowing that you are well-prepared.

Minimize your finance costs. We will coach you on how to structure your offer with respect to contract dates and what the Seller can pay.

It's free and easy to get pre-approved for a mortgage on a New Hampshire property. To begin, fill out the form here.

Monday, December 18, 2006

How Does Refinancing Work in New Hampshire?

To refinance is to get a new mortgage that's better than the one you have now. The new mortgage is used to pay off your old mortgage. The process of refinancing is similar to when you purchased the home... only easier and less expensive.

Here's how it works:

  1. Contact Compass Mortgage at (603) 471-9300 to discuss how much refinancing will save you.
  2. Apply for the mortgage of your choice (takes 1/2 hour)
  3. We often need an updated appraisal (takes a week or two)
  4. Go to a closing (takes 1/2 to 3/4 hour)
  5. Skip a payment and start paying the new mortgage the following month.

The costs of refinancing will normally range from $0 to $2500, depending on your loan amount. These costs can be paid with any combination of the following:

  • "No Closing Cost" Loan is where the lender pays the closing costs.
  • The borrower can pay the closing costs out of pocket at the closing (uncommon) . The borrower can roll the costs on to the loan amount to get the lowest rate.

Warning: Just because you refinance and your payment goes down by $200, doesn’t mean that is the amount you are saving – you may have stretched out the financing over a longer period of time. The real savings is based upon how much less interest and PMI you will pay each month and over the life of the loan.

Friday, December 15, 2006

"Rate Watch" Alert

Don't overpay on your mortgage! Our free "Rate Watch" program will scan New Hampshire mortgage rates daily until it finds just the program, rate, and points you want. We will alert you by e-mail when your target rate has been reached. Whether you're purchasing or refinancing, you know what the best rates are. Sign up today at www.charleyfarleyhomeloans.com

Thursday, December 14, 2006

Free Newsletter

Compass Mortgage offers a free monthly publication, filled with tips and ideas on managing your personal finances. Sign up now to receive each issue, starting with our January 2007 newsletter. Click here to subscribe.

Wednesday, December 13, 2006

Welcome!

Welcome to the official Compass Mortgage weblog. We are in the business of originating, purchasing, and selling mortgage loans secured primarily by single family, multi-family, and condominium residences. Investors purchase conforming loans (generally those borrowers with perfect or good credit) and non-conforming loans (generally below average and delinquent credit).

Compass Mortgage Inc. is registered and/or licensed to originate, purchase closed loans, underwrite, fund, or sell residential mortgage loans in the state of New Hampshire. To learn more, visit http://www.charleyfarleyhomeloans.com/