Sweepstakes Winner Announced

Elaine Moreau of Hudson, NH is the winner of our first “Win a FREE Mortgage Payment” Sweepstakes.

Read the press release here

What Kind of Mortgage Do You Have?

A new BankRate poll found 34% of homeowners do not know what type of mortgage they own.

Other items of note:

• 28% of survey respondents worry (either "regularly" or "sometimes") about how they will afford their payments next year.
  
• 34% of respondents with ARMs do not know what they will do when their loan readjusts.
  

If you have an adjsutable rate mortgage, now may be the time to lock into a mortgage with a fixed rate. Call Compass Mortgage at (603)472-2272 or visit www.CharleyFarleyHomeLoans.com


Source: BankRate

So You Want to be a Landlord...

Owning rental property can be a nightmare -- or a good way to steadily build wealth.

The difference between a profitable investment and a disaster, experienced landlords say, is often the amount of work an investor is willing to put in. Not everyone is cut out to screen tenants, track down overdue rents and field middle-of-the-night repair calls.

Read the entire story (from MSN) here: articles.moneycentral.msn.com/Investing/RealEstate/DoYouHaveWhatItTakesToBeALandlord.aspx.

My House is Worth.......

"My House is Worth What?", a new series that began airing on HGTV in August 2006, is coming to Manchester, NH in May. Show producers are looking for area homeowners who would like to be considered for the show.

Each episode of the show tells homeowners across the country:

• what their current home is worth,
  
• where they should renovate if they are planning to
  
• or just how much equity is available to fulfill a life long dream (child’s college, wedding, trip around the world, etc.)
  

For more information on the show, visit www.pietown.tv/shows/myHouseIsWorthWhat.html

For an application form, visit www.pietown.tv/shows/myHouseclientreqs_H.html

How Terrorists Affect Your Mortgage Application Process

Here's how current laws that were developed to stop/detour/minimize terrorist activities affect you when you apply for a mortgage:

The Patriot Act is a U.S. Federal law that was designed to assist in the prevention of money laundering by terrorists. (Money laundering occurs "when criminals attempt to characterize the proceeds from illegal activities as funds derived from a legitimate enterprise."*) Terrorist financing is only one aspect of money laundering. But the events of September 11 has made our government aware of how crucial it is to block terrorist access to the U.S. financial system.

According to the U.S. Treasury, identifying and curtailing terrorist financing isn't easy. This is because transactions may originate from legitimate sources and involve relatively small amounts of money. So efforts to contain terrorist-related money laundering must be both broad and comprehensive.

The Patriot Act covers a wide range of activities, from simply opening up a checking account to taking out a home loan. All lenders -- including Compass Mortgage -- must comply with this law. (And as mortgage brokers, we must also meet the "due diligence" practices of the many companies whose programs we offer.) But what does this mean to you when you apply for a new mortgage or attempt refinance an existing one?

The Patriot Act requires us to verify your identity when you ask us to help you obtain a loan. When you apply, we'll ask you for your name, address, date of birth, and other information that allows us to identify you. We'll also ask to see your driver's license/passport/military ID (or other form of government-issued photo ID).

After you provide us with the information we need, your name is then checked to determine whether it appears on any government-provided lists of known (or suspected) terrorists/terrorist organizations. Your current home address and place of employment are also verified; the source of funds used for the transaction are also considered.

Additionally, we're required to keep an eye out for borrowers who
-- provide insufficient or suspicious information
-- have funds inconsistent with their income
-- have suspicious movements of funds from one bank into another

The overwhelming majority of most lenders' customers and transactions are not considered "high-risk", so is the Patriot Act and similar legislation really necessary? Some people believe that the personal information they are now required to provide when conducting financial transactions represents an invasion of privacy. Regardless of whether this is true, the fact remains that the Patriot Act is a law that all lenders -- including Compass Mortgage -- are required to follow. Also, most borrowers recognize that the satisfaction of home ownership far outweighs the inconvenience of having to provide additional proof of identity.

*Source: Findlaw.com

Mortgage Programs and Homeselling

For buyers, ramifications of the current mortgage industry gyrations are pretty apparent. Because lenders are tightening requirements for obtaining credit, it may be harder for many people to obtain a favorable mortgage program. (And even if you do qualify for one, you may have to put more money down.)

But what does this mean to you if you're trying to sell your home?

Fewer qualified borrowers could mean a smaller pool of available buyers for your house -- no matter what your asking price. In the recent past, homes of all sizes and value have been financed through "no money down" and "no income verification" loans, from entry-level homes through multi-million dollar properties. Although "low doc/no doc" programs are unlikely to vanish entirely, there will fewer programs and fewer loans offered in these categories.

Fewer buyers is not the only problem for homesellers. The buyers who are in the market may have less money to spend than previously. (Again, because of stricter lending requirements means, potential homebuyers may qualify for a lower amount of financing than they may have six months or a year ago.)

So fewer buyers with less money means that homeowners may have to lower their asking and selling prices. If you're a buyer with impeccable credit, this can be a great opportunity to get more house for your money. If you're the seller... well, not so good.

So should you sell now, before requirements constrict further? Or should you try and wait it out until the industry normalizes (in late 2007 or early 2008)? Because each situtation is unique, we advise that you consult with your Realtor.

Limited Housing Options for Those With Bad Credit

A Reuters article claims that, due to the subprime mortgage situation, lower-cost housing (such as mobile home parks and apartment rentals) may be the only housing options left to those closed out of homeownership.

However, it warns that former homeowners with ruined credit from mortgage defaults --or those who have substandard credit -- might still find it difficult to find housing. Becaus eof their bad credit, they won't easily qualify for a personal loan with which to buy a mobile home. What's more, many available apartments are in high-quality buildings that have tough credit standards for tenants.

Soure: www.reuters.com/article/ousiv/idUSN1930366120070320

Greenspan on Subprime Risk, Housing Prices

Last week, Former Federal Reserve Chairman Alan Greenspan there was a risk that rising defaults in subprime mortgage markets could spill over into other economic sectors.

Greenspan said the ongoing housing downturn appeared to stem more from:

• the recent stagnation in housing prices after years of appreciation
  

than from

• a decline in mortgage quality
  

but said he was not downplaying problems in so-called subprime loans.

If home prices keep falling, he warned, there could be more of an impact on the broader economy's momentum. Consumer spending fuels two-thirds of national economic activity.

Source: CNN Money

Tax Myths about Homeownership

1. My mortgage interest will reduce my tax bill.

2. All costs related to my home are deductible.

3. I must use money from my home sale to buy another residence.

4. Putting my child on my home's title is a smart tax move.

5. If I take a capital loss when I sell my home, I can write it off.

Read the entire story and learn more at realestate.msn.com/Buying/Article_bankrate.aspx?cp-documentid=687267>1=9226

How are Home Prices Being Affected?

House prices could fall 10% in 2007 if a credit crunch taking shape in the mortgage market gathers momentum, said a Merrill Lynch researcher this week.

The company stated that the biggest concern is that tighter lending standards in the mortgage market -- even if it is confined to lower-quality (read "sub-prime") borrowers -- will constrain overall housing demand and hamper recovery in the housing market.

Source: Reuters

Why Use a Local Mortgage Lender?

Local firms such as Compass Mortgage have the knowledge, expertise, and contacts to handle your financing as efficiently as possible. Your bank or credit union may not offer a full range of loan programs for your unique needs; they are often limited to offering their own programs (when you might need a more flexible solution). They also may not be as familiar with local real estate and/or insurance requirements or property values. What's more, they may send out an appraiser who doesn't know the local market. Just as you work with a local Realtor who specializes in a particular geographic regions, so should you work with a local mortgage professional.

On Subprime Lending

Subprime lending has been in the spotlight recently, due to a number or articles on predatory practices and failing institutions.

The term "subprime lending" describes a specific lending market sector that makes loans to customers who may otherwise have difficulties obtaining financing.

Typically, subprime customers do not qualify for prime market rates because they have blemished (or limited) credit. Consequently, they are charged a higher interest rate and higher fees by lending institutions to compensate for the increased risk of default or foreclosure.

Subprime lenders are usually stand-alone companies and are not affiliated with prime lenders (who take little risk with their funds). There are a number of lenders in the subprime mortgage market who "play by the rules" and serve communities that may have been underserved by other lenders in the past. However, other lenders engage in abusive practices such as

• Equity stripping, which occurs when a loan is made based on the equity in a property rather than on a borrower's ability to repay the loan.
  
  
• Packing, which is the practice of adding credit insurance or other "extras" to increase the lender's profit on a loan.
  
  
• Flipping, which happens when a lender induces a borrower to repeatedly refinance a loan, often within a short time frame, charging high points and fees each time.
  

So how can this be a problem for existing homeowners who have already obtained financing from a reputable source? Tightening guidelines on subprime lending are affecting all aspects of the mortgage industry. This makes it more challenging for homeowners to convert from an adjustable rate loan to a fixed-rate one, or to pull equity from their properties. Some borrowers are locking in rates, only to find out that their loan program doesn't exist a few weeks later.

Here's how one visitor to Mortgage News Daily sized up the situation:

"I can't refinance. There's no equity in my property. The loan I need can't be offered. I can't sell without bringing money to the closing. I don't want foreclosure. How do I make it through this cycle?"

---

The bottom line: Obtaining a new or refinanced mortgage can be a life-changing financial decision. Subprime finance companies offer customers with low FICO scores a chance to re-establish their credit and eventually qualify for loan programs with more favorable rates and terms.

Whether you're looking to buy or refinance, be sure obtain multiple offers and consider getting a second opinion. Have a back-up plan in case your financing is delayed or denied, and don't wait until the last minute to apply.

Four Tips for Refinancing

Bankrate.com offers these four tips to ease the refinancing process:

• Know why you want to refinance
  
• Provide paperwork promptly;
  
• Lock long
  
• Keep in touch (but not too much)
  

Read the entire article here: www.bankrate.com/ust/news/mortgages/20030605a1.asp

Why Balance Transfers Harm Your Credit Score

Taking advantage of a balance-transfer offer to reduce your debt can affect your credit scores in a number of ways:

• Simply opening a new credit card to take advantage of the offer can lower your scores by about 5 points.





• Transferring your balance to a card with a lower limit can also hurt your scores, as can consolidating debt. The FICO formula typically would rather see $1,000 balances on five cards than a $5,000 balance on one card.





• You can compound the damage by closing the old credit card, since shutting down the account trims the amount of available credit that's used in the credit-scoring formula.
  

Source: MSN Money

Credit Facts: Checking Your Own Credit

True or false: requesting your own credit report lowers your credit score.

False. Many people get this one wrong. There is a difference between checking your own credit and having a creditor check your credit. When you check your own report, it does not harm your credit score.

Making sure your credit report is accurate -- along with paying your bills on time and keeping credit card balances below 35% of their limits --will help you maintain a healthy credit profile.

How Competitive is Your Local Market?

Whether you're buying or selling, it's good to find out how "hot" your local area is. Here's some advice from Yahoo Real Estate and Inman News on how to do just that:

Talk with local real estate agents. Find out how many listings are on the market in your area. How does this compare with the inventory level of last month, six months ago, and a year ago? How long is it typically taking listings to sell? Is the time lengthening or shortening? Are homes in your area selling with multiple offers? (If so, this usually indicates that there are more buyers than sellers in the market.) In such a market, listings can sell quicker. If prices have been slipping, an inventory shortfall can cause the market to firm up and prices to stabilize.

Subscribe to a local newspaper. How fat is the real estate ad section? Are the same home-sale ads running week after week? Or, are listings selling quickly? Are price reductions common or rare?

A little research can make you a better-informed real estate buyer/seller.

Fallout From Tighter Guidelines

In the wake of news that a dozen or so subprime lenders have recently closed their doors or been purchased, and that a dozen more are in trouble, USA Today took a lot at what's happening in the mortgage industry


They found that, to stem their losses, lenders nationwide are notifying mortgage brokers to cut back on some subprime ARM loan programs. Many of them are:

• Reducing loans for 100% of the purchase price.

  
  
  

• Reducing the number of "piggyback" loans, whereby a lender makes one loan for 80% of the purchase price and a second loan for the remaining 20% of the price at a higher interest rate.

  
  
  

• Raising the required credit score.

  
  
  

• Requiring more documentation of a borrower's income and scrutinizing the appraisal and comparable-home sales data.
  

So how will this affect your ability to get a new loan, or refinance your existing one? It really shouldn't as long as you were't a marginal candidate to being with. At this point, most of the pain is being felt by lenders who made riskier loans... and hasn't spread to the broader financial markets.

But what if your ARM is climbing to an interest rate you're not comfortable with? Call us today at (603) 472-2272 and learn how we might help....

5 Ways to Lower Your Credit Score

Here's 5 easy ways to wreck your credit score (they're more common than you'd think):

• Late payments
  
• High card balances
  
• Closing credit cards
  
• Too many in-store cards
  
• Fines that add up
  

Interested in learning more? Then read this CNN Money article: money.cnn.com/2006/07/10/pf/credit_killers/index.htm