SEATTLE AVENUE

Every once in a while I am successful in negotiating with my family to have for dinner what I affectionately refer to as “LOs.”

By LOs I don’t mean Loan Originators, which is what/who the US Senate may be serving up with the current proposed bill S. 2452, Home Ownership Preservation and Protection Act of 2007. Please log on to http://mymortgageplan.blogspot.com and read the 12/18 posting for my blog entry on that subject. Not a pretty picture for you or for me.

What I mean is “leftovers.” It was a tradition when I was growing up that every few days we would put together the leftovers from the previous few evenings. It was a smorgasbord of differing tastes, sort of like the Buffet at the Tulalip Casino! Well, except we didn’t have the guy in the chef’s hat carving turkey - with my family of 8, however, not a lot of food makes it to the refrigerator.

So to re-live the good ol’ days of yore, I’ve decided to serve up a few leftovers for you — these are topics that don’t necessarily call for their own posting but nonetheless are tasty tidbits of information that should go down pretty smoothly. Enjoy!

A “Green” Mortgage?
Seems to be the new buzz-word and honestly it probably started around here! Some builders use environmentally friendly building supplies and energy-efficient appliances that qualify them for “Green” status (visit http://www.buildinggreen.com/, http://www.usgbc.org/ or google building green for a plethora of Web sites); some car manufacturers have jumped on board and even the oil companies have allegedly spent millions of dollars in pursuit of sustainable energy (though I don’t know if they’ve gone as far as claiming to be ‘green’).

The “Green” mortgage follows suit by allowing for a higher amount to be financed in order to use funds to purchase energy-efficient appliances, windows, et al. There is some buzz about this; however, not a lot of lenders have jumped on board so we may be a ways out before this hits the main stream. Your local PUD probably has a separate program for this as well.

The “No Cost” Mortgage
This has been cropping up more and more in marketing campaigns, presented as the new best thing in the mortgage market and often claim it to be an “exclusive” program. Not so much, really.

Any Loan Originator can structure the loan this way, and regardless of the crafty word-crafting often used to carefully balance on the line of truth (notice I didn’t say which side of that line), the trade-off is that you have a higher interest rate (please see comments on the blog entry I mentioned above for a ‘how do they do that?’).

The real question you want to ask is this: “when would paying a higher rate and having no fees be in my best interest?” Ahhh, there’s the rub! Think of it as ‘the scale of justice’ type of old fashioned scale. When one side goes up, the other goes down, right? Which side is best down (weighted) depends on how long you plan on being in the home and the answer to that can tip the scale one way or the other.

Have your Loan Originator work out the ‘break-even point’ for you — if you plan on being in the loan longer than that point, it makes sense to pay more upfront; if however you plan on being in the home (or loan) for less time than it takes to break even, consider rolling more of the cost into the rate.

Clear as mud pie? Speaking of dessert…

Cut Your Mortgage Payment IN HALF!
This one really chaps my hide - I get calls from past clients probably weekly, asking for clarification on this ‘offer’ that I apparently sent them - not the same past client of course, and I don’t mind the phone calls, that’s what I’m here for. But I didn’t send them the offer! There’s a fungus amungus (fungus among us).

Especially for mortgages that have originated in the previous 6-12 months, snappy offers promising to cut your mortgage payment or interest rate in half, appearing to be from your current mortgage company seem to be arriving by the truck full! But there’s some eensy-weensy print down at the bottom of the letter (or on the back, or possibly on a separate page) that very discreetly says “this is a solicitation and that the soliciting company has no affiliation with your current lender.”

“But how do they get away with that?!?!” …you demand? Well, some details of a home purchase become part of public county records, so they snoop through and mail off a rather convincing letter that looks just like it came from your lender. I suppose we can contact our government officials (http://www.usa.gov/Contact/Elected.shtml), and filing a complaint (http://www.atg.wa.gov/FileAComplaint.aspx) with the state Attorney General (http://www.atg.wa.gov/) wouldn’t be a bad idea. How is Rob McKenna these days anyway?

And here in Washington State, we have the Department of Financial Institutions (http://www.dfi.wa.gov/), they’d love to hear from you and get a copy of that letter. At the moment, DFI is also up in arms about the local lender promising– but not delivering– the 1% mortgage (see the DFI front-page). Don’t even get me started on that one.

By the way, I’m James Wirth, WA DFI License #510-LO-34536, and if anyone is asking, the comments in this post are the sole opinion of the author.

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James Wirth is a Mortgage Planner licensed by the Washington State Department of Financial Institutions under Loan Officer License Number 510-LO-34536. His Blog can be found at http://mymortgageplan.blogspot.com and he can be reached directly at:
James Wirth
Landover Mortgage

Cell/Direct: (425) 501-4749
Office: (425) 977-2244 Ext. 1002
Fax: (866) 215-1749Email: Jameswirth@landovermortgage.com
Web: http://www.landovermortgage.com/jameswirth/