Real Estate and Mortgage Viewpoints In Retrospect


This first article titled, In Philadelphia, a Chance to Stave Off Foreclosure is published to the NYTimes.com website.

My commentary: The article provides an insightful description of a necessary and timely housing program provided by the city of Philadelphia to that city’s homeowners. It is a program which should serve as a model to every municipality in the country. Housing and mortgage professionals should find the article very informative. Take a look!

This second article titled, Back to Business – Investment Funds Profit Again, This Time By Paring Mortgages is published to the NYTimes.com website. it sheds light on the mortgage crises of 2007. View the entire article here!

My commentary: Way to go Wall Street! When you read this article you will probably be as surprise as I was. I have been pretty down on Wall Street for the last couple of years for a variety of reasons, not the least of which is the mortgage crises, but here is a Wall Street idea that is actually creating benefits for homeowners (Main Street). If you promote affordable financing for homeowners as I do, you will enjoy this article. Take a look for yourself at the above link!

Article number 3 is titled, An Upturn in the Housing Market May Be Reversing, is published on the NYTimes.com website.

My commentary: At first I thought all the housing market news was going to be negative, but as I continued reading that turned out not to be the case. It’s kind of a mixed bag: One index shows housing prices rising just a fraction, another forecasting a decline of as much as 10 percent, while yet another has prices flat for September. Read more!

Article number 5 is titled, Bigwigs Debate ‘Too Big to Fail’ and is published to the Seeking Alpha website.

My commentary: Some workout programs have not been working out, and it may be necessary for the federal government to take a second look at the Home Affordable program. This is a fascinating article which gives the reader a brief insight into what is really taking place behind the scenes at mortgage servicers/holders across the country. Was it ever the intention of these banks and mortgage holders to implement the program as the government intended? You be the judge!

Article number 4 is titled, Treasury to Pressure Mortgage Companies to Cut Payments, is published to the NYTimes.com website.

My commentary: As one who believes in, and writes about affordable housing at every opportunity, I certainly can’t fathom the TBTF concept. There are many who believe that our government is too big as it exists, and yet here we are debating whether certain institutions (not of the government) ought to be permitted – actually enabled – to continue operating on such a scale that their failure spells doom for the rest of us.

‘TBTF’ just doesn’t seem a reasonable or acceptable societal structure under which to live, so I’m anti-TBTF and I hope those we elect to address these matters share these sentiments. The above article, authored by Carolyn Austin, is very thought-provoking and, to her credit, she has opened what I believe to be one of the more profound discussions of our time. Take a look!

Article number 6 is titled, Official Google Blog: RT @google: Tweets and updates and search is published to the Google blog.

My commentary: What an appropriate statement. There is certainly a lot happening on the social networking scene, and when you add search to it, my sentiments are exactly those on the above article. Take a look!

Thank you for your support. We will continue working to provide the most relevant and useful information about current FHA-insured programs and related topics. God Bless!

Avoid Extra High Mortgage Financing Costs


While it is true that real estate property buyers and owners looking to refinance their mortgages want to avoid extra high financing costs, the question of how to avoid such costs and what action(s) one must take in order to to so. What costs are considered extra high? And when might a borrower find him/herself in a position to be chartged extra high financing costs in today’s – years AFTER the subprime mortgage era – real estate mortgage market?

You may or may not know that there are ways for you to pay less while you own more, but taking yourself out of a certain high-cost category may be another thing entirely. If you know exactly how to work within the real estate arena, then you can probably find ways to avoid extra financing costs being tacked on to your purchase or refinance mortgage.

For example, if you’re an investor, finding the right area to focus on for your investment can be an important element in paying lower amounts without extra charges. If you’re not an investor but you’re seeking mortgage financing for the first time or you wish to re-mortgage a home you already own, the work you do BEFORE signing a mortgage application will determine what kind of mortgage you obtain and at what costs.

One of the easiest ways to avoid extra costs is to make sure that you make your monthly payments on time. Usually, mortgage companies will add extra charges (late charge penalties) if you don’t pay by the date they have set for you. Over a period of time – if you continue to pay late – this can result in hundreds of extra dollars in extra costs at one time. Staying ahead and consistent will help you to keep costs stable and lower. But this is one of the easily identified extra costs which is similarly easy to avoid paying.

What about other charges you can be hit with? Like pre-payment penalties, discount points, origination fees (which are also considered points by most attorneys), warehousing fees, a higher-than-prevailing interest rate at closing, a longer-than-necessary loan term (30 years when you qualify for 15 years can cost tens of thousands of dollars, if not hundreds of thousands), getting locked (or talked) into a FHA mortgage when a conventional mortgage would be a better, more affordable mortgage loan (FHA rates are usually 1/2 percent higher than conventional and you’ll have to pay the MIP which is non-existent on a 80% LTV conventional mortgage).

So of course, knowing the mortgage financing options that are available to you can certainly help you to avoid extra high financing costs. Some homes will require that you invest more, and some loan programs will also ask that you invest a higher amount out-of-pocket, but this is not necessarily a bad thing. For example, if you are able to make a down paymwent of 20 percent of the home selling price, you immediately eliminate any kind of mortgage insurance (MIP AND PMI), making your monthly payment lower by those amounts.

As long as you put youself in a position to determine the type of financing that would be beneficial to you in the short term, and even more importantly, the long term – which is where many mortgage borrowers fail to spend enough time planning for – the decisions you make will be informed and thus guide your selection of a mortgage loan that will best suit your situation.

Keep in mind that until you commit to a mortgage type, you always have the choice of looking into a different type of mortgage program. The type of program that you decide upon for your mortgages will make a huge difference in how much you pay overall and how much you pay each month.

The finances don’t stand alone when you are trying to avoid extra costs. The value of the property that you are investing in will also make a difference. The goal for any real estate investment is a high quality home for a lower price. You want to get as close to this goal as you can. Even if you pay on the home for a while, it will allow you to benefit later on with the investment that you have made. You will have the ability to have more equity returned to you when you decide to invest in something bigger and better.


Real estate financing can be beneficial if you approach it correctly. Understanding how all the parts of your loan, your home and your individual needs work together can help you to find the best deal. Over time, you will not only have a home to live in, but will also have an investment that can help you to make the most of what you have. That is, of course, if you are buying a home to live in and not one to buy and flip in a short period, in which case your approach to buying real estate has to be totally different although the goal of avoiding extra high costs is the same.

Understanding The Cash-Out Refinance


What is a Cash-Out refinance?

A cash-out refinance enables homeowner to remortgage their home for an amount greater than the exiting mortgage balance. Once the new mortgage is approved and a mortgage closing takes place, the homeowner then begins to make repayments on the new higher amount over the course of a new term. In other words, this cash-out refinance results in a brand new mortgage for the homeowner with new interest rate, new term and new payments. So the reason for refinancing should be a good one and the reason for taking cash-out should be as good or better.

When is a Cash-Out Refinance possible?

A homeowner can apply and, most likely get an approval for a cash-out refinance when there is enough existing equity in the home (for a FHA refi, at least 85% of the property’s appraised value must cover the existing mortgage, closing costs and the amount of any check written to the homeowner. For a conventional refi it’s 80%). This is important because the lender is able to justify the approval of increased funds to the homeowner due to the value of the property. Every lender must have security and collateral for every mortgage, and the cash-out refinance is no different.

Homeowners who wish to take advantage of a cash-out refinance offered by a lender should inquire as to whether or not the lender offers this type of refinancing. This is important because not all lenders offer this option. It should actually be one of the first questions the homeowner asks when inquiring about refinance programs. Doing so will save homeowners, who are seeking a cash-out refinance, a great deal of time.

How Can the Cash be Used?

For many homeowners the most appealing aspect of cash-out re-financing is that the additional funds can be used for any reasonable project or undertaking the homeowner wishes to accomplish. The lender will require an explanation (most likely in affidavit form for FHA mortgages) of how the cash-out money will be used.

It has to make sense to the lender and must also be in accordance with refinance mortgage guidelines set by both conventional and the FHA. Most homeowners would probably not refinance their homes and use the cash to gamble in las vegas or Atlantic City, but in the circumstance where there is one or two who might need cash-out refinance funds to gamble with, they would have to look elsewhere because they wouldn’t get it from a mortgage lender.

That having been said, most homeowners I’ve dealt with during my years as a mortgage lender representative had very practical reasons for wanting a cash-out refinance, and in my opinion that hasn’t changed with homeowners wanting to refinance today.

Of course, getting approved for a cash-out refinance is more of a challenge for today’s homeowners due to the loss of equity and underwater mortgages many have suffered as a result of the subprime mortgage crises. Those who have enough equity for cash-out refinancing will be wise to use the funds in a judicious manner. Some of the popular uses for funds received from cash-out refinancing include:

  • Home Improvement Projects
  • Home Renovations
  • Child’s College Education
  • Hospital/Health-related Bills
  • Mortgage Debt Consolidation
  • Credit Debt Consolidation

There are probably a few more, but all the reasons listed above are excellent uses of a cash-out refinance that a lender would certainly approve your cash-out refinance for. Homeowners who are considering this type of a refinancing option should also consider whether or not the closing costs and other expenses related to the loan are tax deductible.

Using the cash-out option to make home improvements is jus one example of a situation where the funds can be tax deductible. Homeowners should consult their tax professional on the matter to determine whether or not they are able to deduct the interest from the repayment of their refinance mortgage.

An Example of a cash-out Refinance

The process of a cash-out refinance is fairly simple to explain. Consider a homeowner who purchases a home and borrows $150,000 at a rate 7% interest to complete the purchase. Now consider the homeowner has already repaid $50000 of the loan and would like to borrow an additional $20,000 to make a rather large purchase or pay off some credit cards. With this additional funding available the homeowner has an opportunity to use the equity in their home to reduce credit card debt thereby increasing their monthly cash-flow.


In the example above the homeowner may refinance for a total of $120,000 at a lower interest rate such as 6.25%. This process allow the homeowner to take advantage of the existing equity in their home and also allows him/her to qualify for a substantial loan at a great rate AND get rid of credit card debt.