Mortgage Refinancing Arizona

Important information about our rate tables
Many lenders have different rates on their own websites than those posted on Bankrate.com. In order to get the Bankrate.com rate, please identify yourself as a Bankrate customer. Rates are subject to change without notice and may vary branch to branch. These quotes are from banks, and thrifts, some of whom have paid for a link to their own Web site where you can find additional information

 

Arizona Real Estate Prices

While the beleaguered real estate market in Arizona began to show signs of stabilization in 2009, the state continued to exceed the national average in rates of decline both in total units and in median price

Arizona Median Price and Total Unit

While the U.S as a whole experienced a marginal reduction in housing prices of .2% from December to January 2010, Arizona declined 1.1%. Similarly, the national market declined 5% for the full year comparison of 2008 to 2009 for a median sales price of $186,000. Arizona exceeded those averages declining 16% for the full year 2008 to 2009. These declines resulted in a median sales price of $151,000.
On a more positive note, in single family homes and condominiums, Arizona did surpass the national average in year over year unit sales increases. While U.S total home sales grew at a 27.2% rate from 2008 to 2009 to slightly over 5 million units, Arizona exceeded the national average with a 31% year over year increase that resulted in sales of just over 150,000 units.

Tracking Sales for Major Metropolitan Areas

The Phoenix and Tucson metropolitan areas continue to see significant price declines in housing that show only slight signs of moderating. In fact, homes in Phoenix saw a decline in the median sales price of 28% from 2008 to 2009, and a continued deterioration of 7.7% in the fourth of 2009. Tucson fared only slightly better, declining 16% for the full year and 10% in the fourth quarter..
Arizona continues to face significant headwinds related to the extreme speculative bubble that the state experienced from 2005 through 2007. Combined with extraordinarily lax mortgage qualification standards as well as exotic mortgage instruments such as interest only loans and unrealistic adjustable rate mortgages, Arizona continues to struggle to absorb a glut of foreclosures. In 2009, 163,000 properties in Arizona went into foreclosure. With a foreclosure rate of 6.12%, Arizona is second to only to Nevada as the nations most troubled real estate market.

The Best Cities in Arizona

Abundant sunshine 300 days a year, low humidity in the summer, incredible recreational choices and clean and modern cities are all reasons why Arizona will continue to see population growth despite the current economic conditions. In fact, Arizona’s 9.1% unemployment rate mirrors the national average and remains substantially below that of neighboring California and Nevada.
Phoenix
Naturally, no mention of popular places to live in Arizona would be complete without the Phoenix metropolitan area. Starting with the Phoenix area itself and its clean high tech industry including Intel, Honeywell and Raytheon, Phoenix is a growing center for well paying high tech jobs in engineering, research and manufacturing.
Surrounded by many suburban communities, the Phoenix metropolitan area has upscale cities such as Scottsdale and Paradise Valley as well as numerous master planned communities in both the East and West Valley.
As the nation’s fifth largest city, Phoenix has professional teams in every major sport, scenic desert hiking trails, impressive golf courses, world class museums and a variety of authentic ethic restaurants.

Tucson
About a two hour trip down Interstate 10 from Phoenix is the city of Tucson. Located in the lush Sonoran desert, Tucson’s higher elevation and greater rainfall allows for a variety of unusual and exotic plants, shrubs and trees.
Tucson is surrounded by the Rincon, Santa Rita and Catalina mountains, and is truly an outdoor recreational oasis. The Saguaro National Park is within close proximity and offers numerous hiking trails, waterfalls and exposure to desert wildlife and vegetation.
The Sonoran Desert Museum is one of the highest rated exotic zoo’s in the country including everything from Gila Monsters to limestone caves.
Neighborhoods in metropolitan Tucson provide every style of living from the retirement communities in Green Valley, the family friendly suburb of Oro Valley, to the affluent neighborhoods of the Foothills community.
Other Great Arizona Cities
Other prominent cities in Arizona include Flagstaff, which is 2 hours north of Phoenix in the Ponderosa pines. Flagstaff is the home of Northern Arizona University and has homes for both year round residents as well as second homes for those desert dwellers looking for an escape from the summer heat.
Similarly, in the northeast quadrant of the state is the White Mountains, a collection of communities including Show Low, Pinetop, Lakeside and several other small towns nestled in the tall pines. This area enjoys moderate temperatures all year, skiing in the winter and boating in the summer. It is a popular inexpensive vacation spot for residents from all around the state.

Arizona Deeds of Trust

In Arizona a “mortgage” is usually issued as a deed of trust although they remain separate legal instruments. Under a deed of trust methodology, a property remains in trust until full payment occurs for the underlying loan. The primary benefit to the lender is that the deed becomes a three party mechanism whereby the borrower conveys legal title to the third party trustee. The title is held on behalf of the lender. This conveyance provides the lender with a non judicial avenue for grievance resolution including trustee sales which is unavailable option with a conventional mortgage.
In practical terms, the foreclosure process can be expedited through a deed of trust much faster than a mortgage, usually 3 months rather than a full year. Additionally, because the foreclosure can be a non-judicial procedure, the cost of implementing the foreclosure can be substantially less.

Arizona Foreclosure Laws

In Arizona, the lender who operates under a deed of trust has essentially two options to foreclose. The lender may foreclose on the property by utilizing a judicial sale, or elect to pursue a trustee’s sale and seek legal equity against the original note. Unlike a mortgage where both remedies can not be pursued simultaneously, Arizona law does not prohibit initiating both procedures at the same time.
If a foreclosure sale results in proceeds that are inadequate to satisfy the remaining loan balance, the mortgagee or lender can seek judgment against the borrower which is known as ‘deficiency.” Under Arizona law, this amount is equal to the amount of the debt minus the amount secured through the foreclosure.
More recently, a new Arizona law was passed that was designed to protect community banks by amending foreclosure laws to make certain homeowners liable for the difference between the loan balance and what the lender can recoup from the sale of the home. However, SB 1271 was recently repealed by Arizona Governor Jan Brewer on September 4, 2009. Recently, the Arizona Bankers Association appealed to the Arizona Supreme Court challenging the validity of the Governors actions.

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Mortgage Lead Sales

                                              HOW TO GENERATE MORTGAGE LEADS
Lead generation is an important part of the sales process. Whether you are a mortgage broker, branch manager, or loan originator, you can always add to your marketing mix in an effort to bag more mortgage leads.
1. Invest in a website that serves as an authoritative portal for anyone seeking information on mortgages, which includes potential home buyers and mortgage refinancers.
2. Advertise your service through brochures, flyers and yard signs on For Sale by Owner properties.
3. Connect with divorce, family law and real estate attorneys, and relocation specialists who can direct prospects your way.
4. Team up with a real estate appraiser or a listing agent to cross-sell each other's services.
5. Use Craigslist for mortgage marketing - create an attractive posting and make sure you link your ad to your sign-up form or mortgage information page (as opposed to the home page), to encourage prospects to take action.
6. Tap into the marketing potential of social media. Over 70% of all B2C marketers acquire leads through Facebook, 40% through Twitter and 65% via LinkedIn.
7. Use email marketing to keep existing customers interested in your offerings, while also using the opportunity to win referrals. An email rewarding existing customers for referrals is a proactive strategy.
8. Identify appropriate trade shows where you can advertise your offerings to a large audience.
9. Tap into your personal network to find prospects - you need to be persistent in your efforts by reminding friends, relatives, well-wishers about your offerings and benefits from time to time. Join a local civic group, such as the rotary club or Chamber of Commerce where you will get a chance to build relationships with key community members and professionals.
10. Attend local fundraisers, business meetings, town hall meetings, check bulletins in local stores, and turn them into networking events for yourself. Start off by handing out your business card and marketing material/ instructions to an identified network of clients and future referral business.

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A Mortgage Refinance

What You Should Know Before Refinancing

Getting a new mortgage to replace the original is called refinancing. Refinancing is done to allow a borrower to obtain a better interest term and rate. The first loan is paid off, allowing the second loan to be created, instead of simply making a new mortgage and throwing out the original mortgage. For borrowers with a perfect credit history, refinancing can be a good way to convert a variable loan rate to a fixed, and obtain a lower interest rate. Borrowers with less than perfect, or even bad credit, or too much debt, refinancing can be risky.
In any economic climate, it can be difficult to make the payments on a home mortgage. Between possible high interest rates and an unstable economy, making mortgage payments may become tougher than you ever expected. Should you find yourself in this situation, it might be time to consider refinancing. The danger in refinancing lies in ignorance. Without the right knowledge it can actually hurt you to refinance, increasing your interest rate rather than lowering it. Below you will find some of this basic knowledge written in order to help you reach your best deal. For comparative purposes, here is a rate table highlighting current rates in your area.

What is Refinancing?

Refinancing is the process of obtaining a new mortgage in an effort to reduce monthly payments, lower your interest rates, take cash out of your home for large purchases, or change mortgage companies. Most people refinance when they have equity on their home, which is the difference between the amount owed to the mortgage company and the worth of the home.

• Tips for Consumers Refinancing their Homes – Some things to think about before deciding to refinance.
• Is it Time to Refinance? – How you can tell you are in the best position to refinance.
• When Should We Refinance? – How refinancing at the right time can help you increase equity and pay lower interest rates.
• Home Mortgage Refinancing while in Bankruptcy – When filing for bankruptcy, refinancing a home mortgage loan can ease your burden.

What are the Advantages of Refinancing?

One of the main advantages of refinancing regardless of equity is reducing an interest rate. Often, as people work through their careers and continue to make more money they are able to pay all their bills on time and thus increase their credit score. With this increase in credit comes the ability to procure loans at lower rates, and therefore many people refinance with their mortgage companies for this reason. A lower interest rate can have a profound effect on monthly payments, potentially saving you hundreds of dollars a year.

Our home refinance calculator shows how much you can save locking in lower rates.

Second, many people refinance in order to obtain money for large purchases such as cars or to reduce credit card debt. The way they do this is by refinancing for the purpose of taking equity out of the home. A home equity line of credit is calculated as follows. First, the home is appraised. Second, the lender determines how much of a percentage of that appraisal they are willing to loan. Finally, the balance owed on the original mortgage is subtracted. After that money is used to pay off the original mortgage, the remaining balance is loaned to the homeowner. Many people improve upon the condition of a home after they buy it. As such, they increase the value of the home. By doing so while making payments on a mortgage, these people are able to take out substantial home equity lines of credit as the difference between the appraised value of their home increases and the balance owed on a mortgage decreases.

• Help for Homeowners – There has been recent legislation regarding refinancing. Take a look and know your rights.
• Home is Where the Equity Is – An article on the importance and process of building equity.
• Home Affordable Refinance Program – New programs are available to help you refinance.
• Streamline Your FHA Mortgage – This specific type of loan can be extremely beneficial to the homeowner looking to refinance.
• Refinancing May be More Costly than You Think – The hidden costs and fees of refinancing a mortgage, even when there are lower interest rates.

What are the Risks?

One of the major risks of refinancing your home comes from possible penalties you may incur as a result of paying down your existing mortgage with your line of home equity credit. In most mortgage agreements there is a provision that allows the mortgage company to charge you a fee for doing this, and these fees can amount to thousands of dollars. Before finalizing the agreement for refinancing, make sure it covers the penalty and is still worthwhile.
Along these same lines, there are additional fees to be aware of before refinancing. These costs include paying for an attorney to ensure you are getting the most beneficial deal possible and handle paperwork you might not feel comfortable filling out, and bank fees. To counteract or avoid entirely these bank fees, it is best to shop around or wait for low fee or free refinancing. Compared to the amount of money you may be getting from your new line of credit, but saving thousands of dollars in the long run is always worth considering.

• Refinancing Risks Have Not Become Smaller – There have been reports that risks are diminishing when refinancing. This article argues against that idea.
• Refinancing: The Top 5 Mistakes You Don't Want to Make – Some of the mistakes people make when refinancing can have disastrous effects. Avoid them with this article.
• Refinancing Won't Fix the Housing Market – How massive amounts of refinancing is affecting the country as a whole.

What Do I Do to Refinance?

The first thing you must do when considering refinancing is to consider exactly how you will repay the loan. If the home equity line of credit is to be used for home renovations in order to increase the value of the house, you may consider this increased revenue upon the sale of the house to be the way in which you will repay the loan. On the other hand, if the credit is going to be used for something else, like a new car, education, or to pay down credit card debt, it is best to sit down and put to paper exactly how you will repay the loan.
Also, you will need to contact your mortgage company and discuss the options available to you, as well as discussing with other mortgage companies the options they would make available. It may be that there is not a current deal which can be met through refinancing that would benefit you at the moment. If that is the case, at least you now know exactly what you must do in order to let a refinancing opportunity best benefit you. When refinancing, it can also benefit you to hire an attorney to decipher the meaning of some of the more complicated paperwork.

• Will Refinancing Your Mortgage Save You Money? – Perhaps the most important question to ask yourself before refinancing, this article gives you the tools to come up with an informed answer.
• How to Decide Whether to Refinance – There are so many things to consider before refinancing. Use this resource to organize your thoughts.
• Refinancing Your Home – A housing specialist's home ownership fact sheets with information on the best time to refinance.
• Refinancing and the US Economy – The issues regarding the costs and benefits of mass refinancing by the American people.
• Saving Your Home in Chapter 13 Bankruptcy – How refinancing your mortgage can actually help you while in Chapter 13 bankruptcy.
• Streamline Refinancing - Some consumers may be eligible for refinancing options which close quicker and at lower costs than a typical refinance.

When Can I Refinance My Home?

Most banks and lenders will require borrowers to maintain their original mortgage for at least 12 months before they are able to refinance. Although, each lender and their terms are different. Therefore, it is in the best interest of the borrower to check with the specific lender for all restrictions and details.
In many cases, it makes the most sense to refinance with the original lender, but it is not required. Bear in mind though, It's easier to keep a customer than to make a new one, so many lenders do not require a new title search, property appraisal, etc. Many will offer a better price to borrowers looking to refinance. So odds are, a better rate can be obtained by staying with the original lender.

Reasons for a Borrower to Refinance

Borrowers may consider refinancing for several different reasons, including but not limited to:

1. A Lower Monthly Payment. To decrease the overall payment and interest rate, it may make sense to pay a point or two, if you plan on living in your home for the next several years. In the long run, the cost of a mortgage finance will be paid for by the monthly savings gained. On the other hand, if a borrower is planning on a move to a new home in the near future, they may not be in the home long enough to recover from a mortgage refinance and the costs associated with it. Therefore, it is important to calculate a break-even point, which will help determine whether or not the refinance would be a sensible option. Go to a Fixed Rate Mortgage from an Adjustable Rate Mortgage. For borrowers who are willing to risk an upward market adjustment, ARMs, or Adjustable Rate Mortgages can provide a lower montly payment initially. They are also ideal for those who do not plan to own their home for more than a few years. Borrowers who plan to make their home permanent may want to switch from an adjustable rate to a 30,15, or 10-year fixed rate mortgage, or FRM. ARM interest rates may be lower, but with an FRM, borrowers will have the confidence of knowing exactly what their payment will be every month, for the duration of their loan term. Switching to an FRM may be the most sensible option, given the threat of forclosure, and rising interest costs.
2. Avoid Balloon Payments. Balloon programs, like ARMs are a good ideal for lowering initial monthly payments and rates. However, at the end of the fixed rate term, which is usually 5 or 7 years, if borrowers still own their property, then the entire mortgage balance would be due. With a ballon program, borrowers can easily switch over into a new fixed rate or adjustable rate mortgage.
3. Banish Private Mortgage Insurance (PMI). Low or zero down payment options can allow buyers to purchase a home with less than 20% down. Unfortunately, they usually require private mortgage insurance. PMI is designed to protect lenders from borrowers with a loan default risk. As the balance on a home decreases, and the value of the home itself increases, borrowers may be able to cancel their PMI with a mortgage refinance loan. The lender will decide when PMI can be removed.
4. Cash out a portion of the home's equity. Generally, most homes will increase in value, and are therefore a great resource for extra income. Increased value gives the opportunity to put some of that cash to good use, whether it goes towards purchasing vacation property, buying a new car, paying your child's tuition, home improvements, paying off credit cards, or simply taking a much needed vacation. Cash-out mortgage refinance transactions are not only easy, they may also be tax deductible.

The Cost of Refinancing Your House

In general, refinancing includes the following closing costs outlined below:

• Application fee. Lenders impose this charge to cover the cost of checking a borrowers credit report, and the initial cost to process the loan request.
• Title insurance and title search. This charge covers the cost of a policy, which is usually issued by the title insurance company, and insures the policy holder for a specific amount, covering any loss caused by discrepancies found in the property's title. It also covers the cost to review public records to verify ownership of the property.
• Lender's attorney review fees. The company or lawyer who conducts the closing will charge the lender for fees incurred, and in turn, the lender will charge those fees to the borrower. Settlements are conducted by attorneys representing the buyer and seller, real estate brokers, escrow companies, title insurance companies and lending institutions. In most situations, the individual conducting the settlement is providing their services to the lender. Borrowers may be required to pay for other legal fees and services related to their loan, which is then provided to the lender. They may want to retain their own attorney for representation in the settlement, and all other stages of the transaction.
• Points and fees incurred in loan origination. Lenders charge an origination fee for their work in preparing and evaluating a mortgage loan. Points are prepaid financial fees which are imposed by the lender at closing. This is to increase the lending institution's yield beyond the agreed upon interest rate on the mortgage note. One point is equal to one percent of the actual loan amount.

Unsure if You Should Refinance?

Run the numbers to see if refinancing makes sense for you. Our home refinance calculator shows how much you can save locking in lower rates.

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Mortgage Refinance Quotes

If you're considering refinancing your mortgage, you are likely eager to find the lowest mortgage refinance rates.

But before you start shopping around for the lowest rates, experts say you should establish your objectives and prepare your finances to improve your chances of qualifying for the lowest interest rate.

“First, figure out the best loan product to meet your financial goals, and then you can start looking for the most competitive mortgage rates,” says Michael Jablonski, executive vice president and retail production manager for BB&T Mortgage in Wilson, North Carolina.

Here are 12 steps that will help lock in the lowest refinance rate possible:

No.1: Raise your credit score

"Typically, a credit score of 740 or higher puts borrowers in the best tier for a conventional loan program," says Michael Smith, first vice president – business development manager for mortgage lending for California Bank and Trust in San Diego.

Most lenders require a minimum credit score of 620 to 640, but you'll pay a higher mortgage rate for conventional loans unless your score is 740 or above. However, some portfolio lenders set their own guidelines.

30 Yr. Fixed - Refinance Rates from Our Lenders in California

Lenders

Rate

APR

Monthly Payment

Details

LoanDepot, LLC

4.000%

4.202%

$1,671

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HomePlus Mortgage

3.875%

3.899%

$1,646

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LendingHome Corp.

3.750%

3.768%

$1,621

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CloseYourOwnLoan.com

3.750%

3.887%

$1,621

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Ad Disclosure - Rates Last Updated: 04/16/2017 More Mortgage Rates

 

No. 2: Lower your debt

Paying bills on time and paying down your credit card balance can reduce your debt-to-income ratio, or DTI, which improves your chances of qualifying for a low mortgage rate, says Jablonski.

A good rule of thumb is to make sure your debt-to-income ratio is no more than 36 percent, and even lower is better.

"Don't buy a new car, make other major purchases or fill out multiple credit applications before you refinance, because all of those actions can hurt your credit profile," says Smith.

Even if you have a high credit score, you may be denied a refinance altogether or subjected to higher interest rates if your DTI ratio is too high, says Jablonski.

What is HARP and do I qualify for a HARP loan?

No. 3: Increase your home equity

Remember that your credit scores and the loan-to-value ratio of your property could have a much bigger impact on your refinance rate than a slight shift in average mortgage rates, says Malcolm Hollensteiner, director of retail lending sales for TD Bank in Vienna, Virginia.

"Both a lower-than-average credit score and a high loan-to-value can lead to a more expensive interest rate," he says.

If you are underwater on your mortgage, a Home Affordable Refinance Program (HARP) loan may be your best option.

No. 4: Organize your financial documentation

You should get your credit reports from all three bureaus to make sure there are no mistakes that need correcting before you apply for a refinance, says Smith.

A refinance application typically requires two years of tax returns with W2s, two recent pay stubs, and your two most recent bank and investment statements.

"Gathering these materials ahead of time can expedite the loan process and prevent you from paying extra for an extension of your rate lock," says Smith.

Refinancing? Use this document checklist

No. 5: Save cash for closing costs

Closing costs average about 2 percent of the loan amount.

"You can pay cash for the closing costs or, if you have enough equity, you can roll these costs into your new loan," says Hollensteiner. "Another option that some lenders offer is to pay a higher interest rate for a lender credit to cover those costs."

Shop smart for your refinance

Once your preparations are complete, you can begin to shop around for the refinance that works best for you.

No. 6: Start online

Deborah Ames Naylor, executive vice president of Pentagon Federal Credit Union in Alexandria, Virginia, recommends starting online with a refinance calculator that estimates your monthly payments at various loan terms.

"A shorter term loan will have a lower interest rate than a 30-year fixed-rate loan, but the payment will be higher because you're paying it off faster," says Naylor. "It's important to decide what payment you're comfortable making before you see a lender, because that payment could be much less than the payment you qualify for."

No. 7: Decide on a loan term

Barry Habib, founder and CEO of MBS Highway in New York City, says the loan term you choose needs to be made in the context of your other financial obligations and plans.

"If you have $30,000 in credit card debt and no savings for college, you may want to go for a 30-year loan to keep the payments as low as possible," says Habib. "Someone else may want a shorter term to build equity faster while another borrower might want a longer loan so they can keep their tax deduction as long as possible."

No. 8: Talk to multiple lenders

Once you’ve decided on your loan term ,it’s time to research loan products available from a credit union, a regional or community bank, a direct lender and a national bank to find out what special programs they offer, says Naylor.

"Many lenders offer 'portfolio loans,' ones they keep in-house instead of selling on the secondary market," she says. "They can be more flexible with those loans and offer special promotions."

Instead of choosing a lender solely based on current mortgage rates, Russ Anderson, senior vice president and a centralized sales executive with Bank of America in Los Angeles, says you need to find a lender you can trust. "People get too wrapped up in the rate rather than finding someone who will communicate with them," he says. "You need to find someone you trust, who will be engaged in your family's financial situation."

No. 9: Review all your loan options

Lenders can discuss various loan products when you interview them.

"There's a broad product mix of conventional financing, government-backed programs like FHA loans and special refinancing programs through the Making Home Affordable program," says Anderson. "A good lender can present the pros and cons of each of these programs in the context of your individual finances."

No. 10: Decide how you will finance your refinance

You’ll also need to decide how to pay for your refinance. Closing costs and lender fees can be paid at closing, wrapped into your loan balance or you can opt for a "no-cost" refinance.

"A no-cost refinance means that your lender will pay the fees and you'll pay a slightly higher interest rate of one-eighth to one-fourth percent," says Habib.

HSH.com's “Tri-Refi” refinance calculator can help you decide the best way to finance your refinance. Here's how:

HSH.com’s Refinance Calculator

We've been asked thousands of times: "Is it better to pay closing costs out of pocket, finance them into the loan amount, or trade them for a higher interest rate?" There's no one simple answer, since each refinance choice has its own benefits and total costs over time. One may be more or less expensive depending upon how long you'll hold onto the mortgage. Our unique calculator allows you to run the numbers for a Traditional Refinance, a Low-Cash-Out Refinance and a No-Cost Refinance so you can determine which is best for you. Fill in the information once and instantly compare the costs and savings.

No. 11: Compare mortgage rates and fees

Advertised mortgage rates are sometimes based on paying points, so you need to make sure you compare loans with zero points or the same number of points.

"It's important to shop for the same loan on the same day to get a true comparison of mortgage rates, because mortgage rates change every day," says Smith. "You need to explain to each loan officer all the criteria for your refinance, not just ask 'what's today's rate on a $200,000 loan?' You should also ask about loan processing times."

Shopping by APR can be confusing, since different lender fees and policies can affect the outcome. It is possible for two loans to have identical rates and fees and different APRs. Conversely, two loans could have the same APR but different interest rates. Because of this, it is usually better for you to focus instead on the two most important components of APR: interest rate and fees.

The most important component of your refinance will generally be the interest rate, so you'll of course want to pay attention to that. Fees and closing costs matter, but whether you want or need to pay them will depend upon your situation. There are times when paying costs to obtain the lowest mortgage refinance rates can make sense and times when it does not.

No. 12: Know when to lock-in your rate

Once you’ve finalized your loan decision you should consult your lender about when to lock-in your rate.

"Processing times for different lenders can range from 30 to 45 days to more than 90 days," says Smith. "Typically, lenders will do a 30- or 45-day rate lock, so you should be consulting with your lender to determine the appropriate day to lock your loan. If you have to extend the lock or re-lock your loan, that will likely cost you more money."

While shopping around for a refinance may take a little longer than refinancing with your current lender, the rewards can last as long as your loan

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Mortgage Email Marketing

There might be some skeptics out there that say loan officer email marketing is either a waste of time or simply not effective. These are all valid reasons and trust me, if you’re not doing your email marketing correctly, then it might be an ineffective solution from poor execution. However, the truth is that numbers don’t lie and email marketing, when done right, is a truly powerful tool to help you grow your business.
It’s frustrating to see articles predicting the “end of email marketing” or “‘the new email killer.” Cheap tricks to get peoples interest going. But what is important to remember about all these articles is that they do have a valid point. The reason social media was so exciting for businesses is that they all had lost the attention of their audience through email. Not because the email medium was “dying” but because the old school “spray-n-pray” approach to email was simply ineffective. So it’s not necessarily email that died, rather, bad email marketing died.
With that idea in mind, high quality email marketing is seeing a huge resurgence in 2013 and into 2014. That’s why I’ve put together a quick list of reasons why email marketing works for mortgage brokers.

#1 – Cost Effective & High ROI

It might surprise you to know that email, when done right, has the highest ROI for your marketing dollars. For every $1 spent, $44.25 is the average return on email marketing investment (Experian). Compare that same dollar to other channels too, it’s the best bang for your buck. For ever dollar spent, keyword ads have an ROI of $17 and banner ads are ranked at $2 ROI.

#2 – Not a Spray-n-Pray Approach

Traditional marketing approaches you might be familiar with (or still currently using) are incredibly ineffective. You know these methods too: taking out ads in phone directories, real estate guides, local community newspapers, and billboards. Or even worse: direct mail and door hangers. Direct mail campaigns get an average of 1-2% response rate! Email marketing campaigns have an average open rate of 20%-30%. I know where I’d spend my money.

#3 – Conversational and Engaging

Unlike traditional advertising methods and even social media, when you send out an email to someone, you’re not just blanketing a large crowd with a generic message. Email is directly from you to them, giving them the ability to reply to you and start up a conversation. Whether this is a simple reconnecting with an old client or a genuinely interested prospect, email provides a powerful medium to help you turn advertising into relationships.

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#4 – Metrics and Data

If you’re using a DYI tool or an email service, you’ll be able to track email campaigns in a much deeper way than you would with traditional marketing. With each email, you’ll be able to see open rates, deliverability, bounces, bad email addresses, clicks, and more. And best of all, this is tied directly to an email address, meaning that you’ll know when someone is interested in doing business.

#5 – Broad Reach Potential

And if you ever thought for a second that your clients don’t use email or that they don’t see it if you send it, you’re wrong. As it turns out, there are 3.2 billion email accounts today. Pair that with the statistics that 95% of online consumers use email and 91% of people check their email once a day, it’s safe to say that if you’re using email correctly, they’re going to see it. (ExactTarget)

#6 – Top-of-Mind

Lastly, email marketing spammers a no longer giving the rest of us honest email marketers a bad name. Spam filters and modified inboxes keep the nonsense out of sight and mind. So when you send emails that are engaging, interesting, and not self-promoting, people take notice. Even if they don’t open up every email you send, there is incredible value of email marketing outside the inbox.

Well-executed email marketing for mortgage professionals is something that is relatively new simply because over the past few years, it was easier to keep doing the same old email newsletters or nothing at all. Today’s consumers are smart. They’re keen to pick up on bad “marketing” attempts, easily tune out messages they don’t want to hear, and are heavily active online. Email is just one avenue to reach these audiences and it really does work, you just need to have the right approach to stay top-of-mind.

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Credit Loan Mortgage

The bad credit mortgage is often called a sub-prime mortgage and is offered to homebuyers with low credit ratings. Due to the low credit rating, conventional mortgages are not offered because the lender sees this as the homebuyer having a larger-than-average risk of not following through with the terms of the loan. Lenders often charger higher interest rates on sub-prime mortgages in order to compensate for the higher loan default risk that they are taking.
The following table displays current conforming rates for people with prime credit scores. If you have a poor credit score you can expect to pay a significantly higher rate of interest on your loan & the loan is more likely to be structured as an adjustable-rate rather than a fixed-rate. The table also offers a credit score filter which allows you to find offers matching your FICO credit range.

Ways Subprime Mortgages Differ

Subprime have interest rates that are higher than prime loans. Lenders must consider many factors in a particular process that is called “risk-based pricing,” which is when they determine the terms and rates of the mortgage. Sub-prime rates will be higher, but it is the credit score that determines how high. There are also other determining factors like what kinds of delinquencies are recorded on the borrower’s credit report and the amount of the down payment. An example is the fact that the lender views late rent or mortgage payments as being worse than having credit card payments that are late.
In some cases borrowers may take a higher interest second mortgage to help qualify for a lower cost first mortgage.
Sub-prime loans are very likely to have a balloon payment penalty, pre-payment penalty, or penalties for both. A pre-payment penalty is a charge or fee that is placed against the homebuyer for paying off the loan before the end of the term. This early payoff can be because the borrower sells the home or they refinance it. A mortgage that has a balloon payment means that the borrower will have to pay off the entire balance in one lump sum after a specified period has gone by. This period is usually five years. If the borrower is unable to pay the whole balloon payment, they must refinance, sell, or lose the house. If a first time home buyer is working with a non-traditional lender it is typically worthwhile to have a legal and financial expert review the paperwork before signing the application.

A Closer Look at Credit Scores

Credit scoring is the method in which credit risk is assessed. It uses mathematics to determine a person’s credit worthiness based on their current credit accounts and their credit history. The system was created in the 1950s, but did not see widespread use until the last couple of decades.
Credit scores are numbers reported that range from 300-900. The higher the number is, the better the score. Creditors see this number as an indication of whether or not an individual will repay money that is loaned to them. The scores are determined by looking at the following data:

• Late payments
• Non payments
• Current amount of debt
• Types of credit accounts
• Credit history length
• Inquiries on the credit report
• History of applying for credit
• Bad credit behavior, which can be something such as writing bad checks

The score that creditors like to see is above 650, which is a very good credit score. Those who have credit scores of 650 and above will have a good chance of acquiring quality loans with excellent interest rates.
Scores between 620 and 650 indicate that a person has good credit, but does indicate there might be potential trouble that the creditors may want to review. A creditor may require the applicant to submit additional documentation before a loan will ever be approved.
When scores are below 620, the consumer may find that they can still acquire a loan, but the process will take longer and involve many more hurdles. Below this number indicates a greater credit risk, so more aspects have to be reviewed.

Verify There Are No Outstanding Errors

Many people have issues on their credit report which they are unaware of. Identity theft is a common problem in the United States & consumer debts are frequently sold into a shady industry. The first step in determining if you have any outstanding issues is to get a copy of your credit report. AnnualCreditReport.com allows you to see your credit reports from Experian, Equifax & TransUnion for free. While many other sites sell credit reports and scores, a good number of them use negative billing options and opt you into monthly charges which can be hard to remove. If you find errors in your credit report, you can dispute them using this free guide from the FTC.

Visit AnnualCreditReport.com for your report & Credit Karma for your score.

 

Candidates for Bad Credit Mortgages

Some people with poor credit profiles or a small down payment may have trouble borrowing from conventional lenders. One alternative to consider is obtaining a Federal Housing Administration loan. These loans have liberal underwriting requirements which allow people to purchase a home with a poor credit score and as little as a 3% down-payment. Some FHA borrowers have credit scores below 620. Veterans may want to explore low-cost VA loan opportunities.
Another common loan type among subprime borrowers is the 2/28 ARM, which offers a 2-year teaser rate and then adjusts yearly beyond that. Many of these loans have a sharp increase in rates at the 2-year point, with the home buyer planning on refinancing at that point. However if the homeowner still has outstanding credit issues or the mortgage market tightens up then they might not be able to refinance. The higher rate can cause a prohibitively higher monthly payment, & an inability to refinance can mean a loss of home ownership.
The below items are the general guidelines that can be used as a rough rule of thumb when determining whether a consumer may be a candidate for a bad credit loan:

• A credit score below 620
• Two or more delinquencies of 30 days on a mortgage in the past 12 months
• One delinquency of 60 days on a mortgage in the past 12 months
• A charge-off or foreclosure within the past 24 months
• Bankruptcy within the past 24 months
• Debt to income ratio is over 50%
• Inability to cover family living expenses in the course of a month

However, overall creditworthiness is not determined exclusively by credit scores. A couple of missing credit card payments does not mean that a consumer is doomed to receive double-digit interest rates. The only way to know where one stands is to apply for the loan and speak to a professional specializing in mortgage loans.

Information for Couples

Joint borrowers applying for a mortgage together may pay a higher interest rate than they would individually. If one person has a significatnly lower FICO score than their partner, the loan officer will likely offer a higher interest rate based on the lower FICO score. In many cases it would be more advantageous for the individual with a higher credit score to apply individually. The Washington Post recently highlighted an example:

A $300,000 30-year fixed-rate mortgage in Illinois, underwritten using a 760 FICO might have qualified for a 3.3 percent rate quote and a $1,309 monthly payment of principal and interest at the beginning of April, according to Myfico.com. If the application were instead underwritten using a score of 650, the rate quote might be around 4.3 percent with a $1,485 monthly payment. Annualized, that comes to $2,112 in higher costs — in this case solely because the couple opted for a joint application and the 650 score raised the rate.

To get around the above issue, the person with a higher FICO score needs to apply for the loan individually and have sufficient personal income to qualify for the total loan amount.

Ways to Improve Your Credit Score

The following are simple ways to improve credit scores

• The number one method is to pay bills on time. Delinquent bill payments can have a tremendous negative impact on credit and the longer a person pays bills on time, the better the credit score. For example: A person with a credit rating of 707 can raise their score another 20 points by paying all bills on time for a single month. Paying items such as mortgage and rent are especially important. Mortgage lenders like to look at payment trends on mortgage and rent payments.
• Balances need to be low on credit cards. High credit card debt can hurt the credit score and lower the credit score as much as 70 points.
• It is important to not open credit cards that are not needed. New accounts can lower the account age, which can lower the credit score by 10 points.
• It is good to have credit cards, but it is very important to manage them well. Having credit cards and installment loans raise credit scores, especially if payments are consistently made on time. Someone who doesn’t have credit cards tend to be at higher risk than someone who hasn’t managed their cards well.
• Accounts still stick around when they are closed. The account will still show up on the credit report and be factored into the score.

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