Radio Commercial Teases Consumers!

I heard a radio commercial yesterday where the lender said that you can get an interest rate in the upper 5% range.

Are they really still that low? Well, the answer is YES and NO.

It depends on which type of mortgage program it is.

I spoke with my preferred mortgage consultant, Rick, this morning and he said that a 30-year, fixed interest rate mortgage is in the 6.5% - 6.625% range. So, how can the radio ad be quoting in the 5% range? Well, the ad most likely is offering an adjustable rate mortgage. They don't give you any details on the commercial. They want you to call them and then they've got you.

Don't fall for this 'bait & switch' ploy!

According to Regulation "Z" of the Federal Trade Commission, when you advertise an interest rate, you're supposed to list the terms of the program...i.e. the term, the actual rate and the A.P.R. (annual percentage rate) at the very least. But on the radio, they didn't have to give any details about the loan. I think that's wrong.

The reality is there are hundreds to thousands of different types of mortgage products and variations in the market today. Most of them are NOT for the average consumer.

Yet we as consumers are inundated with phone calls, direct mail and e-mail spam calling to lower our monthly payment and have tens of thousands of dollars to spend on whatever we want to do.

(One side note on direct mail: many envelopes have forms inside that you can fill out to get a new mortgage or credit card. Shred it or at least tear it up before an Identity Thief fills it out and mails it in using a different address. Be careful!)

Before you apply for a mortgage of any kind, always ask someone you trust for a referral of a mortgage professional, who won't take advantage of you. Never get a loan over the Internet! Use the Internet for information-gathering, but not to sign up for a first mortgage or home equity loan. If you do, you may find yourself at a closing, looking at a higher interest rate and closing costs than you were told.

If you have questions about re-financing or taking out a 2nd mortgage, please contact me 513-615-1890 or dan@danweis.com for advice. It's good to get a second opinion and I'll give you some questions to ask them, so you don't get ripped off.

Plan An EMERGENCY Way Out!

Fire drills aren't just for schools or office buildings. They are even more important in the home.

According to the Nationa Fire Protection Association (NFPA), most fatal fires occur in the home.

Make sure every member of your family knows how to get out in case of a fire. Here's what NFPA recommends:

• Draw a floor plan of your home. Note all windows and doors.


• Plan two exits from each room. Make sure windows open easily. Doors and windows with security bars should be equipped with quick-releasing devices that everyone can operate.


• Agree on an outside meeting place and mark it on your escape plan.


• Install smoke alarms on every level of your home and in or near every sleeping area. Test smoke alarms monthly.


• Practice your escape plan at least twice a year.


• And finally, once out, stay out! NEVER go back inside a burning building.

If you have friends or extended family sleeping overnight, make sure they are also aware of where escape routes are out of the home.

July 11th - Free Home & Condo Buying Class

If you or someone you know plans on investing in a new home or condo in the near future, it's time to take advantage of this FREE Home & Condo Buying Class.

You will become educated in the latest strategies and 'true stories' happening in this ever-changing real estate market and learn how put yourself in a better position when you're ready to buy a home or condo.

Our next class is scheduled for Wednesday, July 11th from 7:00pm - 9:30pm.

For more details and to register, go to http://www.HomeBuyingClass.com.

Why Did My Payment Go Up?

There are a couple of reasons why your mortgage payment can increase, even if you have a fixed-rate mortgage.

1. Your annual, homeowner's insurance policy amount increased.
2. Your property taxes were re-assessed and increased.

It's important to understand that if you have an escrow account as part of your monthly mortgage payment, you're paying 1/12th of your homeowner's insurance each month into the escrow account as well as 1/12th of your property tax.

Now, when your lender receives your tax and insurance bills each year, if the amounts have increased, they don't ask you for the extra money right then, because they wouldn't receive it quick enough from you. So, your lender does an annual escrow analysis of your account. In many cases, your account will be short money, because of the increased bills, so they require you to make up the shortage in one lump sum or they spread it out over the next 12 months in your monthly payment.

It's also financially prudent to have your homeowner's insurance policy checked to make sure you have enough coverage for replacement value on your home. When home values increase, most homeowners don't think to protect their financial position with the new, higher home value. I have 2 experienced insurance agents that have helped many of my clients with their insurance needs.

One way to decrease your insurance premium is to increase your deductible from $250 to $500 or $1,000. Over time, save up that money in a separate account, so that you have it should you need it for an insurance claim. Ask your insurance agent what the different amounts are based on the deductible.

Secondly, there are 2 ways for your property taxes to increase:

• your county auditor re-assesses your property's value
• your school district passes a school levy

If you believe your property's value has been re-assessed at too high of a value, it's possible to challenge the new value through your county.

So, even if you have a fixed-rate mortgage, expect your monthly payment to increase by a certain amount every year. If your payment doesn't change in a given year, you should feel very fortunate.

5 Ways To Pay Off Your Mortgage Faster!

Here are 5 simple ways to pay your mortgage off faster:

1. Round up your monthly payment to the nearest $100. For example, if your monthly payment is $1,147, then add an extra $53 to your check totaling $1,2oo. Make sure that you stipulate that you want the extra amount to go to your principal. With most lenders today, if you receive a monthly statement, you'll be able to check a box and write in the extra amount you'll be adding.
2. Start saving your spare change. Make it a habit to pay with cash whenever possible. Instead of pulling out change to pay for something, give an extra dollar bill, so you get change back. Then at the end of each day, put all of your change in a jar. At the end of the month or every other month, start rolling your change into the coin wrappers (get at your bank). I've been doing this for years (my wife, Amy, sometimes yells at me :) for taking her change) and in most months, I collect $20 - $30 in change and then I apply it to reducing my principal amount on my house payment.
3. On certain months, you may just want to pay an extra $25 - $50 - $100 to your payment to be applied to your principal amount.
4. Add any windfalls to reduce your principal balance (i.e. lottery winnings, tax refund, etc.)
5. Take on a part-time job where you apply your earnings to paying down your principal balance. It's like having a forced savings plan.

One thing to consider before adding large amounts to pay down your principal balance is you should have an emergency fund where you have quick access to cash in case something happens and you need money fast. Equity in your home is NOT a liquid source of cash.

Some people have a line of credit or a home equity loan attached to their home, but be VERY careful, if you go that route. It should only be used in an extreme emergency. It's too easy (writing a check) to take money out whenever you want it...remember you have to pay it back.

One other strategy to use is if you have a mortgage with an interest rate at 9% or higher, you could see if it would be financially feasible to re-finance your loan to a lower interest rate or to a shorter term (30 yr loan to a 20 yr loan). Make sure that you're not charged high closing costs. Don't contact an internet lender or someone you've never heard of before or someone who sends you a direct mail piece. Go back to the lender you have your current mortgage with and see if they can improve your situation. It needs to be better for you, not your lender. If you need a recommendation, contact Rick Pilger of Union National Mortgage 770-6999 or cell: 600-9003. I've worked with Rick for many years and he cares about what's best for his clients.

You can always call me for advice as well. I welcome your call. Don't be afraid to call me, because you think you're bothering me. You're not. Real estate and financial matters are very important and you need to know all of the facts before making your decisions.

Beware Of Mortgage Scams!

I recently received a letter in the mail from a mortgage lender in the Cincinnati area that said:

Have You Heard About The Special Mortgage Program That Has A Fixed Interest Rate and Could Lower Your Payments By Hundreds of Dollars Per Month?

The problem I have with this type of advertising is that it's usually not in the best interest of the consumer. When you really think about it, what are the only ways to lower your monthly payment?

• increase the number of years on the loan,
• the fixed rate could be a 'temporary' rate, later to be increased over time
• put down a larger down payment,

Lenders and bankers are trying to come up with ways to get consumers to re-finance their mortgages or to take out 2nd mortgages or home equity loans, etc. They're in the business of lending money and with real estate sales down this year, they need to find other sources of increasing their profits.

So how do you know if any advertised TV ad, radio commercial or direct mail piece about getting a new mortgage is really something you should consider?

Well, before anything else, call me first - (513) 615-1890. I will review your situation and give you an un-biased opinion on what your best options are. I will ask you some questions that will help me make some recommendations to you.

There are too many people, who fall victim to the common 'bait & switch' scams. Lenders and telemarketers, who call you on the phone, are often 'FAST' talkers, who make everything sound so easy to do and such a great deal. They may even say that you can sign up for their 'great' program on-line and never meet anyone. WRONG! You always need to have someone to talk to and go over all of your options with you. The "salesperson" may be trying to 'sell' you a mortgage program that is terrible for you, but great for them. There may be a lot of closing costs and junk fees associated with or built into the loan that you don't know about until you sign the final papers.

If you're thinking about re-financing your mortgage, it should be for one of the following reasons:

• you want to convert your adjustable rate into a fixed rate mortgage,
• you want to convert your 30 yr loan to a 20 or 15 yr loan,
• you want to consolidate some bills into your mortgage, (then cut up your credit card)
• you now qualify for a lower fixed rate, because your credit score has gone up,
• you get a lower interest rate with a no-closing cost loan ( your payment goes down with no additional out of pocket expense to you)
• you want to remove Private Mortgage Insurance from your monthly payment

Again, call me at 615-1890 or e-mail me at dan@danweis.com and I will gladly go over your situation and give you your best options, so that you don't get taken advantage of by some 'slick' salesperson.

Wishing you the best,

Dan