the PDF! - Hey Mortgage Fans

Volume 8 Issue 1 – Spring 2008
Valuable Mortgage Information
Hello Mortgage Fans! My
mother called me last night
and said, “Dude, now that
the writers’ strike is over
shouldn’t you be mailing
some newsletters?” The
answer to her question was
yes, and the timing couldn’t
be more perfect. Lots to catch
you up on in the lending
industry, so let’s dive right
into it:
If the lending industry were
a rock star it would be Rod
Stewart. If you ever see clips
of his concerts from the 70s
and 80s you’ll see Rod working
the stage like the Energizer
bunny while his audience
smokes, drinks, and dances
around half naked. If you
look at Rod now you’ll see a
guy who has stopped partying,
preaches morals, and releases
records of songs that were
written in the 30s and 40s
by Gershwin and Cole Porter.
Wait – what the hell just
happened?? That’s what
everyone looking for a
mortgage now is asking.
Overnight the lending industry
has gone from Woodstock to
my 8th grade principal’s
office. With all the foreclosures
and banks going under, the
industry drastically changed.
Here are some of the biggest
changes:
1. Need to purchase or
refinance a home this
year? Your interest rate
will be higher than the
going rate, or you will pay
and a lot of other really Cool Stuff !
more fees if your credit
score is under 680 (the
cutoff used to be 620). So
make sure you pay your
bills on time, don’t
overextend yourself, and
stay away from all
collections big and little
even if they aren’t your
fault (note: in college I
bounced a $7.00 dollar
check to Dominos1, they
they would look at your
application and say, “We
believe you.” This is one
of the main reasons why
nobody feels sorry for the
banks that have gone
under. Regardless, the days
of liars’ loans are over. If
you don’t qualify for a
loan you most likely won’t
get it. And Mortgage Fans,
you don’t want to lie2 on
Mortgage industry 1977-2007
Mortgage industry 2008 - ?
reported it to a collection
agency, and it stayed on my
credit report for 10 years!).
2. In the good old days of
2007 you could do what
was called a stated income
loan (known in lending
circles as ‘Liar Loans’) –
this is where you could state
on your loan application
that you make enough
money to qualify for the
loan and the bank would
approve you without looking
into your income. Yep –
your application anyways
as it can bring civil and
criminal charges – not to
mention bad karma.
3. Second mortgages and
home equity loans are
much harder to obtain –
especially for a purchase.
It used to be a practice to
split your loan into two
different loans to avoid
PMI (private mortgage
insurance) if there was less
than 20% equity in your
home. Now it is near
impossible as many banks
have gotten out of the
home equity loan game
entirely. You’ll need at
least 10% down and near
perfect credit and a little
luck to pull this off. In
some cases PMI is tax
deductible so it may not
be the worst thing in the
world for you.
4. In various states and
counties (including Cook
County) you will need to
go to a class for counseling
if you want to get an
interest only loan or an
ARM that is fixed for 3
years or less. I know at this
point you’re all thinking,
“Barry – are you the one
that broke up Pam
Anderson’s marriage?” and
I’ll tell you the same thing
I told the folks at US
Magazine – we are just
friends! I know you’re also
thinking, “there is no way
in hell I’m taking a class
to get a mortgage,” but if
you don’t want to take a
class then don’t get an
interest-only loan. You
could be a billionaire and
have graduated number
one from Harvard Business
School, and you will need
to go to a class if you
want one of the loans I
mentioned above.
Brokeback Mortgage – coming
to a home theater soon?
There’s nothing in life that
will make you lose more
sleep than not being able
1. At the time I had six dollars in my checking account. Had I ordered plain cheese without toppings the check would’ve covered the bill.
My love of pepperoni killed my credit.
2. Time out for the biggest lie I told in 2007: while watching a Lifetime movie about bulimia my wife cuddled me and said, “You’d rather
be watching sports than lying here with me,” to which I replied, “No way – this is the best.”
773.413.6242
heymortgagefans.com
to afford your mortgage
payment3. And worse yet –
many mortgage payments
are climbing because the
adjustable rate mortgages
taken out in 2003 are now
starting to adjust to higher
rates. Most banks will mail
you a letter a month before
the adjustment telling you
what your new payment will
be, and that letter will make
you sick to your stomach4
when you see your payment
is 40% higher than what it
used to be. So what do you
do, Mortgage Fans? You
refinance now! Also, rates
are so low you should think
about switching from an
ARM to a 30-year fixed if
you plan on being in your
home for awhile. I wish I
had listened to my wife five
years ago when she told me
it would be best to get a
fixed rate versus and ARM –
but I was not listening due to
my FADD5 and that decision
is now costing us money.
30yr fixed rates in 2003 were
in the low 5% range, but
they are still below 6% which
is a real gift – so don’t screw
up like I did. Get a fixed rate
if you think you will be living
in the property for more than
7 years (less than 7 years I
would get an ARM because
the savings will be worth it).
And guess what – if your
loan is over $250,000.00 I
will refinance you for free.
Please be sure to tell your
friends, family, and coworkers
to call me if they want to
take advantage of this.
Non-mortgage stuff:
A moment of silence for my
favorite character on the
Brady Bunch and a man that
never lived up to his serial
killer nickname – Sam the
Butcher – a.k.a Allan Melvin
- passed away in January at
the age of 85. Before Brady
Bunch fame he was the voice
behind Magilla Gorilla – a
cartoon that is constantly
overlooked when naming the
all-time classics. But it was
in front of the camera where
Melvin belonged. It was his
smiling face and joking
demeanor at his deli that
brought ‘Sam the Butcher’
instant fame. Had I known
him I would’ve been proud to
let him handle my meat. Umm…
that didn’t come out right
but you know what I mean.
Greatest Duet song ever: I
saw a list recently that listed
You Don’t Bring Me Flowers
by Neil Diamond and Barbra
Streisand as the greatest duet
song ever. After I was done
throwing up I tried to think
of all the duet songs that
have come out that are better
than that one (roughly 3,000).
After much research I found
the answer; in my opinion
the runaway favorite for
greatest duet song ever is
1984’s Solid as a Rock by
Ashford and Simpson. Go
onto YouTube and check it
out and you’ll have a hard
time arguing against it being
the best. They sing about their
love with so much passion
and heart because they
weren’t two stars brought
together to cash in a paycheck.
They were actually married at
the time and still are! Think
you know a better one –
email me or call me and let
me know.
Which couple looks like they’d be more fun to hang out with? ‘Nuff said.
3. After writing this I realized the winged monkeys in Wizard of Oz are worse. I still see them when I close my eyes at night.
4. This will have the equivalent of how you felt if you saw the movie About Schmidt when Kathy Bates disrobes to enter the hot tub.
5. Fake Attention Deficit Disorder.
Trivia Challenge
It’s been a long time since I threw some trivia questions into the newsletter so my apologies – here we go – ten questions that if
you get them right means you spent too much time watching TV and not enough time studying as a kid. Whoever said there are
no free lunches obviously didn’t know Barry Schwartz because I’ve got prizes for everyone—
8 or more correct – mystery prize valued at over $4.00. 6-8 correct – Barry Schwartz/Perl Mortgage pen which retails for $39.95.
4-6 correct –Hostess cupcake or Twinkie. Less than 4 – self-esteem tapes.
Email me (barry@perlmortgage.com) or fax me (773.413.6142) your answers. There are prizes for everyone!
1. Fill in the blank: Hello, my name is Inigo Montoya. You killed my father. ___ __ ___”
2. In what city does Police Academy 5 take place in (if you get this question right you are the biggest loser because I don’t
know anyone that saw this movie. Please – if you are someone I respect - don’t answer this question).
3. Who is Alanis Morissette singing about in her song You Oughta Know?
4. Name the Rod Stewart song these lyrics are from: I didn’t know what day it was, when you walked into the room.
5. On The Simpsons what does Nelson’s mother do for a living?
6. In the movie Rain Man what is the only airlines that Raymond Babbitt will fly on?
7. In 2007 hot dog eating champion Joey Chestnut ate how many hot dogs (and buns) in 12 minutes: 28, 46, or 66?
8. What color is Palmolive dishwashing liquid?
9. On Beverly Hills 90210 where did Brenda move to after season 4: Paris, London, New York, or Wisconsin Dells?
10. Who is the better judge: Joseph A Wapner (People’s Court 1981-1989) or Judy Sheindlin (Judge Judy 1997 to present)? Explain.
773.413.6242
barry@perlmortgage.com