INCLUDING MORTGAGE ANALYSIS INTO COMPREHENSIVE FINANCIAL PLANNING

It pays for an investor to incorporate their biggest debt into an overall financial plan. Understanding one's mortgage and the current financial environment can provide a few opportunities and help prevent some costly mistakes. Here are seven tips to aid in navigating these turbulent times:

1. Expect Tighter Lending Guidelines – The recent mortgage industry headlines have led to tighter lending standards for all borrowers – not just subprime. Every borrower should be ready for the increased scrutiny that is required to qualify for a mortgage loan - even borrowers with platinum credit records. Lenders will require an investor to fully document income, assets, down payment, and reserves. Every investor will need a high credit score and a solid property appraisal. The pendulum has swung back and lenders are now overcorrecting the loose loan guidelines of the past few years with extremely strict underwriting.

2. Preparation is the Key – There is a silver lining in this situation. If an investor is prepared prior to putting in an offer or applying for a refinance, they can avoid problems and put themselves in a position to get a great competitive rate. An investor should review their credit report well in advance and correct any deficiencies or inaccurate entries. Even a couple of points on a credit score can make a huge difference in one's ability to qualify or get lower mortgage rates. Having an in-depth annual mortgage review will save time and unnecessary frustration.

3. Choose a Mortgage Professional to Help – Rubino & McGeehin is the first stop for this analysis. R&M has a relationship with an experienced, knowledgeable mortgage advisor. Call R&M for an introduction. R&M can coordinate the available loan programs with each investor's financial and tax planning to best suit specific needs.

4. Conforming Loan Amounts Increased – Conforming loan amounts increased to $729,750 for the Washington, DC, metropolitan area. The Department of Housing and Urban Development (HUD) released the new increased FHA and GSE (Fannie/Freddie) loan limits for 2008, which is great news for current and potential home-owners across the nation. These temporary increases could help avoid the higher interest rates associated with "non-conforming," or jumbo, loans – which are currently more than a point higher than conforming loans. This means many consumers who want to purchase a new home will be able to take advantage of great real estate deals and get more home for less money. In the DC market, one can purchase a $912,000 house with a 20% down payment and still qualify for a lower rate conforming mortgage. These increased loan limits are also good news for those looking to refinance their expensive jumbo loan into a new "conforming loan." In fact, the only restriction is that these increases apply only until the end of 2008.

5. Platinum Rates for Platinum Borrowers – The current rates on Jumbo ARMs for loan amounts up to $2.5 million are the lowest in years – ranging from 5-5.25%. Borrowers that need loan amounts higher than the new conforming limit of $729,750 should look for lenders that offer mortgages fixed for five to seven years. These lenders typically retain these loans on their books and require the highest quality borrower. Until the secondary market for mortgage and asset-backed securities recover, these are a great interim, low-cost solution.

6. Appraisals and Market Valuations – In markets that have experienced foreclosures or rapidly declining values, a more complete appraisal with additional review may be required. The more money one puts down or the more equity one has already invested, the greater the reduction of analysis and scrutiny. An investor should be sure to include an appraisal contingency in their offer. This will allow the investor to get their deposit back or renegotiate the price if the appraised value does not meet the purchase price.

7. Be Prepared to Move Quickly – Mortgage markets are extremely volatile. Rates can drop or increase in a matter of hours. In some cases, rates quoted in the morning are not available after lunch. If one is planning to take advantage of the higher conforming loan amounts or low Jumbo ARMs, it pays to have a pre-approved loan application and a target lock-in rate.

A little advanced preparation can yield great savings for clients that are prepared, informed, and work with a recommended mortgage professional. Mr. Moore can be reached directly at smoore@rubino.com. For more information about Rubino & McGeehin, please visit www.rubino.com or call 301.564.3636.