Lenders Are Getting Innovative - A Couple Of New Programs

As a mortgage broker, we are able to get approved with many
different lenders to represent their product lines to our clients.

With few exceptions, we can place loans with all the major
lenders that have an "office on the corner". Wells Fargo,
Chase, Citimortgage, Washington Mutual and Countrywide
are among those large companies.

There are also many lenders that do not have a retail
presence with origination offices locally and create loans
via the broker network. They make their lending programs
available to us, we do the work to process the loan paper-
work and upon their approval, the fund the loan to allow
for the closing.

When you apply with one of the large lenders directly,
you will be faced with the fact that you are limited to the
loan programs that they offer. In their effort to gain your
business, you will need to adapt to their product line,
whether that is the best loan program for you or not.
They represent their LOAN PROGRAMS to you.

We, as brokers, on the other hand, have access to all of
their programs as well as the specialized programs that
other lenders and mortgage companies develop to meet
their clients needs.

I work to understand your goals, your needs, your risk
tolerance, your time horizons and find the best match of
mortgage product from all the lenders that we represent.
We represent YOU to the marketplace.

Here are a couple of new programs designed to provide
benefit to segments of the borrowing public:

A. A 40-year loan that allows for interest only payments
for the first 15 years.

This is a fixed interest rate loan for the first 15 years. At
that point it adjusts and then is amortized over the next
25 years.

This loan is perfect for the borrower that wants long-term
stability with the interest rate that they are paying, but
also wants the flexibility of paying a minimum payment
of just the interest each month.

There have been so many loan programs that only offered
interest only payments with the interest rates being fixed
for the first 3, 5, 7 or 10 years. If you have been following
some of the difficulties that borrowers have been experiencing
lately, you know that a number of those borrowers are facing
new payment terms once they are reaching the end of the
3 or 5 year introductory periods.

This new loan eliminates the possibility of that short-term
payment shock and works well for borrowers that may want
to work toward owning their home free and clear some day.

B. A first trust deed line of credit that is designed for
borrowers that are big income earners, and who spend less
than they earn.

The concept behind this loan is to allow the borrower to
use their income more effectively in reducing their mortgage
and to have compounding work in their favor.

Let me go through an example to illustrate how it works.

Let's say the borrower obtains a $500,000 loan to purchase
their home. They bring home $10,000 per month and have
routine expenses of $7,000 per month including their
mortgage payment of $3,500, let's say.

Traditionally, they would deposit their checks into their
checking account. They would pay their mortgage payment
of $3,500 and through the remainder of the month pay the
other bills of an additional $3,500. They would have $3,000
remaining to put into savings, investments, or to pay down
on their mortgage loan.

With this new mortgage plan, the $500,000 loan would be a
line of credit. At the beginning of the month, they would
deposit the entire $10,000 against the line of credit, paying
the interest due and all of the remainder would be applied
to the principal. Through the course of the month, they
would use the ATM privilege, the online banking feature, or
the checks supplied for the line of credit to pay their bills.

By paying everything against the line of credit at the
beginning of the month, they are reducing the principal
balance so that the interest accrues on the smaller amount.
Where they would normally be leaving $6,500 in their
checking account, earning zero or little interest, to pay
their bills, now they are drawing the amounts that they need
just when they need it.

That $6,500 is "earning" interest by the fact that it is not
accruing an interest debt during that time. The combination
of reducing the principal balance significantly and only having
their interest debt accrue for a limited amount of time works
heavily in the borrower's favor over the term of the loan.

This plan allows for savings of tens of thousands of dollars in
interest charges over the life of the loan.

It requires the borrower to think in terms of actual savings and
sound financial planning principles. Too many borrowers are
so focused on the interest rate that they fail to consider alter-
natives that could provide them substantial benefits with these
kind of creative solutions.


Please remember that I have access to many distinctive loan
programs that are not available to the large lenders, but are
valuable resources to meet your needs.

As always, please get in touch with me to discuss the unique
qualities of your situation so we can arrive at a suitable solution
for you.