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Practical Info

Rate Expectations

Did anyone see where my 3.25% interest rate went?

The mystery of what controls interest rates rivals the Bermuda Triangle and why women like shoes so much. And now that rates have shot up from the insanely low levels of pre-March 2013, people care a lot more about this stuff. But before you become a limbo-obsessed ("how low can you go?") Internet ratemonger, take a step back for a moment and think about WHAT drives rates.

The simple answer is RISK.

Here's how it works. Lenders are in the business of making money. What many lenders do is make loans and then sell them in bundles of 50, 100, or even 1000 to an end user. That end user can be Fannie Mae (FNMA) or Freddie Mac (FHLMC), government-sponsored enterprises (GSE) who then takes those mortgages and creates an investment called a mortgage-backed security (MBS). Often, mutual fund managers, institutional investors & foreign investors buy these securities because they guarantee a specific rate of return. For example, a FNMA 30-yr. fixed bundle with a 4.0% rate, pays the investor 6% return on their money. Not too shabby! Interestingly enough, this money is coming from people paying their mortgage payments.

How do the lenders make money doing this? They may sell the bundle of loans to FNMA for a profit. For example, if a lender has a $100,000 loan at 4.0%, FNMA may buy that loan for $106,000. That's $6000 payday for the lender. Of course, FNMA turns around and sells this loan or the servicing rights for a profit as well. Everyone wins.

So why can't you get a 3.25% 30-yr. fixed mortgage anymore? Because no one is buying those investments. Enough confidence has returned in the global investment community that money is going into other options such as stocks & commodities. People just aren't happy with making 3.25%. But, they are willing to take the RISK on mortgage-backed investments at 4.0%. Demand drives rates.

And what about YOUR loan? Why can't you get that 4.125% 30-yr. fixed loan you saw online? Well, most low-rate pop-ups and websites are simply a hook. They are ADS, and oftentimes they are selling your information once you fill in the slick little form that pops up. Word of advice. If you're chasing something that looks too good to be true, you can have a very unhappy ending. Just like the grouper that ends up on a sandwich at lunch.

What's the Advantage of Using Kroboth & Helm Mortgage, Inc. Over a Bank?

It's all about more options. We have over a dozen wholesale lenders we do business with and they all specialize in different types of loans. Some require little money down on a purchase, others offer incredible rates to highly-qualified borrowers, and a few will even allow us to refinance someone up to 200% loan to value, sometimes more. With expanded income and credit guidelines, faster turn times, an office in your backyard, and so many choices, we feel we can offer you the best loan at the best price while not sacrificing our service. We'd be happy to explain what options we may have for you, so call, e-mail or even fill out the form available on this site by clicking HERE. So pricing is also driven by RISK. If your credit score is UNDER 740, add ..125% to your rate. Under 700? Add another .125%. Putting less than 25% down? Add another .125%. Have a second mortgage in the mix? Add yet another .125%. See where this is going? So if you're working with someone local, knowledgeable & trustworthy (like us), you can get an ACCURATE quote on a rate along with an estimate of the costs involved and maybe even a bit of advice on what rates will be doing in the weeks ahead.

And rest-assured, there is still time to lock in a historically-low interest rate. Check out this chart for some perspective and CONTACT US if you'd like a quote!

CREDIT COACHING

For the longest time, we thought the credit scoring model was 2 parts magic, one part fairy dust, and three parts pi times the square root of the sum of the numbers in your social security number. But now we know better; it's all magic.

Black magic for a lot of folks these days. But there are some things we can do to lift the curse of sub-600 scores from our land. Stop killing your credit!

Ignoring the FACTORS that influence your credit score is like ignoring that pesky rash that keeps coming back. Stop itching and start treating the cause. There are some obvious things that pummel your score like foreclosures, bankruptcy, judgments, collections, late payments, maxed out credit cards, and lack of accounts. But some of the silent wolves have snuck their way into the hen house and those are the ones that are killing my clients' credit scores.

Take for instance a borrower with a 750 FICO score who has a $1,500 balance and a $12,000 credit limit on a CITI credit card . No big deal. The fine folks at CITI Cards, in an effort to mitigate their risks, lower his available credit from $12,000 to $2500 despite the fact that he's paid on time for the past 6 years. His debt ratio on this particular card goes from 12.5% to 60%, and in turn, his FICO drops 25 points. I'm sure you've seen this.

True story. We had a client with ONE judgment from our friends at Verizon. It was only $144, but his score was a 696 because of it. Not bad you say? If he had at least a 720 FICO score, his rate would improve by .5%! He called Verizon, settled the matter once and for all, had it removed from his report, and 21 days later, his score was a 790! Amazing! For him it made the difference between a decent rate and a GREAT RATE. In some cases, it can be the difference between a deal or no deal.

If your credit score has dropped, or it's been low for as many years as you can remember, it's time to bring your FICO back to life! For folks in the Bradenton-Sarasota area, We urge you to sit down with us and do some mortgage planning. We can figure out why your score is low, look at the obvious and not-so-obvious contributing factors and scheme how to create a better chance of running your credit through Experian's 10 top-secret algorhythms and coming out on top. Contact us by filling out THIS FORM or calling me today!

Check out the below FAQ's when it comes to CREDIT and your HOME LOAN.

Why Is My FICO So Important?

These days, lenders are very concerned about risk. Your credit score is a prediction of your future ability to pay your mortgage based on past performance. If you have good credit depth, low balances, no late payments or collections, and plenty of accounts, the higher your score and the better your interest rate.

I Got a Free Credit Report Online; Why Can't You Use That?

Lenders use what is called a "tri-merge" mortgage report to make a credit decision; it’s a compilation of all three major credit bureaus. As a consumer, the report you get is more of a thumbnail, while the lender requires a close-up portrait. It’s not uncommon for tri-merge mortgage report scores to vary 50-100 points from the free reports you get online.

Can I Buy Furniture For My New House?

We get asked this one a lot. Lending guidelines have changed and it’s important you are aware that your lender will actually be looking at your credit again, right before closing, to make sure you still qualify for your loan. Big purchases or late payments can drop your score or inflate your debt, so be extra cautious with credit card spending and call us if you have questions about a purchase or account; your loan could depend on it.

More Options. Less Complicated.