Da ADR BLOG

Interested in learning what HUD says about buying a home? Check it out right here.

Have a great new year, and remember....save money, live better....through an ADRMORTGAGE.COM loan!

Andy May

919 771 3379

A lot of clients ask me, "when is the best time to purchase or refinance". It's an easy answer. It's around December 15th. No one wants to be working on their mortgage during the stress-induced days of the holidays.

Let's face it, do you want to work on your mortgage 10 days before Christmas?

So, it stands to reason, with not a lot of homebuyer activity, it's also a good time to purchase a home - before the spring homebuyer season kicks in. Rates are at an all time low right now and you can get a great rate if you are willing to work for it during the holidays.

Have a prosperous new year and we'll speak with you soon.....thanks for your business and thanks for making 2009 the best year ADRMortgage.com has had!

Andrew Coumo purportedly created the Appraisal Management Company. Thanks Andrew! We appreciate you adding another layer to the mortgage business, and significantly raising consumer closing costs! This isn't New York ya know!

We have been tracking how the added cost with which the Appraisal Management Company system impairs North Carolinians. So far, it is costing approximately $500 more (rate lock extentions and blown deals) per person. And 80% of North Carolinians are infected by this New Yorker's infective problem.

What can you do about it if you are purchasing or refinancing your home? Well, nothing. You've got to go through the nightmare that Andrew Coumo purportedly brought you. However, you can write your Congressman, Senator, and or Washingtonian insider and complain about the treatment of the American public by these new changes. By the way, we are 100% TARP-FREE! We take no government assistance. We don't pay ourselves $1 million a day (like so many bankers).

I hear this question all the time. Quite frankly, no one and no company really has any idea. However, everyone has an opinion. With 22 years of mortgage banking experience, and an MBA from Duke University in Finance.....here's my opinion:

As of mid-January we saw the lowest rates in the history of the United States of America - for 30 year fixed. With the economy slowing, oil prices down, and a real estate recession demand for mortgages is lower than it has been in a decade.

Starting in mid-January rates tend to rise, and we've seen that happen already. Our best clients received rates in the high 4% range for 30 year fixed rates. Those rates disappeared quickly and have since crested 5% ....of course, if you pay points you can always get a lower rate and boast how low your rate it....not mentioning that you had to pay points (unknowingly buying the rate down).

Where are we heading now? My belief is that we've seen the last of these ultra-low "kick-start the economy" rates. We'll likely stay in the low 5% range for a while as the industry digests the trillion dollars of mortgage refinances. And then, starting in a few years, the economy on the mend, rates will go much higher. I believe that you can't issue $10 trillion in new debt and not have an inflationary event. Yes, it's $10 trillion. Everyone (economists) never mention the balance sheet effect - only the new debt issuance. FHA will likely lose $1-2 trillion.

We, anticipate that the fence-sitter will be looking back at their 6+% rate thankful that they have it, but disappointed that they could have been in the 5s. Of course, this is all speculation but  it's a scenario that could easily unfold. Take care, and enjoy rates your grandparents never saw. Or for that matter, any US Citizen.

Smaller banks are what America should stand for. It certainly is questionable what America stands for when you work in Big Banking. America's top banks raked in $125,000,000,000 in a government bailout and already spent $108,000,000,000 of it on employee compensation for senior executives. Only UsBank refused government money (and First Citizens, and other smaller banks).

Read the attached article for up to date information on how your tax dollars are being put to work. Remember, don't reward these banks with your business. They are taking tax payer money and giving it away to employees. Almost dollar for dollar.

 Bank Executives Get Windfall Bonus

This letter to the editor of the business section was posted in the local Raleigh paper (NewsandObserver) and can be seen on their website or page 2 of the business section dated June 15th, 2008.

Mortgage company saves green by operating online

I thoroughly enjoyed John Murawski's article on saving the environment while saving money ("Green saves green," Work&Money, June 1).

This e-mail message is to let you know what American Dream Residential (www.adrmortgage.com) is doing to help.

First, we take about 500 loan applications a year via the Internet. This saves about 80 pages of paper per loan application, or 40,000 pages of paper a year (times two -- there's always a copy package). That's about $16,000 in paper.

Second, we don't have to overnight 500 loan applications to our clients and investors, because we have an e-mail signature platform that is electronic. This saves us about $25 a loan (times two, one for the investor), or about $25,000. It also saves our client a similar amount, because the client doesn't have to send the package to us by overnight delivery ($37,500 total; ADR, client, investor).

Third, we don't have to maintain a large office for people to send all this paper around and receive it. And we store information electronically, saving about $12,000 a year in rent expense and saving on commuting costs.

So as a small Raleigh mortgage company, we're saving about $60,000 a year. We are also reducing our carbon footprint by not requiring commuting by our loan officers, all of whom work from home.

I want to thank you all for communicating what companies are doing.

Although we are small (about 20 loan officers), we want to do our part to make Earth a better place.

Andrew May, president, American Dream Residential

Raleigh

April 30th - closed a $917,000 loan at 4.75%. Ask us how. Of course, this client was a full doc, high credit score, high income client. If you have a high LTV this won't work either.

But, at ADR we are knocking it out of the ballpark on jumbo loans. As of June 4th our Jumbo Loan rates start at 5.75%. We may be able to get a similar product as the April 30th closing, call your ADR Loan Officer to find out if we can.

Also, ADR continues to maintain a ZERO Better Business Bureau complaint record. ADR receives approximately 5,000 unique individuals a year hitting our website for our GREEN experience (paperless) .....call us today! We'll exceed your expectations.

Countrywide - $28,000,000,000 loan; Bear Sterns - Bankrupt; CitiBank - $25,000,000,000 in quarterly losses. Wait until Wachovia and Wamu start announcing those wonderful $500,000,000,000 in negatively amortizing loans.

What's a client to do? Stay away from retail banks. They have over 100,000 branches that they need you to pay for.

The Federal Government bailed out Bear Sterns by guaranteeing the losses, when JPMorgan announced they were purchasing Bear for $2. Actually, it was $2 a share (down from $150 a share 6 months earlier). How'd you like a 401k at Bear! One employee wittled the 401k from over $1 million to $12k. OUCH!

So, why do we tell you this. Because it's all about trust at ADR. We make sure you are happy. Banks are notorious for changing terms on you. We still have yet to receive a better business bureau complaint, in nearly 3 years of operations.

Select a professional when you get your mortgage. One that isn't simply 18 years old (that is the only requirement to sell mortgages if you work at a bank). One that isn't living in a foreign country - cold calling you every 15 minutes (we don't have a call center that bothers you).

Our volumes were up 200% in 2007 over 2006. That's pretty good given the environment we were in. In 2008 our volume is up 20% for the first 3 months of the year, over 2007's first three months.

Call Andy May at 919 771 3379 if you are experiencing any issues with working with ADR. We'll help you through it. Take care and thank you for considering ADRmortgage.com.

How to Improve your Credit Scores at no cost

Credit Score Improvement Guide

By Andy May

To raise your credit score by up to 20 points - opt-out of all junk-mail solicitations from credit card companies and others. Go to https://www.optoutprescreen.com/?rf=t and register to opt out.

You will get two benefits: First, your score will improve by up to 20 points. Secondly, you will save the environment by saving on gas used to deliver your mail, paper used to produce this junk mail, and you'll stop having to waste time opening solicitation junk mail.

Here's some more "how to improve your credit score" information. But first, let's give you a little background:

What: How to improve your credit score.
Who: Credit Bureaus rank you from 350-850 (scores). There are 3 repositories that collect and report your data to any company that you want to buy a financial product.
When: Everyday.
How: They use a simple model like: ax+by+cz ----- where a, b, and c are coefficients (0-100%) and x,y, and c are the factors that they rank you on.

This is a simple Factor Model, or Discriminant Analysis Model.

Example: Years of Credit Experience = "x"; Factor for "a" = 25%. So, if you're older you would potentially get 100% of 25% for the full 25 points; say age 55 or older. The credit bureaus don't report exactly how they score you.

And you thought there wasn't age discrimination in America? Well, one of the factors is years of credit experience. How can you have a lot of years if you aren't older? Proceed carefully if you are thinking of getting your 14 year old a credit card.

In any case, younger people have lower credit scores as a result of this factor - which contributes probably as the second most important factor when scoring your credit.

First is i) on-time payments for everything (never-ever-never miss a mortgage payment - then comes installment payments (ie: auto) then comes revolving credit (credit cards)). Second is ii) your age (aka: years of credit experience). Third is job stability (yes, moving lowers your scores). While there are other factors, it's kind of like getting your website ranked in google. The Credit Bureaus, like Google, change the factors all the time.

That makes it interesting, as the Credit Bureaus really can't tell how good you are at managing your credit going forward - only how good you managed it in the past. That's why your age is so important to them.

Education also plays a role in how high your score is. The more years of education - the better your score should be. However, the credit bureaus aren't sophisticated enough to make these adjustments at this time.

So, you want to raise your score? Here are other ways, with the author's scale of 1-10 (10 best) to rank order my opinion on how to improve your score:

1) Opt-Out of Credit Solicitations (10) - see above for web address;

2) Raise your credit limits on your card (10) ; this pushes your useage of credit down. If you owe $15k on a limit of $15k on your credit card - that's 100% use. You want to be under 50% - so call your credit card company and have them give you a $30k limit. This will improve your score;

3) Check your credit report (not the free ones, as those are "fake" reports and you won't know who is reporting you delinquent - call your local mortgage broker and ask them to do it for you. They may be able to save you some money on your loan anyway. And it's only $20 to pull all three bureua scores. If there is a mistake on the report, have your mortgage broker fix it with you - or if you're in real trouble, your mortgage broker can refer you to a credit specialist that they work with regularly. I've often seen scores improve 150 points by removing erroneous reporting. So, I'd give this one a (8) because it doesn't apply to everyone;

4) Do NOT close your cards. If you do your score will drop by up to 25 points. If you want to pay off a card, that's great. But closing an account is not good. It will lower your scores. (10);

5) Put your mortgage in only one spouses name - both on the deed. This will lower the indebtedness that the computer model sees for one of the spouses. That way you'll always keep one spouses credit "clean". (4);

6) Put student loans in forebearance. This eliminates your payments from your debt to income calculation and can allow your to qualify for a mortgage. Speak with your mortgage broker about this. As far as improving your score - (2);

7) Obviously, pay everything on time (10);

8) Don't get those silly "save 10%" on your Home Depot purchase. That costs you on your credit score. Yes, you will save $100. But I've seen that cost borrowers $10,000. Their score dropped below 620 ......same thing for purchasing a automobile. Don't do it before you buy a home - do it after. (5).

9) Ok, this I only give a (3) because it's kind of become an issue in the mortgage industry and I don't particularly condone it. Add yourself to a person's credit card that has a good score. For example, you are getting married. Add your poor scoring spouse to your long credit history on a card that you've paid on time for the last 10 years. That'll improve the score of the other spouse. Again, (3) since I don't condone this entirely. The example above is obviously fine.

10) Pay your mortgage on the 30th - not 2 weeks later. Paying ahead of time can improve your score a few points. (2). Also, don't worry about having your credit scores pulled. That only lowers your score 1-5 points, and you can pull it many many times over a 30 day period (as long as it's a similar financial institution - like mortgage cos. or auto cos.....not both).

I hope you've enjoyed reading this article. There is a real art to improving your score. In fact there is an entire credit improvement industry - where a professional will charge you $500 to consult with you. DO NOT pay your mortgage broker or anyone associated (paid by) with the mortgage broker. You want a pro, not a mortgage broker. We can help you - but we shouldn't be spending all our time fixing your credit scores - rather, we should be getting you into a great mortgage (and not the pay option arm!). If we are spending a ton of time on your credit scores, you'll over-pay on your mortgage - a lot more than the standard $500 charged by Credit Repair Specialists like Shannon Hart in Dallas, Texas.

So, split the two functions up and save money. Get your credit improved by a credit repair company and then get your mortgage through a mortgage company.

andymay@adrmortgage.com
www.adrmortgage.com