Beware of Online Homeowners Insurance

What do you know about Insurance?

St Paul, MN: What do you get with a online insurance provider like Progressive, Esurance, or Geico?

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Get a FREE Condo Insurance HO6 Policy Quote

Well they tell you they have a great price, but come on, what insurance ad have you ever seen that doesn’t promise that. We think the much more important issues are knowledge and coverage. Do you really think their national call centers, filled with order takers trying to help you complete your online quote, really know anything about it?

A great example is the number of people in MN who carry the minimum state required auto insurance coverages of 30/60/10.  It is the cheapest coverage, but leaves you grossly under-protected.  If you talked with a real live insurance agent, they could explain that poor coverage… But more importantly, explain how for usually around just $100 more a year, you could move up to awesome insurance coverage.

As you evaluate coverage and providers, ask about why you need higher limits as a homeowner, or when you have young drivers, or higher liability limits when you have a dog, trampoline, or pool?

These are all great reasons why you want to talk to an agent that lives, works, and understands the local Minnesota insurance market and can advise and help you make the right decisions.

These are important decisions. There isn’t much point in saving $20 a month if you end up owing for a loss of  $40k or $50k that should have been covered but isn’t! Talk about MAYHEM.

On top of that, talking with a live insurance agents usually save people money over these online order centers to boot. Don’t let your friends and family get duped by all the hype and commercials.

Have them call a local insurance provider like The Reliable Insurance Network for a quote and get real service along with a great price.

Shopping for an Interest Rate?

Minneapolis, MN:  Thinking of refinancing your home?  Are you a First Time Home Buyer?  Homeowners have thousands of choices when it comes to shopping for their mortgage loan, and sometimes all these options can spell trouble.

Pretty much every phone call I take starts with “What’s your interest rate?” While this seems like a very logical question to ask, it doesn’t give the lender all the information needed to give you an accurate answer.

rates_compareThis goes for online mortgage interest rate search tools too.  While you may put in some basic information, I haven’t seen a system yet (including ours) that could ever replace a actual Loan Officer and be 100% accurate.

There is no generic rate: A common misconception is there is a “rate”…   We’ve all hear the commercials… “The rate today on a 30-yr fixed is ____, and only at so and so company.”  I cry foul!  The only way you can ever get an accurate interest rate quote is to supply a mortgage company with a complete application, and the lender also reviews a credit report.

Credit Score: To accurately quote you an interest rate, a lender has to run your credit to determine your credit score. Interest rates can vary greatly on some programs depending on credit score. Most loan programs have pricing adjustments based on credit score, so without looking at your credit, any lender quote is just guessing.  While I like to believe what people tell me, until I see for sure, it doesn’t mean anything.  I can not tell you how many times someone has said “I have excellent credit,” (which is a 740 middle credit score or higher), so I quote them based on that score,  only to actually review their credit the next day to find out their score is a 700. On some programs, the difference between a 740+ score, and a 700 score could mean as much as 1/4% (.25) higher interest rates!

There are at least 21 criteria that goes into determining your interest rate.  Here is a small sampling:

  1. Credit score
  2. Loan program
  3. Loan Size
  4. Down Payment (or equity position)
  5. Owner-Occupied or Investment
  6. Closing cost options

I consistently hear, after I’ve taken a full application and accurately quote a client “That’s different than I saw (online, in the news paper, on TV).” The general attitude is that  my quote is high.  The reality is you are usually comparing an accurate quote against teaser advertising rates, or rates that do not apply in your situation.

So be mindful of the difference between advertising and reality.  Let a professional Licensed Loan Officer (NOT A BANK), review your complete application for an accurate quote.


Can’t refinance – Maybe you can with HARP – Find out here

HARP 3.0 ???  Help for underwater home owners

St Paul, MN:  Virtually, all homeowners have lost value on their homes in recent years.  For many, this has created some challenges to refinancing and taking advantage of today’s super low mortgage interest rates.

There are a few programs with can help, depending on what type of mortgage loan you have today.  May people have successfully used program like HARP (Home Affordable Refinance Program), the FHA Streamline Refinance, or even the VA Streamline refinance known as an IRRRL loan.

Sadly, not everyone fits the criteria.  Therefore Washington has been floating the idea of an expanded HARP 3 Refinance ProgramIt doesn’t exist yet, and may never exist…  But if it does, here is what it may look like:

There are some basic criteria for the #MyRefi or HARP 3 refinance program:

  • Current loan is NOT backed by FHA, USDA, Fannie Mae, Freddie Mac
  • Primary home only. No second homes or investment home
  • Loan less than $750,000.
  • On time mortgage payments for the past 6 months, with no more than one 30-day late payment in the past year.
  • Credit score above 580

This new HARP 3 refinance program proposal mirrors the current HARP 2.0 refinance loan program (possible no appraisal, less document, etc), except it would potentially also allow any underwater home owner, not just those who have a loan owned by Fannie Mae or Freddie Mac.

Try out the governments “Would I qualify for a refinance” below..

Home Loan Defaults Up

Home Loan Defaults Up

Minneapolis, MN:  Home mortgage loans defaulted at a higher rate in the last quarter of 2012. This is unwelcome news compared to an overall trend of good news in the housing and real estate market

pdHomeowners defaulting on the home mortgage loans has increased for three consecutive months after hitting a post-recession low in September, according to a recent report.  Mortgage defaults averaged1.36 percent of all loans in September 2012. Since then, defaults on home mortgages rose to 1.47 percent in October, 1.58 percent in November and 1.68 percent in December.

Experts are confused as to why this is happening, as the general housing market has been improving. Foreclosures have been on the decline.  New homes sales are up, and with the continuance of historically low mortgage interest rates, first-time home buyers have been snapping up low priced real estate for some time now.

2012 showed a nice improvement in the quality of consumers loans, like cars and credit cards, but first and second mortgage loan defaults have been holding the overall default rate up.

30-Year Fixed-Rate Mortgage Averages 3.40% for week ending Jan 3, 2012

lmrMinneapolis, MN:  Freddie Mac yesterday released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates moving higher following December’s employment report. The 30-year fixed averaged 3.40 percent, its highest reading in eight weeks. The all-time record low for the average 30-year fixed was 3.31 percent set November 21, 2012.

News Facts

  • 30-year fixed mortgage rates (FRM) averaged 3.40 percent with an average 0.7 point for the week ending January 10, 2013, up from last week when it averaged 3.34 percent. Last year at this time, the 30-year FRM averaged 3.89 percent.
  • 15-year fixed mortgage rates this week averaged 2.66 percent with an average 0.7 point, up from last week when it averaged 2.64 percent. A year ago at this time, the 15-year FRM averaged 3.16 percent.
  • 5-year adjustable mortgage rates (ARM) averaged 2.67 percent this week with an average 0.6 point, down from last week when it averaged 2.71 percent. A year ago, the 5-year ARM averaged 2.82 percent.

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Fixed mortgage rates increased slightly following a positive employment report for December. The economy added 155,000 jobs, above the consensus market forecast, and November’s job growth was revised upward by another 24,000 workers. This helped keep the unemployment rate steady at 7.8 percent, the lowest since December 2008. For all of 2012, 1.86 million jobs were created and represented the largest annual gain since 2006.”

Freddie Mac’s survey is the average of loans bought from lenders * last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s best MN and WI mortgage interest rates.

Home values expected to rise 21% by 2016

Minneapolis, MN:  Homes values have certainly seen a roller-coaster ride.  The big run up in from 2000 to 2006, then the crash.

The big question in everyones mind, is what will happen to values in the future?  Looking at the chart below, you can see an anticipated rise of 21% in values by 2016.

This is great news all around.  Those with existing homes who have lost value should regain a lot.  Those buying at today’s rock bottom home prices, and rock bottom low interest rates should see nice appreciation.


What clients and Real Estate Agents Don’t Understand about Appraiser Independence

What clients and Real Estate Agents Don’t Understand About Appraiser Independence

Minneapolis, MN:  Real Estate Agents constantly call our mortgage office to ask if an Appraisal was ordered, or if it is completed yet.

appThe first question is pretty silly…  Of course it was.  The second question is tougher to answer until the completed appraisal physically shows up on the lenders desk.

Recent lender rules require what is known as “Appraiser Independence”.  This is a double down on the old rules that no one is allowed to influence or pressure the appraiser to obtain any pre-determined value on the home. The rules also means that no one who will be compensated on the file can have anything to do with picking the appraiser.  It has to be totally blind and randomly assigned.  This is very different from years past where the client or the Loan Officer could pick any appraiser they wanted.

Once the appraisal has been ordered, there are varying degrees of what the Loan Officer may or may not know about the status of the appraisal.  Most mortgage companies use a middle company, known as an AMC, or Appraisal Management Company, to handle all aspects of the appraisal. This easily means the lender will meet the “independence” guidelines. Some AMC’s are better than others in letting the lender know the status, giving them the expected date the appraiser will visit the property, and the expected appraisal completion date. With many others, the lender is completely in the blind. In the vast majority of cases, I don’t even know who the appraiser is until the appraisal is completed.

To further complicate the issue, while it is technically possible for a Loan Officer to speak to an appraiser on a very limited number of questions, the vast majority of lenders completely forbid this contact to avoid even the remote likelihood of influence complicity.  It is much easier to respond to regulators that “our loan officers are forbidden”, then to claim they didn’t do anything wrong.

As a mortgage lender, it is very frustrating when real estate agents constantly bombard me with appraisal question.  If I know, I will tell you.  Do not yell at the Loan Officer if they don’t know the answer or say they can not talk to the appraiser.

Why Mortgage Pre-Approval is Important

Successful house hunting starts with mortgage pre-approval – Not talking to a Real Estate Agent.

What Is Mortgage Pre-Approval

Minneapolis, MN:  Mortgage pre-approval is what happens when you talk to a Loan Officer and find out how much house you can afford. It’s an important step because it helps your real estate agent zero in like a laser beam on the correct house price for you. Your mortgage consultant will ask questions about your financial situation, including job, income, assets, debts, and more. Then you’ll talk to them about your comfort level when it comes to a monthly mortgage payment. It’s important to know this, in order to avoid buying a home you really can’t afford.


FHA Mortgage Loan Expert in MN and WI
FHA Mortgage Loan Expert in MN and WI

At this point, you are NOT pre-approved.  The next step to full pre-approval is submitting all your documents to the lender. Common items include; photo ID, pay stubs, W2’s, and bank statements. Once the mortgage company reviews these documents, THEN you will be pre-approved!

Here’s a look at some of the benefits to getting pre-approved before you house hunt:

  • Powerful Buyer. Sellers often give preferential treatment to pre-approved buyers since they know for sure that you can finance the purchase. If you get into a bidding war with another buyer, the seller might look at your offer in a better light than someone who hasn’t talked to a mortgage consultant.
  • Interest Rates. As interest rates go up and down, you can get in on a locked rate before they go up again. You can lock in an interest rate if you are pre-approved, as soon as you have a signed purchase contract. A lower interest rate will save a lot of money over the life of that mortgage.
  • Credit Surprises. Mortgage pre-approval reduces credit surprises.  If you wait until the last minute to secure financing and find that you have a few issues that need to be resolved with your credit, you could miss an opportunity to purchase your dream home.  Getting pre-approved will help you head-off surprises so you can go look for the perfect home.

Mortgage pre-approval is as close as anyone can get to insuring you’ll be able to obtain a mortgage loan in advance of finding a home.  Pre-approval gives MN and WI first time home buyers a definite idea of what they can afford and shows sellers that they are dealing with a serious buyer.