When buying a home in today’s market, you MUST be concerned about MORTGAGE FRAUD. Not only the FRAUD FOR PROFIT that many have experienced, but the FRAUD FOR HOUSING. Yes, if you lie, or are encouraged to lie in the mortgage application, that is FRAUD. It is both a Federal and Arizona FELONY. Your buyer’s agent should help you avoid potential financial losses and criminal prosecution.

This post is inspired by 2 others on this forum. Lenn Harley’s MORTGAGE FRAUD THRIVES – THE PLAYERS ARE THE SAME and Broker Bryant’s You want my buyer to do what?

Both of these posts touch on the Buyer’s agent responsibility in the procurement of a home loan. I am just adding some of my thoughts to theirs.

Many problems in today’s real estate market have been caused by FRAUD! Often guided by the lending officer, who feels pressured to make the deal at any cost. Since most states do not require the lending officer to have a fiduciary responsibility to the lender, fraud may easily occur.

Buyer’s agents DO have a fiduciary responsibility to the buyer. It is their highest duty when representing the buyer. Why don’t they stop the fraud? Here are a few reasons.

1. Accepting a buyer provided lender. Sorry folks, this is my biggest fear. Many, if not most lenders don’t play well with real estate agents. They do not keep us in the loop, and often won’t provide us with the information necessary to protect and counsel the buyer. Make sure your lender will talk to your agent, or be prepared to accept the consequences.
2. Many agents don’t understand mortgage rules and procedures. I will bet most agents have never seen a buyer’s Good Faith Estimate. If your agent doesn’t know what is on this document, there is no way to help the buyer understand the loan they are getting.
3. In my state, most buyer’s agents do not attend closings. I have never seen a loan originator at a closing. It is at the closing, or a few days earlier, that you get to look at the Note. The Note defines all of the terms and conditions of the loan. Anything said or written prior to the signed note are null.
4. Many agents were "trained" to let the "mortgage professional" do the job without interference. This has often been justified as "preserving a buyer’s privacy". It is imperative the buyer’s agent be involved.

These are just a few of the things a buyer’s agent should do to protect their buyer, and make the real estate purchase a good one.

It may be only for a few days, but this first day of fall was glorious! I’m sure we will have some more triple digit days before Halloween, but today was great.

The people who live in the New England area, upper Midwest, and even in Arizona’s mountains mark the change of seasons by the changing colors of the leaves in the trees. Those of us who live in the Sun City and Sun City West of Arizona’s Sonoran desert mark the change by the changing colors of the license plates on the cars in front of us. I particularly like the blue of Minnesota, and the red of Wisconsin, but all snowbirds are welcome.

And now for a joke. Seen on a bumper sticker… So many snowbirds, so little freezer space! Joke folks

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate in the Sun City Neighborhood, Peoria, Glendale or Surprise, please call me with their name and phone number. Thank you!

Get a Home Loan for Only 4% Interest!

That is a teaser rate folks, YES IT IS TOO GOOD TO BE TRUE!

Many lenders in the past have offered rates like this and even lower. You see it on TV all of the time. Thes are teasers, meant to get you to call them. Even if you got a loan at that rate, you need to read the fine print.

Almost without exception, these rates are offered for a limited time frame (1 to5 years). After the introductory period the rate will reset, most of the time at a much higher interest rate, or to market rate but the difference between the teaser rate and the market rate is added to the principle or term of the loan.

Yes, your parents were right! Don’t sign anything before reading it.

For information on a Realtors opinion on Adjustable Rate Mortgages: click on the following articles.

• Adjustable Rate Mortgages, Good or Bad, Part 1
• Adjustable Rate Mortgages Part 2
• ARMs, Part 3, Pitfalls and Benefits

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate in the Sun City Neighborhood, Peoria, Glendale or Surprise, please call me with their name and phone number. Thank you!

The Adjustable Rate Mortgage (ARM) can be a valuable tool when buying a home. It can also become your worst nightmare.

Benefits of an ARM include:

• Ability to qualify for  more house since the qualification is based upon the first payment level.
• Gradual increase in payments if the ARM is correctly selected. This increase will hopefully be made up by an increase in your earnings.

Pitfalls of the ARM:

• Teaser, or introductory rates. This is why so many people are in trouble today. These rates mean your payments will be abnormally low at the beginning. The loss to the lender is made up by resetting after the introductory period to a level greater than the market rate. The change in monthly payment isn’t gradual, it happens at once, causing monthly payments to be more than many can pay. Foreclosure is the result.
• High prepayment penalties and excessively long prepayment periods. These lock the borrower into the loan, as it is not possible to borrow enough to pay these. Recently I have seen prepayment penalties of 7% and prepayment periods of up to 9 years.
• Income fails to rise as expected, Even if your income doesn’t increase, your payments may. You are obligated to make payments based upon your index, not your income.

I hope this series helps to explain the Adjustable Rate Mortgage. If you have any questions, drop me a line.

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate in the Sun City Neighborhood, Peoria, Glendale or Surprise, please call me with their name and phone number. Thank you!

ARMs, how they work.

A basic Adjustable Rate Mortgage (ARM) is based upon the following items (be sure your lending officer and real estate agent explains them in detail)

• An Index
• Margin
• Adjustment Period
• Maximum Increase per Period
• Maximum Increase over the Life of the Loan

INDEX: Each ARM is tied to an economic index. The index relates to the cost of the money loaned, to the lender. The loan interest, upon which the payment is based is equal to the INDEX + MARGIN. Be Careful when evaluating the index. A volatile index means your loan will adjust in an extreme fashion. Common indexes are:

• LIBOR, the London InterBank Offered Rate
• COFI, the Federal Cost of Funds Index
• T-Bills, the interest rate paid by the Treasury Bills.
• Many others may be used.

MARGIN. A percentage added to the index to allow the lender to recover costs and make a profit. If you are the borrower, you want this number to be as low as possible. If you are the lender, you want it to be as high as possible.

ADJUSTMENT PERIOD. This could be monthly, quarterly, twice a year, or yearly. Pick the one you decide will fit your situation. Pick carefully, however, you will not be able to change this later.

MAXIMUM INCREASE PER PERIOD. This one can be a killer. As a borrower, you want this to be as low as possible. An increase of 1% on a $200,000 loan is about an $80 a month increase. If you do this quarterly, you might find you cannot afford the payment.

MAXIMUM INCREASE PER YEAR. Again, another killer. Keep this number as low as possible.

MAXIMUM INCREASE FOR THE LIFE OF THE LOAN. This caps the loan. No matter what happens to interest rates over the life of the loan, this is the maximum interest rate you can be charged.

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate in the Sun City Neighborhood, Peoria, Glendale or Surprise, please call me with their name and phone number. Thank you!

Much has been said recently about the causes of our current and projected foreclosure rate.

Often vilified by the press as the cause of today’s mortgage mess, is the adjustable rate mortgage. (ARM)

The ARM was originally developed as an instrument to give people, often first time buyers a way to get on the property ladder earlier in life. These were often younger buyers, educated, in the early stages of their careers. These buyers typically had some money down and for their closing costs.

The ARM loan was often offered at a lower interest rate since the lender didn’t have the risk of inflation leaving the lender with a low return loan during periods of higher yields. These loans were typically limited to between 5 and 7 year terms, after which the loan would be renegotiated, refinanced to a fixed rate loan, or the property sold.

The advantage to the buyers is that they would be qualified for the loan on the initial rate, usually less than that of conventional loans. The initial payments were lower, and as their income increased, so did the payment.

The borrowers using these loans had every reason to believe that their income would increase as the loan interest and payments increased.

More recently, ARMs were used to finance borrowers who had minimal or poor credit records, and no real potential of increased income. Additionally, these buyers had little or no money to invest in the property, hence need to get their down payment and closing costs financed. As recent events have made clear, this is a recipe for financial disaster.

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate in the Sun City Neighborhood, Peoria, Glendale or Surprise, please call me with their name and phone number. Thank you!

As fall approaches, the Recreation Association of Sun City has announced the entertainment offered free for Sun City members through November at the Sun Bowl.

For those who don’t know, the Sun Bowl isn’t a football game, or a football stadium, it is an outdoor amphitheater at 10220 N. 107th AV in Sun City.

The scheduled shows are:

1. The Swing Sisters: Sunday, September 24 at 7PM. This is an Andrews Sisters inspired act that performs songs of the 1940’s in 3 part harmony.
2. Masanga Marimba Ensemble: Sunday, September 30 at 7PM. This Southern California group plays African style music based upon Zimbabwean instruments. This should be a good act for folk and international music fans.
3. Monte Procopio: Sunday, October 7 at 6:30 PM. Monte sings the songs of the Rat Pack, Frank Sinatra, Tony Bennett, Sammy Davis Jr. and Wayne Newton.
4. The Chordettes: Sunday October 14 at 6:30 PM. A 1950’s, 1960’s group. Hit songs include Mr. Sandman, Lollipop, Never on Sundays.
5. Arizona Winds: Sundaym October 21 at 6PM. A concert band made up of musicians from across the Valley. Traditional band, pop, jazz etc.
6. Spirit of Phoenix Quartets: Sunday, October 28, 6PM. Barbershop harmonies.
7. Arizona Swing Kids Sunday, November 4, 6PM. Known as the USO Kids, children from 7 to 17 do a USO type show.
8. Ahwatukee Foothils Concert Band Sunday, November 11 5:30PM. A salute to all Veterans. Patriotic music, marches, Broadway, jazz, swing.
9. Choralaires of Phoenix Sunday, November 18, 5:30 PM. Male singers with a repertoire of patriotic, spiritual, pop and more.

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate in the Sun City Neighborhood, Peoria, Glendale or Surprise, please call me with their name and phone number. Thank you!

>About The Author

As a full time agent with Ken Meade Realty a Sun City neighborhood Brokerage business, Jim utilizes his Marketing Degree and 35 years of Business and Real Estate experience in order to help clients with their primary residence and second home needs. He contributes to a daily Web Blog which focuses on the Sun City, Sun City West, Glendale, Peoria and Surprise Arizona Real Estate Market, as well as other topics important to those and neighboring communities. For more information on Jim and Ken Meade Realty, please visit his website at http://www.suncityneighborhood.com/ or his other blog at:http://activerain.com/blogs/jlittle

To know the answer to that question, it is important to ask yourself the following questions first:

1. Do you plan on living in the home for 3 to 5 years?
2. Do you have a stable job or retirement income?
3. Are rents and rental occupancy rates increasing in the area you wish to live?

If you answered yes to these three questions, now is the time to buy a home.

If you want a great buy, and could care less about keeping up with the Jones. buy the house that will provide a HOME for you and your family.

The tactic many buyers seem to be taking now, that of attempting to time the market, is self-defeating. Attempting to "time" the market and buy at the bottom, is as difficult as trying to "time" the top and sell at the top. If you don’t believe me, ask the many thousands of real estate "investors" who have filed for bankruptcy recently.

When considering buying a home for you and your family, a few very important things must be considered.

1. Pick a home with a good LOCATION! Homes with good locations sell when nothing else will.
2. Pick a home with good fundamentals. Don’t buy one with an odd floor plan, a lot too big or too small for your needs, too few or too many bedrooms or baths, etc.
3. Get a loan approval FIRST! Interest rates are still near historical lows, and if you are buying a normal family home, fixed rate conforming loans are still availabe, but the seller will need to know you are prepared to buy the home before taking the home off the market. Your real estate agent should be able to help you with this.

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate in the Sun City Neighborhood, Peoria, Glendale or Surprise, please call me with their name and phone number. Thank you!

>About The Author

As a full time agent with Ken Meade Realty a Sun City neighborhood Brokerage business, Jim utilizes his Marketing Degree and 35 years of Business and Real Estate experience in order to help clients with their primary residence and second home needs. He contributes to a daily Web Blog which focuses on the Sun City, Sun City West, Glendale, Peoria and Surprise Arizona Real Estate Market, as well as other topics important to those and neighboring communities. For more information on Jim and Ken Meade Realty, please visit his website at http://www.suncityneighborhood.com/ or his other blog at:http://activerain.com/blogs/jlittle

Jim Little, Your Sun City Realtor

Nationally, the outlook for home buyers is mixed.

• Home loan applications have increased for the second straight week. This may indicate more buyer interest.
• Slowdown in market activity has occurred. Historically, a great slowdown in market activity signifies the bottom of a market cycle.
• Bankruptcy and closings of mortgage lenders has slowed appreciably. In the past we saw several a week, not many at all now. Another indicator the bottom is near. Most news now is about the clean-up efforts at already imploded companies.
• Politicians are getting on the band wagon. These most reactive people are working at last to correct the market problems. They are addressing new programs for governmentally sponsored programs, and also working on sub-prime workout ideas. Politicians always react near the bottom.
• The VA loan maximums have been raised to equal conventional conforming maximums, now $417,000.
• FHA has initiated FHA Secure to help sub-prime borrowers refinance bad loans into something workable for the borrower.
• The Federal Reserve has acted to stop the liquidity problem, and will meet September 18 to consider further steps.
• Interest rates are slipping gradually. When interest rates fall, housing prices recover and increase.

Today’s outlook for the Phoenix area, which includes homes for sale in Sun City, Sun City West, Surprise, Peoria and Glendale Arizona is far better than in much of the nation. Job growth continues at a healthy rate, unemployment is less than the national average, and real income is increasing. Inventory of homes for sale is excellent, giving those who wish to buy a home a great selection to choose from.

Today’s tip for buyers. Don’t get an adjustable mortgage. Most ARM’s have a start rate near that of the conventional 30 year fixed mortgage. This means there is little advantage to the average buyer to use an ARM.

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate in the Sun City Neighborhood, Peoria, Glendale or Surprise, please call me with their name and phone number. Thank you!

>About The Author

As a full time agent with Ken Meade Realty a Sun City neighborhood Brokerage business, Jim utilizes his Marketing Degree and 35 years of Business and Real Estate experience in order to help clients with their primary residence and second home needs. He contributes to a daily Web Blog which focuses on the Sun City, Sun City West, Glendale, Peoria and Surprise Arizona Real Estate Market, as well as other topics important to those and neighboring communities. For more information on Jim and Ken Meade Realty, please visit his website at http://www.suncityneighborhood.com/ or his other blog at:http://activerain.com/blogs/jlittle

Jim Little, Your Sun City Realtor

Lenn Harley, a broker in Maryland at Homefinders.com wrote about this in her blog. I feel it is important enough to quote a few of the secrets here.

Secret: The agent’s whose name is on the FOR SALE sign in the yard has promised the seller that he/she will get the best price for the seller.  The only information required of a seller’s representative would be "material defects".  General condition of a property should be obtained the a home inspection with a contingency to void the contract if the house has serious maintenance, structural problems

Secret:Earnest money deposits may be forfeited if a buyer falsely represents his/her financial ability to obtain financing.  Buyers who do not cooperate with the financing paragraphs and cause the seller to keep the home off market have caused the seller serious damages and may not get their earnest refunded.

Secret:  Termite Warranties do not protect your home from termite damage.  Termites cannot read.

To see the other 27 secrets, please go to Lenn Harley’s blog by clicking here.

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate in the Sun City Neighborhood, Peoria, Glendale or Surprise, please call me with their name and phone number. Thank you!

>About The Author

As a full time agent with Ken Meade Realty a Sun City neighborhood Brokerage business, Jim utilizes his Marketing Degree and 35 years of Business and Real Estate experience in order to help clients with their primary residence and second home needs. He contributes to a daily Web Blog which focuses on the Sun City, Sun City West, Glendale, Peoria and Surprise Arizona Real Estate Market, as well as other topics important to those and neighboring communities. For more information on Jim and Ken Meade Realty, please visit his website at http://www.suncityneighborhood.com/ or his other blog at:http://activerain.com/blogs/jlittle

Jim Little, Your Sun City Realtor