Archive for September, 2010

Purchase Price vs. Interest Rate, by Inwest Title a Utah Title Company

Saturday, September 25th, 2010

As you are aware, property values in Utah have dropped drastically in the past few years, offering an unbelievable discount for prospective buyers in the market today. This coupled with historically low interest rates, which could potentially save you thousands of dollars over the life of your loan, make it an amazing time to buy real estate!

To any “fence sitters” out there, waiting for home prices to drop even lower before entering the market, we wish you to consider the following two scenarios. Values could continue to decline, but interest rates could also rise! Now where is that crystal ball when we need it??

Scenario 1 (Current Market)
An amazing Real Estate agent finds the perfect home for Mrs. “Ima” Buyer. “Ima” offers to purchase the home for $250,000. Mrs. “Ima” Buyer also has an outstanding Mortgage Officer who was able to get her an unbelievable 30 year Fixed Mortgage Rate at 4.25%!!!

“Ima’s” P/I monthly payment = $1,230
Interest Paid for the life of the loan in scenario 1= $192,746

Scenario 2 (Future date)

Mr. “Ben Sittin on the Fence for a While Now…” has been looking at houses for months, running his poor buyer’s agent ragged. He has gone from home to home looking for just the right deal. After several months have passed (and a few buyers agents later) home prices had dropped another 10%! “Ben Sittin on the Fence” decides to get down off the fence and puts an offer on a home at $225,000 “Ben” is thrilled when his agent informs him that his offer was accepted. He had looked at this very home several months earlier, and it was listed for $250,000; thanks to his patience, he was getting the home 10% below original asking price. In the midst of all the excitement, he calls his mortgage officer and says, “We need to get moving on my loan. I have an excepted offer to purchase a property for $225,000, and I want to close right away!” To his surprise his mortgage officer informs him that interest rates have risen to 6.5% for a 30 Year Fixed mortgage. What does this mean for “Ben?”

“Bens” P/I monthly payment $1422.00
Interest Paid for the life of the loan in scenario 2 = $286,978

“Ben Sittin on the Fence “ now goes by “Shoulda Ben” buying real estate. He may have gotten a lower sales price than “Ima”, but he missed out on the historically low interest rates, which translates into his monthly mortgage payment being $192.00 more a month than “Ima’s”, and he will end up paying $94,232 more in interest over the life of his loan.

It’s time to hop off that fence, and prevent yourself from becoming another “Shoulda.” We work with some of the top Mortgage and Real Estate professionals in the industry and would be happy to get you moving in the right direction.


Friday, September 10th, 2010

One of the most important things we do is create customer loyalty. How do we keep our customers and make them loyal to us? Here are a few ideas that will help create customer loyalty taken from Dr. Paul Timm of the BYU Marriott School of Business.

1. Be Reliable. Do what you said you were going to do when you said you were going to do it. Reliability arises from consistent follow through and execution. If your client knows it will get done when he or she asks you to do it and done right and on time, they will keep coming back. Assure your customers that they will receive the same top quality service every time they do business with you.

2. Be Credible. Do exactly what you say you will do – every time.

3. Be Responsive. Share your customers sense of urgency. Provide customers with easy access to information. Timely return phone calls, emails, texts. You have information and expertise that people need. You need to be accessible so that customers can access your expertise.

4. Show Empathy. If the customer seems anxious, be reassuring. If a customer is excited, share that excitement through comments, voice and other non-verbal messages.

5. Make things easier for the customer. Look for things that give our customers difficulty and eliminate them. Work to reduce the customer’s work. Put yourself in the customer’s shoes and ask “what would I want from our company if I was the customer?”. Simplify everything you can. Ask for feedback about what is helpful or non-productive.

Developing loyal customers takes time, effort, concern and expertise.

Don’t be Surprised if the Number of Completed Foreclosures and REO Properties Spike in the Near Future, by Inwest Title a Utah Title Company

Friday, September 3rd, 2010

Fannie Mae has announced in an August 31, 2010 Bulletin,  that it will start fining loan servicers who take too long to complete routine foreclosures.  If a servicer does not monitor the trustee/attorney conducting the foreclosure and make sure they comply with the time frame established by Fannie Mae then the servicer could receive a fine based upon: “Fee calculated based on the outstanding principal balance of the mortgage loan, the applicable pass-through rate, the length of the delay, and any additional costs that are directly attributable to the delay.”  (Fannie Mae Announcement SVC-2010-12).

Ouch, it looks like they are not messing around anymore.  Only time will tell how big of an impact this has on the current number of foreclosures and the subsequent REO properties for sale, but both could dramatically spike in the near future if servicers become concerned about fines and move properties out of their “Shadow Inventory”.

What time frame has been set for a Utah foreclosure?  150 days (approximately 5 months)

In Utah about the fastest you can possibly complete a non-judicial foreclosure is just outside of 4 months (if all the planets and stars align), and as such this will impose a burden on servicers and Trustees/attorneys to bring their A game when conducting a foreclosure.

Another interesting point that can be taken from the allowable timeline is to see where Utah compares to other states.  While Utah does not have the shortest time frame of 60 days (Georgia, Michigan, Missouri, Tennessee, Texas, Virginia, & West Virginia) we are nowhere near the longest time frame of 420 days for New York (Downstate area)!

If you are wondering about the term “Shadow Inventory” used above, then tune in to next week’s blog when we will be explaning the term and giving our thoughts on the topic….