BrianWJLA7NewsTalk – Brianne Carter Interviewing Brian Martucci

Q: Welcome back here to News Talk. Are you looking to refinance your home? Well, now might be the time. If you don’t know where to start or just want to know more about the process, well our next guest has got you covered. Brian Martucci joins us now with some tips on what to do if in fact you’re looking to refinance your home. And I feel like this is certainly a time that a lot of people are looking for that. A lot of people have been looking at the rates, seeing what they’ve been doing. Where does the market stand right now and is now the time people should be doing this?

Brian Martucci: Well, I think it is because people have been looking to refinance for years and the rates have been dropping, dropping, dropping and people have gotten into this mindset that they’re just going to keep dropping.

Q: Right.

Brian Martucci: But they’ve… I would argue they’ve certainly found a floor and in the last couple of months they’ve been starting to get unsettled and (take off?-00:42). This morning is a perfect example. I haven’t been in the office, I haven’t seen what happened to rates this morning but unemployment dropped from 7.9 to 7.7 percent. I know because I got it on my phone that the bond market is in turmoil. I imagine that that’s strong news, which is bad news for the bond market, so I bet interest rates pick up a little bit more today. So I think the takeaway is people need to know we’re not going to see 3 percent, 2½ percent, 2 percent, I think now is the time for all the fence sitters.

Q: Um-hmm. For a lot of people, like you said, who are on the fence and thinking okay, maybe now is the time and they’ve heard of the rate or they thought they locked me into 3 and there are sort of all these other hidden things. What should people be looking at to finally get what that number is actually going to be?

Brian Martucci: Right. There’s a lot of not necessarily hidden things but there’s a lot of variables that go into pricing alone. So if I get a phone call and they say, “I want your best rate,” okay well there are a lot of questions before I throw that out there. For example, on a condominium, not many people realize condo loans over a 75 percent loan to value—and not a lot of people have 25, 30, 35 percent equity…

Q: Right.

Brian Martucci:…is an add-on, they call it an add-on, and the interest rate may go up almost a quarter percent. Multi-family properties are an add-on, credit score is another variable. So I had someone who I was doing a purchase loan for (cuts out-2:00), everybody thinks that rates are 3½ percent, but they had a weaker credit score—actually a really weak credit score—they were buying a condo and putting 5 percent down so the rate was a lot different.

Q: (That adds a lot of things?-overlapping-2:10) to it.

Brian Martucci: Right. So you really need to talk credit score, property type, there’s a lot of things that you need to talk about with your lender before you get an accurate interest rate quote. And I think people kind of run off on the Internet and maybe end up going somewhere that they shouldn’t with inaccurate information.

Q: If you have a question about all of this or you want to weigh in on whether or not now is the time to refinance your home, well just give us a call on the News Talk line: (703) 387 1020 as we continue our conversation here. Certainly a lot of people see the signs outside of banks, they get information in their mailbox, they wonder where’s the right place to even start? If they’re thinking okay, now this is the time because of the way that the rates are going, the way that the market is, how do you begin the process? Where do you even sit down and start?

Brian Martucci: Well, I can tell you I just gave a seminar to some realtors yesterday and one of the big topics that we discussed was choosing a lender. Well, the realtors have been through this, they do this for a living, and interface with lenders quite a bit and they’ve determined that well, we don’t necessarily want to go with a mortgage broker because mortgage brokers don’t really control the underwriting, for example, the underwriting goes to the bank that they broker the loan to. They don’t necessarily control the appraisal as tightly as maybe a direct lender, a mortgage banker—which is what we are—which is really the preferred realtor choice because they get better service, better execution, more accurate appraisals.

So that’s really important for a refinance loan. I had somebody that was solely shopping by price and they ended up going elsewhere, and I usually will follow up with people after I lose a deal to see how things went, and they said, “Well, things settled and everything worked out okay but my house didn’t appraise.” They thought they were going to get X, they got $40,000 lower so they had to pay a bunch of principle into the loan all to save the perception of an eighth of a percent. They saved $30 a month, they paid $30,000 down to pay their loan down.

Q: Well, that’s the big thing, a lot of people sort of weighing the options if I have to go back to closing how much do I have to bring to the table or roll back in versus what my monthly payment is going to lower…? What…? How do you sort of know what is the right thing to do to make sure that in fact you’re not putting more money up front to not really save in the long run?

Brian Martucci: Right. So to me that’s pretty simple, it’s about how long you plan to spend in the property and recapture period. If you’re going to pay $3,500 in closing costs to save $300 a month, that’s about almost a 12-month recapture period. But if you think you’re going to sell it in the fall in six months, don’t do it.

Q: Right.

Brian Martucci: If you’re going to spend… If you’re going to do a no-cost loan, well that’s a little gimmick, you’re just building the closing costs into a higher interest rate. But if you’re saving $150 a month on a no-cost loan and you’re going to move in the fall and you’re going to save $150 a month for six months, that’s great. So the recapture period is important and of course that plays into how long you’re going to be in the property. So there are people that say, “Well, you’re only going to save me $100 a month, it isn’t worth it,” but if you plan to live in that house forever, another 20 years, maybe it is worth it.

Q: Right, right. Let’s head out to the News Talk line, Michael from Dale City has a question. Michael, go ahead with your question.

Michael: My question is, I have been in my home since 2008. The deed is solely in my name and I’m at the point right now to where I have a lender that is ready to go to closing but the actual loan is in another (person’s bank?-5:33) (unintelligible word) (dead?) and I could not get the payoff from out from the Green Tree had just bought it from Bank of America. And I’m at the point now I cannot get the payoff from out from Green Tree so I’m stuck because the mortgage company or the title company needs an exact dollar amount to write the check for.

Q: What does he do in that situation?

Brian Martucci: Well, it’s the title company’s job to get the payoff figure. So if they’re having trouble getting the payoff figure from, I think it sounds like Green Tree, maybe the consumer can call Green Tree. It’s his loan, he’s got the account number, he can give them his information and say, “I demand the payoff figure today,” to help you go to settlement.

Q: Yeah, it seems like it’s sort of a lot tied up into all of that.

Brian Martucci: Right, and a simple issue.

Q: Right, exactly. Another caller from the northwest. John, go ahead with your question.

John: Good morning, Brianne. You look lovely today, great to see you on the show. My question is, is it worth refinancing your home, considering the closing costs and fees you’d have to pay to the bank and when you pay off your home will you really have saved money?

Brian Martucci: Well, that really speaks to the recapture period. One thing that’s interesting is a lot of people will finance the closing cost.

Q: Right.

Brian Martucci: And this is a point that relates to his question; if you finance, let’s say $4,000 in closing costs and you’re in the house for 10 years, maybe you paid $8,000 in closing costs and your recapture period is longer.

Q: Right.

Brian Martucci: So you need to take into account, should I pay cash? And if you owe $300,000 instead of making the loan 3 or 4, maybe keep it at 300 and pay cash for the closing costs and then you can have a more accurate recapture period. If you finance $4,000 you don’t really know what your recapture period is because you don’t know how long you’re going to be there and what your total finance costs are.

Q: Right. It’s certainly a lot that you have to look into and not just sign on the dotted line immediately.

Brian Martucci: Right.

Q: What about for people who maybe purchased and didn’t have to put any… had no mortgage insurance tied into all of this? But we’ve seen what the economy has done, perhaps now they don’t have the value that they thought and they’re going back and now that’s something that they’re talking about adding into it, adding mortgage insurance to the monthly fee. How do you decide, you know, weigh the options whether or not you should go ahead then?

Brian Martucci: Well, usually… I’ve done those numbers a thousand times and it usually doesn’t make sense to add mortgage… The mortgage insurance has gotten really expensive.

Q: Yeah.

Brian Martucci: People are losing money, FHA, default rates are higher so mortgage insurance has gone up as a result. I would look into if you’ve got smaller equity or no equity and somebody’s talking about mortgage insurance, instead maybe doing a HARP or a HAMP Loan, which is the loan that the administration has now forced the lenders to do, where you can refinance with negative equity, no mortgage insurance, as long as you had no mortgage insurance to start, at market rates.

Q: And is that sort of the option people should be putting forward? If you’re looking for a lender—and we’ve talked about this—going through that process when you first buy the home sometimes you have the realtor to guide you along and you have sort of a… someone pushing you in the right direction, so to speak. Now if you’re back out doing this on your own and looking for the right option, the right lender, should you obviously do your homework first and know that those are options that could be put forward in front of you or do you expect that the lender would know that (it could be qualified?-8:56) (overlapping word).

Brian Martucci: Um-um, I wouldn’t expect that.

Q: (Laughs).

Brian Martucci: I would ask a lot of questions. I would ask, “What type of lender are you, where do your appraisers come from?” You don’t want an appraiser to do a D.C. condo appraisal that’s coming from Richmond.

Q: Right (laughs).

Brian Martucci: “Where’s your underwriting done, what are your turn times?” And I think the important question is, have you disclosed every possible loan program that may benefit me, have we looked at every option?

Q: Okay, we have another caller on the News Talk line, (Norville?) calling from Fairfax. Go ahead with your question.

(Norville?): Yes, I would like to… Good morning, I would like to ask, my wife and I, we have two homes. Our primary home we owe about $35,000 on. Our secondary home we owe maybe about $180,000. What I wanted to know is, would it be worth trying to refinance my primary home that I owe $35,000 on or should I just leave it as it is, you know, try to avoid paying the closing costs or the fees that they would charge?

Q: Does that depend on what his rate currently is or…?

Brian Martucci: Yeah, it would depend on the numbers. I’ve seen somebody with a lot of equity in their primary residence, as he has, a larger loan on a second home or an investment property, and if the interest rate on the second home or the rental property is high it does make sense to refinance the primary residence, which is easier to refinance a primary residence than a second home or a rental property…

Q: Right.

Brian Martucci:…and pay down or pay off the larger loan.

Q: About… A lot of people are concerned about the appraisal and where it’s coming from, who’s doing it. What do you do if you think that the number’s going to come back at one thing, like you’re mentioning somebody comes back $40,000 less and it is significantly less than what you had hoped or though it would be?

Brian Martucci: Right. Well, when that client called me I had done the homework and I agreed with his assessment that it should appraise at, let’s say $400,000, and it came in at 360. If I had been that lender and got a $360,000 appraisal and I expected higher, there’s a simple appraisal challenge process; (cuts out-look at?-10:59) homes that have sold recently similar to the subject property…

Q: Right.

Brian Martucci: …and show them to the appraiser, the appraisal management company. They take a look and do an analysis and if your comps indeed are better, they should adjust the value.

Q: Okay. Lots to look at, great advice for a lot of people.

Brian Martucci: Thank you.

Q: Hope we answered a lot of people’s questions. Brian Martucci, thank you so much for coming in. We’ll be right back here on News Talk.