Answers To Common Mortgage Questions

When looking for a new or refinance mortgage is it common for us to go to our banks as this is where we feel safe.  We keep our money there and often have auto and/or credit cards form these same institutions.  Truth be told the banks sell of the majority of their home mortgages so they function much like a Mortgage Broker from the borrowers prospective.

When you sit down with any loan officer they we talk with you about your goals or why you are looking for a new mortgage.  This is so they can select the proper program they have to offer to meet your needs.  This is important, not every Bank or Lender will offer a mortgage program that truly fits your needs but rather best fits the loan officers needs. Just as Chevy is beating up Ford on the aluminum truck beds.  The question is, will you be throwing heavy rocks, bricks or other such items into your mortgage?  So it is important you know what you are looking for when it comes to a purchase, rate reduction, term reduction or cash out mortgage.

I am going to use the company I work for as an example, and there are many companies that work similar to my company, to address many of the common questions I get on a daily bases.  Just a little background on my company,  We are both a Direct Lender and a Mortgage Broker originating in seven states.  We can fund a on one of our programs or broker a loan through a Wholesale Mortgage Partner if they are offering a better options for the Borrower.  We will use a Wholesale Mortgage Partner if it is in the borrower’s best interest, not every Company, Bank, Direct Lender or Mortgage Broker offers this service.  Common questions by mortgage type below, I hope this helps.

Purchase Mortgages                                                                                                                         We offer forward mortgage programs for FHA, VA, USDA, Conventional and HEMC for those over 62 years of age.  Fees are where the cost go up on purchase loans so pay close attention and do not get lost in the excitement of the new home.  A.P.R. is somewhat misleading so where do you look.  The actual cost/money to close and the monthly payment is the answer.  Real Estate Agent referrals are often a good option.  In House Lenders are sometimes questionable.  Always get a second offer as you will often get a better rate with the same credits, up grades or incentives.  There are many In House Lender companies that bank on home buyers not doing their diligence.

Cash -Out Mortgages                                                                                                                         This is an area of the business where companies are all over the map.  My Company offers a cash-out mortgage options to 95% of your homes value with no mortgage insurance.  This is not a hidden mortgage insurance where the Lender pays it I mean truly no mortgage insurance.  Best of all this program has a max loan limit of $1,250,000 for a single family residence.  There are restrictions but they are not too bad.

Term Reduction                                                                                                                                       This is a loan type that most Loan Officers do not seem to offer to people.  The deal is simple, keep your payment the same and reduce the number of years left to pay.  This will often add up to 100’s of thousands of dollars over time.  And if you sell early the ratio of cash to principle more times than not will reduce your remaining principle balance faster than your current mortgage so it is a win/win for the home owner.

Payment Savings                                                                                                                                   The term payment savings is used with a home owners want to refinance to reduce their monthly payment.  This can offer the home owner monthly payment savings that can be significant. When it not enough of a monthly saving to act this is when the Term Reduction option should be looked at.

There are many other programs available to current home owners and future buyers but these are the most common.  When obtaining a new home mortgage for any reason we can all move fast but fast is not always your best option.  I am not saying to delay your purchase but rather take 20 minutes to confirm you are getting a fair deal.  We have all rushed into things and then later were upset we impulse purchased.  These are answers to common questions I get daily so I hope they help.  When it comes to a home mortgage there are no silly questions so please ask any questions that you may have.

 

Stay Tuned…

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The Automated Mortgage Industry

www.mn-capital.comAutomation does make some things very convent – Microwave Ovens, Fax Machines, Digital Cameras, Email, K-Cups, etc.  I guess I am an old school person as when it comes to automated mortgage application to approval in seconds is more of a mortgage lead generator than a industry changer in its current fashion. In the coming years I can see huge improvements coming but with small business being the backbone of the American economy it is difficult to see automation taking over.

Now with that said the mortgage company I work at is currently beta testing its own automated mortgage approval program.  It will greatly speed up the mortgage process as many of the supporting documents needed will be gathered by automation and not by the borrower.  So the process will be much easier for the borrower.  It is almost an unfair advantage when compared to mortgage companies that do not offer the automation technology.

Loan Officers, like it or not automation is coming and millennials like automation.  I can assure those that know me that we will be offering our clients automation, online, email or phone application options.  Watch the younger generations with their cell phones and reality is right in front of you.

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Bank, Mortgage Lender or Broker?

The Mortgage Industry continues to evolve and not always for the best.  When I started in this business there was two types of Loan Officers.  You worked at a bank or you worked at a broker mortgage company.  Today it seems, at least what I would call, the true Loan Officers work for B.R.E. companies.  The term B.R.E. means Bureau of Real Estate.  These Loan Officers are required to hold both a N.M.L.S. license & a B.R.E. license and are required to keep up with annual continuing education requirements. There is also a annual back ground check each Loan Officer.

The other Loan Officers work for DOC, Department of Corporations, companies.  These Loan Officers are not always required to hold a B.R.E. license, in some cases are only required to register with the N.M.L.S. and complete the back ground testing.  DOC companies are required to keep their Loan Officers up to date in terms of industry changes.  Now with that said it is easy to see that if you are told what programs are available, when compared to a B.R.E. Loan Officer, some D.O.C. Loan Officers might only be informed of limited programs.  Limited in terms of what programs their bank offers.

The third option is Loan Officers that work for Mortgage Lending Companies.  These Loan Officers are often D.O.C. based so their training is often limited to what their companies offer.  These companies will often talk about how fast they can close your loan.  Closing your loan fast and later finding out you did not get the best deal is more than frustrating.  Just like the Las Vegas lights do not blink on winners the rapid rise of mortgage companies should cause most people to at least make sure they have got a mortgage offer from both a D.O.C. and a B.R.E. company.

So which Loan Officers is the best to work with?  To be fair there are some very smart D.O.C. Loan Officers but they might not be able to offer you your best option.  A Mortgage Lender or Mortgage Broker that is B.R.E. based, in most cases, will have more options in terms of first and first / second combo mortgages.  All mortgage companies can get all the information needed generally within 14 days.  But this rush to close quickly is often a mistake.  This is where a B.R.E. Loan Officers stand out, I would recommend taking an additional week or two to make sure multiple mortgage options have been looked at.  B.R.E. companies work with multiple investors so it might take them a little longer than a company that has only one option.  You need to make sure you know all your options so you can make informed decision on your mortgage.

 

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No Mortgage Insurance Options

  Most people still follow the 20% down rule so you do not have to pay mortgage insurance.  First time buyers are rarely in a position to put down 20% so they have few options.  No one wants to pay mortgage insurance.  So what are your options?  You can do Lender Paid Mortgage Insurance but this usually comes with a higher interest rate so the mortgage insurance cost is hidden.  I am happy to say I have spoken with Founder of MN Capital Home Mortgage, Michael TenEyck, and I way happen to hear there are so true no mortgage insurance options available.

TenEyck says MN Capital originates no mortgage insurance home mortgages with loan amounts to $1.25 million with 5% down for purchase transactions.  TenEyck went on to say this program is also available to rate & term and cash-out refinances as well.  This program utilizes a first and second combo mortgage.  There are some limitations to the refinance options but they are not as limited as you would think.  Contact MN Capital directly for the refinance details. MN Capital Home mortgage is based in Orange County California company and can be reached at http://www.mn-capital.com or 800-961-6123.

This no mortgage insurance options along with the revised automated underwriting changes as of July 29th should make home mortgages easier to obtain for home buyers.  Fannie Mae rolled out the DU 10 upgrade on July 29th.

 

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The Future of Home Mortgage

Home mortgages and the underwriting process continues to evolve and not always in the best interest of consumers. Credit reports will soon no longer show tax liens and judgments but that does not remove them from the equation of obtaining a home mortgage. Currently the Investors’ I have spoken with have no answer on how to address the lien issue. So a new service is about to be born and at the cost of consumers. How has AMC’s benefited consumers in terms of cost?

The individual home mortgage banker or broker will always be a key part of originating any home mortgage. A computer cannot always explain the proper documentation needed to resolve underwriting issues. I am sure we all fully understand income add backs and who has not experienced “conditions supplied illicit additional conditions.” Us as professionals have found that Lender “A” is OK with income but has an issue with property type and Lender “B” is good with property type but does not like the income. Now put yourself in a position of a consumer dealing with a computer generated response and how frustrated you would be.

This lack of personal interaction has me questioning just how successful the automated process will actually be. In simple terms, the automated process currently, does require the consumer to work at a fortune 500 company and bank with a major bank. I am sure this process will improve but small business is the backbone of the American work force so full automation is a future technology that might be “rocketing out” a little early. I guess time will tell.

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Hello All

Hello, I wanted to talk a minute and let everyone know I will once again begin posting.  I have personally gone through some life changes that has had me sidelined for awhile.  I have historically been a person that never got sick but have developed something call achalasia.  It has been a difficult road with too many test procedure to count and three major surgeries.  I have also had two kids graduate high school and one is now in the Army and the other is in college.  I have also help build the company I work at into a direct home mortgage lender that originates in seven states and has four offices.  So I have been busy.  I have always wanted to continue to post as this is a way to talk from a neutral point of view so it is time to get posting.  Yes there will always be those that disagree with me and I encourage them to email me to discuss their view point.  Some of what is new;

  • Credit Reports will no longer show lien and judgements.
  • DU 10 rolls out July 29th and this is the beginning of the automated loan process.
  • Second Mortgages have returned to the market in a big way.
  • 95% LTV with no MI with loan amounts to $625,000 are once again available.
  • Multiple assistance programs are now available.
  • MCC & EEM mortgage options.

This just touches the surface of what is now available and there is more to come.

Stay Tuned…

 

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Happy Thanksgiving

Happy Thanksgiving

 

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