The Huntington Beach Mortgage Oracle would like to wish all Mother’s a Happy Mother’s Day.
Have you looked at the multiple adds on your internet home page. Yahoo, Bing, MSN, AOL, Google or whichever company that you use they are everywhere. Engineered to amaze, when banks compete you win or get the Obama loan seem to be the most common. I do have to say the engineered to amaze company is at least up front as them are a mortgage company and stat as such. I do have some questions on the “When Banks Compete You Win” company as they originate loans themselves. So are you really getting the best deal? A marketing company that originates loans appears to be a conflict of interest in my opinion. The strangest one is the “Obama Loan” as this is a marketing gimmick playing on Obama’s popularity. The loan that is being referred to is the HARP loan which is a very good option for homeowners that qualify for the program. The tag “Obama Loan” is a disservice to the public as it does not send a clear message. The Mortgage Industry itself, for the most part, has been cleaned up since the meltdown. Yes there will always be a few bad apples but that is the exception today. The clean now needs to address the marketing companies. When looking for a new mortgage it is always in your best interest to obtain two mortgage quotes. I would recommend one from a bank and one from a broker. Do not get lost in what the Loan Officers are telling you. This is very simple to breakdown if you do it in this fashion.
- What is the rate
- Is the rate fixed
- What are the loan fees
- What is your monthly payment
- Do I have upfront fees
If you consider these five items then you will know if you are on the right track or not. Yes there are many other components to every loan but focus on these five simple items as unless you are in the business all of the other stuff will confuse the average person as frankly is confuses many people that work in the business.
Lenders today are once again offering home construction loans. These loan can be used for home remodeling, room additions and for new or ground up home construction. These programs are offered in conventional loan structures. The FHA 203K program does allow for remodeling and in some cases room additions but it does not allow for new construction. With both loan structure you are able to use the “as complete” value when determining the LTV, loan to value, ratio. The LTV will cap the amount you can borrower regardless to your ability to repay the loan.
Soft cost can be built into these loan structures but confirm with your Lender as not every Lender will allow soft cost to be built in. Soft cost are defined as all cost not associated with the the actual build cost. Such as permits, architect fees, etc. as these are cost that are not directly associated with the physical build.
Most of these loans are setup to convert to long term financing after the build is completed. This loan structure is not always your best option so please look closely at the post construction financing.
Just as with any mortgage the only fee you should ever have to pay is for the appraisal only and not until after you receive your approval. The same no fee rule applies, no fees other than appraisal and not until after conditional approval.
I spoke with Michael Gillett of MN Capital, Inc. and I was suppressed to here that stated income mortgages are once again available. Gillett indicated that the stated program is only available to self-employed borrowers but does offer reasonable terms when compared to a traditional Fannie Mae or Freddie Mac mortgage. Gillett went on to say the program is only offered as an adjustable rate mortgage with 5 and 7 year fixed terms with loan amounts up to 2 million. Gillett also indicated that they offer other borrower friendly mortgage programs such as 12 month bank statement and asset depletion programs. These programs are available for both wage earners and self-employed borrowers. For additional information Michael Gillett and be reached at 800-961-6123
I am often asked two questions when speaking with borrowers “why should I use your company for my new mortgage” and “Don’t you think my bank will do a better job than you?” Well let’s start with the second question first and simply put, No your bank will not do better than a Mortgage Broker. The reason to use any Mortgage Broker, simply put, is your mortgage options.
I would think that most people would agree that roughly 90% on the people that invest in the stock market make little to no money with their investments. The reason is most people really do not do their homework before they invest. Roughly only 10% of people will actually get professional advice before that invest. Yes there are always exceptions but for the bulk on investors we speak to our family and friends and not actual professionals. Just like stock market investing most people follow these same patterns when obtaining a new mortgage.
So let me ask you, do you think you would get the best mortgage deal from a mortgage company that only wants to sell their own product? It is no secret that a stock trader that wants to sell their own portfolio funds is because they make more money on these funds. Do you think your bank is not doing the same thing? It is my opinion, there is no difference as this business practice is exactly the same.
Mortgage Brokers use multiple investors which all look at your loan structure and supply roughly pricing. The Broker will use this information from their investors and discuss the options with you, the borrower, before an investor sees any of your personal information. Your best option is to use a broker that will look at your loan scenario as a direct lender and also a broker. The reason being is a direct lender option is not always your best option. This is more common than you would think.
I would recommend that you do a google search for a local mortgage broker and interview a view brokers until you find a broker you are comfortable with. For example, if I wanted a cash out mortgage in the city of Huntington Beach. I would do an internet search for“cash out mortgage Huntington beach” and there you will get a list of local mortgage brokers. I am confident that any of these people would be able to get you much better pricing than a bank. A five minute call could save you thousands. Keep in mind that brokers only get paid if your loan closes, unlike a bank Loan Officer, so they will move your file along quickly. Keep in mind; you should never pay any upfront fees when obtaining a new mortgage with a Bank or a Broker.
The Real Estate market continues to improve with homes values increasing roughly 8% on average in most of the coastal areas. This increased value as allow many people to refinance their homes and obtain much lower mortgage rates. With that said I have noticed an increase of questions addressing their mortgage rate on a loan they are about to get and recently closed loans. Nearly 50% of the inquires, that I have address, have mortgage rates that are much higher than the wholesale mortgage at the time the loan was structured. So what does that mean?
Lenders all make money on every loan that they do, we all know that. The question is how much money you are paying for your loan. Yes the A.R.P. can show you the amount that you are paying for your loan but this figure is often manipulated. You should be able to get a rate quote from any lender without them running your credit report providing you know what your fico score is. Also your rate will be subject to your personal information once reviewed. Once you have a few rate quotes then you will have an idea if you are dealing with a reasonable priced mortgage company.
The larger mortgage companies are the Banks themselves. Do not fool yourself, Banks today function much like a Broker. If your Bank Loan Officer says that they have DU approval on your file, most will not tell you, then they plan to sell the note once created. They will service the loan once created but servicing and owning a note are two different things. For those that do not know, service is much like a property manager when you rent a place to live. You deal with the property manager and not the owner. A servicer and a property manager are similar in terms of function to their client, client as in property owner or note owner. You can also look closely as your paperwork and loan docs and see if there is anything that states the Lender can sale your loan after you sign your loan docs. This is that same thing a Mortgage Broker will do.
This is why I always say to get a mortgage quote from a Bank, Direct Lender and a Mortgage Broker as the cost will vary widely. Look closely at your note rate, loan fees to close and your monthly payment. Keep in mind that Brokers are required to show how much they will make on a loan. Direct Lenders and Banks are not required to show how much they will make on a loan. This is because Lenders both depository and non depository that fund loans using their own funds do not have to show their fees, imagine that! Personally I find it shocking that a Bank, the place most people trust, does not have to show their fees but it is what it is.
The Feds have made many changes to the Mortgage Industry over the past four years but clearly, as indicated above, the industry favors the larger mortgage operations. Today roughly 70% of the small mortgage brokerage companies have closed down just as many of the Banks over the past 10 years. When looking for mortgage companies, look for a local mortgage company in your area, check them out with the Better Business Bureau and request a mortgage rate quote. Mortgage rate quotes should always be free of charge. Frankly all consumers obtaining a new loan should never pay any upfront fees.
MN Capital of Huntington Beach offer free online rate quotes.
MN Capital –
For those of you that have 3% first mortgages there is no way you should ever refinance those loan unless you have no other options. Well I am happy to say that borrowers do have options as Brokers are structuring second mortgages again. With Brokers now offering this product again the cost of these product will be reduced for borrower’s. This is a great option for borrowers is several ways, such as college tuition or unexpected expenses. This option also allows for the 80/10/10 to return. This will help those borrower’s in areas with low conforming and/or FHA loan limits. Only the stronger broker shops will offer second mortgages. You may need to call a few before you find a broker that can structure a second mortgage.