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.
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.
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.
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.
Wow, has 2015 been a wild mortgage ride or what? We have seen huge property value increases, record low mortgage rates, FHA MI reduction program, HARP, TRID, QM and reasonable regulation from the CFPB, imagine that! I know all of this banker talk can get confusing as what is TRID, QM or CFPB? Let’s slow things down a bit and look ahead to the coming 2016 year and how real estate will impact the economy.
We all remember the mortgage meltdown fears of 2009? We heard terms like Alt-A, Stated and Sub-Prime all were bad. Well truth be told all of these programs did work and would still work if the original program guidelines were followed. For example, how does a person with a part-time job allowed to purchase a home with no money down with a $400,000 mortgage? This was done with 100% financing and the stated income program. The program was intended for people that are self-employed and only take from their business the amount of money needed to live. This allows for a business owner to invest in their business to help it grow and not penalize them for mortgage qualification in terms of income. These borrowers would still have to have assets and credit scores higher than full doc borrowers. This became an issue when the program was allowed to be opened up to everyone business owner or not. If you have a strong credit score you are good to go. Brings back memories of my parents saying cough, congrats, you are in.
The industry is moving toward helping people getting back into their dream homes. So how is this going to work? The primary mortgage options will be the Alt-A or NON-QM programs. These programs will have a little higher mortgage rates but will offer people one day removed from BK or Foreclosure the chance to obtain a new mortgage. Yes you do have to qualify for the program and it is paperwork heavy. These programs, with most Lenders, offer rates are .5% to 2% higher than the preferred Fannie Mae programs that we seen advertised everywhere. The more resent the negative event the higher your rate will be. The Fannie Mae programs are very good but life does get in the way which makes us choice a different path than some people.
Most of the bank Loan Officers/Mortgage Bankers that I have spoken with say their companies will not be offering these programs. Your best option will be to speak with a Direct Mortgage Lender or a Mortgage Broker as they can offer multiple options vs a single option as a bank LO. To find these companies I would do a google search for a direct lender or mortgage broker in my local area. This way you are speaking with a person that understands, in detail, how to address a mortgage on a property in the area you want to purchase or refinance. Many times the larger companies become factories and just push paper with no idea of the local market of the subject property. It is in your best interest to be sure you know a little bit about whom you are speaking with for your next mortgage.
If anyone would like more information on these mortgage programs of other programs please let me know.
So what is the going on with the real estate market? Do you find yourself asking should I buy or should I rent? The easy thing to do is to do nothing but that is not in your best interest. With the real estate market in Southern California it is often difficult to determine which direction it is going to move. The best way to determine if you are in a position to purchase is to look at your monthly rent payment vs a monthly mortgage payment. Keep in mind that you have a huge tax write-off with a home mortgage. In most cases your monthly savings is more than you think even without the tax savings factored in.
You can find real time mortgage information online with many companies that all want you to call them. Personally I do not like talking to sales people so it is important to find a true mortgage professional and not a mortgage sales person. Here are a few ways to know if you are speaking with a true mortgage professional, in my opinion. First make sure they work for a solid company, check them out with the BBB or other such company. Second make sure the mortgage professional you are speaking with has both a BRE and MNLS license. No one person will know every mortgage program but if they do not have both licenses then there is a high probability that this person can only offer limited programs. You want the best program for your personal needs and not the one size fits all program.
There are many mortgage companies that post their rates online but it is important that you look for a company that post real time rates as the market moves and rates adjust quickly. This is why a broker is often your best option for a mortgage as they see all investors rates in a single screen.
For an example of real time mortgage rates click here.