Issaquah Undressed

First Time Home Buyers Series Part 3: VA Loans

A few months ago we worked with a young couple in the military. They had misunderstood their VA Benefits. He was just being released from duty and she was quitting her job to go back to school. In other words neither had income. They had temporary benefits from VA but no long term dependable income. Some how they believed being a Vet guaranteed they could buy a home now. It is times like this that agents like me need to be patient. They just didn’t believe me. They did have to have income to prove they could make the payments.

So here are a few tips on VA loans followed up by an article offered me after our last post on FHA.

Tip #1: RE: O Down. Yes you can buy O down VA. Yes the seller can pay closing costs making it a total O down. No  that isn’t a guarantee. If the appraisal doesn’t come in high enough the loan amount has to be reduce. That often means some money out of pocket to buy the home.

Tip # 2: Your interest rate may be higher on VA loans rather than FHA. Why? A history of greater defaults exist on VA loans. Think about it, the more skin you have in the game the less likely you are to walk in hard times.

Tip # 3: For the same reason as #2, you are more likely to be declined on VA than on FHA.

Tip # 4: For the same reason as above VA appraisers may be picky about the condition of the home you are buying. A junker may not be acceptable without fixup prior to closing. This can happen on FHA loans too.

Tip #5: VA looks at your being able to qualify in a different way than FHA or conventional loans. The bigger your family the tougher to qualify.

Now here is our guest article from Jay Buerck. As I mentioned Jay picked up on our last 1st Time Home Buyers article and offered his expertise. Thanks Jay.
On the heels of a huge 2009, loans</a> are set to have an even bigger 2010. Military homebuyers seized on the flexibility and low costs of VA loans last year, driving volume up 80 percent nationwide.http://www.vamortgagecenter.com/va-loan-eligibility.html”>VA borrowers couldn’t have obtained a conventional loan</a>.

This year, there are some new changes affecting the VA loan process for both brokers and buyers. Geared toward boosting consumer protection, these changes are a part of a new landscape for government loans, which have become a crucial cornerstone of the housing market in the last 18 months.

 But for their part, VA loans have been making a difference in the lives of those who have served our country since World War II. More than 18 million veterans have become homeowners since 1944 thanks to these powerful loans.

 VA loans allow qualified veterans to purchase homes with no money down, one of the last loan products in the country to do so. They also come with a host of important financial benefits, including:

-No private monthly mortgage insurance

-No penalties for loan pre-payment

-Higher debt-to-income ratio allowed than for most conventional loans

-Sellers can pay up to 6 percent of closing costs and concessions

VA loans are backed by a government guarantee, which helps approved lenders offer competitive rates to qualified borrowers. For most military buyers, VA loans are also easier to qualify for than most conventional loans. In fact, about 80 percent of <a href=”

To be eligible for a VA loan, borrowers must first be:

-Military members who’ve served 181 days on active duty or three months during war time may be eligible.

-People who have spent at least a half-dozen years in the National Guard or Reserves

-Spouses of those killed in the line of duty

VA borrowers should soon see some changes in the way some upfront costs are presented. Lenders will have to disclose origination fees in one of two years under new Good Faith Estimate regulations. This estimation of buyer closing costs is part of the Real Estate Settlement Procedures Act, or RESPA.

The VA limits origination fees to 1 percent, although some other fees are allowed.

Mansion photo from Flickr and buy Express Monorail

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First Time Home Buyers Series Part 2

We discussed picking the right loan officer in part 1. click here. Part 2 covers what you should know about qualifying.

I get a kick out of pre qualification letters I see on offers of our listings.” So and so qualifies for the exact price” of their offer. The agent says “they are stretching and this is all they can go”. Well is that really so, for so and so? Not so most often. Interest rates aren’t stable. They often don’t last even through the day. They may not be the same an hour from now. And I am supposed to believe this is the max? The way that most loan officers cover their back side is to go conservative on the borrower. In other words they tell their borrower a lower number just in case rates go up. They may use a lower number as a bargaining point.

For you the buyer you should know the max you can afford. You only know that by payment. You only know that by an automated underwriting approval. By payment I mean have your loan officer tell you the MAXIMUM payment you can quafiy for. This means a little extra work for the loan officer. They may have to keep running your approval on the automated underwriting system. This number must include principle, interest, taxes, insurance, and mortgage insurance. In almost every case, you qualify for more than you want to qualify for. That’s a good thing.

When you get serious about a home, check the current interest rate, note the taxes on that property. Check on any home owners association dues, have the loan officer tell you the mortgage insurance and principle and interest payment on that specific home. Get a feeling if rates are fairly stable.

What I find is that it is good for first time home buyers to know the maximum they can buy. All too often they can’t find what they want at the payment they want. Almost always, knowing they can go higher allows them to be happier with their home purchase.

Now, a little about qualifying. It isn’t as cut and dried as you might think. When I first started originating mortgages my bank employer was firm on ratios. For FHA loans 28% of their gross income could go to the total mortage payment and 41% of their total income could go to total monthly payments.

Monthly payments are those that show up or should show up on your credit report. These are items such as credit card payments, car payments, and student loans. They are usually not items such as water, cable, sewer, and power. VA loans look at the latter items as part of their qualfiying process.

In reality each borrrowers financial picture determines what their ratios are allowed to be. Each bank then has their limits. It is not unusual for an automated approval to be higher than a bank will now limit.

In summary, pick a loan officer you can trust as in our first article. Then know how much you can actually qualify for in payments. Then enjoy the hunt. I call it a treasure hunt. It’s fun.

Mansion photo from Flickr and by Michael D Martin

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First Time Home Buyers Series: Part 1

This series is Kathleens suggestion. We have worked with many many first time home buyers. I think it originally had to do with my mortgage practice. I was considered the FHA king in our mortgage office. FHA is often the best loan for 1st time home buyers. I’ll explain in another of this series.

Truly a home purchase can be full of pitfalls and stress. This series is here to help your expectations and results. I can reduce that for you.

So, where to start? For me and for you it is the same place. We start with the financing part. Understanding mortgage financing need not be overwhelming. Take a little time to work through the new lingo you may be introduced to, but don’t let it intimidate you.

The first part of financing is picking a lender.

How do you pick a lender is the number one question to get an answer to. Here are some do’s and don’ts. Don’t assume your friendly neighbor or cute cousin is going to be your best bet.  Do seriously consider your agent’s favorite lender. Don’t use an online mortgage company.

There are two reasons for using  your RE agent’s favorite lender: 1- The loan officer that messes up or charges too much on an agents transaction has more than one loan (your loan) to consider. Real estate agents are often the source of multiple loans for a loan officer. Lose one and you can lose many. At one time as a loan officer, I served one realtor that was worth about 50 loans a year to me. He used me because he knew I would deliver on time and as promised. As promised means no surprises at closing. It means not saying the client qualifies and then gets to closing only to hear – whoops they don’t qualify after all. No suprises means delivering what you promise, in rate, money to close, all of it. 2- The second reason is teamwork. A loan officer and agent that are experienced with each other give you an edge on your purchase. They talk often, they make sure what is needed is getting done, they help each other. Thus, they help the process. They aren’t afraid to run problems by each other. They keep each other informed. You want that even if you don’t know it now.

So what about this shopping around idea? Yes, the new laws encourage this. We are yet to see how the new Good Faith Estimate rules work. My guess is that because of the new rules you will only get general ideas rather than a Good Faith Estimate when shopping around.

One thing that does make sense to me is using online services to be familiar with what lenders are quoting.

Next: Mortgage Financing, Payments, and qualifying.

Mansion photo from Flickr and by Atelier Teee

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Thank You Heather, For This Nice Email About Your Mortgage Experience.

I love these types of customers: happy ones. It’s the only way to have a successful career. Our business is marketing Homes And Loans and teaching the Hub And Spokes Solution to Social Media Marketing. We have closed serveral thousand loans in our career and  hundreds of homes.

We have outstanding teammates in all 3 related ventures.

Here is some feedback from a loan we closed this week. “I wanted to take a minute to thank you for all of your efforts in securing and following through with our loan. I can’t begin to thank you for the huge weight that has lifted off my shoulders knowing that I am set with a fixed payment that will apply to my principle as well for as long as I choose to live here. Thank you for going the extra mile to make this happen!
 
In addition, I want to share with you that this was the cleanest and quickest signing we have every had. On our last loan, it was a mess the day of signing so I was half expecting that. Not with you guys! We walked in, signed and were done in a little over 30 minutes. Thank you for making it so easy.

Thank you! I will be referring you in the future to others.
 
Thanks,
Heather

We will be introducing you to our teammates over the next few weeks. There are over 40 and it is growing.

Mary Pickard is our processor on this loan. Mary is a trained FHA underwriter who has worked for, really with, us for over 8 years. Thank you Mary for making this email a reality. Larry

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The Direction Of Mortgage Interest Rates?

For a little over a week the direction of mortgage interest rates has been steadily downward. In looking at today’s rates I see we are under 5% with a rebate. That of course is for conventional borrowers with no add ons. Add ons can take the interest rate higher for things such as: size of down payment, condo or not, size of condominium project, cash back or not, credit score, type of loan, or owner occupied or investment. All in all today’s rates are refreshing and should help the market. If you think these rates can save you money each month be sure and contact one of our loan officers, even your favorite if he or she is still in the business. 

Or contact me and I will match you with one that would be good for you and your situation. Larry Cragun: 206.618.3724 and by email larrykcragun(@)yahoo.com

steadily downhill photo from Flickr and by  cobber_cpd

PS: It is 3 hours after this post and I am informed by our home office that we are close to a mid day price increase.

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Bought Or Sold A Home In The Last 6 Weeks?

New laws went into effect recently regarding appraisals of home sold. This was supposed to help consumers and solve problems of inflated appraisals in the home buying process. It is turning into a big problem for both buyers and sellers and home values.

Below is a link to a video that expains how this came about. There is a petition you can sign. This system is wrong and needs to be fixed. Please take time to watch the video. Larry Cragun

Click here for an important video:

If appropriate sign the petition.

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Mortgage Update from Issaquah Branch of Loan Network LLC

My personal opinion is this good news for interest rates is temporary. Long term mortgages seem to be going the opposite way as the stock market. I believe that the supply of money being pumped into the market will eventually trigger a fear of inflatilion, the ultimate bad news factor for mortgage rates. Our Issaquah Mortgage Branch has been busy with refinances. In the meantime here is an update for today with the outlook for a surge in rates within the next few days unlikely.

There is no relevant economic news scheduled for release today. The first data of the week is March’s Goods and Services Trade Balance report early tomorrow morning. This report gives us the size of the U.S. trade deficit but likely will not have much of an impact on the bond market or mortgage pricing. It is the least important of this week’s data.The first important piece of data is the release of April’s Retail Sales early Wednesday morning. This is an extremely important report for the financial markets as it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, this data can have a pretty significant impact on the markets. Current forecasts are calling for a 0.1% decline in sales from March to April. A weaker than expected level of sales should push bond prices higher and mortgage rates lower Wednesday. However, a larger increase could fuel bond selling and lead to higher mortgage rates.

Overall, it likely will be a pretty active week for mortgage rates. Besides the week’s important economic news, look for the stock markets to be a major influence on trading. The most important day of the week is Friday with three reports on the agenda, including the CPI. But Wednesday is also important due to the Retail Sales report. I am expecting to see several noticeable changes to rates this week, and would not be surprised to see multiple intra-day revisions also. Accordingly, please be attentive to the markets if still floating an interest rate.

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Who’s Your Loan Officer? Why? Is That A Good Choice?

Is your perspective on the mortgage process a little skewed?

This article was prompted by a neighborhood discussion on mortgages this weekend. We have great neighbors. Living in a condominium building here in Issaquah Highlands as we do offers us the social aspect easily attained when one of us posts a note on the elevator announcing a brunch or bring a treat event at their home.

Sunday was one of those nice days. Out of our St Paddy celebration I learned that some people have some incorrect information relating to banks and mortgage companies. I write this for you the reader and for my neighbors.

Banks and mortgage companies are similar in important areas. Knowing this information can help you make a good borrowing decision. 

Both types of lenders rely on Fannie Mae or Freddie Mac for the bulk of the money they lend. Therefore, Freddie and Fannie set the rules both industries follow. They want the loan they originate to be sellable on this the secondary market. To you the borrower there is no difference.

Both banks and mortgage companies pay their originators a commission. I have worked for two major banks. The differences that caused me to go the mortgage broker route were important. Neither bank I worked for tried to be a rate leader. Both banks I worked for required me to use their underwriters and submit the loan to them. Even when we had relationships with other mortage banks such as Countrywide, we had to get permission to use them. We couldn’t go to the current rate leader as a reason. I left Mellon Bank over a dispute with an underwriter. She turned a loan down that I knew was a good loan. I went to my manager and asked to speak with the underwriter. My answer, “you know we don’t let loan officers talk to underwriters’. That was it for me. I pulled my 14 loans in process and went to work for a mortgage company and all 14 loans were approved. Being a mortage broker gave me more flexibility in interest rate, in special progams, and left me the loan originator able to do what was best for my borrowers.

Using Mellon as an example I can also show you a couple more points that are not commonly understood. Note, Mellon is no longer in our market, but had a Wholesale office in Bellevue as well as several Retail offices. This is common in the mortgage and lending world. In other words I had a retail price sheet and their mortgage brokers loan officers had  a wholesale price sheet that was priced lower. They would then add their fees to the rate sheets and compete. We competed against each other using Mellons system. As long as I had the ability to compete on rate I could stay in business. That’s the way it is now in the market.

So, when you give Wells Fargo a call for a refinance, as did one of my neighbors, you are dealing with a loan officer that is on commission, has a price sheet to give quotes from, and is under the control of that bank. Out of the commission, which is driven by the rate they charge you (the higher the rate they can charge the more they and the bank make) they get a piece of the profit. They may get half, in my case at one bank I got 40% and at the second bank I got 70% of the profit of the file.

To think you go to your existing bank and get a deal may be very wrong. In my job history some days we were competitive and some days we were pricey.

So to follow the theme of this story, who is your loan officer? Why? Is that a good choice? Here are some things to consider: competition is good so don’t just pick up the phone and call your existing bank. You are likely to get sucker punched. Yes, banks want as much money as they can get – you do know that don’t you? Loan officers tend to be mini banks in mentality, they too want what they can get. I sugget you do what a good friend just did to me. He called me and said he wanted to do business with me. He had a friend at local bank X  he had done business with but wanted to give me a shot. Well guess what? I made my margins thinner to get his business.

And PS: Pick someone who has something to lose by doing badly for you. The best way I have found to do that is to pick a real estate agent you trust and have that agent refer you to a loan officer they use. It may be a bank, it may be a mortgage broker. That loan officer is probably proven to not charge too high of an interest rate, to be able to finish what they start, and more importantly has much to lose in future business from that agent if he messes with you.

And thats my advice, may you have a good experience, you can call on me if you like – I will refer  you to loan officers that work for our branch that are among the very best, and would be glad to answer your questions on line or by email even if you are working with someone else. You don’t have to use us to get our solid opinionated advice here. Larry

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The Future Has Almost Arrived For Mortgage Companies

Kathleen and I know the mortgage business well. Having been a top producer in a large mortgage company Kathleen once suggested I might consider starting our own mortgage company. Seeing her as wise and all knowing I started the process the next day.

We quickly became a large company in relationship to other mortgage companies. Within a year we were having months of 300 closed transactions. It was fun. But it was the past. Our company, Homes And Loans became a branch of a company that I see has the future figured out.

It is a well run hybrid of a mortgage company and mortgage bank. I see them as prepared for the day the mortgage company is an extinct business model.

Anyone in the business can see this happening. Surely they can. Certainly denial isn’t in this industry too.

Well here are some easy facts to support this thought. 1- Most major banks have stopped dealing with mortgage brokers. These include Bank of American, Chase and Included Washington Mutual for example. It will probably soon include Countrywide and others. When there are no more sources of money what will a mortgage company do? Die.

This is not good for the consumer. Why would a Bank cut off a source of business?  Easy is the answer folks. Using Countrywide as an example: if 90% of your business is out of your own branches and 10% of your business from brokers: by eliminating the 10% and raising your prices just by 1/8 th of a percent you have increased your profit by multiples. This is going to happen. It is not consumer friendly as it eliminates competition. The reality is that this storm is gaining full steam and will not stop until every mortgage company is wiped off the map. It is moving at a fast pace.

There are other parts to the storm. The mortgage broker has wrongly been given the blame for the crises. The banks and underwriters that created and approved the loans should stop the blame game. Even so, the mortgage industry lacks the clout to defend itself from legislative and oversight blame. Future legislation will give the mortgage companies an unfair disadvantage. The same blame comes from mortgage insurance companies and they are making the insuring rules tougher on mortgage company originated loans. These all add up to mortgage company fatality. It is just the way it is.

Unlike the changes I see in the real estate world being an end gain for the consumer, this storm benefits the banks resulting in an end loss for the consumer. In the meantime – we feel confident our move to close Homes And Loans and join forces as a branch of another great company leaves us postured to best serve our loan officers clients.

See related article  on Issaquah Highlands Undressed

Flickr photo by Vermin Inc

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Does The Most Common Refinance Problem Have A Solution?

What is the problem?

It’s the shrinking value of your little bungalow. Yes, that is what our mortgage business, “Homes And Loans” is facing, many clients where the only problem is the lower home value.

An example: Bob and Carol put 10% down two years ago. They have a 6.25% mortgage rate. They still have good credit, the same employment, and want to lower their payment. The problem – their home value has gone down 10% and no lender is willing to loan 100% any more.

Example 2 is even more concerning. Is there are solution to this? Bob lost his job.

Here are two surprising options for folks like this.

1- FHA may save the day. An FHA loan allows a loan with only 3% equity in the home. When you need a refi and think you have almost no equity it is possibly worth taking a run at a real appraisal. Appraisals are often not an exact science. Determining if you have 3% instead of 0% equity by having an actual appraisal may save the day.

2- Two is big if available, “Streamline Refi” is the term. Many banks do them, VA and FHA do them, and some of the larger mortgage banks are bringing them back. The concept is simple. They have your loan. You have been making your payments on time. Why not reduce your payment for you with a simple streamlined refinance. This would save Bob, even though unemployed. This would overcome an appraisal problem.

Saving money on your mortgage payment is a good thing. Check with us or a trusted loan officer to determine your will allow a streamlined refi. See if it is worth the effort to use the insured FHA loan process. A nice bonus, the costs are lower.

For everyone: rates are volatile. A great rate at 10AM may be gone at 11:AM. Last month many valiant efforts to lock in a great rate were vaporized by the system. I wrote about this on the Seattle P I Real Estate Professionals blog and I suggest you consider its points seriously if you want to be ready to pounce on a good rate. Here is the link to the P I article; Now You See It Now You Don’t Then You Saw It Now You Don’t.

Larry Cragun

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Will Mortgage Rates Go Even Lower?

Mortgage

Originally uploaded by Rev Dan Catt

Some of you may have picked up on the fact we are in the mortgage business. This has been a roller coaster type ride for us. At the peak we had 100 loan officers and were one of the largest brokerages in the state. It was fun. It was stressful.

We and a few of our favorite loan officers are now a branch of Loan Network LLC. Kathleen and I manage our branch and direct those in need to one of our skilled loan officers. Which one depends on your needs.

I offer this as a preamble to the question, will mortgage rates go even lower?

Yesterday one of my favorite competitors Rhonda Porter quoted under 5%. Yep, that is where it is headed – down baby down.

I am fortunate to get daily information from some pretty sophisticated economy and market experts. People I respect as they are often right on.

Their belief seems to be that the answer is yes. They believe the market is headed for 4% for a 30 year fixed rate.

Unbelievable eh? Contact me if you want to be emailed when rates hit a specific number.

New lending policies have changed things for locking rates. You must be ready to move to capture a rate. Locks must be done on real deals. If a loan officer locks the loan he or she is expected to deliver. A fax request won’t lock a loan. The file must be electronically input into the system to lock. That means you must have selected a lender that has your complete data.

You won’t need the appraisal completed, but you may find your loan officer won’t lock the loan without the appraisal. So that could leave you rushing to get that part completed.

These are trying times. Many have people in the industry are gone. Volume for many was less than half this year over last year. We just experienced a surge. In times like these you should be working with full time, hard working, well connected loan officers.

Fortunately for you, that is about all that are left.

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Loan Modification

Photo is not of the type of modification of the subject article, by rick from Flickr

I am aware there is a lot of discussion on line and off about loan modification. As there are a lot of borrowers in financial trouble it is both pertinent and a haven of bad information. As many know of me as a loan officer, mortgage broker, and branch manager I am often asked about the topic.

Here is our company position on loan modification: Loan Modification is OK if done properly and through an attorney.

We do have the services of an attorney we trust to consult for you, a friend, or family member. He will handle all of the direct and consulting letters to the lenders. He will investigate any RESPA issues.

Few loan officers, real estate agents, or brokers have the ability to fight well for suffering borrowers.

I will return on December 7th. If any of you know of anyone who believes loan modification is appropriate you may have them contact me and I will put them in contact with this attorney. Larry

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Winners and Losers Of The Fannie Freddie Takeover

From Reuters  

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The Fed Takes Over Fannie and Freddie, Now What?

Already people have been contacting me about the Fed take over of Fannie and Freddie. What will that do to us or for us is the question? ………..From Dan Green who I respect: Sunday, the government announced that it will takeover Fannie Mae and Freddie Mac and assume their respective operations.  Mortgage-backed debt is now government debt.But for all the front page stories today, there’s suprisingly little coverage about how the news impacts homeowners in need of a mortgage.Mortgage rates are down sharply today, and possibly forever.…………..another good article:  These are potential benefits:

• Lender balance sheets will be cleaned up and thinned out.
• Mortgage rates and fees should get cheaper as a result.
• Mortgage paper will be turned into Federal paper, establishing much needed confidence from foreign investors.  Its a global market, keeping foreign investment money flowing through our economy is vital to its existence in 2008 (and going forward).
• Federal paper will allow borrowers to potentially ‘work out’ their delinquent loans with far more flexibility than they could with lender owned mortgage paper.

Loan ‘work-outs’ were/are generally not in the interest of lenders, especially those who’ve retained mortgage servicing companies or run the divisions internally, since these profit centers are paid to keep homeowners in their current situation and/or handle the foreclosure process.  If the business model is to keep borrowers making payments they can’t afford and/or pushing them into foreclosure, well its easy to see where the misalignment of objects and conflict of interests arise.

The government can effectively work with homeowners to restructure payment terms any way they see fit, keeping more people in their homes, substantially reducing the number foreclosures that have fostered the rapid depreciation in many housing markets around the country.

• Reduction of Wall Street volatility in what has historically been a stable segment of the bond market.  Consumer confidence needs to be restored to the mortgage market, volatility and consumer confidence usually don’t coincide with each other.

Many speculators made a lot of money by short selling Fannie and Freddie’s stock, accelerating their devaluation.  The SEC put a stop to this in mid July 08, by then the damage (or rewards) had been realized.  Months late and billions short(ed) I will be linking other valid articles to this article over the next few days, so come back and check if you are interested. Visit Agent Genius for the completion of the text above. …..From the Garrett-Watts blog: They will still be in business Monday, but with their existing shareholders no longer owning it.We tend to think there will be minimal impact on the day-to-day selling of loans to them.We can envision three things happening after there is a thorough review by the Treasury Department of all aspects of their operations.………………………………………. FHFA Director Lockhart Remarks on Housing GSE Actions From The Big Picture:I am still working my way through the details of the GSE takeover by Treasury, but here is my initial read of the details:

• FHFA will act as conservator of the two firms — meaning the US government has day-to-day control of Fannie and Freddie;• The conservator’s goals are to (1) put the company in a sound and solvent condition, and (2) carry on the company’s business and preserve and conserve the assets and property of the company.

• There is an immediate moratorium of the firms’ lobbying activities. 

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Have You Been On The Fence Over Interest Rates?

Again I ask, have you been on the fence over interest rates? I offer 3 tips.….

It may be time to get off. Today is a great example of how rates work.If you went price shopping this morning and locked a rate, you made a mistake or two….1- don’t price shop over the phone. Your friendly loan officer would  have been able to pick up an extra $3000 or so as rates came tumbling down this morning: depending on the size of your loan. ….2- use a lender and a real estate agent as a team. Use a lender referred by an agent. That puts all future business with the  real estate agent at risk if they mess with you or fail you. Your one loan carries less weight than 3 a month. Three a month is what I used get from a good real estate agent when I was a loan officer…. 3- pick your lender before you want to lock, have the application filled out and have written assurance your loan is approved. How long will rates stay where they are right now? Who knows. Today our mortgage company has received an opening price and two price drop notices from our market leading mortgage bank. If your loan isn’t in the processing system (loaded in the software) most banks won’t accept the lock. You don’t want a verbal you want proof you are locked.I started our first blog, MortgagesUndressed.com strictly to provide great information to consumers. I saw so many people get burned by online lenders that I wanted to help some that found the blog. I wanted to help them learn how to make good mortgage decisions. The tricksters in the mortgage business were numerous back then, and you should assume some are still out there. Back to my title: Todays plunge may be temporary. Call me if you want a referral to a great loan officer. I will make sure they know I am watching out for you. Photo courtesy of Flickr and by code poet

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Mortgage And Loan Officer Tips

For a Mortgage Update: click here – Let us help you with your mortgage needs. 

Photo: Your blog writer and grandkids.

It’s been a while since I have made note of this: we own a small mortgage company. I bring this up as the industry has gone through tremendous change both nationally and in Washington State.

I provide you a list of important tips for you.

1– Mortgage Company Loan officers are generally independent contractors. They often pay a flat fee and/or a file fee to their broker, keeping the bulk of the fees for themselves. This gives them the ability to charge what they want on your loan.

2– In these times of greatly reduced business, some loan officers want to make a killing on one loan (like yours) while others are building a reputation of being competitive.

3– My experience is that online mortgage companies aren’t your best source of loans, even if they quote a good rate. Many just sell your name as a lead, taking a piece of the pie. They care most about closing you and least about you as a source of referrals.

4– Using a lender referred by a real estate agent is the best way to keep the loan officer in the mode of being competitive. It also places your loan as a high priority. The reason, the loan officer wants to look good to the real estate agent, hoping to deserve a steady stream of mortgages from the agent. I built my career as a loan officer on this concept. I had agents that trusted me.

5– This is a bad time to use a part time loan officer. Even me. People that want me to do their loans don’t get me. I know it is in their best interests to have me refer them to a competent loan officer. The lesson is important here, don’t use a loan officer that is part time.

6– In many cases, especially first time home buyers you may be best to use a loan officer that can quote FHA loans. Actually, use one that is very familiar with FHA.

7– Don’t go with the cheapest rate quote lender. Rates these days are volitale. By the time they take your ap rates will have changed. You are prey in the waiting if you choose a lender by rates. The chances are almost 100% you won’t get the rate you are quoted if you shop and pick that way.

8– Don’t be afraid that rates are too high to buy. They are higher than in recent months. However, prices are buyers market prices in most of the Puget Sound.

9– Don’t go shopping without a full loan approval. That means they have drawn your credit report and submitted you to an underwriter.

10– This may seem to contradict #9 – don’t go get a mortgage approval without having done some window shopping. You should know what neighborhood and price range you are happy to own. Do drive byes, pick up flyers, drop in on open houses (tell the agent you have an agent so you don’t get high pressured too soon), search the local webisites that have MLS search. Then talk with an agent for a lender referral.

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An Educated Look At The Mortgage Mess:

This isn’t short but it is informative. An 83 minute panel on the problem and solutions.

“Click for Video on How We Got Into this Mortgage Mess and How We Get Out.”

• Alan Blinder, Professor of Economics and Public Affairs, Woodrow Wilson School, Princeton University
• Zanny Minton Beddoes, Economics Editor, The Economist magazine
• Peter Orszag, Director, Congressional Budget Office.

Location: Princeton Club of New York. Co-sponsored by the Woodrow Wilson School of Public and International Affairs, Princeton University, and The Economist Magazine

Tags: mortgage, implosion, bubble

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If You Know Someone Who Is Thinking Of Walking Away From Their Mortgage -

If You Know Someone Who Is Thinking Of Walking Away From Their Mortgage -encourage them not to.

I have seen many businesses pop up to make money helping people come to grips with the mortgage crises, where the end result is walking away. The message is, hey just do it.

If you know someone thinking of this tell them not to do that. There are a lot of moral reasons not to, lots of reasons to buck it up, and a reason Fannie Mae warns:

From Kenneth Harney: “

The country’s two largest sources of mortgage money have a blunt warning for anyone thinking about joining the growing “walkaway” trend, where homeowners stop making payments and months later send the house keys back to their lender: You will feel the pain.

On March 31, Fannie Mae sent out new guidelines to lenders intended for walkaways and other foreclosure situations. Fannie will now prohibit foreclosed borrowers from getting another mortgage through the giant investor for five years, unless there are “documented extenuating circumstances.” In those cases, the mortgage prohibition is for three years.

Even after five years, borrowers with foreclosures in their files will be required to make at least a 10 percent down payment, and will need minimum FICO credit scores of 680.

Freddie Mac, Fannie’s rival, counts foreclosures as major credit blots for seven years, and a senior official said the company is now aggressively pursuing some walkaway borrowers “to preserve our deficiency rights”

Some people think take the easy way out: this one may not be so good.

Tags: walk+away, foreclosure, mortgage

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So The Fed Made A Cut, So What?

What is the result to the mortgage consumer, really, because the Federal Reserve Board cut the federal funds rate -.75%.

We had a mimi cut in mortgage rates that lasted it seems only hours.

The big benefit is how the banks reacted in the Prime Lending Rate; from 7.25% to 6.50%. It’s the largest single drop since 1991 – (from 7.50% to 6.50% on 12/23/91); and, the lowest the Prime Rate has been
since 09/19/05!!!

This does affect some ARMS and most of your seconds and lines of credit. New or existing of these should go down proportionatly on the next adjustment. You credit card rates may go down also.

Tags: prime+rate, fed+cut, interest+rate

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Here Today Gone Today

Yesterday I posted that rates were way way down and no one knew how long it would last. How long dit it last? A few hours. Some of our lenders upped rates 5 times during the day.

So what do you do if you missed the opportunity and want to be ready? Start the application. Have the loan in the system so if it happens again it is merely a computer transaction, fast and furious.

Mark this site. The first thing I do each day is look at rates. If I see the sub 5% is back, or close, I will post it here. Larry Cragun….. Remember I don’t do loans, just real estate sales, but we do own a company with select loan officers. Several of them serve people locally here in Issaquah.

Tags: interest+rates, issaquah

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