Mortgage Financing Options

Are you fake busy or busy as a bee???

How many times do we use the phrase, "I am so busy, there is not enough time in a day". As a professional mortgage banker, helping people with FHA loans and Conventional loans, I have been very busy the last few months. And there are times, no matter what month or time of day, I am beyond busy. At times, I will admit, I will ask someone if I can call them back in a few minutes, maybe an hour later, or that night. Sometimes, I will just ask them if I can speak to them tomorrow. I have always believed in setting my clients expectations to a certain level, no matter how good or bad the news is.

But are you the other type of person that is not organized, who always says you are extremely busy, but you aren't doing much? Or you just get to people after you are done lounging at work? A huge pet peeve of mine is when a consumer tells me that they spoke to a loan officer who never gave them a good faith estimate. I tell them to call that person up and ask for it. That loan officers response is that they will send it out soon. 3 days later, nothing. The consumer's answer?  "ah, they must be busy".  No, no, and triple no. You are never that busy. I can't stress this enough to all consumers out there. There is busy and there is poor execution.

As always, there are many kinds of busy. But what do you put up with?  If you don't know any better, do you just sit back and wait?  Do you call back that same day?  The next day? Yes, I think so many of us demand service now, same day service, and sometimes will let the other party know this.  But does this force others to give you answers quickly, that might be incorrect, because you expect things in "now mode"?  Does this result in poor service?  Do you respect someone that gives you an answer that you don't want to hear?  Which may result in costing you more money in the long run, because you went to a "yes sir" type of person?

Overall, when it comes to mortgages and real estate, if you are speaking to a professional, they will be upfront with you.  If you are the type of person that can't except that answer and seek help elsewhere, remember, it might come back to haunt you. Yes, we all want your business, but at what price to you, the consumer.  Keep in mind, some of these red flags also. It may save you thousands of dollars. Consumers  need to be aware of these Red Flags !!!



Copyright  © 2008    by Jeff Belonger

 

Author of this blog : Jeff Belonger

e-mail : jbelonger@ihmci.com

An Open Letter to the Consumer - Show me a little respect

Dear Consumer,

I applaud you for doing your homework when shopping for a mortgage. Sometimes the research that you do online, making sure that you are getting a good deal, is a good thing.

My question to you though, do you over do it?  Do you shop to many times, calling many lenders, looking for that best deal?  Do you know that the market can change daily? Do you realize that one deal that you thought was great, could be worse 3 days later?

 

Consumer.... what I respect is that you are patient at times and give loan officers a chance and sometimes the benefit of the doubt when shopping for a mortgage. You sometimes give them many days in getting back to you. But is this good? Are you just fixated on the best price? Don't you know that service comes with a price or in some cases, lack of price.

What do I mean by this? Let me give you an example of one of my most recent clients or in this case, a client that I actually fired. This consumer found me through my blogs and was impressed with my knowledge. I spoke to this person for about 20 minutes, gathering all the information that I need to properly qualify them for a mortgage. They had already spoken to someone from Wells Fargo and received a cost sheet from them. It wasn't a detailed good faith estimate. I was extremely busy that day with a few closings, 2 new clients, and some other people that I promised to get back to. This client asked for a good faith estimate, which wasn't necessary. Anytime I pre-qualify someone, I make sure I send out a good faith estimate to them within 12 hours, depending on my schedule. In this case, I sent one to her in 3 hours, fully detailed, with an explanation in an e-mail. Her reply back to me?

 

Jeff,

I received the good faith estimate, thank you.

The Wells Fargo good faith estimate is much less complete analysis and did not include escrows for taxes, hazard insurance and mortgage insurance.  It also doesn't look at a possible seller's credit. 

My husband and I want to show your estimate to our realtor and wll get back to you.  Thank you for taking the time to be so thorough in our conversation yesterday.

 

Best,

Consumer

 

Thank you Mrs. Consumer, for the kind words. So I follow up with her after the e-mail and she says that their realtor gave them 2 other loan officers to speak to. Me?  Okay, no problem, I'll check back with you in a few days. I called Mrs. Consumer back 2 full days later and she still hadn't received the good faith estimates from these loan officers. I told her that I would be concerned about this. Her answer was...."they must be busy".  To everyone reading this, busy is an overused and abused word, especially in the mortgage industry. To me, it's an excuse. I would bet that I am busier than 70% of the loan officers out there. If I can't get it done during normal business hours, then either that night or the next morning. She received both good faith estimates 4 days later. Me?  Unacceptable.

Consumer, 48 hours to recieve a good faith estimate is too lenient. I always say 24 hours or less is a good indicator. And this is coming from someone that has been in the mortgage industry for over 15 years. Are you going to want me to re-disclose when you finally get your other two estimates?   What happens if rates went down, but their service is not up to par?  You might be picking the wrong lender based on a better market and because the loan officers took their time.

 

In any case, just food for thought. I guess my 15 years of lending experience, professionalism, and just treating you as a person doesn't count for much. And by the way, in reality, these figures are not always worth the paper that it's written on. What am I saying?  I am not always going to be the cheapest, but you will get great follow up and no surprises at settlement. I am a gambler in life, but not with your money.

 

Sincerely,

Jeffrey J. Belonger

Mortgage Consultant since 1992

Do you sacrifice service for price ???

Do you go 3 extra miles out of your way to get your gas 5 cents cheaper per gallon? To end up with longer lines or for the gas attendant that takes their time?

What about the bakery whose ad says birthday cakes for $5.00 done in 3 days. When in reality, they normally are $9.00 and take 7 days. You then go to pick up that $5.00 cake on day 3 and it's not ready. You need it today, but now they promise you tomorrow. 

How many of us sacrifice good service or quality for a cheaper price?  How many of you think that the level of service should be the same, no matter what you pay.



So you decide to go with that person that offers the cheaper product and promises you great service. You can't get out the starting gate. You are applying for a FHA mortgage. They promise you the Good Faith Estimate as you were shopping around. It's been days. You decided to go with them, because they were the cheapest.  This is just the beginning. What do you think it will be like down the stretch, at the finish line?  Do you think you will close on time?  Do you think you will end up with the same rate and or costs as you were promised in the beginning? What happened to 5 Star Service?

I have a consumer just this week who is shopping my good faith estimate. I not only beat out the first lender in rate who was Wells Fargo, but they didn't put the taxes, homeowners, and mortgage insurance on the Good Faith Estimate. Does the fact that the overall charges look cheaper then?  How about misleading, because you will need to pay for them at the end.

How about the fact that their realtor gave them two of her own choices to speak to. But you know what, it's been 3 days so far and they haven't gotten them over their good faith estimates. And when I spoke to the consumer today, she just said, "maybe they are just busy, so I will give them some more time."

Summary :  I am not here to brag, but I think I am busier than 70% of the loan officers out there. But I am still able to get back to her in less than 4 hours with a good faith estimate. Here is what she stated to me :

 

"The Wells Fargo good faith estimate is much less complete analysis and did not include escrows for taxes, hazard insurance and mortgage insurance.  It also doesn't look at a possible seller's credit. 

   

My husband and I want to show your estimate to our realtor and wll get back to you.  Thank you for taking the time to be so thorough in our conversation yesterday."

 

Yet she still wants to wait for others to get back to her. I don't try to pressure, but you then have to look at the reality of the situation. Time is money. Rates move daily.  I might end up being more expense 3 days later, because the rates might have improved. And you might make a split decision and it could cost you more in the end. Or, what happens if rates go higher?

 

 

What do you get with me? I won't be the cheapest, yet I won't be the most expensive. This consumer is out of state. Okay?  I can do the same as the person in your town. The only thing is that I won't be at the settlement table. That is what cell phones are for.

What you will get from me is expertise. You will get good, clear, explanations. You will be able to reach me on my cell phone or e-mail 7 days a week. I will take the extra 30 minutes to clearly explain the whole process, from the mortgage application, to your title charges, to what will happen at closing. Many just want to give you a rate in the first 5 minutes. You will end up with the same rate and fees that I lock you into. And I usually give you answers to many of your questions before you usually ask them. Are you willing to give all of this up for an extra $9 a month in savings? Will it even work out to that much per month? What happens if they changed your rate last minute?  Delayed your settlement for a week?  It can add up quickly.  Just remember this...You usually get what you pay for.

 

Read this and it might just save you thousands :  Consumers need to be aware of these Red Flags !!!!

Copyright  © 2008    by Jeff Belonger

 

Author of this blog : Jeff Belonger

e-mail : jbelonger@ihmci.com

 

 

Sellers & Listing Agents -- Are you hurting your potential buyers mortgage payment?

You are a seller that lists with a real estate agent, and one of you decides that you will not accept FHA financing as a means of a potential buyer purchasing your home? Why is this? Have you been misinformed by the general public? By a real estate agent that doesn't know any better?  By an agent who is remembering issues with FHA appraisals from the 1990's?

What about the lender that the previous buyer was using who was helping them with a FHA mortgage.  And the loan didn't close. What is it because it was a FHA loan?  Was it because of the incompetency of the lender or the loan officer?

Overall, are you willing to shunt away a better buyer who might just be using FHA financing, just because of the rumors of the past?

So, how bad do you think FHA mortgages actually are......  What sparked me to write this post was a comment made by Mike Smith, a loan officer out in California.

Mike said this.... "In my neck of the woods, CA, in addition to FHA, I utilize Access with a Radian second mortgage as well as CalHFA with a silent second and silent third.  In both cases we can get a 3% seller concession and although the rates are not as good as a SRP bought down rate with an FHA, some sellers still won't accept an FHA offer, so we go with alternatives in a declining market."

Sellers and real Estate agents.... just because it's an offer backed by a conventional mortgage, doesn't mean that it's still guaranteed, even if it is backed by a pre-qualification letter. Conventional and jumbo guidelines are still changing.  Could you lose money on your home if a conventional loan is delayed because of a change in program?  Yes, it happens. Do you realize that a buyer with a credit score of 679 or less and 10% down or less, will be better off with a FHA mortgage. Here is a great example of this : FHA mortgages vs Conventional mortgages....  which is better?

Overall, are you a stubborn seller listening to the wrong people? The wrong advice?  And part of the blame should be given to the loan officer for not educating both the seller and the real estate agent that might think otherwise. Conventional mortgages doesn't always mean better, even for the seller. FHA mortgages are not just for first time homebuyers, those with less than perfect credit, and those with less than 5% down. Read more to find out : FHA mortgages - FHA loans & things that you need to know about them!!! What you need is a true mortgage professional that has all of the programs and understands what is best for the buyer. Most of all, can step in to explain it to the seller or their real estate agent. 

 

And read this to understand that putting less money down might be better for the buyer. : FHA / Conventional mortgages OR Cash purchases???

And more education of FHA mortgages : Top 10 reasons FHA is a great way to finance your home....

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!!

Copyright  © 2008    by Jeff Belonger

 

Author of this blog : Jeff Belonger

e-mail : jbelonger@ihmci.com

 

 

Zillow Mortgage Marketplace & Lending Tree -- Online Lead Generators - What does it all mean?

LEAD GENERATORS --  Definition from Mimi.hu -- The process of collecting contact information and extracting potential sales leads. The process of finding people (consumer or business) with a qualified interest in a certain product or service.

Jeff Belonger's definition of lead generators.  Risky, sometimes false hope, misleading, low ball rates and or closing costs, bait & switch.

 

Spencer Rascoff wrote this post, Zillow Mortgage Marketplace Launches: FREE MORTGAGE LEADS. I am not here to knock Zillow and what they are trying to accomplish. I am here to help the average consumer understand how these lead generators work and the potential pitfalls. I have over 15 years of experience in the mortgage industry, and even though this is my opinion, I want people to realize what they might be getting themselves into.

I have many concerns, especially more than ever, because of how much the market has changed and so has getting approved for a mortgage. Lending Tree is a well-known lead generator. I know many lenders that have used this service and typically, the loan officer has baited the consumer with a low rate to capture their interest. I tried Lending Tree for 2 months. Most clients that I spoke to were offered much lower rates than I could offer. Yikes, and I get the money from the same place as all other mortgage companies. I have spoken to many consumers that have used these online sites and many have had bad experiences.

So, what concerns and issues do I have with these online services?  You can't interview the client before giving a rate quote. I physically need to speak to that specific consumer to gather more than just a fico/credit score. With conventional mortgages becoming stricter with their approval standards and guidelines, it really leaves FHA mortgages as the last resort. And many brokers and banks aren't FHA approved or don't have a good understanding of what they are looking at. Why can I say this?  I am working on my 5th client in less than 1 1/2 months that applied with a lender or two, who told them that they could get them approved with a FHA mortgage. I have closed 3 of these to date and I working with the other 2, which both should be closing soon.

How do these lead generators, online services work?  They ask you, the consumer, to fill out a quick mini application. Several main questions would be :

• What is your credit score or the range of your credit score.

• What is your annual income.

• What is the house price that you would like to purchase or the range.

Why do I think that these services are not as good as advertised?  You are having lenders compete against each other. Many of these loan officers won't be experienced in all types of mortgages and many will just be good sales people. Telling you what you want to hear to get you into the door so they can take your application. The bigger problems? 

• Credit.... not just the credit score. I need to know how many lates that you have.  When your last late was and to as why.  Did you have a Ch. 7 bankruptcy just 2 years ago?   
• Income... Your debt to income ratios. If you just started working for a company less than a year ago and you also get a bonus, 9 out of 10 times, I probably won't be able to use that bonus. I need a lot more job history information to determine what I can use.
• Goals....  are you planning on being there for 2 years?  5 years?  Do you need the lowest payment now than later?
• Assets.... do you have more than what would be required, which would be called reserves. Are you getting 100% of the monies gifted to you? FHA loans are the only program that allow for 100% gift unless you are putting more than 20% down, which is usually not the case.
• Declining market values.... if you don't know where they are buying, this could be an issue. On conventional mortgages, you are automatically penalized 5%. On FHA cash-out refinances, there are new guidelines for this.

 

 

Here is a consumer that commented on Spencer's blog.

" When I went to buy my house, I started on LendingTree.com, and I instantly hated the experience, non-stop calls, not one rate was accurate compared to the web site.  I had to start answering the phone with "If you are not prepared to honor your rate you claim on the site, I am not interested" everyone hung up... finally someone owned up to saying, those are teaser rates everyone does it, and no one plans to honor them."

Overall, many mortgages can't be approved with a click of a button. You need a person, someone that understands mortgages, FHA mortgages, and how mortgages work. Not just a rate based on your credit score and how much money you make. A lot of this takes at least 20 minutes when speaking to a consumer. It can't be done with a quick e-mail or just quoting a rate. In my opinion, just another time bomb for the consumer when shopping for a lender. I see these lead generators being more of a problem, than making the purchase or refinance transaction a pleasurable experience. Again, just my .02, but I have tried these before. My answer, you need a true mortgage professional. Possibly a referral from a friend or family member. If you seek someone online, do your research.

 

What do you say? Your experience as a consumer? As a loan officer?

Author of this blog : Jeff Belonger

e-mail : jbelonger@ihmci.com

 

FHA Mortgages - FHA Mortgages - FHA Mortgages - Part 1 of 2

Are some lenders and loan officers just shooting craps with your mortgages? I think so.....  Experience and knowledge don't always have to be a prerequisite to help you with a mortgage. Now, don't get me wrong, knowledge and experience could be the key to your mortgage closing. But what about common sense? Shouldn't it be on the list also?. Why do I say this?

Just a week ago, I received a phone call from another lender in Alabama. Her question was about the down payment assistance programs and if I new any investors that did these with conventional financing. My first question to her was, why aren't you pursing this as a FHA mortgage? Her main response was that the back end ratio to qualify was too high. I asked, how high. She said 47%. Okay, in reality, depending on the loan, I can sometimes get this approved on a FHA mortgage anyhow. But I went over this with her with a fine toothed comb. Read on to see what I suggested which saved this client over $150 a month.

This loan officer had a client with a 623 credit score on a conventional mortgage.  By going conventional, the interest rate was going to be about 5/8% higher than a FHA mortgage.  Just by lowering the rate 1/2%, the payment would be much lower, which would have lowered the debt-to-income ratio to under 45%. By doing this, this particular client would then have no problem qualifying for a FHA mortgage. And one more thing to keep in mind, the mortgage insurance would be lower monthly also. Here is a good example of comparing conventional mortgages to FHA mortgages.   

• FHA mortgages vs conventional mortgages -- 3% down comparision

The bottom line is to make sure that you are not only dealing with a lender/loan officer that can do FHA mortgages, but that individual is someone that can think outside the box.

And you might want to review these red flags. Consumers need to be aware of these Red Flags !!!!!

In Part 2 :  I will explain in more detail and give examples of FHA mortgages compared to conventional mortgages. I will also show you that FHA Jumbo mortgages will be even more cheaper than either a jumbo mortgage or doing a conventional mortgage with a 2nd mortgage to stay under the conventional caps.

Author of this blog : Jeff Belonger

e-mail : jbelonger@ihmci.com

The credit crisis aka the Wheel of MisFortune

Has the real estate market been your wheel of misfortune? Have you been made promises after promises? Have you bought into the hype of what one company or person might promise you, but at the very end, it's not even close to what they promised?

• Does a realtor promise you a high listing price, higher than anyone else did in recent months?
• Did a loan officer from a mortgage company promise you a great rate with low to no fees?

Currently we are in a credit crunch, no matter how you look at it. Credit card companies are losing hundred's of thousands of dollars. Mortgage companies and investors are losing the same. Are some of these individuals that you speak to, are they in the same boat personally, that they need to cling onto each and every client so they can make a living?

Trust...... ouch, such a powerful word, but one that is abused often. How can we trust? How can we take that risk and believe someone that we have never met before. Do we take one person's word over another?

In mortgages and real estate, it can be easy to put your trust in the hands of a realtor or a loan officer. But what I don't understand is if you get a gut feeling that something might not be right, then why do you proceed with that person?

I spoke to a client recently that was going to go with another lender. I asked her to give me some details about her rate and costs. She really didn't know. When I asked about her rate, she said that the loan officer said, "about/around 7%".  And she said that she wasn't 100% comfortable in some of his answers. My question to the general public, why would you even go through with this then?  Even if your back is up against the wall, that you are in desperation, why?  Do you know that this will usually backfire and put you in a worse situation?

The same goes for in real estate. Why listen to a realtor that says they can guarantee a higher price than most? We all like to think that we have a crystal ball. But what about truth and honesty? Realtors have access to what homes have sold in recent months. This is how they determine a possible price for your home. A very good realtor is going to point out to you the market conditions in your area. They will show you homes just as yours and what they sold for. You can't always use a current home on the market, because it might be over-priced. Sure, condition of the property makes a word of difference also.

 

My whole point in regards to both examples?  Pay attention to such words and phrases as "I guarantee", "I promise", "no problem", "110% satisfaction guaranteed", etc, etc.  I have been doing mortgages for over 15 years and I can't make everyone happy. I even had one gentleman report me to the BBB because he was unhappy. He was unhappy because he thought I was getting over on him, when in reality, I was being 110% honest. And luckily I saved my proof of what I went over with him, with his signatures on it. I fought the complaint and one.

You want my honest opinion?  Those in real estate and mortgages that give you a lot of information upfront, before you even ask for it, are the ones that you should be paying close attention to first.

I just had a client last week tell me that I was the 6th lender that she had spoken to. After 15 minutes of speaking to her, she said that I moved into the number 1 spot. I said, may I ask why? She said, "because I answered most of her questions before she even had a chance to ask them."  Meaning I basically gave her all of the information upfront for her to make an educated decision. I didn't hold anything back nor did I have anything to hide. Or was I afraid to compete with other lender's fees and rates. A solid real estate professional or mortgage professional understands this.  Just keep in mind what I have talked about, because you might come across this, thinking that you will be fine.

The average sales person doesn't like a client that is educated and fully armed with answers. The true professional actually loves it, because it makes his or her job much easier. And because they know that you know all that you need to know, to not only make a solid decision, but because this is how they operate and can sleep at night.

 

Consumers need to be aware of these Red Flags !!!!!

 

Author of this blog : Jeff Belonger

e-mail : jbelonger@ihmci.com

Yield Spread Premiums -- FHA & Conventional Mortgages -- Why the uproar?

Politicians are wanting to step in and squash the yield spread premium (YSP) that is paid to brokers by offering higher rates. I am not here to debate politics and what is right and wrong, but to give the true understanding what YSP is used for and how it can help the borrower when purchasing or refinancing a home.

Yield Spread Premium known as YSP is defined by wikipedia as the cash rebate paid to a mortgage broker based on selling an interest rate above the wholesale par rate that the borrower qualifies for.

It becomes a balancing act when a loan officer has to defend the reasoning behind how they make money, when the consumer can assume that the loan officer makes more money if they see the YSP on the good faith estimate or on the HUD settlement sheet. It becomes worse when that consumer now shops for his or her mortgage by trying to compare YSP's. This method in my opinion is ludicrous and just plain retarded.  By disclosing the YSP just confuses the mortgage process.

Question : Would you select a doctor or a criminal lawyer by what they charge?  How does the disclosure of the loan officer's profits affect the price that the consumer would pay for that loan?  Very simple, by knowing the profit, the consumer is able to negotiate better.

What's been the hottest topic of lately? That it's unfair that the broker has to disclose the YSP. What gets me is that you just don't see it on the bankers side. Which could lead you to believe that mortgage bankers are cheaper. A lot of the hype is that many brokers don't disclose YSP on their inital good faith estimate, even though they have to by law. And then it's later seen on the closing settlement statement. This is where the client becomes angry and figures that the loan officer is trying to get over on them. What would solve the problem?  Just allow the broker not to disclose the YSP.  But congress wants to eliminate the YSP on the brokers side.  This could make it more expensive  for the borrower.

Let's take a peak, comparing 2 different lenders, not making a difference if it's a banker or a broker. Example : LENDER A :  If their rate was 5.75% and they were charging 1 pt with $500 in fees. The YSP was 1 pt on the back. LENDER B : Their rate is 5.625% and were charging 1 pt with $500 in fees.  But the YSP was 1 1/2 pts on the back.  Who has the better deal?  LENDER B has the best deal for the client. So what if they made more money.  Unless we put an exact fee per loan to be made there is no transparency.  I truly feel that if you get the loan officer to reduce their fees tremendously, that it would seriously affect your service that you would receive.

Conclusion : Katie Marchione said in a comment in another post, "When you buy a $50 shirt at Macy's, don't you think that there is profit built into that price?  You are paying for a product or for a service and the providers deserve to get paid for it."

I admit, that there are loan officers that take advantage of the consumer. But there are many borrowers out there that don't have the money for all of the closing costs. And the lender can use the YSP to also pay for certain fees. And if the yield spread premium is taken away from the broker, borrowers will end up paying for more in closing costs because the lender needs to make a profit.

 

Mortgages & Real Estate -- Consumers need to be aware of these Red Flags !!!!!

How many of you at one time or another bought a house or refinanced your mortgage and ran into one problem or another. May it have been the realtor who was not able to give you the correct answer or the loan officer who strung you along and then changed things last minute. I have never said that I am perfect or that I know it all, but it does come down to honesty, integrity, knowledge, and very good service. 

What about you first time homebuyers that have never experienced buying a home or refinancing for the first time. I truly believe that there are some key phrases that can sometimes be cause for concern, known as Red Flags. And just because you have done this before, doesn't mean that it won't happen to you. If you hear some of what is mentioned below more than once, especially in a short time period, this could be your warning.

The General / Basic Red Flags from both the loan officer or the realtor :

• As you shopped for a realtor or a loan officer, this person was always getting back to you. Now you have signed a listing agreement, a buyers agreement, or the loan application and they don't get back to you right away.  If you are leaving a few messages per day, both e-mail or by cell, and this continues for close to 48 hours, there is no excuse. This is a huge Red Flag if this takes place a few days prior to settlement / closing, especially the day of closing, if they can't be reached at all.
• Key words or phrases used often when first speaking to you ; "I promise", "I guarantee", "no problem, I'll fix it", "I am the best", "I am the cheapest", and "I have the lowest fees". I am sure there are more.
• Delayed phone calls. I promise to call later or tomorrow. But you don't hear back from them and now you have to track them down. Yes, again, things happen. But if this seems to be a reoccurring issue, then you might have problems.
• Deadlines - If there are certain dates on the contract or with the lender, get everything in as soon as possible. If that is ordering inspections in a timely manner or getting documents to the lender, don't wait.

Red Flags from loan officers or lenders :

• You are shopping for lenders and the loan officer never offers you a Good Faith Estimate. Rut row.
• They don't offer you the rate or the payment?  This might sound silly, but I had 3 clients just in one month, that this happened to them. Yes, can I judge and say that they should have asked?  But maybe the loan officer talked circles around that client, and then they just forgot. Sometimes just hearing, "you are qualified" or "you are approved", gets you excited, hence why you might forget to ask the important questions.
• You find a loan officer because their rates were very good. But since you have so much on your mind, they never go over the rate lock-in features of that program. If they don't cover this prior to application, and especially during application, this could be trouble. Or they get you to sign a rate lock form, but they convince you to float. Question, did that rate even ever exist then?
• You might qualify for a FHA or VA loan, but tell you that you don't want those kinds of loans, because conventional is better for you.  This has happened to at least 5 people that I know of. The main reason was because the lender wasn't FHA or VA approved.
• If your lender/loan officer changes rates or fees during the process or at settlement, don't just give in. Avoid excuses such as; "your credit score dropped", "you have less income", "your credit isn't as good", etc, etc. What I am about to say is the average. These things are usually found out in the first week when processing a loan, not last minute.
• Changing stories / shifting blame.  This one can be used in conjunction with the other red flags mentioned above.
• When comparing good faith estimates, don't just compare the bottom line, "total costs to borrower". Some loan officers low ball certain 3rd party fees to make their good faith look cheaper. Or they escrow less taxes on paper that is mandatory in each state.
• You are at closing and the loan officer says, "don't worry about those docs, we can correct that later". NO !!! Once you sign, it's over.
• Update (04/03/08)  -  If you have a credit score of 679 or less and less than 20% down and you know you should be going FHA, but the lender says that going the conventional way is better.... major red flag. It's been proven that going FHA in this scenario is cheaper monthly.

Red Flags from realtors or real estate offices :

• When an agent only shows their listings. If you want to see homes and they keep showing those only listed by their company or that they are selling themselves.
• One complaint - When a realtor has a full time job that is not real estate related. I heard a story that the buyers had to wait until their realtor got up to show them the house. This was at 1 pm.

 
Red Flags from consumers :

• This is actually to the consumer reading this. Never hesitate to tell your loan officer or realtor everything. Even if they don't ask you and you think it's pertinent to the transaction. Don't take that chance in not telling them. We are all here to help you and not pass judgment. The true professional acts in this manner.
• Be loyal and just don't hop to every realtor showing houses. Build a rapport  with that person. That's if  you feel comfortable with that person.

Overall, don't keep falling for the same excuses over and over. Or, for multiple excuses during the process. Yes, things happen, but 9 out of 10 times, not that many on one transaction. These types of excuses are usually to delay you in finding out the truth, until it's too late. If anything above happens for 2 or more days in a row, don't wait, contact their manager or boss. If you don't feel like you are getting anywhere at anytime, seek a professional in the particular field or possibly seek legal advice. It's one thing to give someone the benefit of the doubt, it's another to be lied to or misled intentionally. Never hesitate to ask questions.

Author of this blog : Jeff Belonger

e-mail : jbelonger@ihmci.com

Market Concerns -- Robbing Peter to pay Paul???

Fears in the market.... ?? Are you hiding because of such fears in today's market place? I think many of us were scared 6 months to a year ago. The media was talking about how bad it was out there. We had the so-called mortgage meltdown.  But was it really that bad? I think it all comes down to how sure of yourself, that you feel comfortable in buying, when it comes to purchasing a new home. May you be a first time hombuyer, someone moving up, or an investor.  I have said this many of times, but you need to speak to a mortgage professional and a real estate professional, those that are looking out for your best interests. If these people don't take the time in understanding your needs and wants,  actually help you make a plan, and walk you through that plan, then seek someone else.


Rich Sweum wrote this post the other day titled, At What Cost another 50 basis point Rate Cut? I truly believe that we can't keep cutting the Fed Rates. There will be some people that will disagree with this. Rich received an e-mail from a realtor talking about the economy, that it could hurt her commissions, and that we need to help and make it work now. (you can read this in Rich's comments) Basically, robbing Peter now to pay Paul later. Better yet, robbing from our own selves now, and pay us back later..... if that theory truly would work, life would be a bed of roses. It's a huge gamble and not a gamble that I am willing to take now. Why?  Too many unknowns still out there, that if we keep digging deeper, how long will it take us to dig out of this mess. The biggest concern that could set us back, foreclosures.   Another fear, jobless claims. Just today,  the jobless figures came out and the stock market responded negatively at first, but is positive now. This will continue for the next several months. The investors are just not sure and pull money from here and dump it there. Basically a sea saw effect.

Summary : I gave a brief description in regards to the difference between the mortgage interest rates and the Fed rate. This is what I stated.... "When the Fed rates adjust, it basically increases or decreases the amount of money circulating within the economy. The Fed is acting as the throttle and the break for economic growth and inflationary control. If the Fed can keep interest rates low, there will be more money in the economy. This type of control allows banks to either lend more money when rates are low because credit is cheaper or lend less money because the cost of credit is high."  In my honest opinion, this can act as a band aide for now. The media and Wall Street are trying to curb fears in the market place now, because of fear of a recession, another post in itself. We need to allow the market to work itself out. There are still plenty of people out there that can buy and want to by. But because of the media sometimes, they get scared. Hence why speaking to a mortgage professional that is knowledgeable not only with mortgage products, with the market, but understands your goals and understands how to help you plan, is the key in being successful.

Overall, rates are low and home values are low. People, rates were even low the last 2 months. A very good mortgage planner can help you curb your fears if you lay it all on the table. Giving you more insight than sometimes found on the internet or even from someone local that just wants your business. Don't forget, the lowest rate offered on paper when shopping doesn't always exist. And you won't always get good service from someone that just offers that piece of paper without properly explaining it.