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