The third week of July has brought once again record low interest rates. Getting a mortgage in 2010 is different than in prior years. It takes expertise to navigate the mortgage process. The key to a successful and great mortgage experience is EDUCATION. When I meet with a potential client I take the time to educate them on what to expect and I review all of their paperwork so that we can prepare for whatever would come up. Home buying, especially the first time homebuyer is the foundation to the healing of the economy. When someone buys a home, they move, they fix the home and garden, etc. They use the services of contractors, gardeners, and movers. They shop at hardware stores, furniture stores and the vast and sundry retail and discount stores that sell household items. This causes an economic ripple affect that’s stimulates the economy. Buying a home, though, can be real scary especially today with all the negative news. A first time homebuyer may be scared to take themselves this huge step.
The questions that come up are often, are, what does it mean to be “qualified” for a mortgage? How can a mortgage professional determine if a person(s) qualifies for a loan?
What does the process entail? What steps can a person take to ensure that they will qualify for the best mortgage rate available? How can a person determine if they are being approved for the best mortgage program possible? Why is it important to know what your taxes will be and why is it important to have your credit checked?
Well let’s start with the basics. When you are thinking about buying a house it is very important to first be pre qualifies/pre approved for a mortgage. This is important for the buyer but even more important to the seller. For the buyer because they should know if they can get a loan before they look for a home and spend money on inspections and attorneys etc. For the seller, I believe it is actually more crucial. When a seller accepts an offer, they take their home off the market. They sign contract with their potential buyers. If those buyers don’t get a mortgage, they have lost precious time in marketing their home. They have lost the opportunity of showing the home to a broader range of potential buyers. This can cause for the seller to lose thousands and tens of thousands of dollars. I recently closed a mortgage loan for a buyer who purchased a home for $540,000. This home had been in contract previously with an unqualified client. The home had been off the market for 6 months while the buyer tried to get a mortgage, The attorney for the buyer kept on requesting commitment extensions. The buyer actually had applied to three lenders and was turned down by all three. The seller was in a terrible financial situation. They had to move to another city. The husband had been out of work and finally got a job. It was for less money and he could not commute. Their credit had been compromised; they couldn’t afford to keep the house. It had originally been under contract for $610,000. It was 10 years old, 3,600 square foot colonial. They put it back on the market for a “quick sale” and my customers purchased the home for $540,000 as long as they guaranteed a 30-day closing.
Monday, July 19, 2010
Wednesday, July 14, 2010
Mandatory Loan Fees Keep Borrowers From Getting Their Absolute Lowest Rate
Conforming mortgage rates may be posting all-time lows this week, but that doesn’t mean you’ll be eligible for them. You may have already called your loan officer and found this out the hard way.
It’s because of a federally-mandated mortgage-pricing scheme known as “loan-level pricing adjustments”.
In effect since April 2009, loan-level pricing adjustments are changes to a loan’s base rate and/or fee structure based on that loan’s inherent risk to Wall Street. It’s similar to auto insurance pricing adjustment in that a sports car, all things equal, will cost more to insure than a comparably-priced minivan.
More risk, more cost.
In mortgage lending, loan risk can be loosely grouped into 5 categories. Mortgage applications in Brooklyn featuring any of the five traits are subject to price adjustments:
Credit Score (i.e. the borrower’s FICO is below 740)
Property Type (i.e. the subject property is a multi-unit home)
Occupancy (i.e. the subject property is an investment home)
Structure (i.e. there is a subordinate/junior lien on title)
Equity (i.e. mortgage insurance is required by the lender)
Furthermore, loan-level pricing adjustments are cumulative.
A 3-unit investment home will face larger adjustments than an owner-occupied 3-unit home, for example. It’s these adjustments that explain why you may not be eligible for the rates you see advertised online and in the newspapers — your particular loan may be subject to this risk-based pricing that raises your mortgage rate and closing costs.
The government’s loan-level pricing adjustment schedule is public information. See what your lender and how your loan quote is made at the Fannie Mae website. Or, if you find the charts confusing, just call or email me for help with interpretation.
It’s because of a federally-mandated mortgage-pricing scheme known as “loan-level pricing adjustments”.
In effect since April 2009, loan-level pricing adjustments are changes to a loan’s base rate and/or fee structure based on that loan’s inherent risk to Wall Street. It’s similar to auto insurance pricing adjustment in that a sports car, all things equal, will cost more to insure than a comparably-priced minivan.
More risk, more cost.
In mortgage lending, loan risk can be loosely grouped into 5 categories. Mortgage applications in Brooklyn featuring any of the five traits are subject to price adjustments:
Credit Score (i.e. the borrower’s FICO is below 740)
Property Type (i.e. the subject property is a multi-unit home)
Occupancy (i.e. the subject property is an investment home)
Structure (i.e. there is a subordinate/junior lien on title)
Equity (i.e. mortgage insurance is required by the lender)
Furthermore, loan-level pricing adjustments are cumulative.
A 3-unit investment home will face larger adjustments than an owner-occupied 3-unit home, for example. It’s these adjustments that explain why you may not be eligible for the rates you see advertised online and in the newspapers — your particular loan may be subject to this risk-based pricing that raises your mortgage rate and closing costs.
The government’s loan-level pricing adjustment schedule is public information. See what your lender and how your loan quote is made at the Fannie Mae website. Or, if you find the charts confusing, just call or email me for help with interpretation.
Monday, July 12, 2010
Is a Pre approval more important for the buyer or the seller?
The second week of July has brought once again record low interest rates. Getting a mortgage in 2010 is different than in prior years. It takes expertise to navigate the mortgage process. The key to a successful and great mortgage experience is EDUCATION. When I meet with a potential client I take the time to educate them on what to expect and I review all of their paperwork so that we can prepare for whatever would come up. Home buying, especially the first time homebuyer is the foundation to the healing of the economy. When someone buys a home, they move, they fix the home and garden, etc. They use the services of contractors, gardeners, and movers. They shop at hardware stores, furniture stores and the vast and sundry retail and discount stores that sell household items. This causes an economic ripple affect that’s stimulates the economy. Buying a home, though, can be real scary especially today with all the negative news. A first time homebuyer may be scared to take this huge step.
The questions that come up are often, are, what does it mean to be “qualified” for a mortgage? How can a mortgage professional determine if a person(s) qualifies for a loan?
What does the process entail? What steps can a person take to ensure that they will qualify for the best mortgage rate available? How can a person determine if they are being approved for the best mortgage program possible? Why is it important to know what your taxes will be and why is it important to have your credit checked?
Well let’s start with the basics. When you are thinking about buying a house it is very important to first be pre qualifies/pre approved for a mortgage. This is important for the buyer but even more important to the seller. For the buyer because they should know if they can get a loan before they look for a home and spend money on inspections and attorneys etc. For the seller, I believe it is actually more crucial. When a seller accepts an offer, they take their home off the market. They sign contract with their potential buyers. If those buyers don’t get a mortgage, they have lost precious time in marketing their home. They have lost the opportunity of showing the home to a broader range of potential buyers. This can cause for the seller to lose thousands and tens of thousands of dollars. I recently closed a mortgage loan for a buyer who purchased a home for $540,000. This home had been in contract previously with an unqualified client. The home had been off the market for 6 months while the buyer tried to get a mortgage, The attorney for the buyer kept on requesting commitment extensions. The buyer actually had applied to three lenders and was turned down by all three. The seller was in a terrible financial situation. They had to move to another city. The husband had been out of work and finally got a job. It was for less money and he could not commute. Their credit had been compromised; they couldn’t afford to keep the house. It had originally been under contract for $610,000. It was 10 years old, 3,600 square foot colonial. They put it back on the market for a “quick sale” and my customers purchased the home for $540,000 as long as they guaranteed a 30-day closing.
So we all agree that a pre approved client is crucial for the seller. What do I do when I pre approve my clients?
Firstly, I ask lots of questions.
I need to know what is going on. I ask detailed income questions and asset questions. I run a mortgage credit report, which pulls credit from 3 bureaus, Trans Union, Experian and Equifax. I get the clients credit scores and I review it carefully. Once I have the Income information, and the asset information and I know the debt information, I use estimated tax and insurance figures to calculate a proposed mortgage payment that the client can afford. I then figure out based on this information what is the maximum mortgage amount that this client can borrow.
There are a lot of variables. What if the taxes are higher than we estimated? And what if they are lower? What if something changes with the income or the assets? I once had a client that gave $20,000 to a sibling to pay for brain surgery on their nephew, which wasn’t covered completely by insurance. Now the client was putting less money down. It is so important to have an open dialogue with the clients and all other parties involved.
A question that often comes up is, why do you need to know the taxes? I can pay them myself? Or who chooses the insurance agent? As far as the taxes, even if you pay them your selves, I have to calculate them as part of your monthly payment, because they need to paid and you must qualify to pay them. As far as insurance, you choose your own agent.
For people reading this article, I have handy free information upon request, on “How to chose a Realtor”, “How to chose Home Inspector”, “How to improve and maintain your credit score” and a very handy “Complete Homebuyers Guide”.
If you have any questions regarding any mortgage issue, contact Ann Zeilingold, Branch Manager of First Meridian Mortgage Corp. Licensed Mortgage Banker NY, NJ, CT, PA banking departments. 1609 Route 202, Pomona NY 10970. 845-354-9700
The questions that come up are often, are, what does it mean to be “qualified” for a mortgage? How can a mortgage professional determine if a person(s) qualifies for a loan?
What does the process entail? What steps can a person take to ensure that they will qualify for the best mortgage rate available? How can a person determine if they are being approved for the best mortgage program possible? Why is it important to know what your taxes will be and why is it important to have your credit checked?
Well let’s start with the basics. When you are thinking about buying a house it is very important to first be pre qualifies/pre approved for a mortgage. This is important for the buyer but even more important to the seller. For the buyer because they should know if they can get a loan before they look for a home and spend money on inspections and attorneys etc. For the seller, I believe it is actually more crucial. When a seller accepts an offer, they take their home off the market. They sign contract with their potential buyers. If those buyers don’t get a mortgage, they have lost precious time in marketing their home. They have lost the opportunity of showing the home to a broader range of potential buyers. This can cause for the seller to lose thousands and tens of thousands of dollars. I recently closed a mortgage loan for a buyer who purchased a home for $540,000. This home had been in contract previously with an unqualified client. The home had been off the market for 6 months while the buyer tried to get a mortgage, The attorney for the buyer kept on requesting commitment extensions. The buyer actually had applied to three lenders and was turned down by all three. The seller was in a terrible financial situation. They had to move to another city. The husband had been out of work and finally got a job. It was for less money and he could not commute. Their credit had been compromised; they couldn’t afford to keep the house. It had originally been under contract for $610,000. It was 10 years old, 3,600 square foot colonial. They put it back on the market for a “quick sale” and my customers purchased the home for $540,000 as long as they guaranteed a 30-day closing.
So we all agree that a pre approved client is crucial for the seller. What do I do when I pre approve my clients?
Firstly, I ask lots of questions.
I need to know what is going on. I ask detailed income questions and asset questions. I run a mortgage credit report, which pulls credit from 3 bureaus, Trans Union, Experian and Equifax. I get the clients credit scores and I review it carefully. Once I have the Income information, and the asset information and I know the debt information, I use estimated tax and insurance figures to calculate a proposed mortgage payment that the client can afford. I then figure out based on this information what is the maximum mortgage amount that this client can borrow.
There are a lot of variables. What if the taxes are higher than we estimated? And what if they are lower? What if something changes with the income or the assets? I once had a client that gave $20,000 to a sibling to pay for brain surgery on their nephew, which wasn’t covered completely by insurance. Now the client was putting less money down. It is so important to have an open dialogue with the clients and all other parties involved.
A question that often comes up is, why do you need to know the taxes? I can pay them myself? Or who chooses the insurance agent? As far as the taxes, even if you pay them your selves, I have to calculate them as part of your monthly payment, because they need to paid and you must qualify to pay them. As far as insurance, you choose your own agent.
For people reading this article, I have handy free information upon request, on “How to chose a Realtor”, “How to chose Home Inspector”, “How to improve and maintain your credit score” and a very handy “Complete Homebuyers Guide”.
If you have any questions regarding any mortgage issue, contact Ann Zeilingold, Branch Manager of First Meridian Mortgage Corp. Licensed Mortgage Banker NY, NJ, CT, PA banking departments. 1609 Route 202, Pomona NY 10970. 845-354-9700
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