The new cliché in the mortgage industry is that "We are getting back to basics." I have heard this phrase thrown around lately, but sometimes I wonder if anyone except other lenders knows what we are talking about? I have a theory that if you get 2 or more mortgage lenders in a room at a party and they start talking shop, others watching probably think we are speaking Klingon, or what I been calling for a long time "mortgagese." You see, we like to throw a lot of words and acronyms around like FICO, DTI, LTV, flipping, deals, etc. But I think we sometimes forget that Joe homeowner or maybe even most Real Estate Professionals have no idea what we are talking about. So in plain old English, let me share what I know about getting back to the basics with mortgage lending.
"Mortgage Lending Guidelines 101"
Cash is King: The more funds liquid in bank deposits and retirement accounts the better.
Down payment is crucial: The more funds you have for a down payment, the stronger the loan file becomes.
Credit trumps all cards: Without a decent credit score, a mortgage lender cannot even give you lending options.
Weird deals are to be avoided at all costs: 95% of the time if the deal is a little off the wall, it won't work.
You must have a job or income: The income source must be verifiable, believable and well documented for usually 2 years. No job, no loan...Sorry!
Equity in your existing home will have a huge impact on the new mortgage loan being approved: Today you must either choose to sell your existing home or have some pretty good equity if you expect the bank to offset the debt with rents. Also, it must actually be rented out! You cannot just say "we plan to rent it out."
Appraised value matters: The home must appraise for your offer price or the lender will cut the maximum amount they are lending.
Chain of title is important: I have run into this issue lately with short sale flipping companies.
Title seasoning is a big deal: Most lenders have sources that can do this loan 1 day after transfer of title, but are limited to where the loan can be placed. FHA has a 90 day anti-flipping policy.
Last month I had a business partner refer me a customer that was denied by a big bank for home financing. This client was not buying the biggest of homes but just wanted to have the dream of homeownership afforded to her. Like every client, her situation was unique. She had her doubts that I would not be able to help and to be honest, so did I; she was turned down by a big bank with lots of options. What I forgot to realize is how much we forget that this business is about the individual and not necessarily about the company. As I met with this new customer, the puzzle started to come together.
In my talks, interviews and initial application with the client, it dawned on me that I had a loan I felt confident in. The client was sincere and just had the wrong person at another bank not work hard enough to make her loan come together. I am sure the other bank collected the same paperwork I did. I am sure they pulled her credit and reviewed the file, but I feel our attitudes of help were very different.
I was confident and knew my perseverance was going to get this loan done for my customer. In the end, I achieved the goal and made a difference to a special person who deserved to be in a home. I did not try to find a reason to not approve her loan, but instead I searched all avenues to make the loan work. Was it a challenge? Absolutely, but this business is exactly that right now.
I love when you can make a difference in someone's life when others did not even want to try.
Todd Duncan as he addresses High Trust Selling in a Low Trust World.
When: Wednesday, October 28th from 8:30 am - 11:30 am (Continental Breakfast at 8:30)
Where: Mesa Hilton; 1011 W. Holmes Ave, Mesa, AZ 85201 (Alma School & US 60)
In today's challenging market, successful realtors must understand 6 governing principles that will drive business in the new economy. While mastery of business planning, prospecting, relationship development, presentation and client retention are still needed, there are new requirements to sustain success.
Todd Duncan will:
Teach you the 6 principles you must master for success.
Show you how top producers redefine success and compete effectively.
The class is FREE, but seating is limited. Call or email me to reserve your seat, 480.214.2818 or gmiljour@ccmclending.com
About Todd Duncan:
Todd has more than 2 decades as a speaker and sales trainer, he is a NY Times best-selling author and has successfully taught thousands of sales professionals to serve their clients with excellence.
Join Cherry Creek Mortgage as we host Tom Ward of Majestic Consulting. Tom has over 25 years of Real Estate Broker and Mortgage Co. Owner experience. Here's what you will learn:
1. How to get the first time home buyer off the sidelines.
2. Learn the 3 step process to get the consumer motivated.
3. How to address the top 2 issues confusing the first time home buyer.
4. Build a strategy together for success in today's challenging market.
And so much more!
Join us October 7th, 2009 from 9:00 am to 2:30 pm at the Hilton Phoenix Mesa/ East, 1022 W. Holmes Avenue, Mesa AZ 85210 in the Kachina AB Meeting Room. Continental breakfast will be at 8:30 am and lunch is served at noon.
The seminar is FREE but space is limited. Call or email me to reserve a seat! gmiljour@ccmclending.com or 480.214.2818
Normally, I would not be so negative about short sales, but I have experienced many problems in the last 30 days with short sales that we do not encounter with bank forclosures.
Situation #1. Buyer,seller and lender all agree to short sale. The file is opened up, appraisal and inspections are ordered, the loan file is processed, underwritten and approved. Then the docs are being drawn and the file does not close. Why?
The bank who agreed to short sale decided to foreclose on the property and does not inform anyone including the sellers and buyer. For all parties involved, valuable time, money and energy was wasted.
Short sales are not guaranteed!
Siuation #2. The buyer, seller and lender on 1st and 2nd all agree to the short sale. Lender #1 agrees to coe of 10/8/2009 and lender #2 agrees to coe of 10/8/2009. The file is opened up, appraisal and inspections are ordered, loan file is processed and ready for underwriting. Lender (myself) gets a call yesterday that lender #2 is going to now sell their 2nd to another lender on 10/1/2009. If the loan does not close by 9/30/2009 then the new lender approval for lender#2 will need to come from the new owner. The new lender usually takes 4 weeks to approve a short sale and now lender #1 will not extend coe further. Now if I cannot get the loan done in 19 days, my buyer will lose this house and seller will be foreclosed upon. Talk about a pressure cooker.
Moral of the (true) story: Short sales are not guaranteed!
Both situations are real war stories from real people put in bad situations. It is making me re-think a buyer's decision to buy a short sale.
Arizona Media insider Catherine Reagor at The Arizona Republic recently wrote an article claiming the mortgage industry has been deceiving the average consumer. Blame has been placed on loan officers for being unlicensed, collecting higher fees and forcing consumers into the worst loan products possible. So I guess until our industry is fully licensed next year, no one will be able to get a "fair mortgage." The problem with this information is the mortgage professionals left in our industry today are the ones that played by the rules to begin with. Now we have to face the music for the flaws of others who were looking at the mighty dollar and not what was best for their customers.
When mortgage professionals are required to have a license, I see two types of mortgage originators surviving this market. Type 1 is going to work for a big bank and you will have to call a 1-800 number to get your loan. You will probably talk with 2-5 people throughout the process, but can feel confident that you will get the product you seek based on the company's reputation. Type 2 is a category I feel that I fit well into; a loan officer with a reputation of providing exceptional mortgage advice on a local level. This means being involved personally with the customer and mortgage transaction from the beginning to the very end. I also see a huge gap level surfacing between the folks that know how to do a mortgage loan correctly, and someone who is going to make mistakes.
At the end of the day, consumers will still buy homes and homeowners will need a mortgage. You will need a mortgage lender to provide this service. A piece of paper saying I can pass a test does not make me a reputable loan officer; having a reputation that is backed up from prior clients and business partners does.
Business Referral Network would like to invite you to our next event. This is a great way to connect with new clients and expand your business. Business Referral Network is dedicated to small businesses wanting to grow using referral marketing.
The networking groups primary goal is to explore deeper business relationships while simultaneously building our businesses through the passing of referrals.
Guests are welcome to attend Business Referral Network meetings to determine if they would be interested in joining the network.
We invite you!
When: Wednesday, September 30th at 5:30 p.m.
Where: Monti's La Casa Vieja, 100 South Mill Avenue, Tempe, AZ 85281
Attention Real Estate Professionals: I have something important to share with you that is happening in the real estate world; and you need to know!
Your hard earned money is getting thrown out the door. Commissions are getting lost, your valuable time is being wasted and complaining isn't fixing the problem.
The good news? You have control of your business! It's time to take the lead and get rid of the garbage. You run your business!
There I said it. Again: You run your business! Oh that felt good.
I am sure by now, you want to choke me and just get to my point. Point taken.
You need to take control of your business and that starts by not letting others, including clients, make decisions for your industry that will affect YOUR money, time and livelihood. It's your business and the buck stops with you. Our services can no longer be traded like a commodities market. We have knowledge, information and a vast head of education that separates us as individuals.
I am tired of hearing about how a deal went south because a buyer used their uncle Billy Bob to do the loan and he is an idiot. You now find out 2 days before closing that uncle Bob can't get the loan done and you are not going to earn a comission. This shouldn't be happening!
Be proactive, this can be prevented! Demand that your lenders provide the best service possible and if you know they can't, it is time to find someone else. Lenders are not all made the same; it's the ones like Billy Bob that give us all a bad name. Do your research, ask your friends and ask potential lenders those tough questions that are vital to the success of YOUR business.
I'll be honest; the entire process of purchasing a home is not fun. Having your teeth pulled by a dentist may be more comfortable than getting a mortgage approval these days. When I am asked about my system, I make it clear the more that is accomplished early on will make for a smoother closing. The system from the beginning to the end is time intensive. I will walk through some of these steps:
1. You hire a "team," meaning the right players that will help make the outcome a positive. First, you hire a lender and see how much you can get approved for. Then you hire a real estate agent to help you find a dream home. This is just the beginning. By the time the process is done you have hired many others including an appraiser, home inspector, termite guy and title company.
2. Get a plan (with your lender and agent). In my experience, I have found that having a plan upfront will make the last days of closing run smoother. Preparing early helps reduce stress levels on all parties involved with the transaction.
3. Get a pre-approved loan. This process can range from a couple hours to days and weeks depending on your specific challenges. If a real estate agent tells you he can have a pre-approval by a lender in minutes, that is not the case in this market. A pre-approval in my book is determined when;
I have a complete and fully reviewed mortgage application on file.
An automated approval process has been run and has come back approved.
I have received all supporting documentation to meet loan guidelines.
Once I have all of this done, your loan is fully pre-approved and I can issue a pre-approval letter or loan status report. I can then inform your real estate agent that he or she can take you out looking at homes in your pre-approved price range.
4. Start house hunting. This process could take hours, days, weeks or months depending on your specific needs, wants and requirements. Once the real estate agent has an ACCEPTED CONTRACT is when the clock starts ticking.
5. Signed contract. This means that the accepted contract is signed by all parties involved in the transaction. All parties include the buyer, seller and agents. If you have a verbal acceptance but it will take three additional weeks to receive from the bank, this doesn't count! Your final approved loan starts with a FULLY ACCEPTED CONTRACT.
6. Process, underwrite and close your loan. Right now my turn times for these steps is in 30 days or less on FHA, VA or conventional financing. Sometimes we can speed up that process, but be prepared for it to take that long.
Knowing and understanding the process of a mortgage approval can prepare you for your own experience. It doesn't have to be as painful as a visit to the dentist, all it takes is a little (or a lot) of patience. Good luck!
Imagine yourself in your dream home; you've got everything you wanted including the white picket fence. Now take a step back...how did you get there? I will tell you one way of never getting into your dream home; bad credit. Period. The end. If you have poor credit, you'll never be able to carry out your dream of homeownership. Some of you may be thinking that you have bad credit and you'll never own a home. Wrong. There are steps you can take to make homeownership a reality.
So you've been behind on payments, creditors are reporting wrong, I've heard them all. Whatever it may be, you think the dream of homeownership has passed you by. What you may not know is several companies exist to help repair your credit. Some have charges up front and some charge a monthly fee, it just depends on the company. You may think you cannot afford credit repair, but I say you can't afford NOT to use a credit repair company.
It's simple. If you don't have good credit, you can't get your own home. Why not take advantage of these companies and their expertise? If you don't know where to start, feel free to contact me with any questions or recommendations to get you closer to your dream home.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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