Mortgage Knowledge at its BEST!!!! (Jeff Belonger)

Mortgages & Real Estate -- Red Flags that consumers need to be aware of - revisted

Sat, 17 May 2008 15:34:16 -0500

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, does not mean that it will not 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.

For a list of the those red flags, please click here : Consumers need to be aware of these Red Flags !!!!!

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For all of your mortgage needs and for more information on FHA loans, please go to this link. The FHA Expert

For more information on how you can obtain your dream home, please click here : Mortgage Financing Options

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

Good Faith Estimates - FHA loans or Conventional loans - Why is it so difficult???

Wed, 14 May 2008 22:16:25 -0500

Earth shatering news here..... when you are shopping for a mortgage, may it be a FHA loan, a conventional loan, or a VA loan... please ask for a good faith estimate. Not every loan officer will volunteer one to you.

I can't tell you how many consumers that I have spoken to this year that didn't really know their mortgage rate, what their real payment was going to be, or what the total amount of money that they were going to need. They did know round-abouts. One thing that they told me was that they were either qualified or approved. But no good faith estimate.

It doesn't matter what kind of loan that you are applying for, if it's a fha loan or a conventional loan, you should get a good faith estimate. RESPA (Real Estate Settlement Procedures Act) says that you are suppose to receive a good faith estimate within 3 days after applying for a mortgage.... this doesn't mean if they talk to you over the phone and qualify you, that they have to. But they should. Click here to find out why (opens in a new window).. A true understanding of Good Faith Estimates !!!!!

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

FHA Loans or Conventional Loans — APR vs Mortgage Rate — Knowing the differences….

Tue, 13 May 2008 22:15:58 -0500

Shop mortgage rates… Shop APR (Annual Percentage Rate)….. Shop mortgage fees….. So which is it? Shopping for a mortgage can be very confusing to say the least. I hear so many called experts tell the average consumer to shop APR. This is not the wisest of decisions and can be argued by many mortgage professionals.

Let’s add some more confusion. Most of us know what the rate is in regards to mortgages. Let’s define rate and APR. Rate : A charge or payment calculated in relation to a particular sum or quantity: interest rates. (from answer.com) APR (Annual Percentage Rate) : Is the cost of your credit expressed as an annual rate. This is a federally required formula, designed to help the borrower compare the cost of credit. The APR rate is different from the note rate of your mortgage and is usually higher than the note rate. Why is this?

This confusion can be better explained if you follow this link : APR vs Mortgage Rate — A better understanding….

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For all of your mortgage needs and for more information on FHA loans, please go to this link. The FHA Expert

For more information on how you can obtain your dream home, please click here : Mortgage Financing Options

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

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

Mon, 12 May 2008 11:09:52 -0500

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

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

Listing Agents, don't hurt your sellers ability to sell !!!!

Sat, 10 May 2008 21:42:07 -0500

Realtors, do you not only hurt your seller from selling their home, but possibly hurt the buyer from buying their dream home? Why do you have anything against a FHA loan?

Do you over think? Do you just go off of what others say in the real estate industry? Because of the media? Do you play the role of God?

Hey, giving advice is your job. But giving bad advice? Before you think or pass judgment, shouldn't you research? FHA loans are not bad. And if this was the case, why would you accept and offer that was 100% conventional financing? Do you know that these types of loans have to be re-run though DU to make sure that it can still be done? This is the same on many loan programs. But not on a FHA mortgage, because it can be manually underwritten. Especially with the ever changing guidelines on conventional loans, I would assume that a FHA pre-qual could be better off than a tight conventional pre-qualification.

Sellers.... word of advice, don't allow your realtor to limit the types of financing that a buyer might be qualified for. Even if they are qualified for a FHA loan. If anything, ask your realtor if they make this recommendation, why they are stating this or advising you. Your house could be on the market for a longer period of time becasue of this. Don't over think and deal with a real estate professional.

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For all of your mortgage needs and for more information on FHA loans, please go to this link. The FHA Expert

For more information on how you can obtain your dream home, please click here : Mortgage Financing Options

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

FHA loans & FHA rates - Why so different from conventional loans?

Fri, 09 May 2008 01:06:08 -0500

FHA loans in many cases are much better than conventional loans. I have made this statement several times recently because I am tired of listening to loan officers, realtors, and the average consumer get all excited because FHA mortgages are back. People, they never left. FHA loans are not the new subprime mortgages.

FHA loans have been around since 1934. And why are they much better than conventional loans? I can make this statement if your credit score is below 680 and especially if you are putting 10 percent or less down.

Overall, it's not rocket science to figure this out. The reason why so many consumers are led down the wrong path sometimes is because either the loan officer doesn't know how to handle the credit aspect of FHA loans or because their mortgage company is not FHA approved.

Come see how you can save $272 per month on FHA loans - what a great deal.... (clicking onto this link will show you the secret to a much lower payment)

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For all of your mortgage needs and for more information on FHA loans, please go to this link. The FHA Expert

For more information on how you can obtain your dream home, please click here : Mortgage Financing Options

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

Creative FHA loans — No Money out of pocket

Sun, 04 May 2008 08:59:42 -0500

FHA loans are becoming a vital part of todays financing when it comes to buying a new home or refinancing. You will still hear from some lenders or realtors that FHA financing is not the way to go. Here are some reasons why and the rumors mentioned :

They are old school and dont know about the new appraisal changes that have taken place in the last 5 years. Truth : FHA appraisals are now done the same way as conventional appraisals.

The lender is not FHA approved or understands how FHA mortgages work.

Some loan officers advertise FHA loans as 100% financing. Not true at all.

Some lenders or loan officers have said that the down payment assistance programs (DPA) are dead.

The reality of it is that FHA loans are more in likely the best option for many consumers if their credit scores are below 680 and putting less than 30% down. So, how can we get creative with FHA loans and possibly put no money out of pocket? For that secret, please read this :

No Money out of pocket — Nehemiah style…..

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For all of your mortgage needs and for more information on FHA loans, please go to this link. The FHA Expert

For more information on how you can obtain your dream home, please click here : Mortgage Financing Options

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

Google -- Customising your home page

Wed, 30 Apr 2008 08:59:19 -0500

As many of you know, I follow Google from time to time. They are so innovative. They change their logos for specific holidays and when you click on that particular logo for that holiday, it gives you a short history lesson. Example :

Now Google has gone beyond that. They are now allowing you to customize your home page with the work of world class artists and innovators. Then you can add your choice of news, games, e-mails, and so many more gadgets, making your homepage colorful.

Here is the link for those artists and such... iGoogle Artist Themes

(These pages are for your Google home page, not your blog page..... )

This is what you would see if you clicked onto todays Google logo. The link, See more artist themes », takes to you to about another 100 artists and virtual themes. Anything from a virtual aquarium, to a tribute to Lance Armstrong, to artists, and special CEO's that have made their name in the world of art and fashion.

Here are some examples of some of the artists and home pages ..........

And here is an example of Michael Graves, who he is, and the gadgets that you can add to your home page.

GADGETS for Michael Graves to add to your homepage........

I hope you all enjoy these. There are many themes to choose from and you can update them anytime that you would want.

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For all of your mortgage needs and for more information on FHA loans, please go to this link. The FHA Expert

For more information on how you can obtain your dream home, please click here : Mortgage Financing Options

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

FHA Loans - FHA Mortgages -- What's behind the credit score....

Tue, 29 Apr 2008 15:24:29 -0500

Credit scores..... aka fico scores. I am a firm believer that you can't believe in everything that you read.

As you can see the illustration to my left, that it states that the average credit score is 678. I have a hard time believing this and just talked to a few loan officers and even a credit specialist about this. I just don't believe that 678 is the average credit score. If I had to put a number on it, I would say 610 to 620.

Why am I bringing this up? With so many changes to conventional loans and FHA loans when it comes to credit scores, it's been more costly for those applying for a conventional loan.

Conventional loans -- If you have less than 30% down with credit scores below 680, you will have pricing hits to your points or to the rate. Even if you don't see the hits, it will be in the price somewhere. This is a major wide adjustment made by Fannie Mae and Freddie Mac. No matter what mortgage banker or broker that you use, those penalties will be applied.

FHA loans -- FHA mortgages

There even has been some major changes on credit scores on FHA loans also. It comes down to the investors who make up their own pricing adjustments based on the risk that they want to take. This risk pricing is then passed onto the consumer from your lender.

So, what kind of pricing adjustments are we talking about when it comes to FHA loans? Many lenders can't go below a credit score of 580. Some can't even go below 600 or 620. I can go down to 500, but there are some pricing hits. We actually manually underwrite our own FHA loans in-house.

When it comes to the FHA jumbo loans, we can go down to 580, when many lenders can't go below 620. And this is still based on a manually underwritten loan. But if it got approved in the system by DU / LP / or DO, then we can go down to 560. The new pricing for these FHA jumbo loans is based on anything over the old limit for that particular county, up to the new limits. Those new limits can be found here : New FHA loan limits

Overall, some food for thought. Here are some red flags....

If you are with a lender that is telling you that you are better off with a conventional loan rather than a FHA loan, but you are putting less than 30% down and your credit score is less than 680, you better look around. Not every lender is FHA approved. A great rule of thumb is if you are putting 10% or less with a credit score of 679 or below, that you would probably be better off with a FHA mortgage. Here is some proof. FHA loans vs conventional loans -- The true story told by numbers....

If you have been in process for 3 weeks or so and settlement is fast approaching and your lender tells you that you are now in underwriting, keep tabs on this. If you don't have an approval within 5 days, start asking your lender questions. Yes, some of these brokers that send their FHA loans to other lenders are 10 to 14 days behind in underwriting. This could delay your settlement.

The last statement above was not based on assumptions. I have closed 3 clients in the last 45 days that were with other lenders. 2 of them were in underwriting for 10 days a piece and both were denied by their previous lender. The 3rd client missed their settlement date, but was never denied. One of these was in Virginia, one was in Pennsylvania, and the other client was in Florida. I closed all 3 of them in less than 10 days. Just beware of certain red flags and of some excuses that loan officers might use at times.

PLEASE READ :

If you aren't sure of your status, don't hesitate to call me. If you don't feel like you are getting the correct answers, call me. If things start getting changed on you (rates and or fees) or that your settlement date has been changed by the lender, definitely call me. Don't give in and give them a 2nd or 3rd opportunity, when it could cost you more money and frustration. If anything, seek another opinion. It can't hurt.

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For more information on FHA loans, please go to this link. The FHA Expert

For more information on how you can obtain your dream home, please click here : Mortgage Financing Options

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

FHA loans vs conventional loans -- The true story told by numbers....

Mon, 28 Apr 2008 09:42:58 -0500

FHA loans are not the next subprime loans. Don't let anyone else fool you on this. FHA has been around since 1934 and subprime mortgages started to emerge in 1994. Subprime loans in many cases were good for those lenders that weren't FHA approved. The problem with that is the rates on subprime mortgages were typically 2% higher than FHA mortgages.

Lastly, just because someone said that they can qualify you for a conventional loan and that it would be cheaper than a FHA mortgage, might not always be correct. In many cases, FHA loans are now cheaper than conventional loans, which I will show you below.

One main reason why a loan officer might still make it sound like conventional loans are cheaper than FHA loans is because they aren't FHA approved. Another reason would be because they don't know much about FHA mortgages.

The example below is based on a $300,000 purchase price with 10% down. One reason why conventional rates are a little higher in this scenario as in FHA rates is because Fannie Mae and Freddie Mac have added penalties per se. If you are putting down less than 30% and your credit score is less than 680, certain fee penalties would apply to you, which would increase your rate. The FICO (credit score) that I am going to use is 640, which is above average credit and will still show in this example that FHA loans are cheaper, even with 10% down.

***And keep in mind, some lenders have penalties on FHA mortgages with credit scores under 620. It all comes down to the investor. We don't have penalties on any credit score above 580. And we can do credit scores down to 550. Many lenders can't go below 580.***

Type of Mortgage	Conventional Loan	FHA Loan
Purchase Price	$300,000	$300,000
Mortgage amount w/10% down	$270,000	$274,500
Mortgage Rate with Zero Points	7.00%	6.00%
Principal & Interest Payment	$1,796.32	$1,645.77
Mortgage Insurance Payment	$117.00	$112.00
Total Mortgage Payment PI & TI	$1,913.32	$1,757.88
Savings		$155.44 per month

Disclaimer : These rates are just an example and can change because of various market conditions and are based on a 30 year fixed rate as of today. The fees would be the same and with zero points, so as to compare this scenario apples to apples. The conventional rate also includes the penalty for the 640 credit score.

Some of you might be saying that you will be adding $4,500 onto your principal balance if you did the FHA mortgage because of the FHA one-time mortgage insurance premium. This is correct and I don't want to confuse you with more numbers and charts. But here is a quick breakdown. If you kept your house for 5 years, which most people sell in a 6 year period, you would have saved $9,326.40 in payments in 5 years. This is a difference of $4,826.40 that you have saved!!! And one other thing that is very small, but still makes a difference. You will be subtracting a few more dollars per month from your principal because your interest is lower. Just something else to remember.

How do I find an FHA approved lender? You want to make sure who you are dealing with is FHA approved.

Why do I say this? Not all lenders are approved FHA and some may tell you that you don't qualify FHA because in reality, they aren't FHA approved.

You can find a HUD approved lender in your area by going to the following HUD website: http://www.hud.gov/ll/code/llplcrit.html DISCLOSURE (just be careful of the spelling of the lender. If I put in my company's full name, Infinity Home Mortgage Company, Inc, it tells me that there is no such company. If I put in Infinity Home Mortgage, it shows my company as being FHA approved. Just keep this in mind. You can always call HUD also. (202) 708-1112

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For more information on FHA loans, please go to this link. The FHA Expert

For more information on how you can obtain your dream home, please click here : Mortgage Financing Options

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

FHA Streamlines - FHA Loans make it an easy process to refinance

Mon, 28 Apr 2008 00:04:34 -0500

I decided to venture out in the blogoshpere today to see what some other lenders are writing about FHA Streamlines. As I have stated, you can't believe everything that you read, even if it sounds true.

In this post, I want to highlight some of the misleading facts that I read and to share with you what is actually right.

FHA loans have been around since 1934 and FHA streamlines been around since the 1980's. It is basically for those borrowers that currently have a FHA mortgage. FHA's sole purpose is to streamline the process, making it very simple and quick when refinancing. The main key points of FHA streamlines are :

no credit check or income verifications
no cash-out

Here is what I found on the internet. The misleading information will be underlined and the correct answers will be in Blue.

Streamlining does not require an appraisal; there are no closing costs. There are always costs of doing a mortgage. It just depends on if the lender passes it along to you or builds it into the rate.; no employment verification, no credit scoring, no debt to income requirement. You just need a good mortgage history with no late payments it states here, fha streamlines/handbooks/.pdf, that FHA does not require a credit report. You can have lates, you just have to be current on the mortgage when going to settlement ; unless the late payment was AFTER a rate adjustment - this is applied on the FHA secure loan.

What are the requirements for a streamline refinance?

The only basic requirement of a streamline refinance is; a person can not have more than one late FHA mortgage payment in a six month period. I already explained this above.

However, if that person does have more than one late payment they may still quallify after paying some additional fees. This sounds like how a lender can have the excuse to charge you more in fees or a higher rate.

How long does a streamline refinance typically take?

A typical streamline loan takes between 25 to 40 days to complete, depending on the time of the month that you lock in your rate. Wow.... it shouldn't take that long to even process a regular FHA loan or FHA mortgage. A streamline should take no more than 10 to 15 days, depending if you need an appraisal or not.

Here are your two types of FHA streamlines :

1. Streamline refinance with an appraisal : This is where you can include your closing costs within the loan amount. There are two types of calculations to achieve this type of refinance. The lower of the two would be used.

Maximum loan-to-value percentages multiplied by the appraised value, exclusive of closing costs.

By adding the existing first mortgage lien, the closing costs, accrued late charges, escrow shortages, and any pre-paid items minus any refund of the upfront MIP (mortgage insurance premium).

2. Streamline refinance without an appraisal : The calculation for this is to include the original principal balance of an existing FHA mortgage to include any new upfront MIP.

These 2 types of refinancing are only for primary residences only. Investment properties that were originally bought as a primary residence, may only be refinanced without an appraisal to only include the outstanding principal and nothing more.

If you have a 2nd mortgage or any junior liens older than twelve months old, then this would be considered a regular refinance and could not be done as a streamline refinance. And then you would have to qualify with income and credit.

FHA programs and insight :

FHA -- Non-Occupant Co-Borrowers, are they allowed?

FHA refinancing cash-out -- knowing your options -- Part 1 of 2

The First Time Homebuyer Series :

First Time Homebuyer Tips : FHA - Conventional - VA - Subprime -- Part 1 of 4

First Time Homebuyer Tips : Getting Qualified & Knowing your Credit -- Part 2 of 4

First Time Homebuyer Tips : FHA, is the best mortgage program? -- Best Programs & Why -- Part 3 of 4

First Time Homebuyer Tips : Understanding the Total Process -- Part 4 of4

Renting vs Buying -- Understanding the difference........ FHA? -- Part 1 of 3

Renting vs Buying -- Showing the difference in $$ -- Part 2 of 3

Renting vs Buying -- Knowing your loan options -- Part 3 of 3

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For more information on FHA loans, please go to this link. The FHA Expert

For more information on how you can obtain your dream home, please click here : Mortgage Financing Options

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